Govt can’t rule out rescuing stricken firms vital to S’pore’s strategic capabilities but high bar set: DPM Heng

• The Government cannot rule out “taking some action” to preserve companies that are vital to Singapore’s strategic capabilities
• These are firms severely impacted by the pandemic but are critical to country's competitiveness or its national security
• There will be a move away from broad-based support for businesses to more targeted support 
• Industries with operating models that have fundamentally changed due to Covid-19 are urged to reinvent themselves

SINGAPORE — As the Covid-19 crisis threatens to wreck businesses that are strategic to Singapore’s future, the Government cannot preclude the possibility of taking some action to ensure these capabilities are preserved.

Deputy Prime Minister Heng Swee Keat said in Parliament on Thursday (Oct 15): “The exact form of support will depend on the circumstances. But the bar for any government action will be high.”

He added that the Government will be prudent in the use of public funds in such a scenario.

Mr Heng, who is also Finance Minister and Coordinating Minister for Economic Policies, did not name these companies, saying only that they are critical to Singapore’s competitiveness or its national security.

He was addressing Members of Parliament (MPs) after two days of debate on his ministerial statement last week that had set out Singapore’s economic strategies needed to emerge stronger from the crisis.

In the wrap-up speech, he explained that Singapore’s initial strategy was to channel support to as many people and businesses as quickly as possible.

A total of around S$100 billion from five support packages were put in place to dampen the economic impact of Covid-19, averting a 5.6 per cent loss in gross domestic product for 2020, and potentially saving 155,000 jobs each year in 2020 and 2021, Mr Heng said.

“As the Covid-19 situation in Singapore stabilises, the next pressing task is to help our economy recover. Our support must therefore evolve from ‘resuscitate’ to ‘rejuvenate’.” 

Instead of the previous broad-based support, the Government will pivot to providing targeted support for various categories of businesses, and is also focusing more on job creation than job retention.

He said that is why he had announced the tapering of the Jobs Support Scheme — a wage support scheme that supports firms to retain their workers — and introduced the new Jobs Growth Incentive, a scheme that incentivises businesses to hire Singaporeans.

Firms that will see greater demand in the post-pandemic economy will be supported by capability development grants that will help them expand and grow, as well as the Jobs Growth Incentive to support their hiring.

For businesses within sectors that are suffering a temporary fall in demand due to Covid-19 but will eventually recover, the Government will help them “recover faster and emerge stronger” through various sector-based support measures, Mr Heng said.

Examples include the SingapoRediscovers vouchers to aid the stricken tourism sector, the Enhanced Aviation Support Package that provides funding support, rental and cost relief to the aviation sector, and the S$55 million Arts and Culture Package and Sports Resilience Package for the arts and sports sectors.

The Government will not rule out any action to preserve companies that are key to Singapore’s “strategic capabilities”, he said, without elaborating on the type of action needed for such firms.

Should the post-pandemic outlook remain bleak for enterprises because of “fundamental changes” in their operating environments, Mr Heng urged them to reinvent themselves and take on new products and sectors.

He referred to nightlife businesses, adding that the Government is finalising a set of measures to support them and will announce these plans next week.

On Wedmesday, Mr Saktiandi Supaat, MP for Bishan-Toa Payoh Group Representation Constituency, had pointed out the dangers of a “cliff effect” for firms if support were to suddenly end. In response, Mr Heng said that customised restructuring schemes will be available for those that need tailored help on top of the financing schemes and payment moratoriums available.

“We will continue to monitor the situation and adjust where needed. Taken together, these measures will help our firms recover, in a more targeted and efficient manner,” he added.