Second stimulus package in the works as global economy, COVID-19 situation worsen: DPM Heng
SINGAPORE: The Government has started working on a second stimulus package about 10 days ago as both the global economy and COVID-19 outbreak have worsened since the first package was announced three weeks ago, said Deputy Prime Minister Heng Swee Keat on Wednesday (Mar 11).
During the Budget statement on Feb 18, Mr Heng had unveiled a S$4 billion Stabilisation and Support Package that contained a range of measures to cushion the blow of the novel coronavirus on local businesses and workers.
Helping workers to keep their jobs will remain a key aspect of the second support package, he said on Wednesday, while adding that he is not ruling out the option of tapping on past reserves.
Mr Heng, who is also Finance Minister, was speaking at a Budget 2020 Roundtable organised by the Straits Times and the Business Times.
COVID-19 “seems to be going in waves”, with the latest hitting major economies like Europe, Japan and the United States, he said. This has triggered more uncertainty and depressed sentiment in global financial markets.
“That in turn is affecting investments, affecting consumption and is affecting linkages across the global economy,” he said.
“I must say that compared to three weeks ago when we were doing the Budget, I think the situation today is worse and that is the reason why about 10 days ago we have started working on the need for a second package to stablise our economy and to emerge stronger from this,” he added.
Mr Heng noted that he just had a discussion with Prime Minister Lee Hsien Loong on Tuesday about the extra measures needed. He is also working together with other ministries on what else needs to be done.
“We have to continue to be very vigilant to look at this wave and how we need to stay on top of this development,” he said.
READ: COVID-19 relief measures appropriate for now but Government will do more if necessary: DPM Heng
WORKERS REMAIN "TOP-MOST CONCERN"
Asked what support measures would be included in the second package, Mr Heng said workers remain the Government’s "top-most concern".
“If our workers can keep their jobs, then consumption can resume and life can take place as normally as possible,” he explained.
It will also include specific measures to help those who are retrenched, as well as ways to better support self-employed people who have been affected by the novel coronavirus outbreak.
“We have to re-think this whole model to look at how we can strengthen it better,” he said so that self-employed people can be better protected during downturns like these and also be ready for the recovery through training and skills upgrading.
There will also be help for small and medium enterprises (SMEs) to tide through the immediate challenges, while making use of the downturn to strengthen their capabilities, he added.
But beyond the short term, the second support package will also contain elements relating to the need for enterprises to transform and grow, as Singapore should “aim to emerge stronger” from the COVID-19 crisis.
“There are several areas which I think that this outbreak now shows us the needs of the global economy.
“If we can be the first on the block to innovate, to make innovation pervasive in our society (and) in our economy, we can respond to this new situation very dynamically, come up with innovations that will meet the needs of Singapore, but also the world,” he said.
Mr Heng was also asked if the Government will consider drawing on Singapore’s past reserves.
“I think this is an option that we are looking at very carefully,” he replied. “Our reserves have been set aside to meet the needs of a rainy day. It looks like this rain is not a light one so we will have to look at what we will need to do.”
But Mr Heng noted that he will need to get the approval of the President and the Council of Presidential Advisors to use the reserves.
“We will have to discuss this very carefully, as we did during the global financial crisis,” he said.
READ: If situation deteriorates significantly due to COVID-19, DPM Heng says will make case to tap on reserves
During the global financial crisis which started in 2008, the Government had sought approval from former President S R Nathan for a provision of S$150 billion from past reserves to guarantee bank deposits in Singapore from October 2008 to December 2010.
In 2009, Mr Nathan had also approved a draw of S$4.9 billion from the past reserves to help fund the Resilience Package to protect jobs and support companies.
In a Facebook post on Wednesday evening, President Halimah Yacob said the COVID-19 outbreak, which the world’s health experts have said could take many more months before running its course, and a recent plunge in global oil prices will have a “great impact” on Singapore.
“In such a situation, we must do our utmost to support our people and our businesses, including considering using the past reserves if necessary,” said President Halimah, noting that the necessary must be done if public health is at stake and people’s welfare are affected.
“The Government has been keeping me and the CPA updated and we are monitoring the situation closely,” she added.
ON THE TIMING OF GENERAL ELECTION
Towards the end of the roundtable on Wednesday, Mr Heng was asked how the COVID-19 outbreak is going to affect the timing of the next General Election, which must be held by April 2021.
He replied that the Government is now very focused on containing the disease outbreak and managing the impact on the Singapore economy.
But as the elections must be called before next April, “we cannot deviate from that".
“What we must do is to create the conditions that will allow us to manage the situation to the best of our abilities,” he added.
Referring to his analogy of how COVID-19 is hitting different parts of the world in “waves”, it is likely the outbreak will last until at least the end of the year.
“I would say that, looking at the global developments, I think the virus outbreak is likely to stay with us for longer … and it is important that we have all the management’s attention to deal with this,” he said.
“I am afraid that the management attention that we need to deal with this will get more challenged in the months ahead because the situation is so fluid, so dynamic.
“I do not want to be alarmist about this – the best case scenario would be that it reverts to normalcy much faster but I do not think we should plan on the basis of hoping for the best,” he added.
“We need to be prepared for the worst,” continued Mr Heng.
“I hope that we will have the conditions to allow us to do that. That will be a major factor in deciding on when we call for the elections.”