Return to Phase 2 (Heightened Alert) will not derail Singapore’s economic recovery: Lawrence Wong
SINGAPORE: Singapore’s return to Phase 2 (Heightened Alert) is not expected to derail its economic recovery, Finance Minister Lawrence Wong said in Parliament on Monday (Jul 26).
Domestic consumer-facing sectors, such as retail and food and beverage (F&B), will continue to face challenges during this period with tightened COVID-19 measures. But demand should pick up as the country continues with its reopening plans, said Mr Wong.
Meanwhile, about 70 per cent of Singapore’s economic activities are in the outward-oriented sectors, he added.
“So, we should remain on track to achieve GDP (gross domestic product) growth of 4 per cent to 6 per cent this year, so long as external demand remains healthy,” said Mr Wong, who is also co-chair of the COVID-19 multi-ministry task force.
READ: S$1.1 billion support package for workers, businesses hit by Phase 2 (Heightened Alert) restrictions
Therefore, the bigger uncertainty to Singapore’s recovery is the impact that the more-infectious Delta variant could have on major economies and external demand.
“On the whole, most economists are still projecting a robust global economic recovery this year. But there are growing fears that as countries open up and the Delta variant spreads, the resurgence in cases could lead to higher hospitalisations and fatalities, especially amongst unvaccinated persons,” said Mr Wong, while adding that this could prompt a return of lockdowns and impact global growth.
“We will continue to monitor global developments, paying attention to any derailers which can affect us.”
RENTAL SUPPORT IN NEW PACKAGE
Mr Wong was delivering a ministerial statement on the S$1.1 billion support package announced last week to help workers and businesses affected by the return to Phase 2 (Heightened Alert) until Aug 18.
The latest tightening in safety protocols, which include the return of a dine-in ban at F&B outlets and a limit of two people for all social gatherings, was made to stem the recent spike in COVID-19 community cases.
READ: COVID-19 restrictions to be reviewed in early August, any easing only for vaccinated people: Lawrence Wong
READ: Return to Phase 2 (Heightened Alert) does not change roadmap of treating COVID-19 as endemic: Ong Ye Kung
Rental relief forms part of the support package, with qualifying tenants of government-owned commercial properties getting an extra four weeks of rental waiver.
Eligible tenant-occupiers and owner-occupiers of privately-owned commercial properties will receive an additional two weeks of rental relief in cash under the Rental Support Scheme.
In addition, the Government “intends to require landlords to provide a matching two-week rental support to their tenants”, said Mr Wong.
He noted that many commercial tenants have asked the Government to intervene and mandate landlords to extend rental relief.
On this, the Government has set out its principles before, said Mr Wong.
“Our starting point is always the sanctity of contract – we do not lightly intervene. But we are prepared to intervene in specific situations, and in a carefully scoped manner,” he added, citing the emergency measures introduced during the “circuit breaker” period last year.
He noted that the Government’s previous support package aimed at covering the period of “heightened alert” since mid-May did not require landlords to extend rental relief.
“Instead we encouraged landlords to do their part to match the Government relief. However, many tenants, especially those in the affected F&B and retail sectors, have told us that not all landlords were forthcoming in providing such rental support,” said the minister.
“This time, in light of the difficulties faced by many businesses, the Government intends to require landlords to provide a matching two-week rental support to their tenants.”
Mr Wong acknowledged that not all landlords are in the same financial situation and some may have difficulties sharing the burden with their tenants.
For landlords genuinely facing hardship, a process will be put in place to take their circumstances into consideration, he said. More details will be announced by the Ministry of Law in due course.
WAGE SUPPORT, NEW RELIEF FUND
Other forms of support include higher wage subsides under the Jobs Support Scheme (JSS) for four weeks until Aug 18.
For instance, sectors that are required to close or suspend most of their activities, such as F&B, sports and performing arts, will receive JSS wage support of 60 per cent, up from 50 per cent previously.
JSS support will also be raised to 40 per cent, from 30 per cent, for those significantly affected by the restrictions, such as retail, museums, cinema operators and the tourism sector.
Wage subsidies for all these affected sectors will taper off to 10 per cent as businesses reopen from Aug 19 to Aug 31, “subject to the eventual situation”, said Mr Wong.
The latest package also comprises a new relief fund that provides a one-off cash assistance of S$500 to each stallholder operating in government hawker centres and markets.
“We recognise that our hawkers and market stallholders are affected disproportionately this time round, with many of them facing loss of earnings,” said the minister.
“Those operating in markets with active transmission have been required to close. Those who can operate have also been affected by reduced footfall due to public reservations about visiting markets and adjoining hawker centres.”
Enterprise Singapore will also reintroduce the Food Delivery Booster Package to help hawkers defray the costs of using online food delivery platforms during this period.
Meanwhile, the COVID-19 Driver Relief Fund will be enhanced from Jul 22 to end-September to support drivers of taxis and private-hire cars in light of the anticipated drop in ridership.
The COVID-19 Recovery Grant-Temporary scheme will also be made available until end-August, as part of helping other workers affected by the tightened safety protocols.
Turning to the funding approach for the latest package worth S$1.1 billion, Mr Wong reiterated that there will be no draw on past reserves.
“We will therefore fund the support package through budget reallocations, in keeping with our principles of fiscal responsibility and prudence,” he said.
First, about S$0.9 billion will come from “one-off under-utilisation in operating and development expenditures” due to delays brought about by the COVID-19 pandemic.
These delays include pandemic-induced postponement and cancellation of activities in schools, as well as construction project delays.
These delayed expenditures will still need to be incurred in the future, as the country recovers, added Mr Wong.
Second, as part of the Supplementary Estimates presented in early-July, the Government had provided a buffer of S$0.2 billion in anticipation that support measures may have to be modestly enhanced or extended.
“We are now making use of the buffer for this package,” said the Finance Minister.
Taken together with the S$1.2 billion package announced weeks earlier to cover the period of “heightened alert” since mid-May, the Government will be providing more than S$2 billion of support to workers and businesses in total over the two periods of “heightened alert”.
With the support package funded by reallocation, Mr Wong said he expects Singapore’s overall fiscal position for FY2021 to remain unchanged with an overall deficit of S$11 billion, or 2.2 per cent of GDP.