Already reeling from its weakest economic growth since the 2008 financial crisis last year, Singapore now faces uncertain growth due to the COVID-19 outbreak. The main takeaway from Singapore's Budget announcement for 2020, was that the government will mitigate the impact of the disease on businesses and individuals.
"The tourism and aviation industries are most directly affected. Visitor arrivals to Singapore and air traffic through Changi have declined, and with them, hotel occupancy rates," said Heng Swee Keat, Deputy Prime Minister and Minister for Finance, Singapore in his Budget 2020 speech last month.
"The virus outbreak has also disrupted supply chains and created ripple effects on other sectors, especially now that our economy is so much more integrated with China’s."
To help, Singapore will provide a Stabilisation and Support Package worth S$4 billion, comprising a Jobs Support Scheme and a Wage Credit Scheme.
The Jobs Support Scheme aims to help enterprises retain local workers by offsetting 8% of the wages, up to a monthly wage cap of S$3,600, for three months.
"For enterprises that have invested in raising productivity, I urge them to continue to upgrade and to share the gains with their workers. Hence, I will enhance the Wage Credit Scheme to support wage increases for Singaporean workers," Heng explained.
The Wage Credit Scheme cofunds wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000. This is now raised to S$5,000, for qualifying wage increases given in 2019 and 2020.
Government cofunding levels for 2019 and 2020 qualifying wage increases have also been increased to 20% and 15% respectively.
"With these enhancements, another S$1.1 billion will go to about 90,000 enterprises, to benefit more than 700,000 Singaporean employees," Heng said.
The Stabilisation and Support Package also includes a Corporate Income Tax Rebate for Year of Assessment 2020, at a rate of 25% of tax payable, capped at S$15,000 per company.
Other tax-related initiatives include a faster writedown of enterprise investments in plant and machinery, and renovation and refurbishment, incurred for Year of Assessment 2021.
To help enterprises access working capital more easily, the maximum loan quantum for the Enterprise Financing Scheme’s Working Capital Loan component has been raised from S$300,000 to S$600,000. In addition, the government's share of the risk on these loans will rise to 80%, from the current 50% to 70%.
Tenants and lessees of government-managed properties may approach the various agencies to discuss options for more flexible rental payments, Heng said.
"Each request will be assessed individually, taking into account the enterprise’s circumstances," he said.
Sectors directly affected by COVID-19 will get additional support as well, specifically tourism, aviation, retail, food services, and point-to-point transport services. Initiatives for these sectors include:
Redeployment programmes with an extended funding period for reskilling, from three months to a maximum of six months.
"Together with the Jobs Support Scheme, we will support employers in these sectors to retain and train more than 330,000 local workers. These workers can make full use of the down time for training and upskilling, to prepare for the recovery," Heng said.
"We will also help affected sectors with their operating costs and cash flow."
For the tourism sector:
- A property tax rebate of 30% for the year 2020, for the accommodation and function room components of licensed hotels and serviced apartments, and prescribed meetings, incentives, conventions, and exhibitions (MICE) venues. International cruise and regional ferry terminals will receive a 15% property tax rebate, and the integrated resorts will receive a 10% property tax rebate.
- A Temporary Bridging Loan Programme for a year, with a loan quantum of up to S$1 million and interest rate capped at 5%. The government will take on 80% of the risk of the loan.
For the aviation sector:
- Rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport.
"The tourism and aviation industries are most directly affected. Visitor arrivals to Singapore and air traffic through Changi have declined, and with them, hotel occupancy rates," said Heng Swee Keat, Deputy Prime Minister and Minister for Finance, Singapore in his Budget 2020 speech last month.
"The virus outbreak has also disrupted supply chains and created ripple effects on other sectors, especially now that our economy is so much more integrated with China’s."
To help, Singapore will provide a Stabilisation and Support Package worth S$4 billion, comprising a Jobs Support Scheme and a Wage Credit Scheme.
The Jobs Support Scheme aims to help enterprises retain local workers by offsetting 8% of the wages, up to a monthly wage cap of S$3,600, for three months.
"For enterprises that have invested in raising productivity, I urge them to continue to upgrade and to share the gains with their workers. Hence, I will enhance the Wage Credit Scheme to support wage increases for Singaporean workers," Heng explained.
The Wage Credit Scheme cofunds wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000. This is now raised to S$5,000, for qualifying wage increases given in 2019 and 2020.
Government cofunding levels for 2019 and 2020 qualifying wage increases have also been increased to 20% and 15% respectively.
"With these enhancements, another S$1.1 billion will go to about 90,000 enterprises, to benefit more than 700,000 Singaporean employees," Heng said.
The Stabilisation and Support Package also includes a Corporate Income Tax Rebate for Year of Assessment 2020, at a rate of 25% of tax payable, capped at S$15,000 per company.
Other tax-related initiatives include a faster writedown of enterprise investments in plant and machinery, and renovation and refurbishment, incurred for Year of Assessment 2021.
To help enterprises access working capital more easily, the maximum loan quantum for the Enterprise Financing Scheme’s Working Capital Loan component has been raised from S$300,000 to S$600,000. In addition, the government's share of the risk on these loans will rise to 80%, from the current 50% to 70%.
Tenants and lessees of government-managed properties may approach the various agencies to discuss options for more flexible rental payments, Heng said.
"Each request will be assessed individually, taking into account the enterprise’s circumstances," he said.
Sectors directly affected by COVID-19 will get additional support as well, specifically tourism, aviation, retail, food services, and point-to-point transport services. Initiatives for these sectors include:
Redeployment programmes with an extended funding period for reskilling, from three months to a maximum of six months.
"Together with the Jobs Support Scheme, we will support employers in these sectors to retain and train more than 330,000 local workers. These workers can make full use of the down time for training and upskilling, to prepare for the recovery," Heng said.
"We will also help affected sectors with their operating costs and cash flow."
For the tourism sector:
- A property tax rebate of 30% for the year 2020, for the accommodation and function room components of licensed hotels and serviced apartments, and prescribed meetings, incentives, conventions, and exhibitions (MICE) venues. International cruise and regional ferry terminals will receive a 15% property tax rebate, and the integrated resorts will receive a 10% property tax rebate.
- A Temporary Bridging Loan Programme for a year, with a loan quantum of up to S$1 million and interest rate capped at 5%. The government will take on 80% of the risk of the loan.
For the aviation sector:
- Rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport.
- A 15% property tax rebate for Changi Airport.
For food services and retail businesses:
- A waiver of a month's rental to stallholders in NEA-managed hawker centres and markets. Other government agencies will provide half a month of rental waiver to its commercial tenants.
- A 15% property tax rebate for qualifying commercial properties.
Heng suggested that landlords to pass the tax rebates on to tenants in the form of lower rentals.
A planned goods and services tax (GST) hike announced in 2018 and which was to take place sometime from 2021 to 2025 will not take place in 2021, the government said.
- A waiver of a month's rental to stallholders in NEA-managed hawker centres and markets. Other government agencies will provide half a month of rental waiver to its commercial tenants.
- A 15% property tax rebate for qualifying commercial properties.
Heng suggested that landlords to pass the tax rebates on to tenants in the form of lower rentals.
A planned goods and services tax (GST) hike announced in 2018 and which was to take place sometime from 2021 to 2025 will not take place in 2021, the government said.
