Everything you need to know about the Big 4's reactions to Budget 2020

Find out what EY, Deloitte, KPMG, and PwC have to say about the Budget.

With Singapore yet to see the full impact of the COVID-19 outbreak, Finance Minister Heng Swee Keat has implemented an expansionary FY2020 budget to help buoy the economy, which pushes expectations for this year’s budget deficit to soar $10.9b or 2.1% of the GDP—the highest in a decade. The government has set aside $800m to help combat the virus crisis, the majority of which will go to the Ministry of Health.

It was not COVID-19 that made up the bulk of Budget 2020, however, as the government reiterated its commitment to continually improving the quality of life—this time focusing on upskilling middle-aged workers to ensure their continued competitiveness and providing more support to the country’s ageing citizens.

A one-off SkillsFuture credit top-up of $500 for every Singaporean aged 25 years old and above will be given starting 1 October 2020. The government also launched the New SkillsFuture MidCareer Support Package, which hopes to enable those in their 40s and 50s to stay employable and, in turn, double annual local job placement to around 5,500 by 2025. A 20% salary support incentive will also be given to businesses who hire employees above the age of 40.

For senior citizens, the government will be adjusting the Basic Retirement Sum by 3% higher to $93,000 for people turning 55 in 2021, and to $96,000 for those reaching this age in 2022. Citizens receiving less CPF funds will also be eligible to a matched retirement saving scheme from 2021 to 2025, which will make about 435,000 Singaporeans eligible to an annual cap of up to $600. The Silver Support Scheme’s quarterly cash payout was also raised by 20%, which equates to senior citizens living in smaller flats receiving a $900 payout instead of the previous $700.

Singapore will also be ramping up their education spending from $10b to $13b; invest $3.6b to national development from only $2.4b in FY2019, the bulk of which will go to subsidies in public housing; and give out $1.1b in cash to citizens in need.

Citizens aged 21 above will also receive a one-off support package of $100, $200, or $300 depending on their income, for which the government has invested $1.6b.

Several sustainability-related programmes are also being launched amidst environmental concerns given Singapore’s position as a low-lying island. The government is establishing a coastal and flood protection fund with an initial injection of $5b. EV car buyers will enjoy a 45% rebate under the EV Early Adoption Incentive, whilst newer housing developments will be required to have a 45%-60% green cover.

For FY2019, the government reported an overall budget deficit of $1.7b, or 0.3% of GDP, but reduced by $1.8b from the $3.5b deficit forecasted a year ago. The deficit is expected to soar to $10.9b for FY2020, or 2.1% of the GDP—making this the highest in a decade.

Here's what The Big 4 have to say:

KPMG

Ajay Kumar Sanageria, Deputy Head of Tax, KPMG Singapore:
“The special package of $5.6b announced is many folds higher compared to support provided by the Government during SARS. This would help to address both the current crisis caused by the COVID 19 virus as well as potential downturn which will be caused by lower GDP growth. It addresses the impact on targeted sectors whilst providing opportunity for workers to acquire new skills during the potential downturn.”

IHL Asia-Ready Exposure Programme
Ajay Kumar Sanageria, Deputy Head of Tax, KPMG Singapore:
“The expansion of the IHL Asia-Ready Exposure Programme is timely as having employees who understand Asian markets better and learn cross culture skills will be key to help enterprises internationalise successfully and to be ready to thrive in today's economic environment.”

Reduction of dependency ceiling ratio
Ajay Kumar Sanageria, Deputy Head of Tax, KPMG Singapore:
“The further reduction of dependency ceiling ratio to 15% for construction, manufacturing and marine yard sectors shows that the even during this current crisis, the government is not looking at the easy route of hiring foreign workers to meet the manpower needs. This is to make sure that we do not lose sight of the medium- to long-term challenges and ensuring that our productivity targets are not compromised. Whilst it is not going to be easy for these sectors, it is even more imperative for them to continue to transform and adopt technologies by tapping on the enhanced schemes announced in the budget.”

GST deferment announcement
Lam Kok Shang, Head of Indirect Tax, KPMG in Singapore:
“The announcement of the deferred GST hike is a welcome move considering the economic slowdown due to the ongoing Covid-19 situation and the worsening global economic outlook, it will allay the fears of additional expenditure on GST by Singaporeans.

We commend the $6 billion Assurance Package announced to help offset the impending GST rate hike to 9% by 2025. This will support lower income households to buffer the impact of the 2% hike. Whilst we appreciate the intent, the cost of the Assurance Package must be funded from other sources. We do not anticipate an increase in tax rates as Singapore needs to retain its tax competitiveness.”

Enterprise Financing Scheme’s Working Capital Loan Scheme and Temporary Bridging Loan Programme
Chia Tek Yew, Head of Financial Services Advisory, KPMG Singapore:
“The enhancements announced to help cash-strapped enterprises is indeed a welcomed move, and together with the new Jobs Support Scheme, it comforts both employers and employees to ride out the immediate concerns. We hope that banks will embrace these moves and allow for faster and easier access to financing for SMEs. For example, banks could look at waiving certain conditions such as personal guarantees from shareholders or directors, or profitability track records to make the loan application process more friendly.”

Property tax rebates as part of Covid-19 measures
Teo Wee Hwee, Head of Real Estate and Asset Management, KPMG Singapore:
“We applaud and welcome the property tax rebates provided to the hospitality and retail industries in light of the ongoing business challenges brought about by the Covid-19 crisis. The rebates coupled with the job credit scheme will not only help business owners better manage cash flow challenges but could help to preserve jobs that may be otherwise displaced. In ensuring the effectiveness of these rebates, the Government can consider enforcing reduced rents as a qualifying condition for the rebates, to ensure that landlords pass the savings to the tenants.”

COVID-19 Measures
Satya Ramamurthy, Head of Infrastructure, Government & Healthcare, KPMG Singapore:
Through the Stabilisation and Support package, businesses and families will enjoy relief from the impact of Covid-19, whist the Transformation and Growth Package increases the long term productive potential of the economy as we develop our enterprises and people during this challenging period.”

Sustainability measures
Shared Somani, Head of Infrastructure Advisory, KPMG Singapore:
“The $5b Coastal and Flood Protection Fund is a step in the right direction as it will not only encourage a suite of new players to come up with innovative solutions, it will also kick-start a climate adaptation and mitigation ecosystem to position Singapore as a model for climate risk mitigation for other coastal cities and countries to follow suit.”

Tay Hong Beng, Head of Tax, KMPG Singapore
“One area that we could push harder is in green building initiatives, where a quarter of our carbon footprint lies. This is both a sustainability issue and a new business opportunity for our technology-led enterprises in proptech solutions and clean energy adoption, which could be exported to the region.”

Stabilisation and Support Package
Tan Chee Wei, Head of Consumer & Retail, Tax, KPMG Singapore:
“The quantum of the Stabilisation and Support Package with additional support for five specific sectors is generous. Various measures such as property tax rebates of up to 30% for the tourism sector are very timely. However, looking at the 2003 SARS relief package perhaps the government could have also introduced a reduction in foreign workers levy to help the services sector tide over this challenging period.”

Alan Lau, Head of Financial Services, Tax, KPMG Singapore:
“The government’s introduction of a $4b Stabilisation and Support Package is a most welcome reprieve for Singapore. It turns the current difficult global outlook into a golden opportunity for workers’ reskilling, which will help with job preservation. More importantly, it is a welcomed cushion for all facets of the Singapore economy and especially the man on the street, and readies the country perfectly for rebound when the global economy turns around.”

SkillsFuture measures
Toh Boon Ngee, Partner, Tax, KPMG Singapore:
“The need for continuous, lifelong learning cannot be overemphasised in this era of disruption. I welcome the additional schemes that help both enterprises and employees upskill and reskill, especially for mid-career workers, because in order for Singapore enterprises to undergo large-scale transformation, it must be underpinned by a pool of workers equipped with the right skill sets.”

Startup SG Equity to help start-ups
Chia Tek Yew, Head of Financial Services Advisory, KPMG Singapore:
“Whilst setting aside an additional $300m to catalyse deep-tech start-ups is good, we must not forget that investors and entrepreneurs are drawn by market opportunities that lie outside Singapore, across ASEAN and beyond. This is why it is extremely important for incumbent players to embrace innovation and look to collaborate with these new start-ups who could potentially disrupt their existing business models.”

Executive-in-Residence programme
Mr. Chiu Wu Hong, Partner, Tax, KPMG Singapore
“The Executive-in-Residence programme for TACs is a long-awaited one. This will help to establish a conducive ecosystem, as we know that one reason for SMEs' low digital adoption rate is due to a lack of knowledge and guidance on what government support is available.”

PwC

Dealing with the immediate challenge
Chris Woo, Tax Leader, Tax Leader, PwC Singapore
“Just like in Goldilocks and the Three Bears, DPM is trying to find a 'not too hot not too cold' Budget that finds the balance between short term needs and necessary longer-term measures. It addresses the COVID-19 impact to preserve jobs and sustain businesses through cash relief, tax rebates and the like. The bulk of the measures announced are to prepare Singapore for longer-term transformation: new skills, deepening capabilities across a broad spectrum of the Singapore workforce and helping local enterprises.”

Abhijit Ghosh, Tax Markets Leader, Pharmaceutical Leader, PwC Singapore
“It was clear that we need more support beyond masks and sanitizers to fight the current crisis. Finance Minister unveiled solid measures including corporate tax and property tax rebates, faster write down of plant and machinery, temporary bridging loans. All these will help our local businesses to weather the storm and stay stronger to enjoy better days in future.”

Vishal Thapliyal, Partner (Corporate Finance, Strategic Solutions & Transformation), PwC Singapore
This is a time for companies to seek some stabilizing capital that will help them weather the storm and emerge stronger in the medium term. Some of the measures such as the Stabilisation and Support Package and the working capital bridging loan will definitely help and will hopefully also encourage private sector special situation funds to provide capital to promising companies with good long term potential that may be facing short term headwinds.

Dr. Zubin Daruwalla, MBBCh (Hons), BAO, MRCSI, MCh (Orth), MMed (Orth), Health Industries Leader, PwC Singapore
Given the successes, we are seeing globally in what PwC calls the New Health Economy where the most impactful success stories are those involving partnerships between new entrants and larger organisations, the first thrust in the transformation and growth strategy announced.

Vishal Thapliyal, Partner (Corporate Finance, Strategic Solutions & Transformation), PwC Singapore
Rental payment support by government landlords would help retailers who are particularly impacted by the COVID19 outbreak. This should help ease the working capital requirements for these businesses in these challenging times.

Tan Ching Ne, Digital Tax Leader/ Technology, Media & Telecommunications Leader, PwC Singapore
Enhanced corporate tax claims on plant & machinery and renovations to be undertaken this year should provide assurance to for companies that had existing plans to proceed with their investments while encouraging others to do new business planning given the expected downtime and reduction in footfall.

Singapore as the Global-Asia Node of Technology, Innovation and Enterprise
Mark Rathbone, Asia-Pacific Capital Projects Infrastructure Leader, PwC Singapore
Tourism, aviation, and point to point logistics sectors period for upskilling will be extended from 3 months to 6 months. This is likely to help the affected cruise centres, airlines and others to prepare and keep their workforce ready for the upturn. In addition, property tax rebates for cruise centres, Changi Airport and other tourism-related infrastructure will ease the burden felt by these businesses who are already seeing very low tourist numbers.

Frank Debets, Managing Partner, Customs & International Trade, PwC Worldtrade Management Services
Grants to help companies utilise FTAs better will be very welcome to SMEs. They lack the resources internally to plan for and implement efficient and effective FTA use.

Dr. Zubin Daruwalla, MBBCh (Hons), BAO, MRCSI, MCh (Orth), MMed (Orth), Health Industries Leader, PwC Singapore
In order to avoid the failure mentioned by Minister Heng, it will be imperative for all healthcare organisations to (1) identify new technologies through regular horizon scanning, (2) see the long term benefit of upskilling and/or re-skilling employees or as opposed to short term measures such as retrenchments, and (3) work towards using the identified technologies to complement people and processes rather than replace them.

Dr. Zubin Daruwalla, MBBCh (Hons), BAO, MRCSI, MCh (Orth), MMed (Orth), Health Industries Leader, PwC Singapore
Whilst an additional $300m has been set aside for investing in Deep Tech startups (including MedTech) with requirements for larger investments and longer gestational periods, success will also require not only committed investment but also an integrated ecosystem that allows startups to navigate in a timely and efficient manner.

Frank Debets, Managing Partner, Customs & International Trade, PwC Worldtrade Management Services
Linking the Networked Trade Platform to equivalent platforms of Singapore's key trading partners is an excellent first step to enhance the automation of international trade compliance. But there is a long way to go to get both multinationals and Singapore SMEs on board, given that they often either have their own systems for data exchange or lack the technology and resources to manage such electronic exchange properly.

Dr. Zubin Daruwalla, MBBCh (Hons), BAO, MRCSI, MCh (Orth), MMed (Orth), Health Industries Leader, PwC Singapore
The fact that our healthcare spend has tripled over the last decade from $4b to $12b not only reiterates the government’s unwavering support to ensuring care for all but also highlights the challenge of rising costs. The latter is not sustainable. It is therefore important for all stakeholders across the Health Industries to work towards lowering the rising cost of healthcare via solutions such as Intelligent Automation and Data Monetisation which lower their costs and generate new revenue streams, respectively for example.

Caring for Singaporeans, Building an Inclusive Home
Chris Woo, Tax Leader, Tax Leader, PwC Singapore
Education is the greater leveller and providing good quality education regardless of one's background is consistent with a meritocratic society like Singapore. The enhanced plethora of help in the MOE Financial Assistance Scheme continues the journey to ensure no one gets left behind.

Dr. Zubin Daruwalla, MBBCh (Hons), BAO, MRCSI, MCh (Orth), MMed (Orth), Health Industries Leader, PwC Singapore
No longer debated, the social determinants of health (SDOH) have the largest impact on an individual’s health outcomes. It is no longer about your genetic code but rather your postal code, so to speak. Very promising to note that the majority of measures announced during this Budget directly or indirectly relate to addressing the SDOH and thus will positively impact the health outcomes of our population as a whole.

Sustaining Singapore’s success for our future generations
Mark Rathbone, Asia-Pacific Capital Projects Infrastructure Leader, PwC Singapore
Circular Economy - a focus area to reduce carbon footprint - for example, use of NEWsand for road construction. Circular Economy is a very relevant development considering shortage of land for landfill. These innovative solutions can then be commercialised and Singapore has an excellent track record in harnessing new innovations and commercialising them, for example desalination and NEWater solutions to resolve water challenges.

Energy efficiency driven through tax incentives; vehicles with combustion engines - Singapore is looking to stay ahead of development of Electric Vehicles, hybrids and the development of new fuel sources like hydrogen fuel cells . Although the introduction of new public electric buses is a good start, it is not necessarily the easiest solution to implement, as the number of charging stations within bus depots remain limited, and the grid does not necessarily support large scale introduction of charging stations islandwide.

Cooling HDBs could become possible through new district cooling solutions. New solutions to air conditioning and the introduction of renewable energy solutions like HDB rooftop solar goes some way to addressing Singapore’s sustainability challenge.”

Deloitte

Low Hwee Chua, Regional Managing Partner for Tax & Legal, Deloitte Singapore and Southeast Asia, says:
“Lots of measures here to support Singaporeans: we saw lots of rebates, cash payouts and incentives; and actions around job opportunities and skill development and community investments.”

“This may be one of the most far-reaching budget speeches yet; it was certainly one of the longest! A combination of near-term measures to address cost-of-living and economic challenges, combined with the ongoing restructuring and transformation measures, means that this budget addresses both the challenges of today and tomorrow.”

Sabrina Sia, Leader of Global Employer Services, Deloitte Singapore, says:
“It was somewhat surprising that no personal tax rebates had been announced for the Year of Assessment 2020 (income year 2019), especially given the coronavirus situation. However, direct cash payouts were announced instead to help families cope with living expenses during this trying period. Such payouts would reach a wider population rather than tax rebates, given that quite a significant population of Singaporeans do not pay taxes.”

Ong Siok Peng, Tax Partner at Deloitte Singapore, says:
“The Jobs Support Scheme offset 8% of the wages of every employee who is a Singaporean or permanent resident for three months, up to a monthly cap of $3,600 and additional support given to sectors directly impacted by the current COVID-19 outbreak will be of great help to retain jobs.”

“The property tax rebate for 2020 will come in handy for companies within the five affected sectors as it will help them off-set their operating costs due to the economic slowdown brought by COVID-19 outbreak from a cash flow standpoint. Their tax bill will also be reduced as the Government has provided accelerated write-down on plant and machinery and renovation and refurbishment expenditure incurred in 2020.”

Christina Karl, Tax Partner and Immigration Leader, Deloitte Singapore & Southeast Asia, says:
“Following the Government’s reduction on the foreign worker quota for the service sector in 2019, this year’s budget brings another round of reductions specifically for the construction, marine shipyard and process sectors. The Government continues to focus either on ensuring these roles are filled by skilled Singaporeans or for those benefiting from the Government reskilling schemes. We anticipate this sector will continue to be under the Government’s spotlight until they see a redressing of the workforce.”

Richard Mackender, Indirect Tax Leader, Deloitte Singapore, Southeast Asia and Asia Pacific, says:
“In an effort to push Singapore to the forefront of AI and shape it as a leading smart city, it is crucial that we are aware of the impending cyber security threats. As a city state, the Government recognizes the threats we face as a small country and the $1b budget set aside in this budget for cyber security threats shows that we stand ready and united against any threats, including digital.”

Liew Li Mei, Tax Partner and Singapore International Tax Leader, Deloitte Singapore, says:
“The new Asia-Ready Exposure Programme targets 70% of students from Institutes of Higher Learning to gain exposure overseas with 70% of the exposure in Asean, China and India. As we go global at a faster rate than ever, this new programme will indeed help local students gain valuable experience and a broader world view that will stand them in good stead to build their careers whether locally or globally.”

Lee Tiong Heng, Tax Partner and Leader of Global Investment & Innovation Incentives at Deloitte Singapore & Southeast Asia, and Tax Leader, Technology, Media & Telecom at Deloitte Singapore, says:
“The expansion of the Market Readiness Assistance grant to cover free trade agreement consultancy services and the increase of grant size from $20k to $100k per new market per company will be much welcomed by local enterprises seeking to venture overseas. The grant will help defray a significant portion of the initial costs of accessing a new market.”

James Walton, Transportation, Hospitality & Services Sector Leader, Deloitte Singapore says:
“Definitely a more near-term focus for the transportation and tourism sectors with necessary boosts for hotels, MICE venues, aviation and point-to-point transport as well as retail and F&B. The Government is keen to avoid retrenchments as shown by wage offsets, corporate and property tax rebates, bridging loans and rental waivers. These measures are very welcome and should help our Singapore businesses ride out the anticipated slowdown in the sector.”

EY

Soh Pui Ming, Singapore Head of Tax, Ernst & Young Solutions LLP, says:
“Overall, Budget 2020 is a balanced one for extraordinary times. Budget 2020 showcased the government’s foresight in recognising that the twin drivers for Singapore economic transformation would be led by empowering the people of Singapore to learn and adapt, while incentivising enterprises to grow, transform and embrace our evolving workforce.”

Chester Wee, EY Asean International Corporate Tax Advisory Leader, says:
“While the Budget provides support packages to affected businesses and individuals during this trying time, it also urges continuous investments and upgrading so that Singapore emerges stronger after this challenging time.”

Chai Wai Fook, Partner, Tax Services at Ernst & Young Solutions LLP, says:
“Budget 2020 is a strategic road map that not just supports businesses and workers in this current fragile economic situation but also drives continued focus on transforming businesses and upskilling workers for the future.”

Chester Wee, EY Asean International Corporate Tax Advisory Leader, says:
“Singapore Budget 2020 introduces measures that cater to the specialised needs of the various industry sectors and companies in their respective stages of growth from micro enterprises to developed start-ups.”

Singapore as the Global-Asia node of technology, innovation and enterprise
Amy Ang, EY Asia-Pacific Financial Services Tax Leader, says:
“The enhancement of the Enterprise Financing Scheme’s Working Capital Loan and the new Temporary Bridging Loan Programme will enable companies to have easier access to working capital and hence better support companies to meet challenges and seize opportunities.”

Enabling stronger partnerships
Chai Wai Fook, Partner, Tax Services, Ernst & Young Solutions LLP, says:
“For business transformation to succeed, Singapore needs a supportive and enabling ecosystem. Trade associations and chambers (TACs) remain an important stakeholder and the greater support given to TACs to further deepen their capabilities will strengthen our business ecosystem.”

Adrian Ball, Partner, Global Trade – Asean at Ernst & Young Solutions LLP, says:
“With 25 Economic and Free Trade Agreements (FTA), Singapore has invested in creating one of the most comprehensive FTA networks in the world. The benefits of FTAs have often been perceived to flow primarily to multinational corporations, i.e., to those companies who have the financial muscle and expertise to navigate complex FTA rules. Enhancing the Market Readiness Assistance grant for SMEs to help in accessing FTA benefits should drive exports and business growth.”

Deepening enterprise capabilities
Chai Wai Fook, Partner, Tax Services, Ernst & Young Solutions LLP, says:
“The new Enterprise Transform Package to groom business leaders of promising SMEs with training and mentorship will uplift the competency of our SMEs’ business leadership and sharpen their skill sets.”

Samir Bedi, EY Asean Workforce Advisory Leader, says:
“The Industry Digital Plans for the 23 industries’ transformation will help organisations deepen capabilities to innovate and remain relevant, and help people to define the digital skills required to achieve their fullest career potential.”

“The support to firms in the investment of workforce capabilities is crucial in times of digitalisation. The Skillsfuture Enterprise Credit to defray 90% of out-of-pocket costs for job redesign will greatly assist and prepare firms in their workforce and enterprise transformation.”

Chia Seng Chye, Partner, Tax Services at Ernst & Young Solutions LLP, says:
“SMEs have often highlighted that they do not fully understand the governmental schemes or measures that are available to them. The launch of the Go Business Platform should provide more direct and easier communication with the relevant bodies and allow enterprises to have better knowledge of and tap the help available to them.”

Developing our people for our future
Samir Bedi, EY Asean Workforce Advisory Leader, says:
“The top-up of the Skills Future credit with an expiry date will motivate Singaporeans to take action now on their own lifelong learning journey.”

Kerrie Chang, Partner, People Advisory Services at Ernst & Young Solutions LLP, says:
“Even though the Covid-2019 situation has dampened the economic outlook, it is important to prepare for recovery. Companies should seize the opportunity to upskill and reskill the workforce as this will put both business and individuals in a better position to be future-ready.”

“The enhancements to the CPF regime continue to focus on the accumulation of CPF savings during working years and the adequacy of retirement savings. We welcome the gesture to offset half the increase in employers’ CPF contribution.”

Foreign worker policy
Panneer Selvam, Partner, People Advisory Services at Ernst & Young Solutions LLP, says:
“The reduction of S-Pass quota for the construction, marine shipyard and process sectors in phases highlights the need for companies to review their employee mix and make the necessary adjustment.”

Securing our home
Benjamin Chiang, Singapore Government & Public Sector Leader and Partner, Advisory at Ernst & Young Advisory Services Pte. Ltd., says:
“Cybersecurity is a key pillar of Singapore’s Smart Nation strategy. It is paramount that we preserve trust in our digital economy by protecting personal data and our critical information infrastructure against cyberattacks. It is heartening to see that the government is investing S$1b over the next three years to bolster our cybersecurity capabilities against this evolving threat.”