Singapore Budget 2020 Full Coverage: COVID-hit sectors to get $4b and GST hike moved to 2025

The budget deficit could hit $5.1b in 2020, the government injects $1.6b into the CPF Housing Grant, and $1b gets pumped into cybersecurity measures.

ADDRESSING SOCIAL CHALLENGES

• Our Singapore Fund (OSF)
  • Nearly $4.3m has been committed to support ground-up projects for culture, heritage, arts, and sports
  • $250m to be set aside for greater movement to partnership efforts
  • Extend OSF beyond 2020 to support more ground-up initiatives
• Issued National Innovation Challenges to date
  • AI-enabled healthcare, ageing, energy, urban mobility, etc.
• Government to address more specific challenges to encourage ground-up participation
  • Challenges in the social sector to support youth mental wellbeing amongst other things.

FISCAL STRATEGY

• Ongoing discussion to revise international tax rules under the Base Erosion and Profit Shifting (BEPS) project
• Singapore is one of the countries with triple AAA credit rating
• The government will set aside an Assurance Package for GST
  • Today, the net investment return contributions from our reserve is the biggest component of our revenue."
• Singapore budget deficit
  • For FY2019, Singapore government expects an overall budget deficit of $1.7b, or 0.3% of GDP.
    • This deficit is $1.8b lower than the $3.5b deficit forecasted a year ago
  • For 2020: "We expect a basic deficit of $5.1b or 1% of the GDP"

CYBERSECURITY

• "Diplomacy and deterrence are the twin pillars of SG sovereignty."
• SGSecure Movement
• Cybersecurity Agency (CSA) (2015) and passing of Cybersecurity Act in 2018
• CSA preparing more measures for the next-level of cybersecurity
• The government will set aside $1b over the next three years to build up country’s cybersecurity and data security capabilities

CLIMATE CHANGE

• Manage greenhouse gas emissions
  • Carbon tax introduced in 2019
  • Enhanced minimal energy performance tenders
  • Domestic transport sector: Significant carbon gas emissions
• Progressively phase out the use of internal combustion (ICE) vehicles
  • Set a long-term strategy goal to achieve this
  • All vehicles must have cleaner energy by 2040
• 3 measures for ICE vehicles phase-out:
  • 1. Enhance incentive to encourage adoption of cleaner vehicles
    • Commercial Vehicle Emissions Scheme
      • For light vehicles, announce details at COS
    • Cars and taxis: Additional EV Early Adoption Incentive
      • Those who purchase EV will receive rebates of up to 45%
      • Fully electric car: Rebate of up to 45% on the Add’l registration fee capped at $20,000
      • From January 2021: Across the board reduction for road tax for EVs and hybrids
  • 2. Revise road tax methodology for cars
    • Extend public charging infrastructure for EVs
    • Expand EV charging infrastructure: About 1,600 currently
    • By 2030: Up to 28,000 chargers at public chargers islandwide
  • 3. Procure cleaner vehicles
    • Mileage tax: To discourage excessive driving and reduce road congestion
    • Update vehicular tax structure to preserve such considerations
    • Usage-based tax on EVs as an alternative to fewer excise duties
    • In the interim, a lump sum tax will be imposed to be built in road tax schedule of EVs to partly account for loss of fuel excise duties
      • Phase in starting Jan 2021 for over 30 years
      • Full quantum implemented by Jan 2023
      • EV buyers can expect to enjoy substantial cost savings

• Energy efficiency measures
  • Households encouraged to purchase energy-efficient household appliances
  • Incentives to help lower income household with the cost of this appliances
• Newer housing developments will have 45-60% green cover
• More than 36,000 gardening enthusiasts are nurturing over 1,500 community gardens island-wide
• New HDB Green Towns Programme
  • Key focus areas: reduce energy consumption, recycle rainwater, cool HDB homes/towns
• Combatting rising sea levels
  • Elaborate plans at the Committee of Supply Debate (COS)
  • Climate change adaptation may cause $100b or more over 100 years
  • Coastal and flood protection fund, with an initial injection of $5b, will be topped-up subsequently.

ENABLING EMPLOYMENT CRE (EEC)

• Will replace Special Employment Credit (SEC) and Additional Special Employment credit (ASEC)
• Available from 2021 to 2025
• Cost of $31m/year
• The government will review the EEC after two years and make necessary adjustments
• Top up 3 funds that provide competent help for the elderly and lower income
  • $750m for Elder Care fund
  • $500m for the ComCare fund
  • $200m to the MediFund

Ministry of Social Family Development and National Council of Social Service will develop the Community Capability Trust 

• Enhance capabilities and capacities of Social Service Agencies
• $200m provided to the trust in FY2020
• $150m matching
• Commit $350m in the community capability trust in the next 10 years

AGEING POPULATION

• 650 active ageing programmes to engage seniors
• Household income per capita, risen 4.1% per year in nominal terms
• Basic Retirement Sum (BRS) increase: $90,500 for cohort turning 55 this year
• Continue adjusting the BRS for the same 3% every year; $93,000 for cohorts turning 55 in 2021; $96,000 in 2022
• Seven in 10 actively employed persons from these two cohorts expected to be able to set aside their BRS
• Enhancing the Silver housing bonus and lease buyback scheme
  • Provide risk free interest rates on their savings
  • In 2019, such voluntary cash top-ups added up to about $1b
• For those with less CPF
  • Matched retirement saving scheme from 2021-2025
  • For eligible Singaporeans aged 55-70
  • Not set aside their BRS
  • The government will match every dollar of cash top up to an annual cap of $600
  • About 435,000 Singaporeans will be eligible
• Silver Support Scheme
  • Silver support currency: Bottom 20% of Singaporeans aged 65 and above
  • Raise quarterly cash payout by 20%
  • Smaller flats: From $750 to $900 per quarter
  • Broader eligibility criteria and new payout tier to cover those $1,300 but not exceeding $1,800

ENHANCED CPF HOUSING GRANT

• In 2019:
  • First-time flat buyers, up to $160,000 in housing grants
  • Income ceilings for subsidised flats and executive condo were raised to $14,000 and $16,000
  • Expect around 16,000 HDB households to benefit each year
• For 2020:
  • Government will provide comprehensive care and support package amounting to $1.6b
  • One-off cash payout of $300, $200 or $100, depending on income for Singaporeans aged 21 and above
  • Double rebates to a one-off GST voucher, U-Save special payment to all eligible HDB households
  • Extend a service and conservancy rebate by another year, receive rebates between 1 ½ and 3 ½ months of S&CC charges
• Lower-income Singaporeans will receive:
  • Grocery vouchers worth $100 each year in 2020 and 2021 for use in major supermarkets
  • A further $100 cash payout with at least one Singaporean child aged 20 and below
  • Additional GST voucher for larger households with five or more members
  • Larger household can receive 2.5 times more than the regular rebates this year and receive up to $1,000
• $100 top-up to the Passion Card to all Singaporeans aged 50 above this year
  • Those who don’t have card can receive one for free
• For self-help groups: Provide $10m grant over two years to help more families
  • Community development councils
  • Each CDC has a set of local assistance schemes
  • Provide $20m to CDCs (Community Dev’t Councils) to do more
• Care and support package for families will be at $1,300
  • A three-generation family can receive above $1,800

EDUCATION

• Enhanced preschool subsidies will be made available to more families this year
• Increased government support to preschool places: From 50% today to 80% by 2025
• Doubling support for young and preschool years
  • 2018: spent about $1b on early childhood sector
  • Within next two years, will double to over $2b per year
• Secondary school
  • Lower income families: Enhance the MOE financial assistance scheme
  • Pre-university system: From $900 to $1,000
• Bursary for full-time ITE students for AY 2020
  • Lower income tier: 100% fee subsidies on top of the cash bursary
  • Lower and middle income: Cash bursary quantum increased by $200/year
  • Cost of bursaries for higher education will rise from $148m/year to $198m/year
• A Singaporean child will receive $180,000 in total by the time he turns 16
  • This includes $50,000 in government subsidies over 5 years

• SOCI2010-2019: Healthcare expenditure tripled from $4b to $12b per year
• Education: From $10b to about $13b
• National developments: From $2.4b to $3.6b with the bulk going to subsidies in public housing
• Gave out $1.1b dollars in cash to Singaporeans who need more help

FOREIGN WORKERS 

• Concerns on S-Passes
  • Holders from construction, manufacturing, marine shipyard sectors growing by 3.8% per year over the last 2 years
  • Can increase over the next 2 years as sector recovers
  • "S-passes should not be a means for firms to hire low-cost foreign workers when qualified locals are available."
• Cuts for dependency ratio ceilings for the services sector
  • Starting 1 January 2020, the DRC for the services sector will be reduced to 38% from 40%, and cut further to 35% from 1 January 2021
• For 2020
  • Reduce S-Pass sub-DRCs in construction, marine, shipyard sectors from 20% to 15% from 1 January 2021 to 1 January 2023
  • Tighten S-Pass sub-DRCs for manufacturing sector as well
• Lean Enterprise Development Scheme
  • Maintain foreign worker levy rates for 2020 (2019 data: $300 for higher-skilled workers and $450 for basic-skilled workers)

RETIREMENT AND REEMPLOYMENT

• Raised CPF contribution for those 55-70 years old
• To ease these changes: Senior Support Package is introduced comprising four measures:
  • Senior employment credit, take effect by 2021
  • When employer CPF contribution rates go up: we will provide employer with CPF offset by half of contribution
  • Senior worker early adapter grant
  • Part-time reemployment grant
• Wage offsets in employing Singaporean workers 55 and above

MID-CAREER WORKERS

• Some workers in 40s and 50s have not changed jobs since leaving school or upskilled
• Now facing greater competition from younger workers and overseas
• Broader global shifts: Exciting jobs will emerge
• New Skills Future MidCareer Support Package
  • Locals in 40s and 50s
  • To help them stay employable, move on to new jobs
  • Double annual local job placement to around 5,500 by year 2025
• Reskilling programmes
• For each eligible worker: Provide 20% salary support to employer for 6 months, $6,000 in total
  • Improve access to reskilling programme
  • $500 dollars special SkillsFuture credit for Singaporeans in 2020
  • Credit will expire in five years to encourage early action

ENHANCING ROLES OF ENTERPRISES

1) Introduce a SkillsFuture Enterprise Credit - Embark in the transformation of workforce

• 90% of out-of-pocket costs of business transformation, job redesign and skills training
• $10,000 per enterprise
• Benefit 35,000 enterprises, most of which are SMEs

2) Productivity solutions grant

• More support for job redesign services
• o Pre-approved digital solutions and equipment
• o Job redesign consultancy services

3) Work with large anchor enterprisers

• Help the skills of workers in SMEs
• Aims to partner up to 40 of such anchor enterprises to benefit 4,000 SMEs in the next 5 years

4) Institutes of Higher Learning (IHLs) work with more enterprises through SkillsFuture Work-Study Programme

• Double capacity by 2026
• Make this the mainstream pathway, with 12% of each cohort going through these pathways, up from 3.5% today

5) Working with Nanyang Polytechnic National Centre of Excellence

• Deepen workplace learning capabilities

One-off SkillsFuture credit top-up is proposed

• $500 for every Singaporean aged 25 years and above
• Starts from 1 October 2020
• Will expire in five years, ending in 2025

SkillsFuture Movement

• 5 years after launch: Training participate rates rose to 49% in 2019 from 35% in 2015
• End-2019: Helped more than half a million Singaporean pick up new skills and develop new developments
• Three elements to further support SkillsFuture
  • Enabling the individual
  • Enhancing the role of enterprises in developing their staff
  • Special focus on mid-career workers

DEVELOPING LOCAL TALENT

• Study trips
• Set ourselves 70% of local IHL graduates to have overseas experience
  • 70% of this group to have exposure to ASEAN, China, India
• New Asia-ready Exposure Programme
• Internships: Global Ready Talent Programme

Enterprise Transformation Package

• Launch Enterprise for the Leadership Transformation Programme for Promising SMEs
• Over next 3 years: Support leaders of 900 enterprises
• Collaboration between banks and institutes for higher learning
• Continue to broaden transformation to the Enterprise Development Grant in FY2020
  • Support about 3,000 projects through the EGD in FY2020
  • This will increase by 10%

Beyond Startups

• SMEs Go Digital programme
  • Gold business platform: Single touch point for enterprises to transact with the government digitally
  • Expand to all 23 ITM sectors
  • Access to pre-approved digital solutions
• Markets Readiness Assistance Grant
• Enhance market readiness assistance grants
• Expanding support package (FTA consultancy)

Startups Ecosystem

• 3,800 tech startups in Singapore
• 150 VC funds investing in startups here and in the region
• Ranked in the top 15 globally
• StartupSG helps startups get their ideas off the ground
  • Holistic support through: Co-investments, Mentorship, Fiscal space
• Startup SG equity
  • Catalysed $560m in private sector funding over the past 4 years
  • Improve support for deep tech startups (including advanced manufacturing, agritech)
  • $300m will be set aside under the startup SG equity
  • More equity over the next ten years

Enhance for Trade Associations and Chambers (TACs) to scale and raise capability of industry

• Enterprise SG will launch a pilot Executive in Residence programme
  • Fund more than 10 TACs of all sectors
  • Provide expert advice
• Heartland Enterprise Upgrading Programme to support heartland enterprises

Research Innovation and Enterprise 2020 Plan

• AI, industrial robotics, urban solutions and sustainability, health and biomedical sciences
• Enhance solutions and sustainability
• Number of biomedical startups doubled from 2014: More than 300 startups now

Enhancing digital connectivity

• Singapore customs connecting with the global trade network platform
• Last month concluded the first digital economy agreement with Chile and NZ
• Enable more trade

Set of measures to drive transformation

• The government will allot $8.3b over the next three years to enable transformation and growth

SINGAPORE'S FOUR AREAS OF GROWTH

1) Grow our economy, Transform enterprises, Create opportunities

• To account for half of global GDP by 2040
• Productivity rose by 2.6% per year; an improvement over the 2.2% growth in the preceding 3-year period
• 2016-2019: real median income grew by 3.7% per year, up from 3.2% per from the preceding 3 years

2) Care for Singaporeans in every stage of their lives, creating inclusive society

3) Build a liveable and sustainable SG in the face of climate change, ensure fiscal sustainability

4) Mobilise Singaporeans to work together for this goal

GST HIKE MOVED

• Won’t take effect in 2022 but will "not put off increase indefinitely"
• Provide assurance package when GST rate is raised
  • $6b package for Singaporeans to cushion the increase
• Majority of Singaporean households to receive offset to cover at least 5 years' worth of additional GST expenses incurred
• Lower income households will receive much more
  • 1-3 room HDB flats: Equivalent to 10 years' worth of additional GST expenses incurred
  • Every adult Singaporean: Cash payout of $700-$1,600 over five years
  • 4-room HDB flat: Will receive about $7,000 in offset over five years in total, cash about $4,000
• Fully offset the GST for the lower half of retiree households
• Significantly offset the upper half of retiree households
• Budget will set aside $6b for the assurance package in the GSTV Fund in this year’s package

COVID-19 MEASURES

• The government will set aside $800m to help soften the impact of COVID-19, in which a bulk will go to the Ministry of Health
• To reduce pressure on corporations, the government will provide $4b of stabilisation and support packages
• To help SG households and families, the government will provide $1.6b of care and support packages
• Extend reskilling drom 3 months to 6 months
• Job support scheme: Retain and train 330,000 local workers
• Tourism
  • Tourism: Tax rebate of 30% for 2020 for conventions, exhibition venues, etc.
  • Ferry terminal: 15% property tax rebate
  • Integrated resorts: 10% property tax rebate
• Aviation
  • Rebates of aircraft lending
  • Assistance to ground agents
  • Assistance to shops
  • 15% property tax rebate for Changi Airport
• Food Services and Retail
  • Full-month rental waiver to any stallholders in NEA hawkers and markets
  • HDB provide half month rental waiver to its commercial tenants
  • Grant 15% property tax rebate for qualifying commercial properties
  • Encourage reduce rents
• Ministry of Transport's point-to-point support package
  • Taxi and car operators have come out strongly support by matching government contribution

Enhance the enterprise financing schemes

• Raised from $300,000 to 600,000
• Government's risk-share on the loans raised to 80% from 50-70%

WAGE CREDIT SCHEME

• Raised to $5,000 ceiling from $4,000 for qualifying wage increases given in 2019-2020
• Government co-funding levels for 2019 and 2020 raised by 5 percentage points to 20% and 15%
• $1.1b to go to about 90,000 enterprises to benefit more than 700,000 Singaporean employees
• Stabilisation and support package to provide economy-wide support to help enterprises with cashflow
• Income tax rebate at 25% of tax payable capped at $15,000 per company (costs about $400m)

Two stabilisation and support packages for workers worth $5.6b

• Stabilisation and support package: $4b dollars
• Introduce job support scheme
• Help enterprisers maintain local workers
• Offset 8% of wages
• Will be given by the end of July

GDP GREW 0.7% IN 2019

• Weakest since 2008 financial crisis
• Arrivals and air traffic in Changi declined, along with hotel occupancy rates
• We must be prepared that economy impact may be worse than we projected