DPM Heng Swee Keat has just announced the Fortitude Budget, which is a $33 billion dollar budget drawn from Singapore’s past reserves. This is in addition to the $63.7 billion provided in the Unity, Resilience and Solidarity Budgets, which were unprecedented.
A comprehensive package has been designed in this Fortitude Budget for businesses.
Greatest challenge of this generation
DPM Heng started his ministerial statement with several phrases which underscore the gravity of the pandemic as Singapore expects to see the worst recession since independence with estimated economy contraction between 4% to 7%.
Some of the phrases he used include:
- IMF predicts Asia to see 0% growth in 2020, the lowest in 60 years.
- Global efforts at containing the pandemic are uneven and uncoordinated.
- Singapore’s economy is deeply impacted by the global shocks.
- MTI downgraded Singapore’s GDP forecast from between -1% and -4% to -4% and -7%.
- Resident unemployment rate at 3.3% (March 2020), highest since December 2009.
- Global economy is unlikely to recover quickly, we must be prepared for tough times in the months ahead.
- This is a challenge for this generation of Singaporeans.
- Our path forward will be tough, but we will journey together.
What we don’t know about COVID-19?
DPM Heng has also shared about the uncertainties of the pandemic:
- What is the risk of transmission by asymptomatic carriers?
- Are recovered patients immune to future infections? And if so, for how long?
- Will there be significant mutations of the virus?
- Will there be a resurgence of infections as restrictions as restrictions on activities and travel are gradually lifted?
- How soon will a vaccine be ready? Making a vaccine available globally is also a huge challenge.
Reopening safely is key
DPM Heng has highlighted that life will not be normal again as Singapore gradually reopens. As activities and interactions increase, so will new community cases. Singapore needs to be psychologically prepared for reopening.
Anxiety at all levels
DPM Heng has shown empathy to the situation on the ground:
- Some have lost jobs or had pay cuts.
- Fresh graduates worry about finding jobs.
- Mid-career Singaporeans who have multiple dependents are anxious about job stability.
- Families have found it challenging to balance working from home and adapting to home based learning.
- More families seeking counseling for marital conflict or domestic violence.
- Businesses worry about cashflow and staying afloat.
Fortitude Budget for Businesses
The Fortitude Budget adds on to the biggest spending ever by the government in Singapore’s history. The budget is also the biggest draw on Singapore’s reserves as well. The Fortitude Budget is expected to create jobs and build skills for workers, boost transformation of enterprises, and strengthen resilience for Singapore’s community.
Keeping workers employed
Jobs Support Scheme
There are several enhancements to Jobs Support Scheme (JSS)
- Extended for 1 more month to cover wages in August 2020, bringing total coverage to 10 months of wages.
- 25% to 75% of the first $4,600 of wages for each local employee.
- For firms that are not allowed to resume operations, government will continue providing wage support at 75% until August 2020 or when allowed to reopen, whichever is earlier.
- Increased support for some affected sectors (e.g. aerospace, retail, marine and offshore) from 25% to 50% or 75%.
- Aim to create 40,000 jobs by end-2020.
- Public sector to offer 15,000 jobs.
- Private sector to offer 25,000 jobs.
- 21,000 traineeships for local first-time job seekers.
- Applications will open from 1 June 2020.
- 4,000 traineeships for local mid-career jobseekers to learn new skills and start new careers.
- Training courses for about 30,000 jobseekers to upgrade their skills while looking for a job.
- Training allowance of $1,200 per month for course duration (between 6 to 12 months) to cover basic expenses.
- Rolled out progressively from July 2020.
Hiring incentives to retain workers
- Hiring incentive for employers which hire local workers who have completed eligible traineeship and training programmes.
- Expanded to cover workers of all ages.
|Age of Worker||Incentive||Max Cap|
|Under 40||20% of monthly salary for 6 months||$6,000|
|Above 40||40% of monthly salary for 6 months||$12,000|
Cashflow, support and credit for businesses
Foreign Worker Levy will have an extension of waiver and rebate
- Extended by up to 2 months for businesses that are not allowed to resume operations after the circuit breaker.
- 100% waiver and $750 rebate in June 2020.
- 50% waiver and $375 rebate in July 2020.
Deferment of higher CPF contribution rates
- Increase in CPF contribution rates for senior workers deferred by 1 year, from 1 January 2021 to 1 January 2022.
Expanding rental relief for SMEs
- $2 billion in cash grants to help SME tenants with rental costs
- Including the Property Tax Rebate for 2020, Government will
- Offset 2 months’ rental for qualifying SME tenants of commercial properties.
- Offset 1 month’s rental for qualifying SME tenants of industrial and office properties.
Rental Relief for Government Tenants
- Additional rental waivers for commercial and other nonresidential tenants of government properties.
|Hawker & Markets||3 mths||2 mths||5 mths|
|Commercial||2 mths||2 mths||4 mths|
|Industrial, office & agricultural||1 mth||1 mth||2 mths|
Financing support for promising startups
- So far, $4.5b of loans catalysed through Government financing schemes (e.g. Temporary Bridging Loan Programme, Enterprise Financing Scheme).
- $285m of additional financing support for promising startups by co-investing with the private sector.
- On top of $300m set aside under the Unity Budget for deep-tech startups.
- Bonus of $300 per month over 5 months to encourage adoption of e-payments by stallholders in.
- Hawker centres
- Wet markets
- Coffee shops
- Industrial canteens
Digital Resilience Bonus
- Pilot starting with Food Services and Retail sectors.
- Payout of up to $5,000 to help businesses digitalise with:
- PayNow Corporate, e-invoicing, business process or e-commerce solutions.
- Additional payout of $5,000 for businesses that use advanced solutions.
National Innovation Challenges
- Encourage partnership with the private sector for industry-led solutions to reopen Singapore safely.