TL;DR

What: The Budget reflects the government's urgency in tackling the challenges that COVID-19 has brought

Budget 2020: Short-term Stabilisation, Long-term Growth

The long and short of Budget 2020 is to deal with the long- and short-term economic challenges.

Singapore budget 2020
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This article will be updated with links to business-related reports on Budget 2020 as they are published. Bookmark this page for further updates!

For businesses, Budget 2020 is about the short-term consolidation of businesses and workforce and the long-term growth of the Singapore economy.

The COVID-19 outbreak threw a wrench into the global economy’s recovery (and also Finance Minister Heng Swee Keat’s Budget announcement), which explains the emphasis on mitigating the impact of the outbreak on all quarters.

For businesses, Budget 2020 is about the short-term consolidation of businesses and workforce and the long-term growth of the Singapore economy.

Many of the measures aim to help workers stay employed and businesses stay afloat amidst the economic uncertainty.

Stabilisation and support

The government will provide a Stabilisation and Support Package to stabilise the economy. $4 billion will be committed to help workers stay employed and businesses with cash flow.

The government will provide a Stabilisation and Support Package to stabilise the economy. $4 billion will be committed to help workers stay employed and businesses with cash flow.

Support for workers

“To help our workers stay employed, I will support enterprises by defraying their wage cost, through two schemes.”

Jobs support scheme

Objective: To help companies retain local workers.

For every local worker in employment, the government will offset 8% of the wages, up to a monthly cap of $3,600, for three months.

The payment will be reimbursed to employers by the end of July 2020.

Enhanced Wage Credit Scheme

The government co-funds wage increases for Singaporean employees through the Wage Credit Scheme. The monthly wage ceiling will be raised from $4,000 to $5,000 for all qualifying wage increases given in 2019 and 2020.

Objective: To support Singaporean employees’ wage increases.

The government co-funds wage increases for Singaporean employees through the Wage Credit Scheme. The monthly wage ceiling will be raised from $4,000 to $5,000 for all qualifying wage increases given in 2019 and 2020.

The government’s co-funding levels for 2019 and 2020 qualifying wage will also be increased by five per cent, to 20% and 15% respectively.

Support for businesses

“The Stabilisation and Support Package will also provide economy-wide support to help enterprises with cash flow.”

Corporate Income Tax Rebate

For the Year of Assessment 2020, a tax rebate of 25% of tax payable, capped at $15,000 per company will be granted.

Objective: To help enterprises improve cash flow

For the Year of Assessment 2020, a tax rebate of 25% of tax payable, capped at $15,000 per company will be granted.

Enhanced Tax Treatments

Objective: To help enterprises improve cash flow

Tax treatments under the corporate tax system will be enhanced for a year. An example of such enhancements is allowing enterprises a faster write-down of their investments in plant and machinery, and renovation and refurbishment, incurred for Year of Assessment 2021.

Enhanced Working Capital Loan component

The maximum loan quantum of the Enterprise Financing Scheme’s Working Capital Loan component will be raised from $300,000 to $600,000, and the government’s risk-share on the loans will be raised to 80% from the current 50% to 70% for a year.

The maximum loan quantum of the Enterprise Financing Scheme’s Working Capital Loan component will be raised from $300,000 to $600,000, and the government’s risk-share on the loans will be raised to 80% from the current 50% to 70% for a year.

Flexible Rental Payments

Objective: To help enterprises improve cash flow

Tenants and lessees of government-managed properties (specifically those under JTC, HDB, SLA, STB, and SDC) may approach the respective agencies to discuss more flexible rental payment arrangements.

5 sectors to get additional support

Objective: To help industries that took a direct hit from the COVID-19 situation

Tourism, aviation, retail, food services, and point-to-point transport services are industries that are directly affected by COVID-19 and will receive additional support. 

The funding period for reskilling workers under the Adapt and Grow initiative (specifically through redeployment programmes) in the tourism, aviation, retail, and food services sectors will be extended from three months to a maximum of six months for this year.

Employers in these sectors will be supported to retain and train local workers.

Tourism, aviation, retail, food services, and point-to-point transport services are industries that are directly affected by COVID-19 and will receive additional support. 

Tourism

Property Tax Rebate

Objective: To ease cost pressures

Accommodation and function room components of licensed hotels and serviced apartments, and prescribed Meetings, Incentives, Conventions, and Exhibitions (MICE) venues will be granted a 30% rebate for 2020.

International cruise and regional ferry terminals will receive a 15% property tax rebate.

The Integrated Resorts will receive a 10% property tax rebate.

Temporary Bridging Loan Programme

Objective: To help enterprises improve cash flow

The government will work with participating financial institutions to issue loans with a quantum of up to $1 million with the interest rate capped at 5%. The government will also take on 80% of the risk of the loan.

Aviation

Objective: To ease cost pressures

Rebates on aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport will be provided.

Changi Airport will also be granted a 15% property tax rebate.

Food and Retail

NEA will provide a full month of rental waiver to stallholders in NEA-managed hawker centres and markets. 

Objective: To ease cost pressures

NEA will provide a full month of rental waiver to stallholders in NEA-managed hawker centres and markets

Other government agencies, like HDB, will provide half a month of rental waiver to its commercial tenants.

Establishments that operate in private properties will be granted 15% property tax rebate for qualifying commercial properties. Minister Heng urges landlords to pass down the rebate to their tenants.

Point-to-point

The Ministry of Transport has announced a Point-to-Point Support Package.

More details of the Stabilisation and Support Package here.

Support for the general economy

GST to remain at 7% in 2021

GST hike will not take effect in 2021 but is likely to happen by 2025. 

“After reviewing our revenue and expenditure projections, and considering the current state of the economy, I have decided that the GST rate increase will not take effect in 2021. In other words, the GST rate will remain at 7% in 2021. However, we will not be able to put off the increase indefinitely.”

Objective: To ease cost pressures for businesses and consumers

GST hike will not take effect in 2021 but is likely to happen by 2025

The government continues to absorb GST on publicly-subsidised healthcare and education. 

Transformation and growth

Including sums allocated in previous years, the government will commit a total of $8.3 billion over the next three years to enable transformation and growth to support this vision.

“Two years ago, I set out our vision of Singapore as a Global-Asia node of technology, innovation, and enterprise. Ours will be an economy driven by innovation and digitalisation. Singapore will serve as a launchpad for multi-nationals and regional corporates to access Asia, and for Asian enterprises to go global. Our enterprises will compete on value, and reach new customers, and these enterprises will be powered by a skilled, adaptable and Asia-ready workforce.”

Including sums allocated in previous years, the government will commit a total of $8.3 billion over the next three years to enable transformation and growth to support this vision.

The transformation and growth will be driven by three key thrusts:

Enabling stronger partnerships

Partnerships within Singapore

The government continues to invest in promising ideas, such as artificial intelligence, industrial robotics, urban sustainability and solutions, and the biomedical sciences, under the Research, Innovation and Enterprise 2020 Plan.

“Within each industry, we need to strengthen partnerships to deepen industry-wide capabilities. Even as our enterprises compete to differentiate themselves, they must come together to solve common challenges.”

Objective: To improve the competitiveness of Singapore enterprises in the global market

Minister Heng urges stronger partnerships in the country.

The government continues to invest in promising ideas, such as artificial intelligence, industrial robotics, urban sustainability and solutions, and the biomedical sciences, under the Research, Innovation and Enterprise 2020 Plan.

Enterprise Singapore will launch a pilot Executive-in-Residence programme, to fund more than ten Trade Associations and Chambers (TACs) covering all sectors of the economy, to hire experienced executives and provide expert advice to enterprises in their industries.

Merchants’ Associations continues to play a critical role in upgrading heartland enterprises and will be supported by Enterprise Singapore’s launch of the new Heartland Enterprise Upgrading Programme.

Partnerships with the world

“As a small, open economy, we must continue to strengthen partnerships with the world.”

Objective: To improve global trade and create new value

The government will continue to expand its extensive network of economic and digital connectivity.

More details on Enabling Stronger Partnerships And Deepening Enterprise Capabilities here.

Deepening enterprise capabilities

The government will set aside $300 million to support deep tech startups, such as pharmbio and medtech, advanced manufacturing, and agri-food tech.

“Our enterprises must be the incubators of innovation, the crucibles for skills upgrading, and the creators of good jobs for our people. Many of our enterprises are deepening their capabilities – by innovating, digitalising, and venturing overseas.”

Startup SG Equity

Objective: To help startups get off the ground

The government will set aside $300 million to support deep tech startups, such as pharmbio and medtech, advanced manufacturing, and agri-food tech.

Enterprise Grow Package

GoBusiness platform will be launched to provide a single touchpoint for enterprises to transact with Government digitally.

Objective: To help businesses scale

GoBusiness platform will be launched to provide a single touchpoint for enterprises to transact with Government digitally.

SMEs Go Digital programme will be expanded.

Market Readiness Assistance Grant will have its funding support and coverage enhanced.

Enterprise Transform Package

Objective: To help enterprises innovate and get ready for internationalisation

Enterprise Singapore will launch the Enterprise Leadership for Transformation Programme, to support business leaders of promising small and medium enterprises in achieving the next bound of growth.

Enterprise Development Grant (EDG) will be expanded as well.

Developing Singapore’s people

“The Government’s promise to Singaporeans is this: regardless of your starting point, as long as you are willing to learn, we will support you to learn throughout life – in pre-employment, in your working years, and as we pursue lifelong learning and employability.”

Pre-Employment

Objective: To expose young Singaporeans to a variety of cultures and opportunities

Asia-Ready Exposure Programme is introduced to support local youths’ visits to cities in ASEAN, China, or India

Support for internships under the Global Ready Talent Programme will be enhanced.

These programmes will help local students acquire cross-cultural skills and understand our region better

Working years

Individuals

One-off SkillsFuture Credit $500 top-up to every Singaporean 25 years and above. Top-up will be available for use from October 1. The credits will expire in end-2025.

Objective: To support all adult Singaporeans in their learning journey

One-off SkillsFuture Credit $500 top-up to every Singaporean 25 years and above. Top-up will be available for use from October 1. The credits will expire in end-2025.

Enterprises

Objective: To empower enterprises to upgrade their workers and transform their businesses

“Enterprises know best the skills needed for their business to transform and can play a key role in helping their workers learn and apply new skills. By investing in their staff, they build a stronger workforce, which can in turn help enterprises succeed.”

Minister Heng outlines 5 measures:

1. SkillsFuture Enterprise Credit

Employers can use this enterprise credit to defray 90% of out-of-pocket costs of business transformation, job redesign, and skills training, up to $10,000 per organisation.

Employers can use this enterprise credit to defray 90% of out-of-pocket costs of business transformation, job redesign, and skills training, up to $10,000 per organisation.

2. Support job redesign consultancy services

The Productivity Solutions Grant will be expanded to include job redesign consultancy services.

3. Large anchor enterprises to support training for sectors

The government aims to work with 40 anchor enterprises to support training for their sectors and value chain partners.

4. Double capacity of SkillsFuture Work-Study programmes

SkillsFuture Work-Study Programmes will be more than doubled to enable local students to learn in a real work setting.

5. Expand National Centre of Excellence

MOE will expand National Centre of Excellence for Workplace Learning (NACE) to two more Institutes of Higher Learning (IHLs) over the next few years. MOE launched the first NACE at Nanyang Polytechnic in 2018.

The government will also recalibrate funding towards training providers and courses with a stronger link to job and wage outcomes.

Mid-career Workers

Objective: To help Singaporeans between 40 and 60 years old stay employed

“We will introduce a new SkillsFuture Mid-Career Support Package for locals in their 40s and 50s, to help them stay employable and move to new jobs or new roles. We aim to double the annual job placement of locals in their 40s and 50s, to around 5,500, by the year 2025.”

1. Increase capacity of reskilling programmes

These programmes include Professional Conversion Programme under the Adapt and Grow initiative, career transition programmes delivered by Continuing Education and Training (CET) Centres, like IHLs, and sector-specific programmes like the TechSkills Accelerator Company-Led Training for ICT jobs.

2. Incentive for hiring and reskilling jobseekers aged 40 and above.

For each eligible worker, the government will provide 20% salary support to the employer for six months, capped at $6,000 in total.

For each eligible worker, the government will provide 20% salary support to the employer for six months, capped at $6,000 in total.

At the same time, the government will streamline its manpower schemes, including support for hiring and retention, to maximise their impact.

3. $500 special SkillsFuture Credit for Singaporeans aged 40-60.

This is on top of the $500 credit top-up that was mentioned earlier, and will also expire in 5 years.

4. Provide career guidance through volunteer Career Advisors.

The government will assemble a group of volunteer career advisors from professional communities, who will provide peer-level support and career guidance to local workers in navigating professional pathways.

More details on Developing Our People here.

Lifelong Learning and Employability

Senior Worker Support Package

Objective: To support senior citizens with the desire to continue working

[The Senior Employment Credit] offsets the wages that employers pay when they employ Singaporeans aged 55 and above, and earning up to $4,000 a month.

“Many seniors have told us that they want to continue working, and learning. Besides saving more for retirement, it is about a sense of agency and purpose, and staying active and connected.”

“As our people live longer, we will provide more support to help them remain active, and contribute to our society and economy.”

1. Introduction of Senior Employment Credit

The Special Employment Credit (SEC), and the Additional SEC (ASEC) will be refashioned into Senior Employment Credit and will take effect from 2021. It offsets the wages that employers pay when they employ Singaporeans aged 55 and above, and earning up to $4,000 a month. This credit will be effective from 1 January 2021 to 31 December 2022.

2. CPF Transition Offset

This offset will be provided in 2021, the year that employer CPF contribution rates go up. It covers half of the increase in employer contributions, up to the CPF salary ceiling of $6,000 per month.

3. Senior Worker Early Adopter Grant

From 1 July 2020 to 30 June 2023, enterprises that raise their own Retirement and Re-employment ages ahead of the legislated changes will be supported by this grant.

4. Part-Time Re-employment Grant

From 1 July 2020 to 30 June 2023, the government will provide a Part-Time Re-employment Grant to companies which commit to offering part-time reemployment to eligible older workers who request for it.

More details on the Senior Worker Support Package here.

Foreign worker 

S Pass sub-Dependency Ratio Ceiling (DRC) will be reduced from 20% to 15% in the construction, marine shipyard, and process sectors by 2023.

“With our declining local labour force growth, foreign workers are a necessary complement. But we must regulate the inflow carefully, in a way that creates opportunities for our locals.”

Objective: To encourage businesses to hire locals

S Pass sub-Dependency Ratio Ceiling (DRC) will be reduced from 20% to 15% in the construction, marine shipyard, and process sectors by 2023.

It will be carried out in two phases. The first step from 20% to 18% on 1st January 2021, and then to 15% on 1st January 2023.

S-Pass sub-DRC for the manufacturing sector will not be reduced at this time, but manufacturing companies are urged to recruit local workers and technicians.

In light of the current economic conditions, foreign worker levy rates for all sectors will be maintained for 2020.

More details on Foreign Workers here.

Resources

Singapore Budget 2020 Infographic: Business Edition

SBO Singapore Budget 2020 Infographic for Businesses

Singapore Budget 2020 Announcement

Watch the announcement on Channel NewsAsia’s YouTube Channel.

Official Transcript and Annexes

Download a copy of the Budget transcript or the annexes.

Coverage by Mainstream Media

Channel NewsAsia

Channel NewsAsia’s full coverage

Commentary: Don’t waste Budget money. Here’s how to stretch your SkillsFuture dollars

Businesses welcome S$4 billion package as timely relief, but some say more help needed

5 things to know about plans to help workers and businesses amid COVID-19 challenges

More support for transformation of workforce, including SkillsFuture top-ups

S$8.3 billion package to help businesses grow over next three years

S$4 billion support package for workers, firms amid COVID-19 outbreak

‘More expansionary’ budget to result in biggest estimated overall deficit since 2009

The Straits Times

The Straits Times’ full coverage

Interactive breakdown of revenue and expenditure estimates in Budget 2020

$6.4 billion set aside to support businesses, families and agencies impacted by coronavirus outbreak

Steps to stabilise economy and support workers

Boosting confidence in Singapore key to quick recovery: Businesses

Expansionary, but targeted and reassuring, say observers

New wage offset scheme for firms hiring people with disabilities

S Pass quota cut for construction, marine shipyard, process sectors

Rent, tax reliefs among aid for sectors hit by outbreak

Strategic financial plan to prepare nation for long term

Tax benefits extended, enhanced to ensure firms’ resilience

25% corporate income tax rebate among measures to ease companies’ cash flow

Jobs Support Scheme to subsidise wages of local workers

GST stays at 7% next year; $6b fund to help when rise kicks in

Wage and CPF offsets for firms hiring older workers

$500 extra SkillsFuture Credit for mid-career workers aged 40 to 60

Firms to get more help to innovate and go global

More support for workplace training and learning new skills

The Business Times

The Business Times’ full coverage

Budget 2020’s short-term stimulus could be smaller than it seems


 

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