In 2019, Singapore’s economy grew by a modest 0.7% - the weakest growth since the 2008 Financial Crisis. The Ministry of Trade and Industry (MTI) has downgraded Singapore’s growth forecast to -0.5 – 1.5% from 0.5 – 2.5% and this indicates a possible recession.
With the COVID-19 outbreak, the Ministry of Finance (MOF)’s budget 2020 has set aside a substantial amount of focus and resources into helping businesses and industries towards cushioning the impact from such uncertainties.
In this post, we will look at the initiatives announced in this year’s budget that aims to help sectors who have been financially hit as well as measures to help them tide through this tough season.
With the COVID-19 outbreak, the Ministry of Finance (MOF)’s budget 2020 has set aside a substantial amount of focus and resources into helping businesses and industries towards cushioning the impact from such uncertainties.
In this post, we will look at the initiatives announced in this year’s budget that aims to help sectors who have been financially hit as well as measures to help them tide through this tough season.
The government has set aside a S$4 billion Stabilisation and Support Package to help sectors affected by the COVID-19 situation though implementing a wide range of measures. The following is what businesses in Singapore can take away:
1) Job Support Scheme
This new initiative is introduced to help ensure Singaporeans stay employed by helping to defray the wage costs on employers through subsidising the wages of local employees. Employers can claim up to 8% of each local employee’s monthly wages (capped at S$3,600) for 3 months from October 2019 – December 2019. This applies to employees who are Singaporeans and Permanent Residents (PRs).
2) Wage Credit Scheme
This existing scheme will be enhanced to support salary increases for local employees. The scheme will now co-fund 20% of wage increases in 2019, and 15% of wage increases in 2020, for Singapore employees earning a monthly income of up to S$5,000.
3) Corporate Income Tax Rebate
The government will offset 25% of the payable tax for the year of assessment 2020, capped at S$15,000 per eligible company.
4) Enterprise Financing Scheme
Businesses can get up to S$600,000 of the working capital loan – double the amount of 2019’s maximum loan. The government will also be increasing its risk share to 80%, an increase from the current 50% - 70%.
5) Additional Support for Sectors Affected by COVID-19
Aviation – Changi Airport will receive a 15% property tax rebate. In addition, there will be rebates for aircraft parking and landing charges. Rental rebates will also be rolled out for shops at Changi Airport.
Tourism – Hotels, serviced apartments and event venues can expect a property tax rebates of 30%. Businesses in the tourism industry will qualify for a Temporary Bridging Loan Programme. Eligible businesses can borrow up to S$1 million, with annual interest rate capped at 5%, to alleviate cashflow needs.
Food services & Retail – The government has implemented rental waivers to alleviate costs borne by hawker stall owners and commercial tenants in government managed facilities. Eligible commercial properties will also receive a 15% property tax rebate.
Point-to-point services – Taxi and private-hire drivers will receive a S$77 million support package to tide them through the decline in business.
6) Start-up SG Equity
The government has allocated S$300 million to support deep-tech start-ups. As Singapore’s start up ecosystem is ranked in the top 15 worldwide, this additional funds will improve support for deep tech start-ups in emerging technology areas such as pharmbio and medtech, advanced manufacturing and agri-food tech.
7) Enterprise Grow Package
This package will help to businesses innovate and adopt digital solutions, and support their ambitions to venture into new markets.
8) GoBusiness
Businesses can now access this new streamlined licence application portal and conveniently transact with the government.
9) SMEs GO Digital Scheme
This scheme will be enhanced to include 13 more sectors to help businesses in these sectors build up their digital capabilities.
10) Market Readiness Assistance (MRA) Grant
This grant will be enhanced to help Singapore businesses expand overseas, the grant will be increased from S$20,000 to S$100,000 annually per new market per company, between financial years 2020 and 2022.
11) Enterprise Transform Package
Under this new package, business leaders of Singapore’s small and medium enterprises (SMEs) will get a boost in driving their business transformation. This package includes a 3 year programme that is meant to groom and train business leaders of 900 SMEs. The government is also working with institutes of higher learning, banks and industry experts to facilitate collaboration under this programme.
12) SkillsFuture Top-ups
A one-off $500 SkillsFuture top-up will be made available for every Singaporean aged 25 and above, as part of the Government’s effort to support workers to develop new skills. The government is also be introducing SkillsFuture MidCareer Support Package to help Singaporeans aged 40-60 in 2020 with reskilling. Those eligible will receive an additional $500 SkillsFuture Credit this year. This can be used from 1 October on about 200 career transition programmes by Continuing Education and Training (CET) centres. Businesses can also stand to benefit from the government’s investment with SkillsFuture Enterprise Credit. Each business will receive S$10,000 to defray 90% of out-of-pocket expenses for business transformation, job redesign and skills training.
13) Senior Employment Credit
To support workers who intend or need to stay employed longer, employers with senior employees aged 55 and above, who are Singaporean earning up to S$4,000 a month will receive funding to offset the costs of their wages. The government is introducing the Senior Employment Credit which will help to offset up to 8% of wages, depending on the age of the employee.
14) Reduced Quota for Foreign Workers
The government will be reducing the quota for skilled foreign workers in the construction, marine shipyard and process sectors over the next three years. The dependency ration relating to ‘S’ Pass holders will be reduced from 20% to 18% by 1 Jan 2021, and to 15% on 1 Jan 2023 for these three industries. Foreign worker levies for all sector including tourism, food & beverage and retail sectors, which have been affected by COVID-19 outbreak, will remain unchanged.
15) GST Increase Postponed
The Goods and Services Tax (GST) will remain at 7% in 2021, in view of the current economic conditions. The increase will still be necessary by 2025.
The list above is non-exhaustive, thus for more information on Singapore Budget 2020, you can visit the following website: https://www.singaporebudget.gov.sg/budget_2020
Still unsure how the #SGBuget2020 will affect your Singapore company? Our team will be able to help you understand how the new and enhance measures will impact your business.
Contact us today and we will guide you accordingly.
