Live updates: Finance Minister Heng Swee Keat delivers Budget 2016 statement – Channel News Asia
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SINGAPORE: Drawing on the theme of partnership, Finance Minister Heng Swee Keat delivered his inaugural Budget statement on Thursday (Mar 24), with a strong focus on continuing the transformation of the Singapore economy, while ensuring that society also remains caring and resilient.
Measures announced by the Government included economic measures aimed at addressing immediate cyclical weaknesses, but also significant economy-wide initiatives aimed at transforming industries through innovation and enterprise. Targeted at helping industries find new areas of growth, the Minister said that the entire package of initiatives, called the Industry Transformation Programme, would amount to S$4.5 billion.
Social policies announced in the Minister’s speech centred on forging greater partnerships to build on the Government’s social support schemes, to encourage collective responsibility involving individuals, the community and the Government.
New initiatives were also announced, targeted at supporting younger Singaporeans, disabled workers, as well as seniors, through implementation of the Silver Support Scheme.
In line with earlier hints at prudence in his first Budget, the Minister announced that even as overall expenditure will be S$5 billion higher than the last financial year, he expected an overall budget surplus of S$3.4 billion in the first year of the new term of Government.
KEY FOCUS AREAS
Mr Heng outlined the Government’s focus areas to meet challenges today:
- ECONOMY: Invest in building stronger enterprises and nurture innovative industries
- PEOPLE: Invest in education and health
- HOME: Invest for better liveability and connectivity
- SECURITY: Invest more in intelligence, operational capabilities, technology and systems
The Finance Minister also laid out the spending landscape for three key areas:
- Education spending is expected to be S$12.8 billion, almost double what it was 10 years ago
- Healthcare spending is expected to be S$11 billion, an almost six-fold increase from a decade ago
- Transport spending is expected to hit S$10.1 billion, more than 5 times a decade ago
Expenditures will grow to meet Singapore’s many needs, but GDP growth will slow as economy, workforce matures, Finance Minister Heng said.
Ultimately, Mr Heng said, the spirit of partnership, where “Singaporeans work together in new ways to transform our economy and strengthen our society”, is the core to success.
“Everyone has a role, and together, we are weaving a rich tapestry – each thread a different colour and texture.”
MEASURES TO TACKLE MARKET CHALLENGES
While overall growth is subdued, there are pockets of growth, said Mr Heng. He highlighted the growing medical technology and chemicals sectors for manufacturing; the export of services, domestic-oriented sectors such as retail, healthcare and education; as well as construction as examples.
“We should not be overly pessimistic,” the Finance Minister said.
Mr Heng noted that there are three key thrusts to address challenges in the economy: Adopting an expansionary fiscal stance, Industry Transformation Programme and supporting people through change.
Among the measures announced:
- LAUNCH OF INDUSTRY TRANSFORMATION PROGRAMME: The programme will strengthen enterprises and industry, and drive growth through innovation. “The aim is to enable our firms to emerge stronger to benefit from the broader global recovery when it takes place,” he said.
- CORPORATE INCOME TAX REBATE RAISED: The CIT Rebate will be raised from 30 per cent of tax payable to 50 per cent of tax payable, with a cap of S$20,000 rebate each year for 2016 and 2017.
- WAGE CREDIT SCHEME: This month, firms will receive a total of S$1.9 billion for qualifying wage increases under the scheme – the “largest payout to date”.
- SPECIAL EMPLOYMENT CREDIT EXTENDED: The SEC will be modified and extended for three years, to provide employers with a wage offset for workers aged 55 and above and earning up to S$4,000 a month. This will help about three in four older Singaporean workers.
- PUBLIC SECTOR CONSTRUCTION PROJECTS: This will “increase significantly” in 2016, which will benefit smaller construction firms even as private sector construction wanes.
- NEW SME LOAN SCHEME: The SME Working Capital Loan scheme, for loans up to S$300,000 per SME, will be introduced for the next three years. Under the scheme, the Government will co-share 50 per cent of the default risk of such loans with participating financial institutions, to encourage lending to SMEs.
- REVITIALISATION OF SHOPS SCHEME: To help heartland shops to be more vibrant, the Ministry of National Development will enhance the Revitalisation of Shops package to the tune of about S$15 million per year.
- FOREIGN WORKER LEVY INCREASE FREEZE: To help the Marine and Process sectors, the levy increases for Work Permit holders in these sectors will be deferred for a year.
This report offers a more in-depth look at the measures, especially for SMEs, introduced above.
NEW NATIONAL TRADE PLATFORM
Mr Heng, on outlining the measures for industry-level transformation, introduced the National Trade Platform – a next-generation platform to support firms, particularly in the logistics and trade finance sectors. It will eventually replace the current TradeNet and TradeXchange systems.
He said firms only have to provide trade information once and authorise its use by logistics providers as well as business partners. “The information can also be used for customs and other trade regulatory approvals. This will be especially helpful for SMEs, to cut costs and streamline processes,” the Minister said.
The Platform is also envisioned as an open innovation platform, so that other service providers can develop value-added services and apps in areas such as operations, visibility and trade finance, he said.
The National Trade Platform is expected to cost more than S$100 million to develop and has the potential to bring more than S$600 million worth of man-hour savings each year for firms, he added.
The Finance Minister also introduced the Jurong Innovation District, touted to be the “future of innovation for enterprise, learning and living”.
SHIFTING FROM BROAD-BASED SUPPORT
In line with the Industry Transformation Programme, which is more targeted, Mr Heng said he will continue tapering broad-based measures, such as the Productivity and Innovation (PIC) scheme.
The cash payout rate under PIC will be lowered from 60 per cent to 40 per cent for expenditures incurred on or after Aug 1 this year. The scheme, which has been extended for YA 2016 to YA2018, will expire thereafter, he added.
“Even with the tapering of these broad-based measures, we will continue to provide significant support for firms to restructure in the coming years,” he said.
MORE SUPPORT FOR PMETS
Mr Heng introduced the Adapt and Grow initiative, which is meant to help workers here adapt to changing job demands and grow their skills.
These include expanding wage support schemes to encourage firms to hire those who have lost their jobs and finding it difficult to find new employment.
Mid-career jobseekers, including retrenched professionals, will also get to look forward to professional conversion programmes, including new ones in sectors such as design and ICT, he said.
“We want a Singapore which is a great place to raise family, and where we bring out the best in every Singaporean; a society that takes care of those who have special needs, who are less well off or who have fallen on hard times; a society where our seniors age with energy and dignity,” Mr Heng said, on building a “caring and resilient society”.
Some of the measures for families with young children and the youth introduced include:
Also introduced: A new National Outdoor Adventure Education Masterplan, which includes a new Outward Bound Singapore campus.
MAKING SINGAPORE A MODEL FOR SUCCESSFUL AGEING
SILVER SUPPORT SCHEME: The aim of the scheme is to support the bottom 20 per cent of Singaporeans aged 65 and above, with a smaller degree of support extended to cover up to 30 per cent of seniors.
“It can be a modest but meaningful supplement to their retirement incomes,” Mr Heng said.
However, the implementation of the scheme has been pushed back. Mr Heng noted that the original start date was supposed to be around the first quarter of 2016, but as the scheme is a new and extensive scheme, more time was needed to operationalise it.
As such, the first payout will be in July this year, and it will be a double payout for two quarters – the two quarters of April to June 2016 and July to September 2016, he said.
SUCCESSFUL AGEING: “We care about enabling our seniors to stay active and healthy, to stay meaningfully engaged,” the Minister said.
As such, he announced the pilot of the Community Networks for Seniors – which will comprise local stakeholders such as voluntary welfare organisations, community volunteers, schools and businesses.
At the core, the network will have a small team of full-time officers who will study the health and social needs of seniors and draw together stakeholders to provide coordinated support, Mr Heng said.
HELP FOR FAMILIES, INDIVIDUALS
- One-off GST Voucher – Cash Special Payment: For those 21 years and above, with an assessable income of S$26,000 or less for YA2015, they are eligible to the payment of up to S$200.
- Service and Conservancy Charges Rebate: 1- and 2-room HDB households will receive a total of three months of rebates, while those in 3- and 4-room households get 2 months of rebates.
For individuals, Mr Heng introduced a Personal Income Tax Relief Cap of S$80,000 per year of assessment – which will not affect 99 per cent of tax-resident individuals. There are 15 personal income tax reliefs, and “taken together, the tax reliefs may unduly reduce total taxable incomes for a small proportion of individuals”, he noted.
Mr Heng also detailed measures to encourage Singaporeans and businesses to give back to the community.
Live updates: Finance Minister Heng Swee Keat delivers Budget 2016 statement – Channel News Asia}