Singapore releases a second budget aiming to shore up and support businesses affected by the Coronavirus pandemic
Barely a month after Singapore announced its annual budget dubbed the Unity Budget, a supplementary one, called the Resilience Budget, was unveiled by Deputy Prime Minister and Finance Minister Heng Swee Keat on March 26.
Totalling S$48.4 billion, the bill draws on S$17 billion of Singapore’s reserves in an effort to support the economy and businesses that are being negatively affected by the unprecedented Coronavirus pandemic. Singapore’s economy is expected to go into recession with Growth forecast now expected to be between -4.0% and -1.0%.
The budget has three main objectives: saving jobs and supporting workers; supporting enterprises; and strengthening resilience across the economy and society. For businesses in Singapore there are a number of areas that are addressed, designed to help with the ‘Three Cs’, cash flow, cost, and credit:
- ‘Cash is King’ – The Job Support Scheme has been enhanced with cash grants increased from 8% to 25% of gross monthly wages of local employees, up to a monthly salary cap of S$4,600 (initially S$3,600) and extended to cover nine months of wages (up from three months). To further help with cashflow, the government is deferring income tax payments for companies and self-employed persons for three months
- Reducing Costs – the Property Tax Rebate announced in the Unity Budget will be enhanced. Properties badly affected by the COVID-19 outbreak, including hotels, serviced apartments, tourist attractions, shops, and restaurants, will pay no Property Tax in 2020. Other affected businesses in offices and industrial properties will receive a Property Tax Rebate of 30% for the year 2020. Commercial and other non-residential tenants of government buildings will receive up to two-months rental waiver. Additionally, all government fees and charges will be frozen for one year
- Easing credit – the Enterprise Financing Scheme (EFS) – SME Working Capital Loan introduced in 2016 to help SME’s access financing for their operational cash flow needs will be enhanced until 31 Mach 2021, increasing the maximum loan quantum to S$1,000,000 per borrower, from S$600,000 previously. Trade financing is also helped through the enhanced EFS – Trade Loan, increasing the maximum loan quantum from $5 million to $10 million, and increasing the Government’s risk-share from up to 70%, to 80%. A further $20 billion of loan capital has been set aside, available for companies where the need is particularly acute
There were a number of other areas relevant to local businesses, including additional help and support for the tourism and aviation sectors among others. Importantly, the budget aimed to shore up not just the finances, but the psychological and social aspects of society too with aid to help protect livelihoods, secure healthcare supplies among other measures.
The entire global economy has received a shock to the system and Singapore – seen as an economic bellwether – is bracing itself for the full impact. Should this pandemic go on longer than expected then the government will no doubt announce a third budget, but this is a good start.
For more information on the Resilience Budget and how it affects you, contact Alpadis Group