By now, you should be pretty dang shaken by the social and economic impacts of the Covid-19 pandemic. If not, then you and your circle are very privileged. Many Singaporeans are struggling to make ends meet: businesses are in the red, while workers are suffering pay cuts and losing their jobs.
Today, Deputy Prime Minister and Finance Minister Heng Swee Keat made the Solidarity Budget 2020 speech. This makes 3 budget announcements in less than 2 months, which is a first for Singapore.
This comes shortly after the "circuit breaker" measures, which were announced on April 3, 2020, basically putting Singapore on a "soft" lockdown. (For 1 month, schools, offices and non-essential retail stores must close from April 7 onwards. You can read more about it on MOH's website.)
Singapore Solidarity Budget 2020 - more support for the "circuit breaker"
According to DPM Heng, this Solidarity Budget provides more urgent support during these 4 weeks of the circuit breaker.
Acknowledging that the new restrictions will disrupt businesses and impact workers, the new measures announced aim to help businesses continue paying their workers and give households cash for more immediate needs.
Here is a summary of the key announcement highlights:
For households: more cash for Singaporeans, existing payouts brought forward
Of the $5.1 billion, $1.1 billion will go to a new Solidarity Payment of +$300, which will provide households with "more direct cash in hand".
Understanding that there is an urgent need to ease cashflow, the previous Care & Support Package payout will also be brought forward so Singaporeans can receive the cash this month.
|Assessable income for 2019||Care and Support Package – Cash||Solidarity Payment||Total payout|
|Up to $28,000||$900||+$300||$1,200
($600 in Apr + $600 in June)
|$28,001 to $100,000||$600||+$300||$900
($600 in Apr + $300 in June)
|$100,001 and up||$300||+$300||$600
(fully paid in Apr)
|Parents (at least 1 Singaporean child under 21 y/o)||+$300||–||+$300 on top of the above-mentioned|
|Elderly (age 50 and above in 2020)||+$100||–||+$100 on top of the above-mentioned|
1. (NEW) Solidarity Payment - $600 for all Singaporeans in April 2020
All adult Singaporeans will receive a one-off Solidarity Payment of $600 cash in April 2020. The Solidarity Payment comprises $300 from the previous Care and Support Package cash payout and an additional $300 from the Solidarity Budget.
This may be confusing, but what it means is that you basically get +$300 on top of what was previously announced. Of that amount, $600 will be paid out this month.
For those who already provided their bank details to the government for previous payments will have this extra payment credited by Apr 14, 2020. The rest will receive the payment by cheque, starting from 30 April onwards.
2. Care & Support Package cash payout - brought forward from August to June
As mentioned earlier, $300 of the $600 Solidarity Payment will come from the previously announced Care and Support Package cash payout. For the rest, it will be brought forward to June, instead of August.
- The remaining $300 or $600 from the higher tiers of the Care and Support cash payout
- The additional $300 payout for parents
- The $100 cash for seniors (previously PAssion Card top-up)
For businesses: support for the 3 C's that are cash, cost and credit
Referencing the 3 C's mentioned during the Resilience Budget on 26 March, Mr Heng shares that they will do more to help businesses with their cash, cost and credit issues. Of the $5.1 billion, $4 billion will be directed here.
To help businesses retain staff, the government will increase their co-funding under the Jobs Support Scheme (for Singaporeans). For foreign workers, there is no co-funding, but there will be levy waivers and rebates.
The government will also help with firm's financing issues by increasing their risk share for certain loans.
For self-employed persons (SEPs), the Self-Employed Person Income Relief Scheme (SIRS) will also be enhanced.
1. Jobs Support Scheme - co-funding increased to 75 per cent for all sectors
Previously, the government announced that under the Jobs Support Scheme, they will co-fund 25 per cent of the first $4,600 of local employees' salaries. For affected sectors, the support is more (50 per cent for food businesses and 75 per cent for aviation and tourism).
With the Solidarity Budget announcement, the Jobs Support Scheme co-funding is increased to 75 per cent for all firms for April 2020. According to Mr Heng, there are some 1.9 million Singaporean workers who are eligible.
Do note that those who earn more than $4,600 will still qualify, it's just that the co-funding will only be for the first $4,600 of the paycheck. Companies can expect this payment as early as this week (for those who opted for GIRO/PayNow).
With this subsidy, the government hopes companies can continue paying workers for a while more, so they don't have to retrench or put them on no-pay leave.
2. (NEW) Levy waiver + $750 rebate for foreign workers
The above-mentioned Jobs Support Scheme is very generous, but it is only for local employees. To ease the costs of foreign labour, the government announced that they will waive the foreign worker levy for this month.
In addition, businesses will receive a $750 levy rebate for each work permit / S Pass holder. This will be paid out from Apr 21, 2020 onwards.
3. Increased risk share on eligible loans to help businesses with financing issues
One of the key C's is credit, so the government is also helping businesses to ensure credit access by increasing their risk share on eligible loans to 90 per cent (previously 80 per cent).
Eligible loans include those under the Temporary Bridging Loan Programme, the SME Working Capital Loan programme, and the Enterprise Financing Scheme - Trade Loan scheme, initiated from Apr 8, 2020 to Mar 31, 2021.
4. Increase in rental waivers + new Bill for property tax rebates
After the property tax rebates were announced in the Resilience Budget 2020, many tenants aired grievances that their landlords did not pass on the savings to them. To ensure landlords do their part to help struggling tenants, Mr Heng said that a new Bill will be soon announced.
This new Bill will
- Let businesses and individuals defer certain contractual obligations, such as paying rent, repaying loans, or completing work for a period, and
- Ensure that property owners pass on the Property Tax Rebate in full to tenants
Additionally, the government will increase the rental waiver for industrial, office and agricultural tenants of government agencies from 0.5 to 1 month.
Hawker centres under NEA will continue to receive 3 months of rental waivers, while commercial tenants will receive 2 months.
5. Self-Employed Person Income Relief Scheme (SIRS) - more inclusive criteria
Those are all for businesses… So what about our freelancers and the self-employed?
Last month, SIRS was introduced to help this group of people: it is a cash relief scheme that gives eligible SEPs $1,000 per month for 9 months to tide through this tough period. Previously, it excluded those who lived in properties with Annual Value over $13,000.
Mr Heng shared that after it was announced, many SEPs who did not fulfil the previous SIRS criteria came forward with appeals, asking to be included as they too needed the support.
As such, the SIRS annual value threshold will be increased to $21,000 to include those who live in some condominiums and other private properties.
The other criteria remain the same, so the SEPs and their spouses must still only own 1 property to be eligible. Together, their assessable income must also not exceed $70,000.
In total - all 2020 Budget announcements combined - the Government will spend about $59.9 billion (~12 per cent of GDP) in response to Covid-19, increasing the overall budget deficit for FY2020 to $44.3 billion (8.9 per cent of GDP).
This Solidarity Budget alone will cost $5.1 billion, with $4 billion coming from national reserves. That's a lot of money, especially considering that they expect the country's overall GDP to take a further hit this year.
So if you want to do your part to help Singapore overcome this crisis, you better "guai guai" stay at home and follow instructions. The sooner we stop the spread of Covid-19, the sooner we can work on getting everything back up to speed.
Take care and stay safe everyone!
For the latest updates on the coronavirus, visit here.
This article was first published in MoneySmart.