One of the key themes of this year's Budget 2020 announcement by Finance Minister Heng Swee Keat is the Covid-19 coronavirus outbreak in Singapore. It came at an unfortunate time, as an economic downturn was long forecasted before the medical emergency hit us.
According to Mr Heng, Singapore's economic growth was 0.7 per cent in 2019, which is a 10-year low. In his words, it is the "weakest it's been since the 2008 financial crisis". As such, the Ministry of Trade and Industry has downgraded the GDP forecast to -0.5 per cent to 1.5 per cent.
Unity Budget 2020 measures to cushion impact of Covid-19 on businesses and key sectors
The government is working hard to provide relief for businesses and key sectors hit by the coronavirus outbreak. Here's an overview of the measures announced.
Note: Since the Unity Budget (Feb 18, 2020), there have been 2 more announcements: The Resilience Budget (Mar 26, 2020) and Solidarity Budget (Apr 6, 2020). This article reflects the updated information.
1. Jobs Support Scheme (new) - updated Apr 6, 2020
To help businesses retain workers, employers will receive 75 per cent (previously 8 per cent / 25 per cent) to offset monthly wages (wage capped at $4,600 per worker, previously $3,600) until the end of 2020.
When the Jobs Support Scheme was first introduced during the Unity Budget in February, it was only 8 per cent co-funding for the first $3,600 of Singaporean workers' salaries.
Subsequently - in the Resilience Budget in March - the co-funding was increased to 75 per cent for aviation and tourism sectors, 50 per cent for food businesses and 25 per cent for everyone else. The wage cap was also bumped up to $4,600.
Most recently, the JSS was enhanced yet again during the Solidarity Budget in April. Now, all firms will get 75 per cent co-funding, regardless of sector. This is because the government acknowledges that almost all businesses are hit, and not just those in aviation, tourism and food.
2. Wage Credit Scheme (existing, enhanced)
Currently, this scheme co-funds wage increases for Singaporeans earning up to $4,000 monthly. This will be enhanced to include workers earning up to $5,000 instead.
Additionally, the co-funding will be increased from 15 per cent to 20 per cent in 2019 and 2021. This is expected to help over 700,000 Singaporeans.
3. 25 per cent Corporate income tax rebate (capped at $15,000)
Mr Heng also announced a 25 per cent corporate income tax rebate, capped at $15,000 per company. This will cost the government $400 million.
4. $800 million to help frontline agencies fighting Covid-19
Mr Heng announced that in total, $4 billion will be spent on the Stabilisation and Support package for workers and businesses.
Of this, $800 million will go to the frontline agencies (the bulk of it going to the Ministry of Health).
5. Targeted relief for key sectors impacted:
Update (Mar 26, 2020): With the newly announced supplementary resilience budget 2020, qualifying commercial properties like hotels, serviced apartments, tourist attractions, shops and restaurants will not need to pay property tax (instead of the previously announced 15 per cent to 30 per cent rebate).
Businesses in other non-residential properties (like offices and industrial buildings) will also receive a 30 per cent property tax rebate for 2020.
Aviation - 15 per cent property tax rebates for Changi Airport
Of the impacted businesses, aviation was highlighted as a key sector. Hence, Chang Airport will receive 15 per cent property tax rebates.
Related functions like ground handling agents and cargo agents will also receive assistance.
Point-to-point transport -$77 million support package for taxi & private hire drivers
The Ministry of Transport previously announced this special relief fund to help taxis and private hire operators during the outbreak.
Mr Heng highlighted this again, sharing that the government is contributing $45 million to this cause.
Tourism - 30 per cent property tax rebate
Within tourism, there will be a 30 per cent rebate for accommodation and function room components of hotels, serviced apartments and MICE venues.
That, plus 15 per cent and 10 per cent rebates for international cruise and regional ferry terminals, and integrated resorts respectively.
Food and retail businesses - rental waivers and property tax rebates
Stallholders in hawker centres and markets by NEA will get 3-month rental waivers (up from the previously announced 1 month), while tenants under other agencies like HDB will receive 2-month waivers (up from previously announced 0.5 months).
There'll also be a 15 per cent property tax rebate for those in retail (for qualifying private properties).
More general measures to help with cash flow
The bulk of the measures are to help businesses in these targeted industries, but generally, Mr Heng also announced the following to further help businesses with cash flow:
Firstly, enterprises will be given faster write-down of their investments in plants and machinery, and renovation and refurbishment.
Secondly, under the enterprise financing scheme, the maximum working capital loan quantum will be raised from $300,000 to $600,000, with the government's risk-share increased to 80 per cent (previously 50 per cent to 70 per cent).
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This article was first published in MoneySmart.