If you haven’t been able to catch the live updates of the Singapore Budget 2020 on 18 February 2020, fret not – we’re here to summarise the key updates for you. In light of the Coronavirus Disease 2019, or COVID-19, this year’s budget is heavily geared towards providing relief and support to local businesses, as well as the affected workers. And there is a lot to unpack!
Hence, similar to what we did in 2018, we’ve selected and put together the key initiatives from Budget 2020 in an easy-to-digest infographic. This infographic is segmented into two main parts: 1) Stabilisation and Support, and 2) Transformation and Growth.
More details on the infographic below.
Stabilisation and Support
One such relief effort is a $4-billion Stabilisation and Support Package. Its key objective is to stabilise the economy in the short-term by supporting both businesses and workers, by enhancing cash flows and employment respectively. We will cover this in detail by breaking it down into two parts: Enhancing Cash Flows, and Enhancing Employment.
Enhancing Cash Flows
1) Corporate Income Tax Treatments and Rebates: To ease tax-paying businesses’ cash flows
A new Corporate Income Tax Rebate will be made available to all tax-paying companies, in order to help them with cash flows. The rebate will be 25% of tax payable and capped at $15,000 per company.
Tax treatments will also be enhanced for a year. This will enable businesses to have a faster write-down of their investments in plant and machinery, and renovation and refurbishment, for their taxes incurred for the Year of Assessment 2021.
2) Enterprise Financing Scheme: To grant businesses easier access to loans
Good news to businesses that require access to more working capital. The Government is enhancing the Enterprise Financing Scheme’s Working Capital Loan component for one year. This lets businesses take up loans of up to $600,000 (previously $300,000), with risk-sharing of loans by the Government to 80% (previously 50-70%).
3) Special attention to sectors directly affected by COVID-19
This applies specifically to the five sectors directly affected by COVID-19. They are tourism, aviation, retail, food services, and point-to-point transport services.
The tourism sector:
Qualifying commercial properties will get various property tax rebates:
- Hotels, serviced apartments, and MICE (Meetings, Incentives, Conventions, and Exhibitions) venues: 30%
- Cruise-related venues and ferry terminals: 15%
- Integrated resorts such as MBS and RWS: 10%
In addition, the Government will work with participating financial institutions to introduce a Temporary Bridging Loan Programme for a year, with a loan quantum of up to $1 million and interest rate capped at 5%. The Government will take on 80% of the risk of the loan.
The aviation sector:
There will be a 15% property tax rebate for Changi Airport.
Various rebates will also be given for aircraft landing and parking charges, assistance to ground handling agents, and rental rebates for shops and cargo agents at Changi Airport.
The retail and food services sector:
There will be a 15% property tax rebate for qualifying commercial (private) properties. Hence, the Government strongly urges landlords to pass these savings in rebates on to their tenants by reducing rental fees.
In addition, a one-month rental waiver will be given to stallholders in NEA-managed hawker centres and markets. A half-month rental waiver will be given to HDB-managed commercial tenants.
The transport sector:
A $77 million Point-To-Point Support Package for Taxi and Private Hire Car (PHC) drivers has been established. In essence, the Government is committing $45 million towards this package, with taxi and PHC companies contributing the remaining funds. A Special Relief Fund (SRF) has also been set up to help active full-time taxi and PHC drivers defray business costs. This means about 40,000 eligible drivers can expect to receive a Special Relief of up to $20 per vehicle per day for three months.
Active drivers who do not qualify for the SRF can also benefit from some form of financial assistance. The Government and NTUC will jointly set up a Government & NTUC Driver Care Fund for needy drivers. More details will be released later.
As for P2P drivers (i.e. GrabHitch drivers, we’re looking at you), LTA will waive three months of operator license fees.
1) Job Support Scheme: To encourage companies to hire and retain local workers
For every local worker employed, the Government will offset 8% of the worker’s wages, up to a monthly cap of S$3,600, for three months. This is in the form of a cash grant, which will be paid out to companies by the end of July this year.
2) Enhanced Wage Credit Scheme: To encourage companies to increase the wages of local workers (shared productivity gains)
The current scheme co-funds wage increases for qualifying local workers earning a gross monthly wage of up to S$4,000. This will be expanded to those earning up to S$5,000 a month.
The proportion of wages co-funded by the Government will also increase by five percentage points to 20% and 15%, for 2019 and 2020 respectively.
3) Adapt and Grow: To encourage redeployment in affected sectors
The Adapt and Grow initiative aims to help local workers adapt to the changing work environment, as well as help them grow in accordance with the market’s demand for new skills. It was first introduced in 2016 (and in our Budget 2017 infographic).
Likewise, this 2020, the Government hopes to encourage workers to adapt and grow with the recent gloom-ridden environment by extending the funding period for the reskilling of workers from three months to a maximum of six months. This is to help businesses retain their workers in the sectors most directly affected.
Transformation and Growth
Singapore Budget 2020 is also the Government’s strategic financial plan to prepare Singapore and Singaporeans to brace themselves from challenges ahead and seize new opportunities. In the second portion of our infographic, we touch base on 1 of the 4 foundations of SingaporeBudget 2020 which applies to you, local business owners — Transform Enterprises and Grow our Economy.
Let’s break this down further into four parts: 1) Enterprise Grow Package, 2) Enterprise Transform Package, 3) SkillsFuture Initiatives, and 4) Senior Worker Support.
Enterprise Grow Package
1) Launch of the GoBusiness Platform
This is meant to be a single touchpoint for enterprises to transact with the Government digitally.
2) Expansion of the SMEs Go Digital programme
Across all 23 ITM sectors, we will have Industry Digital Plans or equivalents, and enable businesses to access pre-approved digital solutions and vendors.
3) Enhancement of the Market Readiness Assistance (MRA) Grant
This is to help businesses enter new markets outside of Singapore.
Enterprise Transform Package
1) Launch of the Enterprise Leadership for Transformation Programme
To support 900 business leaders from promising businesses with training and leadership. The launch of this programme is helmed by Enterprise Singapore.
2) Scale the Enterprise Development Grant (EDG)
In FY2020, the EDG will support an estimated 3,000 projects.
1) One-time SkillsFuture Credits Top-up of $500
Used up all your SkillsFuture credits? Have no fear, the top-up is here. It is for adults at age 25 years and above. After all, the top-up will be available for use from 1st October 2020. However, do note that there is an expiry of credits in 2025.
Also, an additional $500 SkillsFuture credit top-up will be given to local workers aged 40-60.
2) Increased support for businesses to redesign jobs
To do this, a few measurements have been put in place. They are:
- Introduction of a new SkillsFuture Enterprise Credit. This is where 90% of out-of-pocket costs of business transformation, job redesign, and skills training can be paid via this credit, capped at $10,000 per enterprise.
- Expansion of the Productivity Solutions Grant, to include job redesign consultancy services.
- Government to work with large anchor enterprises to support training for their sectors. The rationale behind this is to efficiently spread the benefits to the entire supply chain through one big partner.
3) Increased capacity of reskilling programmes to support workers in their 40s and 50s
This will include the Professional Conversion Programme under the Adapt and Grow initiative, career transition programmes delivered by Continuing Education and Training Centres, or CET Centres, like IHLs, and sector-specific programmes like the TechSkills Accelerator Company-Led Training for ICT jobs.
4) Provision of hiring incentives to employers who hire local workers aged 40 and above through a reskilling programme
For each eligible worker, the Government will provide 20% salary support to the employer for six months, capped at $6,000 in total.
Senior Worker Support
1) Introduction of the Senior Employment Credit for wage offsets
Taking effect from 2021, the Senior Employment Credit will provide employers with wage offsets when they hire local workers aged 55 and above.
2) Introduction of the CPF Transition Offset for CPF contributions
In 2021, CPF employer contribution rates may increase. At this time, the CPF Transition Offset will help to offset half of the increase in employer CPF contributions.
3) Introduction of the Senior Worker Early Adopter Grant
To encourage employers to raise their own retirement and re-employment ages ahead of the legislated changes in their companies, by rewarding those who do so.
4) Introduction of the Part-time Re-employment Grant
To encourage employers to formalise part-time re-employment provisions in their companies. A part-time arrangement is desirable for senior workers who want to continue to learn and stay active in their jobs, without compromising on having some much-deserved leisure time to enjoy in their golden years.
For more details on Singapore Budget 2020, please refer to the official speech here.