Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, delivered the 2020 Budget for Singapore on the 18th February 2020, and as will come as no surprise, it has been a generous Budget to cushion the financial blow from both the trade wars between the China and US, reducing trade, and the impact to businesses and households in Singapore from the Coronavirus outbreak. The Singapore Budget clearly outlines how the Government plans to address both Singapore’s current needs, but more importantly the needs of the generations to come.
The day before the Budget was announced, the Ministry of Trade and Industry, reduced its economic growth forecast for Singapore to between -0.5% and 1.5%, which highlights that Singapore could head into a recession. This is largely due to the outbreak of the Novel Coronavirus (COVID-19). This week we explore the key announcements in the 2020 Singapore Budget, and what impact this could have on Australian expats living and working in Singapore.
- $800M in Support for COVID-19
Singapore has decided to set aside a whopping S$800M to assist the economy in its recovery from the outbreak of the virus. At this stage, it is unclear how severe the economic and financial damage will be from the virus, but it would be ‘wishful thinking’ to assume that it’s simply going to blow over without taking its toll on key sectors in the economy. To put this package in perspective, Singapore set aside S$230M when SARS broke out in 2003.
A large portion of the S$800M will be directed towards the public health system in dealing with the virus, while further funds will be directed to those sectors most affected by the virus including the following:
- Tourism: A Property Tax Rebate of 15 – 30% will be provided to integrated reports, cruise and ferry terminals, accommodation and function rooms of licensed hotels, in addition to bridging loan facilities made available with capped interest rates.
- Aviation: $112M has been allocated to an assistance package for this sector to support the airline activity of Changi, with an additional 15% tax rebate being provided to Changi Airport itself.
- Food & Retail: Hawker centres will be provided with a full-month rental waiver, while other commercial tenants in HDB facilities will receive ½ month waiver to facilitate the impact.
- Transport: A S$77M package has been announced for taxi and private-hire drivers to provide a $20 relief facility for each driver for 3 months.
Each of these key sectors receiving support is designed to ensure minimal disruption, which is particularly valuable for those Australian expats travelling regularly and conducting business in the region.
- Stabilisation and Support Package
A further S$4B has been set aside to cover both employees and companies during this difficult time. Firstly, a corporate income tax rebate has been announced for 25% of tax payable, which is being capped at S$15,000 per company. A further cash grant to offset 8% of local employees’ waves for 3 months to assist in keeping them employed has also been announced to assist companies in maintaining their staff during these times.
For any Australians running businesses in Singapore that employ local staff, each of these measures could be invaluable, particularly if your company is impacted by the virus.
- No Increase in GST
It was announced in the previous Budget that the GST rate would increase by 2%, from 7% to 9%, at some point between 2021 and 2025. In this year’s Budget, they have announced that it will not be increasing in 2021 to cushion the economy from a further decline in spending if GST were to be increased next year. Additional funds have been set aside, to the tune of S$6B to assist local families with the increase in their cost of living.
While many Australian expats may not benefit from the S$6B assistance package, it does mean that at least for the next 22 months, we will not see an additional 2% increase in our cost of living in this city state.
- Transformation and Growth Fund
Singapore has announced that S$8.3B will be set aside to be put to work over the next 3 years to assist Singapore in three key areas, outlined below:
- Stronger partnerships
- Enterprise capability deepening
- Developing the people of Singapore
These funds will enable SMEs in Singapore to grow, increase their use of technology, enter new markets as well as support these business leaders in achieving their next phase of growth.
- SkillsFuture Enhancements
The SkillsFuture programs in Singapore will receive additional funding to increase the skills of Singapore’s staff, allow companies to enhance the learning and development opportunities of their employees as well as a focus on enhancing the opportunities for mid-career employees. There are a number of key measures here, which I’ve outlined below:
Skills Future Credit Top Ups
All Singaporeans who are 25 years old and above will receive a Credit top up of $500, which will be available from October of 2020 through to December 2025 to allow Singaporeans to learn new skills
SkillsFuture Enterprise Credit
Companies will be granted a credit of S$10,000 to encourage them to upskill their workforce.
Mid-Career Support Package
Companies will be provided with incentives to employ those who are aged 40 and above with 20% salary support capped at $6,000 per employee, in addition to career advisors and re-skilling programs.
- Care & Support Package
The Singaporean Government has allocated S$1.6B for the Care and Support package, which will ensure that all Singaporeans receive a cash payout of $100, $200 or $300 depending on their annual income. Those Singaporeans who are under a lower income group will also receive additional support to counter the effects of the increase in living costs. This will be achieved through vouchers, U-save rebates and PAssion card top-ups.
- Climate Change and Sustainability
As should come as no surprise, climate change and sustainability formed a key element of the 2020 Budget for Singapore, with four key measures being announced:
Electric Vehicle Incentive: Anyone who buys an electric vehicle at present will receive a rebate of 45% of the Additional Registration Fee, which will be capped at S$20,000 per vehicle, a significant saving.
Enhanced EV Charging Infrastructure: Singapore has announced that they plan to have 29,000 charging stations across the country. To put this in perspective, Australia has approximately 800 charging stations across our vast continent.
HDB Green Towns Program: There will be a new program for HDB estates to reduce their consumption of energy, recycle the rainwater and provide energy efficient cooling measures.
For those Australian expats considering purchasing or leasing an electric vehicle, it certainly is about to get slightly more affordable and far more efficient to get around the island.
Overall, this year’s Budget for 2020 has been a generous one and will certainly benefit the country and us, as Australian expats, as we all get past the virus outbreak.
To Your Financial Success!
Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3
Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.
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