1. Budget for FY 2019 remains expansionary:
Singapore’s growth trajectory remains constant with Finance Minister Heng Swee Keat forecasting a GDP growth of S$7.1 billion in the current financial year. For FY 2018, the overall expected budget surplus stands at S$2.1 billion or 0.4% of GDP. This is S$2.7 billion more than the S$0.6 billion deficit forecast in the last budget! On the whole Mr. Heng predicted a deficit of S$3.5 billion or 0.7% of GDP.
2. Singapore has sufficient fiscal surplus:
The math seems to work in the country’s favour! With the surplus from 2018, Singapore has a sufficient fiscal store to fund the overall deficit in FY 2019. According to Mr Heng, this can be done without drawing on past reserves.
3. Merdeka Generation package to cost $8billion; will benefit 800,000 Singaporeans:
The 2019 budget provides significant incentives to Singapore’s Merdeka Generation who will get MediSave top-ups and other healthcare benefits. Seniors born in the 1950s will also get an S$100 top-up for their Passion Silver cards. Mr Heng also said that the government will set aside S$6.1 billion for a new Merdeka Generation Fund. With accumulated interest, this fund will cover the projected costs of S$8 billion for the entire package.
4. Singapore to spend S$4.6 billion on firms and workers:
Singapore’s position as Asia’s business haven will get a boost with investments of around $4.6 billion for boosting businesses and supporting local workers. These investments will be phased out over the next three years, with S$3.6 billion of this earmarked to assist workers during industrial disruptions. The remaining will be used to enable firms to grow their deep enterprise capabilities. Start-ups and SMEs will also be given help to boost business growth.
5. Investments in tech and innovation to continue:
The budget provides for new Centres of Innovation at local higher learning and research institutes. Enterprise Singapore plans to set up two centres: a Centre of Innovation in Aquaculture (marine farming) at the Temasek Polytechnic, and a Centre of Innovation in Energy at Nanyang Technological University (NTU). The aquaculture centre will foster high-tech marine farms in Singapore, and improve the country’s food resilience. The energy centre at NTU will work in association with the Sustainable Energy Association of Singapore and drive innovation in the areas of renewable energy, energy efficiency, and electric mobility.
6. Government to spend 30% of expenditure on defence:
The Singapore government will continue to invest a huge chunk of resources – about 30% in total – towards boosting defence, security, and diplomacy efforts in the country. To quote Mr Heng, “This spending is significant but indispensable. We will invest more if the need arises”. The Home Team Science & Technology Agency is expected to be set up by the year-end and will play a major role in developing science and technology capabilities of the Home Team to fight terrorism, cybercrime, and other threats.
7. Start up-SG to get a boost and government to initiate Scale Up-SG:
Enterprise Singapore (ESG) is tasked with launching a ‘Scale-up SG’ programme to assist high-growth local firms. It will do so in partnership with the public and private sector. The programme will identify how local businesses can innovate, grow and venture overseas, There will be a two-year pilot to help firms understand innovation and commercialisation opportunities with mentorship from industry veterans or “Innovation Agents”. Singapore will also invest an additional S$100 million in a new SME Co-Investment Fund III; in addition to the S$400 million already invested.
8. GST on international travel to increase:
With more Singaporeans travelling abroad, the government has decided to reduce the GST relief offered on imports. For all those who spend less than 48 hours outside Singapore, the value of goods bought overseas and eligible for GST relief will be reduced to S$100 (from S$150). For travellers who spend more than 48 hours abroad, this quantum will now stand at S$500 from the previous S$600. This change will take effect from Tuesday (Feb 19).
9. DRC levels for the services sector to be tightened:
Singapore’s DRC (Dependency Ratio Ceiling) is used to calculate the maximum permitted ratio of foreign workers to the total workforce that a company can hire. To allow Singaporeans to have continued access to employment opportunities, the DRC levels for the services sectors will be reduced. This will be done over the next two years: reduction from 40% to 38% DRC will happen on 1st January 2020, and to 35% on 1st January 2021.
10. Bicentennial Bonus, fund, and tax rebates:
Singapore’s bicentennial year celebrations will mean up to S$300 GST Voucher cash payouts for its 1.4 million strong lower-income group. There will also be a Workfare Bicentennial Bonus for workers – they will get an additional 10% of their WIS payment as a bonus for work done in 2018 (minimum $100 in cash). Personal income tax for tax residents will be capped at $200 per taxpayer – a rebate of 50% with an estimated cost about $280 million. Apart from the Bicentennial Bonus, a $200 million Bicentennial Community Fund will also be set up to encourage Singaporeans to give back to the larger community.
Our Take on Budget 2019
If budgets were like good ice creams, Singapore’s 2019 budget would take the cake! There is nothing controversial here – all the major highlights are as expected. Given that the coming year is an election year for the country, there is no reason for the current government to deviate from the script. In that sense, this budget is a tad populist, with benefits for the pioneer/older generation. The theme of ‘smart nation; and adoption of technology – which has been a constant refrain during Prime Minister Loong’s reign – remains foremost with the continued clampdown on foreign workers and the country’s reliance on it.
There is one section that may have a beef with this budget – travellers who will now be able to celebrate their trips abroad with only 2 litres of the ‘good stuff’!
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