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More winners than losers in Singapore’s Budget war on virus

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·4-min read
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SINGAPORE - 2020/02/14: A couple wearing protective face masks walk along Orchard Road, a famous shopping district in Singapore, on Valentine's Day. Singapore declared the COVID-19 outbreak as Code Orange on February 7, 2020. (Photo by Maverick Asio/SOPA Images/LightRocket via Getty Images)
Singapore Orchard Road, February 7, 2020. (PHOTO: Maverick Asio/SOPA Images/LightRocket via Getty Images)

By Abhishek Vishnoi and Ishika Mookerjee

(Bloomberg) -- Singapore pledged billions of dollars in its budget to counter the economic fallout from the coronavirus outbreak, before elections due by next year.

Finance Minister Heng Swee Keat said in his budget speech Tuesday he will set aside S$800 million ($574 million) to help with the repercussions from the health emergency, give S$5.6 billion in support to businesses and consumers and delay the increase of a goods-and-services tax. He also outlined a package of subsidies -- worth S$6 billion -- to support consumers when the sales tax hike takes effect.

The city-state’s commitment came after it downgraded its forecast for this year’s growth on Monday and said it planned to unveil a strong budget to counter the threat of the virus. The economic impact is already more severe than during the 2003 SARS pandemic, Prime Minister Lee Hsien Loong was cited as saying Friday.

READ: Singapore Cuts Growth Outlook, Plans Stimulus Amid Virus

The government is putting in every effort to “slow down the spread of the virus,” said the finance minister, who is also Singapore’s deputy prime minister.

READ: Singapore Gives S$6.4 Billion Boost to Economy in Budget

The budget seems measured as there is “no significant spending on any particular sector, except for public health care,” said Joel Ng, an analyst at KGI Securities (Singapore) Pte. The government can come out with more measures if the virus fallout worsens, he added.

As Singapore’s benchmark stock index slipped 0.5% Tuesday, here are some winners and losers from the budget plan:


Virus-Hurt Sectors

Singapore announced a slew of packages and tax rebates to counter the impact of the deadly coronavirus in the city-state, which has more than 70 cases of infections and is losing as many as 20,000 tourists a day amid travel curbs.

There will be a property-tax rebate of as much as 30% to offset the operational costs of hotel rooms and function rooms, Heng said. For the aviation sector, the government will implement a suite of measures including rebates on landing fees, parking and a 15% property-tax reduction for the Changi Airport, he added.

Companies that could benefit from the positive measures on travel and tourism include hospitality REITs like CDL Hospitality Trusts and Far East Hospitality Trust, said KGI’s Ng.

Small Enterprises

The government has introduced a Jobs Support Scheme to help enterprises retain their local workers. For every local worker in employment, there will be a subsidy of 8% of the wages, up to a monthly cap of S$3,600 for three months.

“Supermarket operator Sheng Siong will be a beneficiary from the wage offset and various cash payouts and vouchers for households,” said Paul Chew, Singapore head of research at Phillip Securities Pte.

UOB is also a winner as it has higher loan exposure to small and medium enterprises than other local banks, Chew added.

Senior Citizens

The government is introducing a matched retirement scheme for some people between 55 and 70 years old who have trouble saving for retirement. The plan will match every dollar up to S$600 for qualifying seniors.

Heng also announced a top-up of hundreds of millions of dollars to existing health funds for the elderly and low-income Singaporeans as part of this budget.

Climate Change

Singapore spoke about devoting considerably more state resources to deal with the challenge of climate change. The city-state will set up a new S$5 billion coastal and flood protection fund and announced S$1 billion for urban-sustainability solutions.

Heng added that Singapore should progressively phase out internal combustion-engine vehicles to make way for electric and hybrid ones.


The government has provided a lot of relief and rebates for companies and households but disappointed those who were looking for similar measures on the personal-income tax front.

Heng’s projection that Singapore will post its biggest budget deficit since at least 1997 weighed on the Singapore dollar, which was already following other Asian currencies lower against the U.S. dollar as investors fretted over global growth.

The deficit will widen to 2.1% of gross domestic product in the year through March 2021 from a projected 0.3% in the current fiscal year, Heng said. The median in a Bloomberg survey of economists was for a fiscal 2020 shortfall of 1.5% of GDP.

© 2020 Bloomberg L.P.

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