By Francis Kan
With talk of impending elections, there were high hopes that Singapore’s 2019 Budget would be brimming with goodies. And for the most part, Finance Minister Heng Swee Keat delivered on expectations during his two-hour Budget statement in Parliament on Monday (18 February).
Beyond the $6.1b Merdeka Generation Package that will help subsidise healthcare for those born in the 1950s, there was a pleasant surprise in the form of a Bicentennial Bonus for Singaporeans that included income tax rebates and CPF top-ups. Some 1.4 million lower-income Singaporeans will also receive up to $300 in the form of GST Voucher cash payouts, among other benefits.
On the economic front, a slew of measures were announced to help Singapore’s SMEs grow and internationalise, and innovate in the face of a fast-changing and uncertain global environment. Measures including new funding for training programmes were also announced to encourage the development of a skilled workforce.
Responding to the announced measures, Soh Pui Ming, head of tax services, Ernst & Young Solutions LLP, said: “Transformation is a journey, not a destination. Budget 2019 recognises this and continues to provide support to help Singapore enterprises to deepen capabilities, innovate and internationalise in order to compete in the new global economy.”
The two other focal points were Singapore’s safety and security, and social measures, part of the government’s long-term plan to build a caring and inclusive society. The latter includes measures to help Singaporeans maximise their potential, provide greater assurance for healthcare, and encourage Singaporeans to help others around them.
Help for growth and innovation
The ability to innovate has become critical to success in the digital economy. Enterprise Singapore will launch a Scale-up SG programme in partnership with the private and public sectors that will work with aspiring, high-growth local firms to identify and build new capabilities for innovation, growth, and internationalisation.
A pilot Innovation Agents programme will also be launched to allow firms to tap on a pool of experts who can help them innovate and commercialise technology.
Co-investing in SMEs
The Ministry of Finance will set aside an additional $100 million to establish the SME Co-Investment Fund Ill this year, a third round of funding for Singapore-based SMEs that are ready to scale up. It is expected that this will bring in at least $200 million in additional funding from the private sector. Since 2010, the Government has set aside $400 million through two rounds of fund injections through the Co-Investment Programme (CIP).
Existing financing schemes offered by Enterprise Singapore will also be streamlined into a single Enterprise Financing Scheme to be launched in October. It will cover trade, working capital, fixed assets, venture debt, mergers and acquisitions, and project financing. This will make it simpler for companies who currently have to apply for the different schemes at different government agencies.
The SME Working Capital Loan scheme will also be extended to March 2021, while the SMEs Go Digital programme – which funds SME adoption of pre-approved technology solutions – will be expanded.
Helping companies go digital
To help companies become more efficient in a tight labour market, the Automation Support Package (ASP) will be extended by two years. The ASP supports firms that deploy impactful, large-scale automation such as robotics, Internet of Things, and other Industry 4.0 technologies.
Making government transactions easier
To make it easier for businesses to transact with the government, the Ministry of Trade and Industry and other relevant agencies will develop a one-stop portal for doing business with the public sector. A pilot for this portal will be launched for the food services sector by the third quarter of 2019. Businesses will have only one point of contact, instead of up to 14 different ones.
Income tax rebate for all
As part of the Bicentennial Bonus, the government will provide a 50 per cent Personal Income Tax Rebate, subject to a cap of $200, for the Year of Assessment 2019.
Re-skilling workers for new roles
Since its launch in 2007, over 100 Professional Conversion Programmes (PCP) have been launched to help job seekers acquire the necessary knowledge and competencies to take on jobs in emerging sectors. This year, new PCPs will be launched relating to blockchain, embedded software, and prefabrication to prepare Singaporeans to move into new growth areas.
The Career Support Programme, launched in 2015 to provide wage support for employers that hire Singaporeans who are 40 years and older and have been retrenched, will also be extended by two years to March 2021.
Funding support for internships
Local and overseas internship programmes will be combined into a single Global Ready Talent Programme for students in institutes of higher learning. The programme will provide enhanced funding support to students interning overseas with Singapore firms.
The scheme will also support high-growth Singapore firms that send Singaporeans with up to three years of working experience for postings in key markets such as South-east Asia, China, and India.
More help for low-income earners
The Workfare Income Supplement (WIS) scheme provides cash payouts and CPF top-ups for workers whose earnings are in the bottom 20 per cent, with some support for those slightly above. The WIS will be enhanced to better support lower-wage earners. From January 2020, the qualifying income cap will be raised from the current $2,000 to $2,300 per month. The maximum annual payout will also be increased by up to $400.
Easier to hire older workers
To support employers who hire older Singaporean workers, the government introduced the Special Employment Credit (SEC) scheme in 2011, and later an Additional SEC (ASEC) scheme. Both schemes will be extended for another year until Dec 31, 2020. To support this extension, the Finance Ministry will top up the SEC Fund by $366 million.
More help for lower-income earners
The Government will hand out a $1.1 billion Bicentennial Bonus, including up to $300 in GST Voucher cash payouts, that will benefit 1.4 million lower-income Singaporeans. There will also be a CPF top-up of up to $1,000 for Singaporeans aged 50 to 64 years old in 2019 who have less than $60,000 in retirement savings in their CPF accounts. About 300,000 Singaporeans will benefit from this CPF top-up, aimed at beefing up their retirement savings.
Conservancy Rebates for HDB homeowners
HDB homeowners will receive a Service and Conservancy Charges rebate of between 1.5 and 3.5 months, depending on the annual value of the property. This will cost $132 million and benefit about 930,000 households.
As part of the Bicentennial bonus, primary and secondary school students will each get a $150 top-up in their Edusave accounts. Those aged between 17- 20 will get up to $500 in their post-secondary education accounts.
Enhanced Community Health Assist Scheme
The Community Health Assist Scheme (Chas) was introduced in 2012 to help lower- to middle-income families by making primary care and basic dental care at clinics near their homes more affordable.
Chas subsidies at GP clinics will be extended to cover all Singaporeans for chronic conditions, regardless of income. Lower- to middle-income Singaporeans who are Chas Orange cardholders currently receive Chas subsidies for chronic conditions only. The government will extend subsidies to cover common illnesses for this group, and will also increase the subsidies for complex chronic conditions.
Support for long-term care
As healthcare costs rise, a new $5.1 billion Long-Term Care Support Fund will be set up to help fund CareShield Life subsidies and long-term care support measures, such as ElderFund, that benefit older Singaporeans.
Targeted at Singaporeans born in the 1950s as a way of recognising their contributions, the $6.1-billion Merdeka Generation Package is made up of five key benefits:
- All Merdeka Generation (MG) seniors will receive a one-time $100 top-up on their Passion Silver cards.
- They will receive a MediSave top-up of $200 a year for five years. This will begin this year with the final payment made in 2023.
- MG seniors will receive additional subsidies, including Chas subsidies, for outpatient care for life, including for common illnesses, chronic conditions and dental procedures
- MG seniors will receive additional MediShield Life premium subsidies, for life.
- The Government will provide an additional participation incentive of $1,500 for MG seniors who join CareShield Life when it becomes available for existing cohorts in 2021.
Meanwhile, Singaporeans aged 50 and above in 2019 and who do not get Merdeka or Pioneer Generation benefits will get a MediSave top-up of $100 a year for 5 years.
Services sector employers
One key loser in a Budget filled with goodies will be employers in the services sector who depend on foreign workers. To keep Singapore’s services sector competitive, companies in the sector will have to rely even less on foreign workers.
As such, the government is tightening the Dependency Ratio Ceiling (DRC), or the proportion of foreign workers a firm can employ, from 40 per cent to 38 per cent on 1 Jan next year, and to 35 per cent on Jan 1, 2021.
For the subset of S Pass workers – mid-skilled foreigners earning at least $2,300 a month, the quota will be cut from 15 per cent to 13 per cent on Jan 1 next year, and to 10 per cent on Jan 1, 2021.
It was also bad news for the jetsetters. From Tuesday (19 February), returning travellers who spend fewer than 48 hours outside Singapore will have to pay the 7 per cent goods and services tax (GST) on items bought abroad worth more than $100, compared to the current $150. The threshold will be lowered from $600 to $500 for travellers who spend 48 hours or more outside the country.
From April 1, the duty-free concession on alcohol will also be reduced to two litres from three litres.
More stories on Budget 2019 here.
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