A health crisis is never the greatest way to kickstart a new year. Even as Singapore grapples with the economic symptoms of the Coronavirus outbreak (COVID-19), Prime Minister Lee Hsien Loong shared in the budget announcement that it’s impacted us harder than the SARS epidemic did back in 2003.
A total of $800 million has been allocated for COVID-19 Recovery Package, most of which will go to the Ministry of Health.
Prior to the Budget 2020 announcement, Finance Minister Heng Swee Keat touched upon the government’s plans to put in place a recovery package to help Singaporeans tide over the effects of COVID-19.
Problems arising from COVID-19
Early this year, COVID-19 has had, and will likely continue to have, an adverse impact on the Singapore economy.
Tourist arrivals have drastically declined, with the Singapore Tourism Board (STB) sharing that they are estimating arrivals to drop by 25% to 30% this year. Hotel occupancy rate in Singapore has also been in free fall, dropping to less than 50% occupancy rate in the week of February 9, with some hotels in Sentosa seeing rates below 30%. Just to give you context on the drastic drop, hotel occupancy rates were close to 100% before Chinese New Year.
Businesses are also expecting significant dips in revenue, especially in the F&B and retail sectors. F&B operators in Singapore have seen a stark drop in sales, with some expecting a loss in revenue of more than 50% over the next 3 months. The Restaurant Association of Singapore (RAS) has since asked major landlords for support, such as through rental rebates. Jewel Changi Airport has been the first to announce that they will be giving their tenants 50% rent rebate for February and March 2020.
Evidently, these concerns have spill-over effects on other areas such as preserving jobs, keeping businesses afloat and driving the growth of Singapore’s economy. It also represents a major turning point in the country’s socio-economic future.
$800million set aside to recover from COVID-19
In 2003, Singapore set aside $230 million as part of the SARS relief package, which included measures such as property tax rebates, reduction in Foreign Worker Levy, a bridging loan program for tourism-related SMEs and more.
To recover from the COVID-19, the government has set aside an additional $800 million in Budget 2020 to support these efforts. The aim is to help households in Singapore cope with the cost of living and to address concerns about expenses during this period with the ongoing outbreak. The bulk of this will go to the Ministry of Health (MOH). This is on top of the substantial resources that are already committed each year to public health.
While details on the $800 million package have not been released, there are measures to provide additional support for sectors directly hit by COVID-19: F&B, Tourism, Aviation, Retail and Point-to-point transport services.
Additional support through the Stabilisation and Support Package
A total of $4 billion was set aside under the Stabilisation and Support Package for sectors directly affected by COVID-19. These include tourism, aviation, retail, food services, and point-to-point transport services.
Here’s what these 5 sectors will receive.
DPM Heng announced that he will grant a Property Tax Rebate of 30% for the year 2020, for the accommodation and function room components of licensed hotels and serviced apartments as well as prescribed Meetings, Incentives, Conventions, and Exhibitions (MICE) venues.
International cruise and regional ferry terminals will also receive a 15% Property Tax Rebate, while the Integrated Resorts will receive a 10% Property Tax Rebate.
The government will work with participating financial institutions to introduce a Temporary Bridging Loan Programme (TBLP) for enterprises in the tourism sector for a year, starting March 2020. Under this TBLP, tourism enterprises will be able to obtain a loan of up to $1 million with interest rate capped at 5% p.a. This loan will provide more cash flow for the companies. The Government will take on 80% of the risk of the loan.
The $112 million Aviation Sector Assistance Package will be introduced with the aim to defray business costs and protect jobs as well as safeguard Changi’s air connectivity. This package will help provide immediate relief to affected companies during the COVID-19 outbreak period and this assistance will be provided for a 6-month period.
A suite of measures will be implemented, comprising:
- Rebates on aircraft landing and parking charges
- Assistance to ground handling agents
- Rental rebates for shops and cargo agents at Changi Airport
Changi Airport will also receive a 15% Property Tax Rebate.
3. and 4. Food Services and Retail (combined)
The National Environment Agency (NEA) will provide a full month of rental waiver to stallholders in NEA-managed hawker centres and markets with a minimum waiver of $200. Other Government agencies, such as the Housing and Development Board (HDB), will provide half a month of rental waiver to its commercial tenants.
For establishments that operate in private properties, the government will also grant a 15% property tax rebate for qualifying commercial properties. In order for tenants to enjoy the benefits of these rebates, DPM Heng has strongly urged landlords to pass the savings from the tax rebate on to their tenants by reducing rentals.
5. Point-to-Point Transport Services
DPM Heng shared that many taxi and private hire car operators have come out strongly to support the initiative by matching the government’s contribution.
The Ministry of Transport announced a Point-to-Point Support Package (PPSP) last week. This $77 million package looks to help tide cab drivers and private-hire drivers over this drop in business. Co-funded by the government as well as taxi and private-hire companies, this package gives close to 40,000 drivers a $20 relief each day for 3 months starting from 14 February.
To help retain and re-skill workers
In addition to the measures introduced for these 5 sectors, the government also has plans to help employers in these 5 industries to retain and re-skill their workers.
The government will enhance support under the Adapt and Grow initiative for 2020, specifically through redeployment programmes in the tourism, aviation, retail, and food services sectors. The funding support duration for redeployment programmes will be extended from 3 months to a maximum of 6 months for these sectors. Workforce Singapore (WSG) will also introduce new programmes to support redeployment.
With the Jobs Support Scheme (JSS), the government will support employers in these sectors to retain and train more than 330,000 local workers. These workers can make full use of the downtime for training and upskilling, while preparing for the economic upturn.
By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. Sue Mae enjoys sharing knowledge on personal finance while chasing the dream of financial independence.
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