Emerging Stronger Together — the name of Singapore Budget 2021. This article will provide you with the live updates on the key announcements made during the Singapore Budget 2021.
In 2020, the Singapore government rolled out five fiscal packages to help Singaporeans tide over an unprecedented pandemic that has affected us financially, socially and mentally. Revisit last year’s Budget 2020 details here.
For Financial Year 2020, Singapore will be ending with a record budget deficit — funded thanks to past reserves that earlier generations have built up.
The economy also shrank by 5.4% in 2020, a significant drop from the growth of 1.3% in 2019. This is Singapore’s first annual contraction since 2001 and its worst recession since independence.
This year, the focus is on Emerging Stronger Together, revealed by Finance Minister Heng Swee Keat as the theme for the Singapore Budget 2021. As we continue to find our feet and adapt to the new norms in a post-COVID world, this year’s budget will bring us out of this crisis on an even stronger and more unified front.
1. $11 billion for COVID-19 Resilience Package
There will be a three-pronged approach for the COVID-19 Resilience Package:
Safeguard the health of Singaporeans
Vaccinating our people is key. Hence, $4.8 billion of the COVID-19 resilience package will be set aside for public health and safe reopening measures, covering costs for vaccination and contact tracing, testing and isolation facilities.
Support workers and businesses where needed
Some sectors grow well, but others remain stressed. The Job Support Scheme (JSS) will continue to be provided for up to the next six months, for sectors that continue to be hard hit, such as those in Tier 1 — aviation, aerospace and tourism. The JSS extension will cost $700 million.
More targeted support for the worst hit sectors
Sectors such as aviation will need help to maintain capabilities and eventually recover. The following sectors will receive:
- $870 million as targeted support and cost relief for the aviation sector.
- $133 million dollars have been set aside for the COVID-19 Driver Relief Fund, to aid taxi and private hire car drivers ($600/month from January to March 2021, $450/month from April to June 2021).
- $45 million dollars for extension and enhancement to the Arts and Culture Resilience Package and Sports Resilience Package, supporting businesses and self-employed persons in the arts, entertainment and sports sectors.
2. $24 billion set aside to enable firms and workers to emerge stronger
Over the next three years, $24 billion will be allocated to firms and workers, allowing them to emerge stronger from the pandemic.
This builds on the momentum of the transformation push started five years ago when Singapore launched the Industry Transformation Maps.
There will be three key enablers for this initiative:
To grow a vibrant business community with a strong spirit of innovation and enterprise that is deeply connected with the ASEAN region and the world
To remain competitive, businesses need to innovate and collaborate on a global scale. There will be three main enhancements:
- Corporate Venture Launchpad: piloted this year, the initiative’s main goal is to drive new innovative ventures. This launchpad will provide co-funding for companies to build new ventures through collaborative venture studios. The main aim is to rekindle a startup mindset.
- Open Innovation Platform (OIP): matches the problems faced by companies and agencies to solutions.
- Global Innovation Alliance (GIA): the GIA is tasked to catalyse cross-border collaboration between Singapore and major hubs globally. It will be expanded to more than 25 cities across the globe over the next five years. It will also be enhanced through the Co-innovation Programme which will support up to 70% of qualifying costs for cross-innovation and partnership projects.
Catalyse a wide range of capital
To help companies innovate, transform and scale, the Government will set up risk-sharing arrangements with providers of capital and provide grants to support businesses at various stages of growth.
For high-growth enterprises, including startups, the Government will ensure access to financial capital by enhancing the enterprise financing scheme debt enhancing programme. Support from the Government include:
- Continued support by increasing the Venture Debt Programme cap on loan quantum supported from $5 million to $8 million dollars. The Government also will co-fund adoption of digital solutions and new technologies.
- The new Emerging Technology Programme will co-fund the cost of adopting frontier technologies.
- The CTO-as-a-Service will provide access to professional IT consultancies, to help companies identify and adopt digital solutions
- A new Digital Leaders Programme will support companies to hire a core digital team to help in developing and implementing a digital transformation roadmap
- The Government will also extend the enhanced support levels of up to 80% for existing enterprise schemes (such as Scale-up SG programme and Productivity Solutions Grant), to end March 2022.
$1 billion dollars will be set aside for the schemes listed above.
The Government will co-invest $500 million with Temasek into the Local Enterprises Funding Platform, which will be managed commercially. Temasek will match the Government’s funds on a 1-to-1 basis, giving the platform $1 billion growth capital to support large local enterprises (LLE) to transform or expand overseas.
Create opportunities and redesign jobs
Singapore aims to develop the skills, talents and creativity of its people. This will be done by providing access to good jobs and opportunities.
An additional $5.4 billion dollars will be put into a second tranche of the SGUnited Jobs and Skills Package. Of this, $5.2 billion will be allocated to the Jobs Growth Incentive (JGI), extending the hiring window by up to seven months, to end-September 2021.
This will help to support the hiring of 200,000 locals this year through the JGI and up to 35,000 traineeship and training opportunities.
3. Enhancement to wages and job opportunities
The salaries of nurses and healthcare workers such as support care staff will be enhanced. More details will be announced by Health Minister Gan Kim Yong.
To enhance the local-foreign workforce complementarity and industry transformation, there are three main changes:
- Extend Wage Credit Scheme: To support the employment of Singaporeans by retaining and drawing in locals, the Wage Credit Scheme will be extended for a year, at a co-funding level of 15%.
- Extend Capability Transfer Programme (CTP): The CTP that supports foreign worker skills transfer will be extended up to end-September 2024.
- Reduce Manufacturing S Pass sub-Dependency Ratio Ceiling (DRC): The Government will reduce the sub-DRC for manufacturing in two steps, to 18% from 1 Jan 2022, and to 15% from 1 Jan 2023.
4. $900 million towards the Household Support Package
To provide additional support to families, here’s what will be provided by the Government to support lower- to middle-income households:
- GST Voucher – Cash Special Payment : All Singaporeans that are eligible for GST Voucher – Cash will receive an additional one-off $200
- GST Voucher U-Save: GST Voucher U-Save Special Payment will be given to eligible households. Each household will receive additional utilities rebates of $120 to $200 this year.
- Service and Conservancy Charges (S&CC) rebate: All Service and Conservancy Charges rebate will be extended for a year. The rebates will offset between 1.5 to 3.5 months of S&CC fees.
- Additional top up of $200 per child to CDA/EduSave/PSEA: To further support parents as they invest in their childrens’ future. This will be issued to families with Singaporean children below age 21
- Community Development Councils (CDC) Vouchers: The Government will also partner CDCs to issue $100 worth of CDC vouchers per Singaporean households. These vouchers will be applicable at participating hawker centres and heartland shops. These resources amount to $150 million dollars given to the CDCs.
Beyond individuals, the Government will provide additional support in the following areas:
- Increase budget allocation by $200 million to Senior Worker Early Adopter Grant and Part-Time Re-employment Grant, to support companies in adjusting to the rising retirement age.
- Resources will be provided to the Ministry of Social and Family Development (MSF) to expand ComLink significantly. More specifically, to scale up ComLink nationwide to cover 14,000 families with children.
- Enhance support for students with special needs by piloting an Inclusive Support Programme to benefit more children with developmental needs
5. Encouraging Singaporeans to provide support for community and charities
The community and charity sector are now facing new challenges. While donations to certain platforms and specific causes like COVID-19 have risen, donations to many other charities and their income streams have fallen.
To encourage Singaporeans to give back to the community and support the charity sector at this time of crisis, there are three main changes:
- The 250% tax deduction on donations to Institutions of a Public Character (IPC) will be extended to end-2023
- The Government will extend ComChest’s SHARE as One matching grant period to FY2023. ComChest’s SHARE as One scheme provides dollar-for-dollar matching for new and additional donations through the SHARE programme.
- $20 million will be set aside for a new Change for Charity Grant. This grant will match ComChest donations raised and also co-fund one-off development costs needed to integrate donation functions onto businesses’ payment platforms.
The Government will match $3 for every dollar raised for the CDC’s Care and Innovation Fund, setting aside $50 million for this.
Besides philanthropy, volunteering will also be encouraged. To encourage more corporate volunteerism, the Business and IPC Partnership Scheme will be extended for two years, to end-2023.
6. Climate change efforts
Sustainable development is a major priority for Singapore and the Government is planning to run a national movement to build a sustainable Singapore for all generations.
Just last week, Singapore launched the Singapore Green Plan 2030. The Government has also announced that $60 million will be set aside for a new Agri-Food Cluster Transformation Fund. This replaces the Agriculture Productivity Fund.
Promoting the use and adoption of Electric Vehicles (EV) will also be a key focus. $30 million will be set aside for the next five years for EV-related initiatives, such as accelerating the development of Singapore’s EV charging infrastructure by deploying 60,000 charging points at car parks by 2030.
The Government will also narrow the cost differentials between electric cars and internal combustion engine (ICE) vehicles. For example, the Additional Registration Fee (ARF) floor for electric cars will be lowered from $5,000 to $0 from January 2022 to December 2023. Road tax bands will also be adjusted so that mass-market electric cars pay road tax that is comparable to ICE cars.
Reducing vehicular emissions
In order to reduce vehicular emissions by discouraging the use of internal combustion engine (ICE) vehicles, petrol duties for premium petrol will be raised by $0.15 per litre, while intermediate petrol will be raised by $0.10 per litre.
To help alleviate the impact of the petrol price increase, the Government will also be providing road tax rebates and additional petrol duty rebates. The most significant rebates are:
- Motorcycles: Receive an additional petrol duty rebate of $50 or $80, depending on the engine capacity, up to 400 cc. This is on top of the 60% first year road tax rebate.
- Taxis: A $360 petrol duty rebate, in additional to a road tax rebate of 15%
To support sustainable finance, the government will issue green bonds on select public infrastructure projects.
Carbon tax will be reviewed post-2023. Up till 2023, the carbon tax will remain as previously announced, at $5 per tonne, to provide businesses with certainty.
All Singaporeans are encouraged to play their part to build a sustainable Singapore. The Government will partner Singaporeans and support ground-up projects which aim to build a more sustainable future.
7. GST rate increase will not happen in 2021
For FY 2021, up to $11 billion will be drawn from Singapore’s past reserves. The total expected draw on past reserves in both FY2020 and FY 2021 will be up to $53.7 billion.
Singapore’s healthcare spending tripled from FY2010 to FY2019. The government maintains the stance that recurrent expenditure should be funded by recurrent revenue.
Impending GST rate increase
To finance the recurrent spending needs, the Goods and Services Tax (GST) rate increase from 7% to 9% will not be raised in 2021. The move to increase our GST rate will be made between 2022 to 2025. This will help to meet our rising recurring needs such as healthcare.
To help Singaporeans ease into the impending GST rate increase, the Government has set aside $6 billion for an Assurance Package. The package will delay the effect of the GST rate increase for Singaporean households by at least five years, with even more support provided for lower income households.
GST on imported low-value goods
Currently, low-value goods imported via air or post are not subject to GST, to facilitate clearance at the border. However, Singapore will extend GST to imported low-value goods with effect from 1 January 2023. This will help to ensure a level playing field for local businesses to compete effectively and overseas suppliers will be subject to the same GST treatment as local suppliers.
Government will issue new bonds to finance major, long-term infrastructure
The Government intends to issue new bonds under a Significant Infrastructure Government Loan Act (SINGA) to help finance major long-term infrastructure, such as new MRT lines and tidal walls to protect the country against rising sea levels. This also allows us to tap on the current low-interest rate environment.
There will be a limit of $90 billion for borrowing under SINGA, based on the expected pipeline of major long-term infrastructure projects.
Emerging Stronger, Together
All in all, the Budget position remains expansionary and the Government expects an overall budget deficit of $11 billion in FY2021, which is 2.2% of Singapore’s GDP.
The COVID-19 recovery will be long drawn and Singapore’s economic recovery is ultimately contingent on how the global situation plays out. Furthermore, vaccinating a large population will take some time and could delay economic recovery.
As the name of Budget 2021 would have it, the support measures announced by the Government today serve to help Singaporeans of all age groups emerge stronger as a united nation in a post-pandemic world.
Help yourself to better financial shape in the new norm, with SingSaver’s all-new Ultimate Savings Guide! Got your free copy yet?
Read these next:
A Look Back At Singapore Budget 2020 Highlights
Singapore Budget 2021: 5 Ways It Will Affect Your Daily Life
8 Job Support Measures You’ll Want To Know About From Budget 2021
Singapore Budget 2021: All The Important Numbers Businesses Should Know About
Singapore Budget 2021: Hawker Eats That Deserve Your $100 CDC Vouchers