2019 Budget – my 28 suggestions:
I hope MOF Heng Swee Keat will include one or two of my suggestions in the 2019 Budget, which will be announced in Parliament by him on 18th Feb 2019.
What will be the game changes in the 2019 Budget for the 4G leaders to transform red dot over the next 10 years that other countries will want to emulate or find it difficult to catch up?
My suggested amounts and figures are not cast in stones.
The 28 suggestions are in seven categories:
Corporate
Individual – personal income tax, etc.
Medical and Health
Taxation
Social Issues
Others
Notes and References
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MOF Heng Swee Keat read his 2019 Budget speech [please see copy below] in Parliament on 18th Feb 2019.
Will many Singaporeans hail the 2019 Budget as a good one, or many demagogues and critics will throw brickbats at it?
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CORPORATE:
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- SMEs.
.Provide more incentives with tax credit/tax relief of S$100,000 for SME companies to research into and manufacture robots and automation machines; and also encourage companies to use robotics and automation machines in their operations and production for better productivity with less labour..This must include training employees in SMEs to be knowledgeable with computerisation to achieve work efficiency including measures to prevent and block hacking..Preventing hacking must be part of a total strategy to ensure continuous production and the survival/wellbeing of the SMEs..All these need funding and a clear direction for red dot to be a Smart Nation with our Total Defence as the core strategy for the continuous and uninterrupted wellbeing of our economy where big companies and small SMEs can thrive freely and be protected from hacking..
- SMEs’ CPF contributions. Give a one-off rebate of 10% on the total employer CPF contribution paid by the SMEs in the year 2018. To qualify, the SMEs has to be privately owned, i.e. not owned by any PLC, and has a 2018 sales turnover not exceeding S$5m generated from sales to unrelated third-party clients.
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INDIVIDUAL – PERSONAL INCOME TAX, ETC:
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- Personal Income Tax Relief.
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Increase the cap on personal income tax relief to S$100,000.
This is the total amount of personal income tax relief an individual can claim.
Give a one-off special tax rebate of 10% on the tax payable, cap at S$5000, or for those whose tax payable is below S$50,000.
- Estate Duty. Reinstate estate duty with revised conditions to fund education needs in pre-school, primary and secondary schools for students from the lower-income groups. Cap the estate duty tax at $500,000.
Place the estate duty in an Education Trust with dollar-to-dollar backing by the Govt.
See Note: 1
Give a further grant of S$30m to the kid-start programme, which is to help parents pay for development programmes for their children up to the age of six.
Give free education up to university level to students who are from families whose total household income is less than S$60,000 per year.
Reference:
https://tankoktim.wordpress.com/2018/06/01/reinstate-estate-duty-tax-to-reduce-inequality/
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- Workfare Income Supplement – Extend WIS payments to those above 60 or 65 years old by crediting S$200 per month from the WIS into the CPF accounts of the elderly based on the 4% difference in CPF contribution, which has been reduced from the employer’s CPF contribution.
Make it worthwhile and attractive for employers to employ the elderly in their workforce. How?
Reduce their CPF contribution but the Govt to top it up.
See Note: 2
Reference:
https://tankoktim.wordpress.com/2015/08/30/minimum-wage-policy-wage-income-supplement-policy-both-should-work-side-by-side/
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- Workfare Income Supplement. Increase the cash portion payment to 50% and credit the other 50% into the CPF account of the lower-income groups.
See Note: 3
Increase the Workfare Income Supplement to minimum $2400 and maximum $4800 per year. To qualify for the WIS, the person’s earned income shall not exceed $24,000 per year.
Reference:
https://tankoktim.wordpress.com/2015/08/30/minimum-wage-policy-wage-income-supplement-policy-both-should-work-side-by-side/
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MEDICAL AND HEALTH:
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- Stay Fit Fund. Set up the Fund to encourage young Singaporeans below 50 to stay fit by giving 20-day hospital bed credit for them to use after age 70.
Reference:
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- MediShield Life, and Medifund.
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MSL should waive the current year insurance premium, and credit the amount to the person’s CPF Medisave Account when 90% portion of the medical claim has been borne by the claimant, who is above 60 years of age.
In the recent case of the $4.50 payment by MSL, the “minimum compassionate approach” should be waiver of the current year’s insurance premium.
The premium amount waived should not exceed and be limited to the 90% amount paid by the claimant.
At the end of each year, Medifund should transfer to and reimburse MSL the total disbursed premium-waived amount.
Singaporeans know that not many individuals qualify to get funding from Medifund and it is harder than trying to put an elephant through the eye of a needle.
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TAXATION:
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- Additional GST on big-ticketed items. Charge additional 3% GST on all retail items with sale price of each item exceeding S$1000. Cap the additional GST at S$30,000 for each item.
Please see Note: 4
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Note: Socialism ideals….. I would like to suggest the Govt give S$10,000 per year to be credited to the 250,000 lower-income household families, and it should be credited into the head-of-the family’s CPF account.
S$2.5b. How should it funded? Please see Note: 4.
Why should the S$10,000 go into the CPF account? It is for their housing, and for their retirement needs.
If it is given in cash, it will be easy money comes, easy money goes, and for some, more will end in the 4D booths.
The above should have been my 29th in my 28 suggestions in my 2019 Budget wishlist which I have sent to the MOF.
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Will the learned, super rich and powerful be prepared to pay more as their stomachs are full and they continue to champion socialistic ideals to give more to the lower income groups?
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Give GST Rebate of $785 to every family with household income of less than S$120,000 per year. This will make spending of $1000 per month [$12,000] of each household on basic necessities become GST tax free.
Stop giving GST rebates by property AV basis.
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10. Property Tax. Impose additional 10% property tax on the AV of all properties with annual value above S$40,000;
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11. Property Tax. Remove property tax on all HDB shops and HDB hawker stalls in HDB central area, and in wet markets. This will be one of the steps to reduce cost of living by 25%.
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12. Road Tax. Impose additional $2000 road tax on all cars with on-the-road price of more than S$300,000.
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13. Payroll Tax. Pay ministers’ and MPs’ salaries by having a 1% payroll tax, which shall be paid by public-listed companies on their total annual group payroll not exceeding $10m.
Maximum payroll tax shall be capped at $100,000 payable by each PLC.
It is time to counter the discontent with ministers’ salaries. We know that higher pay comes with higher responsibility and will be hard to address with moral justification when there is any public outcry on issues that affect a big section of the population.
When will the next GE be held? 2019 or 2020?
When both sides [PAP vs Opposition] contest/compete and come up with better policies [social, financial, economic, development, etc] at the GE, it can only benefit the country and Singaporeans even more. And it is not a bad thing. The nation and Singaporeans will be the winners with better government policies.
How to win the hearts and minds of voters?
Reference:
https://tankoktim.wordpress.com/2014/03/28/payroll-tax-should-we-bring-payroll-tax-back/
and,
https://tankoktim.wordpress.com/2015/09/25/aim-to-win-hearts-of-all- singaporeans/
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SOCIAL ISSUES:
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14. Silver Support Scheme. Revise the Silver Support Scheme to give up to $400 cash per month to elderly Singaporeans aged 65 and above, who have total household income of not more than $60,000 per year.
The SSS is to address the concerns of rising COL for those above 65 in the lower income group who have insufficient CPF retirement minimum sum and in need of social welfare assistance, and those renting HDB public housing.
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15. Merdeka Generation Package.
Set up a S$5b Fund and credit S$200 per year to the MediSave account of Singaporeans born between 1stJan 1950 and 9thAugust 1965.
Like the PG system, I believe the Govt will set up a similar system for the Merdeka Generation to pay all tom, dick and harry, including the super rich Lee, Ng, Wee, Koh, etc. equally. All are treated equal in the PG system. No opting out system.
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16. CPF Compassion Fund. Set up a CPF Compassion Fund to replace the CPF Minimum Sum Policy.
See Note: 5.
Allow all to withdraw their CPF money on reaching 55, no more minimum sum.
There should be a joint-funded CPF Compassion Fund [with dollar-to-dollar backing by the Govt] to address those who fall into the cracks ending homeless and in poverty.
Set up a CPF Compassion Fund by pooling $10,000 [the cap] from each CPF member if they choose to withdraw $145,000 at age 55 [to revoke the Minimum Sum scheme of S$155,000].
The details should be worked out as to who should be allowed to draw from the CPF Compassion Fund when in financial hardship and despair.
Reference:
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17. Community Silver Trust. Increase the S$1billion Community Silver Trust to S$1.5 billion. Set the target to increase this Trust to S$10 billion by 2030.
The Govt should encourage more voluntary welfare organizations in the health and social services sectors to draw funds from this Trust to build up their capabilities and programmes in intermediate and long-term care.
See Note: 6.
Reference:
https://tankoktim.wordpress.com/2011/02/21/my-letter-to-the-media-govt-on-the-new-s1b-community-silver-trust/
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18. Counter-Inflation Fund (CIF). To counter the higher cost of living, set up a permanent and transparent Counter-Inflation Fund (CIF).
See Note: 7.
Reference:
https://tankoktim.wordpress.com/2011/02/22/my-letter-in-bt-make-it-a- counter-inflation-fund-instead/
Set up a Counter-Inflation Fund with seed-money of S$1 billion to pay every wage earner below 60 years of age [those earning less than $60,000 per year] a sum of $1000 when the inflation rate has gone above 4 per cent in any year.
Elderly Singaporeans aged 60 and above, who have total household income of less than $60,000 per year, shall also qualify for the grant of S$1000.
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19. Counter-Unemployment Fund (CUF). Set up a permanent and transparent Counter-Unemployment Fund (CUF) with funds from the additional foreign worker levies, which should not be credited into the government’s Consolidated Fund.
See Note: 8.
Reference:
https://tankoktim.wordpress.com/2013/03/11/policy-proposals-on-4-key-issues-in-ge-2011/
The Govt should transfer ten percent of the foreign workers levy to set up the Counter Unemployment Fund. MOF should work out the details of amount and eligibility criterion in giving support to those who have been retrenched or unemployed;
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20. CPF Trust. Govt should set up a Trust for CPF members to participate in funding at an assured reasonable interest rate of return for SMRT to purchase buses/trains.
The Trust should fund SMRT in the form of mortgaged loans with interest rate at 10% below commercial bank interest rates.
Reference:
https://tankoktim.wordpress.com/2013/03/04/set-up-cpf-trust-to-let-public-share-in-smrt-profits/.
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21. Population growth. Set up 24-hour crèches or child-care centres to encourage couples to have babies.
See Note: 9.
Give S$5000 cash grant to help defray the cost of childbirth delivery expenses and pay in full the medical charges when a baby is born with congenital issues.
This is to help relieve the stress on parents and make it become an incentive to encourage an increase in our TFR.
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22. Population TFR. Encourage youth to marry non-Singaporean to boost the birthrate.
See Note: 10.
Reference:
https://tankoktim.wordpress.com/2013/03/26/should-we-let-in-more-foreigners-how-to-increase-the-trf-by-1
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23. Adult Education Fund. Set up the Fund to encourage life-long training and re-training.
Increase SkillsFuture Credit to $1000 for adult education to upgrade the skills and abilities of everyone.
An initial credit of S$500 was given to all above 25. It is time to raise the grant to S$1000 per year.
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24. HDB’s Proximity Grant. Use the Proximity Grant for HDB housing to encourage all the old-folk homes to transfer the destitute nearer to their relatives for them to stay in the same district close-by to facilitate regular visits by those who are related to them.
Making each HDB town centre unique ‘for bonding in a village-like living condition’ will not be enough unless it is filled with people to make it happen and be vibrant. Let us not forget the old aged homes and the inmates, who should be part of the community and not far from HDB town centres.
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25. HDB public housing – Guarantee return in full the CPF money [principal only, with no interest] that still remains on the flat [i.e. CPF money that has not been credited back to the CPF account] on expiry of the 99th year, and cap the amount at S$100,000.
There will be only a few who will have CPF money in the HDB flat on the 99thyear, or a few persons who have lived to a ripe old age of 100 to qualify for this scheme.
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26. Cost of living. Keep COL down. Set a target to reduce it by 25%.
See Note: 11.
Reference:
https://tankoktim.wordpress.com/2018/08/14/reduce-cost-of-living-rather-than-income-gap/
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OTHERS:
27. National Reserves. – Cap it at 250% of GDP?
The Govt should set a limit for the NR. Some will ask whether is it wise to set a limit.
Reference:
https://tankoktim.wordpress.com/2018/03/05/national-reserves-cap-it-at-250-of-gdp/
Is the sky the limit for our NR? What should the NR be in 2030, 2065, 2100?
NR went up from zero in 1965 to S$1 trillion in 2018.
Should it go up double to S$2 trillion in 2065?
Will the population go up by 100% too by 2065?
Someone suggested capping the National Reserves at 250% of GDP.
Why cap it at 250%, I do not know the rationale or was it just gut feel.
Why not cap it higher at 300% or 400%? I do not know the rationale too.
High cap level means at the expense of current Singaporean taxpayers.
High means depriving the lower-income from enjoying the fruits today, and with no hope for the higher fruits to drop on their lap.
250% cap on present day GDP of S$400 billion = S$1 trillion in National Reserves.
In the future, if the GDP goes up say to S$500 billion, the NR will be managed such [by the use of NIRC and state land proceeds, etc. for long-term infrastructure development not for current year expenditure spending] that the NR will be kept below S$1.25 trillion.
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28. Ministry of Transport. Have three separate budgets for land, sea and air for MOT to prepare for the Cabinet reshuffle to split the MOT into two, land only in one ministry, and another for air and sea.
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NOTES AND REFERENCES:
Note: 1
Estate Duty
Reinstate Estate Duty tax with a twist to serve a specific purpose.
Let us have Estate Duty tax as an extra revenue source to serve two vital and distinct purposes when it is placed in a ‘Counter Inequality Fund’ for the MOE to use the funds for pre-schools,primary and secondary education of children from the lower-income groups, with one main emphasis, that is to address our society’s Inequality Syndrome.
Cap the Estate Duty tax at S$500,000.
For privacy of estate duty filing and declaration, the beneficiaries of the estate who voluntarily pay the full sum of S$500,000 will not have to file estate duty returns and that will save administrative workload as well. [Note: On 3rdJan 2019, China announced this form of taxation on next-of-kin’s inheritance].
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I hope no one will find fault but welcome the Estate Duty tax when it is brought back with the altruistic and specific intention for the sake of Singapore’s wellbeing and future.
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Even when the total collection from this source might be a few millions, It would mean a few thousands of dollars for each student for the MOE to help those from the lower-income groups.
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Sharing:
https://tankoktim.wordpress.com/2018/06/01/reinstate-estate-duty-tax-to-reduce-inequality/
Note: 2
Workfare Income Supplement– extend it to those above 60 years old.
Sharing:
https://tankoktim.wordpress.com/2015/08/30/minimum-wage-policy-wage-income-supplement-policy-both-should-work-side-by-side/
For the Workfare Income Supplementary policy to be more inclusive, I hope the Government will top up the wages of those over 60 years.
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This will encourage more elderly to stay in the workforce when employers find it affordable and worth their while to employ them due to the 4% reduction in CPF contribution, and lower wages.
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I suggest the Government credit S$200 per month from the WIS into the CPF accounts of the elderly based on the 4% difference in CPF contribution, and set the eligible wage limit for this group at not exceeding S$5000 per month.
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I hope the new enhancement of the WIS policy, which must be sustainable like all other policies, will benefit the greater whole to become new game changers.
Note: 3
Workfare Income Supplement– increase the cash portion
PROF TOMMY KOH SAID AT THE ST’S PUBLIC FORUM: If you’re willing to increase the cash component of the Workfare Income Supplement, then we are in business.
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Question is how much [how many % of the WIS] of the WIS component should be paid in cash and not be credited to the CPF account. Should it be 70:30?
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I hope some MPs will ask questions on this in Parliament for the rationale to decide the cash component percentage.
Sharing:
https://tankoktim.wordpress.com/2015/08/30/minimum-wage-policy-wage-income-supplement-policy-both-should-work-side-by-side/
Note: 4.
Additional GST on big-ticketed items:
Prof Tommy Koh at the recent ST public forum asked the govt to give more to the poor, and I hope he agrees we should not forget those over 80 or 70 to receive handouts too.
We know the govt will miss some in the handout exercise when the elderly staying in a private residence with their children or alone will not qualify.
Are the rich, the powerful and the well-learned who champion socialist ideals for greater equality prepared to pay more?
Nevertheless, I propose the following funding sources:
a] impose an additional 3% GST on retail items with sale price of each item exceeding S$1000. Use the collection to pay WIS to those in the lower-income groups, those above 60 who continue to work, and FOC transport for those over 70. Cap the additional GST at $30,000.
b] reinstate Estate Duty but cap tax at S$500,000 to pay for pre-school, primary and secondary education of children from the lower-income groups; For privacy of declaration, the beneficiaries of the estate who voluntarily pay the full sum of S$500,000 will not have to file estate duty returns and that will save administrative workload as well. [Note: On 3rdJan 2019, China announced this form of taxation on next-of-kin’s inheritance].
c] Govt should top up [a] and [b] by dollar-to-dollar backing to set up a trust to pool and manage the funds in perpetuity.
PROF TOMMY KOH SAID AT THE ST’s PUBLIC FORUM:
My third point is I want every worker to earn a living wage. I’m not wedded to the minimum wage, you know, it’s just a means to an end.
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If Progressive Wage Model, Workfare Income Supplement can work, by all means. I have no ideological commitment to one instrument versus another, I’m interested in the outcome.
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My dream is I want a Singapore that is prosperous, just and equitable. I want a Singapore in which every working man and woman can live in dignity.
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MY COMMENTS:
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Hope the Govt will set up a WIS Trust Fund with money from:
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a] charge additional 3% GST on all retail purchases worth more than S$1000 per item purchased.
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b] Government should give dollar-to-dollar backing by topping up the GST collections.
Pay 100% in cash to those in the lower income groups, each person to get at least S$500 per month or at 40% of take-home pay, and cap it at S$500.
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Paying from this Fund will mean:
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a] foreign workers are not given the WIS; It will encourage Singaporeans to look for work, and work.
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b] the payment of WIS is not a direct distribution of the GDP;
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c] the payment of WIS will not jack up the wage bills on employers as WIS is not paid by the employers.
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d] WIS will not jack up retail prices by employers as it does not affect their total cost of production or affect their bottom profit line.
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e] WIS will not cause cost of living to rise due to retailers of food and services jacking up their prices as WIS is not paid by the employers.
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f] The next tier of workers [up the ladder or the moving escalator of employment] above the lower-income groups will not demand for more and more pay rises at work as WIS is paid by the government not by the employers.
Sharing:
Note: 5
CPF Minimum Sum
Sharing:
The MS was not in the original CPF scheme when it was introduced some 50 or more years ago.
The MS came about based on the report of the late Mr Howe Yoon Chong on concerns of a fast ageing Singaporean population.
I hope the Govt will set up a CPF Compassion Fund [CCF] to unlock the contentious MS issue financially and politically..
The Govt should focus on the following and decide:
a] what amount should the CPF members withdraw at age 55 from the retiring account, should it be the entire amount [which was in the original scheme of the CPF]?
b] or should half the amount be withdrawn at age 55 and the balance half at age 65? Or, should it be withdrawn in three equal amounts at age 55, 65 and 75?
c] place 5% of the withdrawn amount [total amount of the 5% retained by the CPF Board not to exceed $10,000] in my proposed ‘CPF Compassion Fund”, which should be set up by CPF Board.
d] should the amount retained be capped at $10,000 or $5000, or less?
e] should the Govt fund it by dollar-to-dollar matching to double the CCF amount to make this new Fund proposal financially feasible? If dollar-to-dollar matching is financially onerous, what other amount is comfortable to the Govt to top up the CCF?
f] should the Govt give a $300 monthly subsistence [or more?] from the CCF to the destitute, those who have squandered their CPF money, are homeless, and have no cash or any form of physical asset? Is S$300 per month too high or too low? What should be the amount?
g] should the Govt allow those who reach 85, but have not claimed the monthly subsistence as a destitute from the CCF, to ask for their contributions [the 5% retained by the CPF Board] to be returned to them from the CCF? Should the age be set at 85 or should it be at 80?
h] or should the Govt keep the contributions [the 5% retained by the CPF Board] in the CCF for the benefit of the rest of the society when a CPF member dies before 85 or after 85? Or, should the CPF Board pay the contributions to the nominee or next-of-kin of the deceased CPF member?
i] should there be an option for the CPF members to opt out not to join the CCF but be in the MS scheme? This will mean that the CPF members want the CPF Board to apply the MS scheme [wef the MS would be $155,000] on them.
Note: 6
Community Silver Trust
Sharing:
https://tankoktim.wordpress.com/2011/02/21/my-letter-to-the-media-govt-on-the-new-s1b-community-silver-trust/
I am glad the Government has not forgotten the passion and compassion of its democratic socialist ideals upon which independent Singapore was set up in 1965.
The setting up of the Community Silver Trust in 2011 was a major breakthrough in caring for Singaporeans in the long run, as it is not a welfare system that will open up the Pandora’s Box clouded with financial uncertainties.
In his Budget Statement 2011 in Parliament yesterday 18 Feb 2011, Finance Minister Tharman Shanmugaratnam said he believes the commitment of S$1 billion by the Government would hopefully spur a much higher level of private funding over the next 10 years.
He added that he would like to encourage philanthropists and others in the community to come forward, participate, and help develop new and better care services together with our VWOs, as the Government believes such institutions could be relied upon to bring the passion, expertise, and resources needed to help the elderly and disabled without the need for the Government’s direct intervention.
I hope the new trust will remain in perpetuity and additional funds would be allocated from future budgets when we have more good years to build on this initial S$1 billion base to become one of our major institutions for the benefit of our people.
I hope the Govt will increase the Community Silver Trust’s initial funding of S$1 billion in 2011 to S$10 billions by 2038.
I hope the Govt will allocate S$500m in the 2019 Budget to increase the Trust from S$1b to S$1.5b.
Note: 7
Counter-Inflation Fund [CIF]
The MOF should transfer these funds from the CUF to the Counter-Inflation Fund [CIF] for disbursement to lower-income Singaporeans once a year [including those ‘unemployed’].
This will help mitigate the people’s concerns about there being too many FWs here.
Clearly, when the government disburses money and more money to Singaporeans, it will help allay their concerns.
The money from the additional FWs’ levy is not government’s money in the first place.
It is money collected by the government to control the inflow of FWs, who have displaced the locals. [Some have remained under-employed or unemployed for whatever personal reasons.]
Sharing:
https://tankoktim.wordpress.com/2011/02/22/my-letter-in-bt-make-it-a-counter-inflation-fund-instead/
Note: 8.
Counter-Unemployment Fund [CUF]
I suggested the CUF in my letter ‘Policy proposals on four key issues in general election” published by BT on 19 April 2011.
More on what I wrote is at this link:
Sharing:
https://tankoktim.wordpress.com/2013/03/11/policy-proposals-on-4-key-i ssues-in-ge-2011/
Let us set up a permanent and transparent Counter-Unemployment Fund [CUF] with funds from the additional FWs’ levies, which should not be kept in the government’s Consolidated Fund.
Note: 9.
24-hour crèches or child-care centres
The Govt’s intention to make pre-school more affordable and of good quality is laudable but will not be enough to help encourage Singaporeans to have more babies.
The crux of the matter is the period before the child enters pre-school. Unless 24-hour crèches or child-care centres are made easily accessible, of good quality and affordable, Singaporeans will still hesitate in having more babies. Half-hearted and inadequately funded policies will not bring the intended result.
All other complicated monetary and elitist Govt policies [involving many stakeholders with vested interest] have failed in reversing the trend of low fertility.
The Govt should promote and support having professionally run 24-hour creches in all HDB estates, especially located near to the 1, 2 and 3-room flats. This is the key to open the mind-set of Singaporeans to have more babies.
Sharing the link:
Note: 10
Population
Sharing:
https://tankoktim.wordpress.com/2013/03/26/should-we-let-in-more-foreigners-how-to-increase-the-trf-by-1/
Govt should provide monetary incentives to encourage our young to marry foreigners.
We should encourage our youths [young men] to marry people from around the nearby countries.
The Govt should have policies to encourage them to meet, fall in love and marry.
We should not hesitate to grant the spouse PR status, and when a child is born to give the spouse Singapore citizenship.
This will help our population to grow by encouraging our youths to marry but not always marrying among Singaporeans.
Our policies should discourage our youths marrying among Singaporeans as the 1.2 TFR will not increase.
It will still remain at 1.2 when locals marry locals unless our young marry foreigners.
Note: 11.
Cost of Living
Keeping cost of living down [e.g. keeping hawker retail prices down for the benefit of the lower-income groups] and the purchasing power of money [wages of the poor] up will be the hallmark of good and capable governance.
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If this is not achieved and maintained, it will bring the opposite result, and that will be eroding purchasing power of money due to rising COL.
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This will have impact on the lower-income or overwhelm some in making ends meet. When the gap between rich and poor widens, it will become untenable and will make governing becomes indeed ungovernable. It must be.
Sharing:
https://tankoktim.wordpress.com/2018/08/14/reduce-cost-of-living-rather-than-income-gap/
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Tougher times ahead, but Government will continue to innovate and raise productivity: Lee Hsien Loong
SINGAPORE – Economic growth for 2019 will likely slow amid global uncertainties, but Singapore will remain squarely focused on its national agenda with healthcare, education and transport as priorities, said Prime Minister Lee Hsien Loong.
Speaking at the annual Teck Ghee Chinese New Year celebration dinner on Saturday (Feb 9), Mr Lee said that he hoped Singaporeans will work well with the ruling party’s new leaders – led by Finance Minister Heng Swee Keat – and keep building Singapore together.
“This year, we see dark clouds on the (economic) horizon… We will work hard, but I expect progress to be harder than last year,” PM Lee said.
Last year , the economy grew by 3.3 per cent, meeting the Government’s expectations.
Nonetheless, the Government will continue working towards ensuring that healthcare, education and transport will be accessible and affordable by all, PM Lee added.
National policies have yielded results for the entire country, he said.
In Teck Ghee, these include a new Ren Ci Nursing Home, which has brought integrated care services closer to the community; more kindergartens, with one opening in Mayflower Primary School; and four additional bus services serving Ang Mo Kio.
PM Lee said that the Government will continue to work hard to achieve stable economic growth here regardless of how the global economy performs.
“We will keep innovating and raising our productivity. Only by doing so can we help retain jobs.”
He also thanked the Merdeka Generation who had “travelled with us on the journey from third world to first”, referring to Singaporeans born in the 1950s who had accepted hardships and made sacrifices to help shape post-independent Singapore.
“Your sacrifices and commitment have made the prosperity and stability we enjoy possible,” PM Lee said.
He encouraged members of the Merdeka Generation to share their values with their children and grandchildren so that “this spirit of contributing to the country and the courage to break new ground can pass from generation to generation”.
Mr Lee said: “The resilience of the Merdeka Generation is precious and our younger generations can learn and imbibe it.”
“In the same way, leaders from my generation are also passing the baton to the new team,” he said, adding the new team will lead everyone to strive for a brighter future for the next generation.
“I hope the younger generation can get along well with the new team, and keep building Singapore together,” he said.
Mr Heng and Health Minister Gan Kim Yong will announce details of a package to help the Merdeka Generation with their medical expenses in Parliament later this month. This was first announced in PM Lee’s National Day Rally speech last year.
.
=========
.Why a forward-looking Budget is needed
by Tan Khee Giap and Tan Yan Yi
PUBLISHED2 HOURS AGO on 15th Feb 2019 in Straits Times
S’pore’s pre-emptive strategies have served it well in mitigating crises in the past. Will it have the resources for the looming challenges ahead?
At an international conference in Budapest organised by the Central Bank of Hungary last week, there was an intense debate among participants on the effective role of central banks.
Singapore was repeatedly identified as an exemplary model where the central bank and the government have consistently done well in crisis management.
The discussion of the Singapore model among central bankers was dominated by how Singapore effectively managed crises, leading to a swift rebound from every economic recession or slowdown. However, I thought the debate largely missed the point – the severity of the crisis in the first place was mitigated, due largely to strong and stable macroeconomic fundamentals and efficient resource allocation for firms and individuals within the micro-economic environment.
PREVENTION RATHER THAN CURE
Singapore’s fundamental strategy in effective crisis management is rooted in preventive and pre-emptive moves, rather than cures. The recent prudent regulations on property purchases, sales and bank-related borrowings, coupled with pre-emptive market cooling measures, are just a case in point.
As a small and open economy, Singapore’s macroeconomic condition is constantly and strongly influenced by external factors. These include business cycles, financial turmoil and tumultuous political changes coming from Asian neighbours, or economic volatility transmitted from Western economies in an inter-connected and inter-dependent world.
Despite these volatile factors, Singapore has remained competitive, staying ahead of the curve in global trade and investments. It is able to do so by seizing opportunities and making itself relevant in the face of changes.
Singapore’s longer-term survival rests upon its continuing to actively pursue globalisation under the World Trade Organisation.
Office workers in the financial district. Singapore’s fundamental strategy in effective crisis management is rooted in preventive and pre-emptive moves, rather than cures. And it has remained competitive in global trade by seizing opportunities and making itself relevant in the face of changes. PHOTO: REUTERS
FREE TRADE AND GLOBAL OPPORTUNITIES
When Singapore was the rotating chairman of Asean last year, regional Free Trade Agreements (FTAs) such as the Regional Comprehensive Economic Partnership were given a further push for the last mile of completion. Singapore’s consistent support for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is clearly stated; in fact, it first founded TPP together with three other member countries.
It would not be surprising if early exploration and preparation for a bilateral FTA between Singapore and the United Kingdom is already being contemplated by senior civil servants before Brexit comes into effect. Singapore’s unrelenting leadership in FTA for greater economic connectivity and regional integration is widely recognised.
1.79%
What Singapore’s productivity growth would have to be at per annum, for the economy to grow at 2.79 per cent, according to an econometric model simulation by the Asia Competitiveness Institute at the Lee Kuan Yew School of Public Policy.
In 2017, Singapore for the first time rose to become the third most competitive financial centre in the world, after London and New York, overtaking Hong Kong from fourth position, according to a London-based think-tank.
Thus, establishing Singapore as an infrastructure evaluation, arbitration, investment and financing hub in Asia and promoting internationalisation of the yuan are simply part of new opportunities that have surfaced under the Belt and Road Initiative which it must quickly seize upon.
Urbanisation is the next phase of development for China and India, and the growth of their middle class is powering their domestic consumption.
Singapore’s businesses and government-linked companies must gain deeper footholds in their urbanisation drive by setting new standards. As a city-state, we have the advantage of providing comprehensive smart urban solutions.
And for the expanding middle class, which possesses strong purchasing power, Singapore as a cosmopolitan city offers an attractive modern lifestyle. This is highlighted by several international studies that have ranked Singapore very highly in terms of e-commerce, digitalisation and city liveability.
FIRM HOME FOUNDATIONS: THREE COMPONENTS
To seize opportunities arising from new development trends globally, there must first be a conducive business environment and a competitive corporate tax structure at home; these are vital for small and medium-sized enterprises to build strong foundations and prepare to venture abroad.
Good fiscal discipline with forward-looking budgetary planning, and ensuring general price and exchange rate stability at home are important too as “safety buffers”, enabling companies to better cope with the next economic downturn or financial crisis. They are preventive measures critical for healthy and robust business expansion. Second, efficient allocation of government resources for provision of public goods and services, transparency of regulations, good governance and firm rule of law at the micro-economic level are the sine qua non of incentivising businesses and individuals to realise or maximise their potential economic contributions.
Finance Minister Heng Swee Keat chatting with Autostore picker Norliati Othman, 37, at the FairPrice distribution centre in Benoi. Beside him is FairPrice CEO Seah Kian Peng. The centre is the first in the region to integrate automated storage and ca
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Together, these provide the strong foundations that are necessary for the economy if our longer-term average growth in gross domestic product (GDP) is to stay at the higher band of 3 to 5 per cent per annum, which would also mean more job choices for citizens.
Third, whether it is soft capacity building by investing in people or building hard physical infrastructure, both are critical in maintaining Singapore’s international competitiveness. Markets often fail when it comes to capacity building and skill upgrading. Government must thus act as a market enabler.
In an era of rapid technological and digital advancement, transformation of companies can be difficult in terms of management, marketing and manpower adjustments.
Multi-stakeholder-driven Industry Transformation Maps involving major industry players, unionists, business professionals, academics and the Government would be more appropriate, rather than leaving it to the more painful creative destruction by market forces for adjustments.
Relook using property type as yardstick for rebates
PUBLISHED on 13th Feb 2019 in ST Forum
With the upcoming Budget 2019, I urge the Government to relook the criteria for citizens to receive rebates and handouts.
Currently, the Government uses a person’s residence as a yardstick to determine whether the citizen is eligible for rebates and handouts.
For example, if a person were to reside in a four-room Housing Board flat, he would automatically be eligible for certain handouts, regardless of the annual value of his flat or his annual income.
Conversely, if a person is residing in a private property, his eligibility for such rebates and handouts would automatically be minimal, even if the size and annual value of his property, as well as his income are much smaller than that of a person living in a four-room HDB flat.
With an increasing number of HDB flats exceeding a million dollars in value – which could surpass the value of an ageing private condominium unit – it is timely to review this yardstick.
Furthermore, we must not assume that a person is definitely well-off simply because he owns a private property, as there are citizens who are consigned to buying a private property because they do not qualify to purchase a resale HDB flat for various reasons.
by Lee Yong Se
If rebates are given in cash, it will be easy money comes, easy money goes, and for some, more will end in the 4D booths.
Stop giving GST rebates by property AV basis.
I said in Note 4:
Prof Tommy Koh at the recent ST public forum asked the govt to give more to the poor, and I hope he agrees we should not forget those over 80 or 70 to receive handouts too.
We know the govt will miss some in the handout exercise when the elderly staying in a private residence with their children or alone will not qualify.
Some grown-up siblings or relatives bunking in with them [their I/C address reflects that] who are unemployed for whatever reasons will be excluded too.
It is not easy to address this anamoly and contradictions to be a truly cohesive nation by taking care of everyone not excluding anyone, or leaving anyone behind or those who have fallen into the cracks.
We know that some of the society’s parasites might abusive the rebate system.
MOF Heng Swee Keat Budget 2019 Speech
CONTENTS
BUDGET 2019
BUILDING A STRONG, UNITED SINGAPORE
.
A. INTRODUCTION…………………………………………………………………………………………….3
Reflections on Our Bicentennial……………………………………………………………………………3 Charting Our Path Forward ………………………………………………………………………………….3 Our Strengths and Our Singaporean DNA ……………………………………………………………… 4
B. KEEPINGSINGAPORESAFEANDSECURE……………………………………………………………6
Safe and Secure Home for All……………………………………………………………………………….6
C. SKILLED WORKFORCE, INNOVATIVE FIRMS, AND A VIBRANT ECONOMY …………………. 9
Steady Growth in 2018 Amid Challenges ……………………………………………………………….9Strengthening Singapore’s Economic Competitiveness……………………………………………9 Building Deep Enterprise Capabilities ………………………………………………………………….10
Supporting Start-ups…………………………………………………………………………………10 Enabling Firms to Scale ……………………………………………………………………………..11 Enterprise-Centric Approach ……………………………………………………………………..13
Helping Our People Seize Opportunities………………………………………………………………14 Partnering to Win ……………………………………………………………………………………………..18 Global-Asia Node of Technology, Innovation and Enterprise ………………………………….19 Our Continued Commitment to Economic Transformation…………………………………….23
D. ACARINGANDINCLUSIVESOCIETY…………………………………………………………………25
Uplifting Every Singaporean ……………………………………………………………………………….26 Strengthening Support in Education……………………………………………………………26 Supplementing Incomes of Lower-Wage Workers………………………………………..27 Supporting Older Workers …………………………………………………………………………28
Greater Healthcare Assurance ……………………………………………………………………………29 More Affordable Care, Closer to Homes………………………………………………………29 Financial Protection for Long-Term Care……………………………………………………..30 Merdeka Generation Package…………………………………………………………………….32 Five-Year MediSave Top-ups………………………………………………………………………35
A Community of Care and Contribution……………………………………………………………….35 ComCare Long-Term Assistance and Singapore Allowance…………………………….35 SG Cares ………………………………………………………………………………………………….36
Commemorating Our Bicentennial ……………………………………………………………………..37
Other Support for Households ……………………………………………………………………………40
- A GLOBAL CITY AND HOME FOR ALL ……………………………………………………………….. 41Linking Our City to the World……………………………………………………………………………..41 Ensuring a Sustainable Environment for All………………………………………………………….41 Building Vibrant and Endearing Homes for Our People………………………………………….44
- A FISCALLY SUSTAINABLE FUTURE ………………………………………………………………….. 45Long-Term Fiscal Planning………………………………………………………………………………….45 Preparing for the Future…………………………………………………………………………………….45 FY2018 Budget Position……………………………………………………………………………………..47 FY2019 Budget Position……………………………………………………………………………………..48
G. CONCLUSION………………………………………………………………………………………………49
INTRODUCTION
A1. Mr Speaker, Sir, I beg to move, that Parliament approves the financial policy of the Government for the Financial Year from 1 April 2019 to 31 March 2020.
Reflections on Our Bicentennial
- A2. This year marks 200 years since Sir Stamford Raffles landed in Singapore.
- A3. Archaeological finds and records show that Singapore’s history stretches back at least700 years, serving as a trading emporium in the region.
- A4. 1819 was a key turning point in Singapore’s development. The British decision to declare Singapore a free port plugged us into an emerging network of global trade. This, and subsequent developments, transformed Singapore into a global node.
- A5. In our bicentennial year, let us reflect on the twists and turns in our history, so as to chart a path forward for an even better future for our people.
Charting Our Path Forward
- A6. Today, we are in a different phase of globalisation, with new forces reshaping the global environment.
- A7. In last year’s Budget Statement, I mentioned three major shifts:
- The shift in global economic weight towards Asia;
- Rapid technological advancements;
- And changing demographic patterns.
- A8. A fourth major force that is gaining prominence is the decline in support for globalisation. Some countries are benefitting from globalisation, while others are questioning its value.
- A9. These four major forces are interacting in complex ways, at the global, regional, and national levels.
- A10. Ontheglobalstage,thetradefrictionsbetweentheUSandChinaaredevelopingintoa deeper strategic competition of strength and of governance systems. This is raising geopolitical uncertainty.
- A11. Closer to home, ASEAN has enjoyed over 50 years of peace and stability, with bright economic prospects.
- Together, the 10 economies of ASEAN are projected to become the fourth largest in the world by 2030, with the size of the middle class doubling.
- Innovation and entrepreneurship are also thriving. In recent years, Southeast Asia has grown several new “unicorns”, or companies with valuations in excess of US$1 billion.
- A12. Working together, ASEAN nations can maximise our potential. But, closely connected neighbours will have occasional differences.
- A couple of issues have surfaced recently with Malaysia. When such differences occur, Singaporeans must stay united as a people, and present our positions firmly and calmly.
- We have worked through difficult bilateral issues with our neighbours in the past, based on mutual respect and common interests, and in accordance with international laws and norms. Singapore will continue to seek to resolve issues in the same spirit.
- A13. Domestically, we need to address longer-term challenges, including ageing, social mobility, inequality, economic transformation, and climate change.
Our Strengths and Our Singaporean DNA
A14. The changing global and domestic landscape presents both challenges and opportunities. We will continue to chart our way forward confidently in the Singapore way, building on our distinct strengths and our Singaporean DNA.
- We must always respond to challenges with grit and determination.
- There were episodes in the centuries of Singapore’s history where ourisland’s fortunes waned due to external forces.
- These are sobering reminders that we have to constantly build up our security and resilience, and plan long-term.
- Singapore’s success has roots in our port, which thrives on openness andconnectivity. These traits have been forged into our identity as a people.
- As a multi-cultural society, our openness to diversity is our strength.
- It has inculcated a global mindset and deepened our knowledge of Asia. We must continue to cultivate cross-cultural literacy among our youth, and encourage them to build bridges with peoples across the world.
- We strive to be a place where people and ideas congregate, at the frontier of global developments. We want to be a Global-Asia node of technology, innovation and enterprise.
c. We turn our size and strategic location into an advantage.
- Technological shifts have spread economic activities more widely, and at the same time, made cities more important as key nodes of enterprise and innovation.
- As a city-state, we are nimbler and can adapt to changes faster.
- We serve as a neutral, trusted node in key spheres of global activity.
d. Like Sang Kancil, the small but quick-witted mousedeer, we can make our way in the world.
A15. Budget 2019 is a strategic plan to allocate resources to build a Strong, United Singapore. In this bicentennial year, let us draw on our strengths, and our Singaporean DNA – openness, multi-culturalism, and self-determination – to continue to progress.
- At a fundamental level, we must keep Singapore safe and secure. This allows us to preserve our way of life and forge our own destiny.
- We must continue to transform our economy, for only a vibrant and innovative economy can provide opportunities for our people to realise their potential.
- We must continue to build a caring and inclusive society, where we look out for one another, and all of us play our part in weaving a tightly-knit social fabric.
- We must continue to build Singapore as a global city and home for all, keeping it smart, sustainable, and globally connected.
- Last but not least, we must achieve these goals in a responsible and fiscally sustainable way.
A16. We are using our financial resources to help realise our strategies for a strong, united Singapore. But financial resources alone do not get us there. We call on all Singaporeans to partner with the Government, and support one another to succeed in this endeavour.
KEEPING SINGAPORE SAFE AND SECURE
Safe and Secure Home for All
- B1. A safe and secure Singapore gives us the confidence to chart an independent course.
- B2. But we cannot take our peace, prosperity, and stability for granted.
- Singapore is vulnerable to the fluctuations in our region and the world.
- Against an increasingly uncertain geopolitical environment, our commitment to defence and security cannot waver. Diplomacy and deterrence are the twin pillars of our approach.
- The Ministry of Foreign Affairs works continuously to build good relations with our neighbours and the major powers, and to promote a rules-based international order with international laws and norms.
- A strong Singapore Armed Forces (SAF) lends weight to our diplomatic efforts and ensures that negotiations with Singapore are taken seriously. Should diplomacy fail, we must stand ready to safeguard our interests, and defend ourselves.
- The Home Team also works round-the-clock alongside other security agencies, to ensure a safe environment for all.
- We also now have the Cyber Security Agency of Singapore leading our efforts to protect our Critical Information Infrastructure from cyber threats, and to create a secure cyberspace for businesses and communities.
- These are fundamental to our sovereignty, our success, and to safeguarding our vital interests.
- B3. Singapore is one of the safest cities in the world. Our crime rates are consistently low, but we must not be complacent.
- B4. Security threats are evolving and becoming more complex.
- A strong SAF remains a bulwark against threats to our way of life.
- Terrorism threats to Singapore remain high.
- We continue to detect individuals in Singapore, who have been radicalised by terrorist propaganda.
- Globally, we see a rise in attacks perpetrated by radicalised individuals and cells.
- Such attacks are hard to prevent. We must stay vigilant.
c. Beyond physical threats, malicious cyber activities are growing.
- The networked nature of our society has enhanced connectivity.
- But this can be exploited to disrupt and divide society, through cyber- attacks, the spread of falsehoods, or other means.
d. In particular, foreign actors will try to influence our domestic affairs and politics.
i. This is not new, but new technologies have made it easier for others to mount attacks with greater ease and intensity, and with more sophisticated tactics.
- B5. To stay ahead of these threats, we must continue to innovate and build new capabilities to meet our security needs. Both the public and private sectors have a major role to play.
- The Ministry of Home Affairs (MHA) will set up a Home Team Science & Technology Agency by the end of this year, to develop science and technologycapabilities to support the Home Team’s operational needs. These capabilities will strengthen the Home Team’s ability to carry out its mission of safeguardingSingapore. The Minister for Home Affairs will speak more about this at the Committee of Supply (COS).
- The private security industry has been stepping up efforts. A good example is Certis, which has redesigned its business processes, infusing technologies such as Big Data and Artificial Intelligence to deal with security threats.
- MHA will help to transform the private security industry through innovation and technology to meet growing needs, and be an effective partner to the Home Team.
- B6. Our Total Defence approach will continue to keep Singapore safe and secure, with every Singaporean playing a part.
- At the national level, we plan long-term and take measures, such as stockpiling critical supplies, diversifying our sources of water supply, and strengthening our food security.
- As a people, we must have the psychological and emotional resilience to face crises stoically. As threats get more sophisticated, Singaporeans must stay vigilant, and guard against non-conventional forces that threaten to divide us.
- National Service (NS) has forged a deep understanding in our people that each and every one of us has the duty to defend our nation. When our young people serve NS, families and employers support them in every way possible.
- B7. With our Smart Nation drive, digital technology has become an integral part of our lives.
a. To harness the digital advantage, we must be prepared to also deal with the threats that arise inevitably from its more pervasive use.
B8. Digital Defence has now been incorporated as the sixth pillar of Total Defence.
- Like the other pillars of Total Defence, Digital Defence involves everyone –individuals, community groups, businesses, and the Government.
- We must all play our part to be secure, alert and responsible online, be it through practising good cyber hygiene, being vigilant against fake news, and helping one another use technology safely.
- Last year, MINDEF launched the Cyber National Servicemen scheme, training national servicemen with the Singapore Institute of Technology, to raise our cyber defence capability.
- B9. The Government is also engaging our tech community with programmes such as the Government Bug Bounty Programme, to achieve a higher level of collective cybersecurity.
- B10. Given its strategic significance, the Government will continue to invest a significant share of our resources – about 30% of our total expenditure this year – to support our defence, security, and diplomacy efforts.
- This spending is significant, but indispensable.
- We will invest more, if the need arises, to protect the sovereignty of Singapore and the well-being of Singaporeans.
- B11. Everyone has a role to play to keep Singapore safe and secure. Let us continue to stay united in defending our home and our way of life.
SKILLED WORKFORCE, INNOVATIVE FIRMS, AND A VIBRANT ECONOMY
Steady Growth in 2018 Amid Challenges
- C1. A vibrant and innovative economy provides our people with the opportunities to realise their potential and to have a better life.
- C2. Our efforts to transform our economy are bearing fruit. In tandem with the global expansion, the Singapore economy grew 3.2% in 20181.
a. Good growth translated into good outcomes for our workers. Over the past five years, the real median income of Singaporeans has grown by 3.6% per year2.
C3. Global growth is expected to moderate in 2019, while uncertainties and downside risks in the global economy have increased.
Strengthening Singapore’s Economic Competitiveness
- C4. Over the years, our sound monetary and fiscal policies have enabled us to weather global economic crises and keep inflation stable. These provide a stable environment for investors to make long-term investment decisions.
- C5. Beyond maintaining a supportive macro-economic environment, we need to build a sound micro-economic foundation, so that resources can be allocated to their best possible uses; and to undertake structural reforms, to enable our workers and firms to adapt and stay competitive.
a. Every firm and every worker will need to work differently, master new skills, and use technology well. And we must continue to create new opportunities, including through partnerships with others.
- C6. In Budget 2016, we launched the Industry Transformation Maps (ITMs), which drive transformation at the company, industry, and economy-wide levels. Each ITM integrates four key pillars of transformation: jobs and skills; innovation; internationalisation; and productivity. These are mutually reinforcing pillars to maximise impact.
- C7. To coordinate efforts, the Future Economy Council brings together leaders from the Government, industry, Trade Associations and Chambers (TACs), unions, and academia.
1 Source: Ministry of Trade and Industry’s Economic Survey of Singapore 2018.
2 Median gross monthly income of full-time employed Singapore citizens including employer CPF contribution. Source: Labour Market Advance Release 2018, Ministry of Manpower.
- C8. After three years of intensive work, I am glad that all 23 ITMs have been launched, covering about 80% of our economy. We are seeing good progress, aided by the global economic upturn in recent years:
- Productivity, as measured by real value-added per actual hour worked, grew 3.6% per year in the last three years, higher than the 1.6% per annum growth recorded in the preceding three years, from 2012 to 20153.
- In particular, we have seen strong performance by outward-oriented sectors such as Manufacturing, while others like Construction and some services industries continue to show weaker productivity growth.
- C9. But this is a continuing journey. There is much more we can do, especially in sectors like domestic services. We must press on. Let me now outline three key thrusts in this Budget to support industry transformation:
- First, building deep enterprise capabilities.
- Second, building deep worker capabilities.
- Third, encouraging strong partnerships, within Singapore and across the world.
Building Deep Enterprise Capabilities
- C10. The basic building blocks of a vibrant economy are strong, competitive companies that maximise value creation. Hence, the first thrust is to support the building of deep enterprise capabilities.
- C11. Companies at different stages of growth have different needs. The leadership of each company is in the best position to lead and drive changes, while our agencies can provide support at each stage of growth.
Supporting Start-ups
- C12. A vibrant start-up ecosystem encourages budding entrepreneurs to try out their business ideas. Such an ecosystem enables entrepreneurs to connect to mentors, prospective business partners, customers, and investors.
- C13. Two years ago, we launched Startup SG to provide holistic support for start-ups and entrepreneurs. Such support ranges from co-investments and proof-of-concept grants, to mentorship and physical space.
- C14. Ourstart-upecosystemisflourishing.
3 Source: Ministry of Trade and Industry, Department of Statistics.
- There are now over 220 venture capital deals per year in Singapore, worth close to US$4.2 billion4. This is a significant rise from the 80 deals worth US$136 million in 2012.
- Today, more than 150 global venture capital funds, incubators, and accelerators are based in Singapore, supporting start-ups here and in the region.
Enabling Firms to Scale
- C15. Start-upscanonlythriveiftheyscaleup,andventureintonewmarkets.Tohelpthem do so, we will provide support in three areas: providing customised assistance, better financing options, and supporting technology adoption.
- C16. Customised support can enable firms to identify and overcome the unique challenges they face, and scale up quickly.
- Enterprise Singapore will launch a Scale-up SG programme in partnership with the private and public sectors. Scale-up SG will work with aspiring, high-growth local firms to identify and build new capabilities, to innovate, grow, and internationalise.
- To support innovation, we will launch a pilot Innovation Agents programme, for firms to tap on a pool of experts to advise them on opportunities to innovate and commercialise technology. (Refer to Annex C-1.)
- C17. Having smart, patient capital that attracts investors with the expertise and the right time horizon is another way to help firms scale-up. Over the past few years, the Government has worked on improving access to private capital for start-ups and SMEs. The pool of private equity and venture capital managers in Singapore has grown. The Monetary Authority of Singapore (MAS) has simplified the regulatory regime for venture capital managers, and launched a US$5 billion private markets programme to encourage global private equity players to deepen their presence here.
- C18. Tofurtherdeepenthepoolofsmart,patientcapital:
- The Government has, since 2010, set aside $400 million through two rounds of fund injections for the Co-Investment Programme (CIP) to invest in our SMEs,alongside the private sector. So far, the Government’s investments have catalysedapproximately $1.3 billion of additional funding for our SMEs.
- This year, I will set aside an additional $100 million to establish SME Co- Investment Fund III. As part of the CIP, it will catalyse investment in Singapore- based SMEs that are ready to scale up. We expect that this will bring in at least $200 million of additional funding. (Refer to Annex C-1.)
- C19. LoanfinancingremainsanimportantsourceoffundingforSMEs.Ourbankshavebeen responding. DBS provides a Business Capabilities Loan for innovative SME projects, UOB
4 Inclusive of spikes in venture capital investments arising from large deals.
provides financial support for technology investments and overseas ventures, while OCBC finances new SMEs which lack the track record typically required for credit assessment. To catalyse these further, we will enhance the accessibility of loans.
a. Today, our economic agencies have different financing schemes. To make it simpler for companies, we will streamline the existing financing schemes offered by Enterprise Singapore into a single Enterprise Financing Scheme that will cover trade, working capital, fixed assets, venture debt, mergers and acquisitions, and project financing. This will be launched in October this year. (Refer to Annex C-1.)
i. In addition, the Enterprise Financing Scheme will provide stronger support for companies that have been incorporated for less than five years. The Government will take on up to 70% of the risk for bank loans to these young companies, compared to the current 50% under most existing loan schemes5.
b. To support viable SMEs in their day-to-day operations, I will extend the SME Working Capital Loan scheme for about two more years, till March 2021. Since its launch in June 2016, the scheme has catalysed more than $2.5 billion of loans. We expect the extension to catalyse a further $1.8 billion. Support for working capital will be folded under the Enterprise Financing Scheme from October. (Refer to Annex C-1.)
- C20. Our companies and workers must stay on top of rapid advances in technology, especially in digital technology.
- C21. WewillcontinuetohelpourSMEsadoptdigitaltechnologies:
- We launched the SMEs Go Digital programme in Budget 2017. Since then, around 4,000 SMEs have adopted pre-approved digital solutions.
- We will expand the SMEs Go Digital programme.
- First, Accountancy, Sea Transport, and Construction will get their own industry digital plans, with more sectors to be added later. These will guide SMEs on relevant digital technologies and skills training programmes.
- Second, we will expand the number and range of cost-effective, pre- approved digital solutions that will be supported under SMEs Go Digital, to boost technology adoption among SMEs. (Refer to Annex C-1.)
- MAS and the Info-communications Media Development Authority (IMDA) will also jointly pilot a cross-border innovation platform for SMEs, known as the Business sans Borders, with an Artificial Intelligence-enabled marketplace to help our SMEs match with buyers and vendors globally.
C22. Tohelpcompaniesintheservicessectorcaptureopportunitiesfromdigitalisation,the Ministry of Communications and Information launched a pilot of the Digital Services Lab (DSL) in November last year. The DSL brings together industry and the research community, to co-develop digital solutions with sector-wide impact.
a. For example, the DSL is exploring the development of solutions to integrate the logistics chain for retail in malls. (Refer to Annex C-1.)
- C23. Besides digital technology, we will support our firms to integrate technologies and re- engineer business processes to raise efficiency and enhance product development.
- Last year, I announced the Productivity Solutions Grant (PSG), to help firms adopt off-the-shelf technology.
- This year, we will extend the Automation Support Package (ASP) by two years. Introduced in Budget 2016, the ASP supports firms to deploy impactful, large- scale automation, such as robotics, Internet of Things solutions, and other Industry 4.0 technologies. Since its launch, the ASP has helped more than 300 companies to automate their operations and raise productivity. We will extend the ASP to encourage more companies to do so. (Refer to Annex C-1.)
- The Agency for Science, Technology and Research (A*STAR) will extend its operation and technology roadmapping efforts to more companies and sectors, to guide them to make the best use of technology in alignment with their business goals.
- C24. In the same spirit, our government agencies must embrace technology to serve companies better. We have made progress in this area.
- The Business Grants Portal, launched in 2017, provides a one-stop shop for businesses to identify and apply for the right grant for their plans.
- To make it easier for businesses to transact with the Government, the Ministry of Trade and Industry, and relevant agencies are developing a one-stop portal, with a pilot to be launched for the food services sector by 3Q 2019. Businesses will deal with only one point of contact, instead of up to the 14 different ones today.
- BCA and HDB are also testing the use of drones to inspect building facades more effectively.
- Learning from these pilots, government agencies will continue to innovate, and improve the ease of doing business.
Enterprise-Centric Approach
- C25. Let me now touch on other ways to help build deep enterprise capabilities.
- C26. Wehavemorethan200,000enterprisesinSingapore,rangingfromlargeMNCstoour neighbourhood shops.
C27. Today, across each of the four pillars of our ITMs, different agencies provide support in each area. While helpful, companies have given feedback that we could streamline these. I agree. To better support this broad base of companies with diverse needs, we will draw resources from each agency, but focus support in an enterprise-centric way to better help enterprises at each stage of growth. This will be done in a tiered manner.
- Firms with large and complex needs or with strong growth potential will be provided a range of customised support by the Economic Development Board (EDB), Enterprise Singapore, and other agencies.
- The large numbers of SMEs facing common challenges will be supported through scalable solutions that are easy to adopt. For instance:
i. I recently visited Precursor Assurance, a local accounting firm. Precursor has developed an integrated digital solution with modules for corporate functions, such as HR, customer relationship management, and finance. SMEs can simply plug-and-play, and scale up the use of these modules when they expand.
c. For medium-sized companies that are seeking to grow, we will provide targeted support, in each of the different industry clusters, to better address their needs as they grow.
C28. The Minister for Trade and Industry will provide further details.
Helping Our People Seize Opportunities
C29. Ihavetouchedonthemeasurestosupportourenterprisestobuilddeepcapabilitiesso that they can succeed in the global competition. But our ultimate goal is to enable our people to continue to have good jobs and opportunities, and to be at their best. Hence, the second thrust of our economic transformation in this Budget is to deepen the capabilities of our workers.
a. As the Chinese say, “活学活用,学以致用;终身学习,终身受用”. Our peopleneed to be nimble to build industry-relevant skills throughout their lives.
C30. We want our people to have the skills, knowledge, and attitude to adapt and thrive in this competitive and technology-intensive environment.
a. In this regard, the leadership of companies plays a key role. The leaders of successful companies are those who are committed to raising the capabilities of their workers, by redesigning jobs and reskilling their staff. These capabilities arekey to the companies’ successes.
- I recently visited FairPrice’s distribution centre, which has adoptedautomated storage and retrieval systems to improve the efficiency of its online store operations.
- Among the staff I spoke to were Mr Amzah Bin Mohammad Ali and Madam Lee Yin Fong. Between them, they have worked at FairPrice for 30 years. I asked how the new technology has impacted their work. They told me thatFairPrice’s training has helped them to quickly pick up new skills to makeuse of new systems, and their work environment is more pleasant and conducive.
- FairPrice is a good example of how an enterprise can strive to serve her customers better, deploy technology and new ways of working, and at the same time, redesign jobs and reskill workers, so that everyone is better off.
- Many enterprises are doing this, and I urge more to take this approach.
- C31. OnthepartoftheGovernment,wewillcontinuetoinvestinourpeopleacrossallstages of their lives, from pre-school, to work.
- C32. Over the years, we have instituted a range of support measures for workers, including the Workfare Income Supplement, Special Employment Credit, and Professional Conversion Programmes (PCPs), to name a few.
- These range from helping low-wage workers and older workers through wage support, to equipping young graduates to have a good start in their careers, and enabling experienced professionals to access new jobs.
- In particular, NTUC has been working closely with its member unions and companies, to enable workers to learn new skills and grow.
- C33. With the national SkillsFuture movement and the Adapt and Grow initiatives, we have made a stronger push to enable our people to reach their fullest potential throughout life, and help Singaporeans affected by restructuring.
- C34. Our investments in supporting our people in their careers, including Adapt and Grow initiatives and continuing education and training, reached more than $1.1 billion in FY20176.
- C35. Ourpeoplearemakinggoodefforttoinvestintheirlearning,withgoodoutcomes.
a. The percentage of residents in the labour force who participated in training grew from 35% in 2015, to 48% in 20187.
6 Excludes expenditure on pre-employment training.
7 Training participation rate is defined as the proportion of residents aged 15 to 64 in the labour force who had engaged in some form of job-related structured training or education activities over the 12-month period ending June. Source of data: Supplementary Survey on Adult Training, Manpower Research & Statistics Department, Ministry of Manpower.
b. From 2016 to 2018, more than 76,000 jobseekers found employment through the Adapt and Grow initiative.
C36. Workers, firms, unions, and TACs all need to play a part to continue this progress.
- Workers need to embrace upskilling and reskilling, and make the most of new opportunities both locally and overseas.
- Firms must step up training and job redesign for their workers, as they are well- placed to know the skills that workers need as their sectors evolve.
i. One example is Mr Abdul Jalil Bin Idros, who started as a technical officer at YTL PowerSeraya. Over the years, the company sponsored his Bachelor’s and Master’s degrees in Electrical Engineering. Through continuous learningas he worked, Mr Abdul Jalil moved from maintenance to managing plant upgrading projects. He is now training his colleagues in cybersecurity and systems operations. He received the SkillsFuture Fellowships Award in 2018 for his exemplary efforts.
c. Besides workers and firms, unions, TACs, and professional bodies need to spearhead the reskilling and the upskilling of workers in various sectors.
i. I am heartened by the Institute of Singapore Chartered Accountants’collaboration with the Singapore University of Social Sciences to develop the joint Business Analytics Certification programme. This programme, which was launched a year ago, equips accounting professionals with practical skills in data analytics.
C37. We will continue to enable our experienced professionals to build on their experience to move into new growth areas.
a. Since the establishment of the PCP in 2007, over 100 PCPs have been launched in about 30 sectors. This year, we will launch new PCPs relating to blockchain, embedded software, and prefabrication to prepare our people to move into new growth areas.
- C38. In 2015, we launched the Career Support Programme to provide wage support for employers to hire eligible Singaporeans who are mature and retrenched, or are in long- term unemployment. We will extend this programme for two years. (Refer to Annex C- 2.)
- C39. We must also ensure that the benefits of enterprise transformation are passed on to our workers.
a. Starting from 1 Apr 2020, all transformation efforts supported by EnterpriseSingapore’s Enterprise Development Grant must include positive outcomes for workers, such as wage increases.
b. I know that NTUC and its unions are putting in extra effort and resources to support our firms and workers in this.
- C40. Althoughsomefirmshavedonewelltodeploytheirstaffefficiently,productivitygrowth has been uneven across sectors.
- The manufacturing sector, which faces strong global competition, has done well.
- In the services sector, while some firms have done well despite a tight labour market, some segments like F&B and Retail remain very labour-intensive.
- Growth in S Pass and Work Permit holders in the services sector has also been picking up pace. The number has risen by about 3% per annum or 34,000 in the last three years. In particular, the S Pass growth in Services is the highest in five years. If this trend persists, foreign manpower growth will be on an unsustainable path.
- C41. WeneedtoactdecisivelytomanagethemanpowergrowthinServices,andencourage our companies to revamp work processes, redesign jobs, and reskill our workers. Our workforce growth is tapering, and if we do not use this narrow window to double down on restructuring, our companies will find this even harder in the future. Relying on more and more foreign workers is not the long-term solution – other economies are developing too. What we need is to have a sustainable inflow of foreign workers to complement our workforce, while we upgrade our Singaporean workers and build deep enterprise capabilities in these sectors. We must enhance the complementarities of our local and foreign workers.
- C42. The basic approach to our foreign worker policies has remained consistent. Based on evidence on the pace of foreign worker inflows, and the progress being made in raising productivity across sectors, we need to calibrate our policies.
- C43. The Government recognises the economic headwinds and cost pressures ahead of us. But if we do not take action early, our firms will find it harder to compete in the years ahead, and our workers will be left behind.
- C44. Aftermuchdeliberation,wewilladjusttheworkforcequotafortheservicessector:
- Reduce the services sector Dependency Ratio Ceiling (DRC) in two steps, from40% to 38% on 1 January 2020, and to 35% on 1 January 2021.
- We will also reduce the services sector S Pass Sub-DRC in two steps, from 15% to13% on 1 January 2020, and to 10% on 1 January 2021.
- We are announcing these changes about a year ahead, to give companies time to prepare. For firms whose existing workers are in excess of the new limits, the DRC will apply as and when these firms apply for renewals of permits. (Refer to Annex C-3.)
- C45. To support firms as they adjust to these changes, we will put in place the following measures, till FY2022.
- First, the 70% funding support level for the Enterprise Development Grant was due to lapse after 31 March 2020. I will now extend this enhanced funding support for three more years, up to 31 March 2023.
- Second, we will do the same for the Productivity Solutions Grant, and expand its scope to support up to 70% of the out-of-pocket cost for training. (Refer to Annex C-3.)
- C46. Separately, firms can continue to apply for additional manpower flexibilities in certain cases.
- The Lean Enterprise Development Scheme provides support to firms that undertake transformation projects which lead to more manpower-lean businesses. Transitional manpower flexibilities can be considered if firms need more resources in the short term to transit to new operating models.
- On a case-by-case basis, firms can bring in foreign workers with specialised skills that are in demand globally. This is provided that they still face a shortage after having given fair consideration to Singaporeans.
- C47. TheMinisterforTradeandIndustryandtheMinisterforManpowerwillprovidemore details at the COS.
- C48. As the Marine Shipyard and Process sectors have only begun showing early signs of recovery, I will defer the earlier-announced increase in Foreign Worker Levy rates for these sectors for another year. (Refer to Annex C-3.)
Partnering to Win
- C49. IhavespokenonhowBudget2019supportsthebuildingofdeepenterprisecapabilities, and the building of deep worker capabilities. Let me now touch on the third key thrust to support economic transformation – building deeper partnerships within Singapore, and across the world.
- C50. Tosucceed,companiesneedtobothcompeteandcooperate–competetodifferentiate themselves, and cooperate to solve common challenges.
- C51. Our TACs can play an important role in developing industry-wide capabilities. This includes supporting members in getting business advice, and improving access to local and international networks.
a. TACs have done well in helping our companies build overseas partnerships. For example, the Singapore FinTech Association has forged many partnerships with foreign FinTech associations, and the Singapore Business Federation (SBF) has
organised Singapore’s commercial participation at numerous overseas trade fairsincluding the 2018 China International Import Expo.
- The Singapore Chinese Chamber of Commerce and Industry has also developed the Trade Association Hub, which now houses 39 TACs, to raise the level of services for members. SBF is also working closely with our TACs.
- We will strengthen our support for TACs through the Local Enterprise and Association Development (LEAD)programme. Enterprise Singapore will be developingfive-year roadmaps with TACs that have demonstrated strong leadership and shown ambition to do more for the business community. This will enable them to take on a more strategic and longer-term approach in driving industry transformation. These TACs will be able to access funding and potentially take in public sector secondees through LEAD.
- C52. We will also develop stronger partnerships around the world, at the Government-to- Government and Business-to-Business levels. Our TACs, such as the SBF, have developed international linkages for our businesses.
- C53. Over the years, we have negotiated Free Trade Agreements (FTAs) with partnereconomies, which enlarge our businesses’ access to new markets.
a. Just last week, the EU-Singapore Free Trade Agreement (EUSFTA) and the EU- Singapore Investment Protection Agreement (EUSIPA) received the EuropeanParliament’s consent with a clear majority.
C54. To draw greater value from these trade networks, we will streamline and digitise our trade processes further to raise efficiency. This will enable easier access to overseas markets, and help our firms make better use of these FTAs.
- Last year, I launched the Networked Trade Platform (NTP), to streamline trade processes and provide a one-stop information management system for traders.
- We will also be working with partners to facilitate the secure exchange of electronic trade documents, to unlock further productivity gains.
Global-Asia Node of Technology, Innovation and Enterprise
- C55. Members will appreciate that the three key thrusts I have just announced – building deep capabilities in our enterprises, and in our people, and forging deep partnerships –build on the ITMs that I announced in Budget 2016. With the progress we have made, we are better prepared for major changes that are coming our way.
- C56. Onemajorchangeisthespeedofadvancementsandconvergenceofnewtechnologies– it is what some have dubbed the Fourth Industrial Revolution or Industry 4.0. This will transform the way we invest, trade, and consume.
- C57. Overtheyears,wehaveforgeddeeppartnershipswiththeG3economiesofUS,Europe and Japan, as well as China, India and ASEAN. With the centre of economic gravity shifting to Asia, and with the technological depth of our partnerships with the G3 economies, we should position Singapore as “Asia 101” for global MNCs looking to expand into Asia’s growing markets, and as “Global 101” for Asian companies ready togo global.
- C58. For our next phase of growth, as we press on with industry transformation, we willcontinue to build Singapore’s position as a Global-Asia node of technology, innovation and enterprise. This will open up new opportunities for our firms and our people to ride on the wave of the Fourth Industrial Revolution.
- C59. Our efforts to achieve this will build on the same three key thrusts as laid out for the broader economic transformation. First, investments in research and innovation by our universities, research institutes, and our firms; second, investments in our people; and third, building global partnerships.
- C60. First, we will continue to invest in R&D to support the push to make innovation pervasive. We have set aside $19 billion as part of our five-year Research, Innovation, and Enterprise 2020 plan. Our investments in R&D in our universities and research institutes are bearing fruit.
- NUS and NTU are ranked the best in Asia in areas such as materials science and chemistry, and among the top 50 globally for engineering and computer science.Many of our researchers are regarded by their peers as among the world’s best,especially in areas such as artificial intelligence, quantum technologies, and biomedical sciences.
- A*STAR has research institutes that are highly regarded. Together with our universities they are actively working to translate research findings into innovation, in partnerships with industries.
- C61. But for R&D to make an impact, our companies must take the lead. Members of this house will be encouraged to know that some sectors are moving ahead – including two‘old economy’ sectors.
- C62. First, despite digital advancements, we still need brick-and-mortar buildings.
a. The Construction sector, seen as low-tech and labour-intensive, is now using Integrated Digital Delivery8. This makes use of Building Information Modelling and other digital technologies, connecting different players working on the same construction projects. This has raised productivity and created new high-value
8 Integrated Digital Delivery taps on Building Information Modelling (BIM) to allow architects, engineers, contractors, and facility managers to share information and collaborate. It raises productivity, and creates new, high value jobs such as 3D digital modellers, data analysts, and computational specialists.
jobs such as 3D modellers. Site productivity has improved by about 15% over the last eight years.
- C63. Second,inthedigitalage,westillneedfood,notjustbitsandbytes.Theagricultureand food production sectors are transforming.
- For example, AVA’s Marine Aquaculture Centre and Temasek Life SciencesLaboratory have developed the “St John’s Sea Bass”. This fish is less susceptible to disease, and can be bred in 30% less time. A start-up Allegro Aqua is looking tobring more St John’s Sea Bass to the world.
- Another example is Temasek Life Sciences Laboratory’s “Temasek Rice”, whichproduces four times as much rice per hectare as compared to regular breeds of rice.
- To tap on the demand for high-quality food, and to build on our progress, Enterprise Singapore’s investment arm, SEEDS Capital, has appointed seven partners to co-invest in Singapore-based agri-food start-ups, to catalyse more than $90 million of investments.
- C64. LeadingMNCsandourlargelocalcompaniesarealsoestablishingtheirR&Dcentresin Singapore, in different areas of technology. We now have 14 corporate laboratories in our universities, doing cutting-edge work from cyber-physical systems to power electronics.
a. Last year, we opened four corporate labs with major companies – Applied Materials, HP, Wilmar, and Surbana-Jurong – to work on advanced manufacturing, biochemicals and smart cities.
C65. I recently visited LUX Photonics Consortium, which brings together researchers in NUS, NTU, A*STAR, and the industry to translate cutting-edge photonics research into practical applications.
- There, I met Nanoveu, a Singapore start-up specialising in nanotechnology applications. One of its prototype products, a high-tech screen protector, promises to allow long-sighted users to see clear images on digital devices without their glasses. And to see 3D objects from 2D films, that is another project. I am sure this House will support the enabling of us to see issues, far or near, with greater clarity!
- I also met Technolite. Our Helix Bridge, and new buildings such as the Jewel at Changi Airport, are lit in scintillating ways by Technolite. The company is embarking on R&D, to take its products to a new level.
- So I wish Nanoveu and Technolite success, to light up our lives and to let us see better!
- C66. To keep the momentum going, we will continue to invest in Centres of Innovation at our Institutes of Higher Learning (IHLs) and research institutes, and to support companies in innovation.
- Enterprise Singapore is collaborating with industry partners to establish a Centre of Innovation in Aquaculture at Temasek Polytechnic to promote aquaculture. This Centre will bring together aquaculture firms to improve our food resilience.
- Enterprise Singapore will also launch a Centre of Innovation in Energy at NTU, building on earlier investments at the Energy Research Institute at NTU (ERI@N). The centre will collaborate with the Sustainable Energy Association of Singapore to drive industry-led innovation in areas such as energy efficiency, renewable energy, and electric mobility. (Refer to Annex C-1.)
- We will share more about these exciting new research initiatives at the Research, Innovation, and Enterprise Council meeting next month.
- C67. Thespiritofentrepreneurshipiscriticalforalltheseendeavours–havingavisionofthe future, and taking practical actions, day-in, day-out, to explore a range of possibilities and solve a myriad of problems. It is the grit and determination of our entrepreneurs that make a difference.
a. Mr Sim Wong Hoo, CEO of Creative Technology, brought us the popular Sound Blaster cards in the 1990s.
- Creative Technology went through a difficult patch after its initial success with the Sound Blaster, but Mr Sim and his team pressed on. After 20 years of R&D costing US$100 million, the company recently launched the Super X- Fi, a technology that recreates the holographic sound experience – or 3D sound – with headphones, personalised. It has already won 14 awards at the 2019 Consumer Electronics Show in the US. Having tried it myself, and having heard the endorsement of audiophiles, including some in this chamber, I am happy that Mr Sim and his team are at the cusp of a major breakthrough. And I wish them every success.
- Mr Sim’s story illustrates the point that to succeed, we must learn, we mustwalk the ground, and we must persist.
C68. I have touched on our efforts in Research, Innovation, and Enterprise. Singapore as a Global-Asia node will bring new opportunities for our people, in new frontiers. The second thrust is to prepare and develop our people to make full use of this node. We are partnering firms to invest in our people, including young Singaporeans, to provide them with opportunities to gain working experience abroad.
a. For students who are currently in IHLs, we will combine the current local and overseas internship programmes into a single Global Ready Talent Programme. It will have enhanced funding support for our students interning overseas with Singapore firms.
- The programme will also support high-growth Singapore firms to send Singaporeans with up to three years of working experience, for postings in key markets such as Southeast Asia, China, and India. (Refer to Annex C-2.)
- By giving young Singaporeans overseas exposure, they can develop new skills tobetter support our firms’ overseas expansion.
i. For instance, Oceanus Group, a local seafood supplier, sent interns from Republic Polytechnic to its operations in China in a range of jobs. One of their former interns, Bernice Chan, is now a management trainee inOceanus’ farm in Fotan, China.
- C69. Our third thrust is to build global partnerships, so that our firms and people can forge new areas of collaboration with other innovation centres.
- C70. InBudget2017,westartedtheGlobalInnovationAlliance(GIA),oneoftheCommitteeon the Future Economy’s recommendations. We have now established nine nodes in global start-up hotspots, such as Bangkok, Beijing, Berlin, Jakarta, and San Francisco. These GIA nodes give our entrepreneurs and students opportunities to learn and build networks globally.
- C71. We are also bringing the global innovation community to come together in Singapore, to explore and collaborate.
- Last year, we held the third edition of the Singapore FinTech Festival. This is nowthe world’s largest FinTech event9. As part of this Festival, the Global InvestorSummit brought together investors on our Meet ASEAN’s Talents and Champions(MATCH) platform. These investors expressed an interest to invest up to US$12 billion in ASEAN enterprises in FinTech, info-communications technology, and MedTech over the next three years.
- Another technology event, the Singapore Week of Innovation and Technology (SWITCH) brought together more than 350 exhibitors, and 1,000 promising start- ups and financiers from 75 countries.
- To maximise impact, this year, SWITCH and the Singapore FinTech Festival will be held in the same week in mid-November. We can draw in even more entrepreneurs, investors, innovators, from around the world, to explore and collaborate in technology innovation in this Fourth Industrial Revolution.
Our Continued Commitment to Economic Transformation
C72. Thesevariousprogrammesoneconomictransformationandjobsbuilduponourefforts and investments over the years.
- C73. To summarise, our economic transformation is progressing well. But, we must persist with our industry transformation efforts. At the same time, the pace of technological innovation is rapid, and global economic weight is shifting towards Asia. We will position Singapore as a Global-Asia node of technology, innovation and enterprise.
- C74. Economictransformationiscritical.Weexpecttospend$4.6billionoverthenextthree years on the new and enhanced economic capability-building measures in Budget 2019, and to support Singaporean workers. $3.6 billion will go towards helping our workers to thrive amid industry and technological changes10. $1 billion will go towards helping firms build deep enterprise capabilities. But let me emphasise that supporting companies and supporting workers are mutually reinforcing – stronger companies provide better jobs and pay for workers, and highly skilled workers make companies stronger.
- C75. I am confident that we can continue to make good progress. Our enterprises and TACs, workers and unions, and the Government must continue to work closely together. As long as we stay relevant and useful to the world, we can continue to create opportunities for our people and enterprises.
A CARING AND INCLUSIVE SOCIETY
- D1. I have spoken about how we invest to secure our home and grow our economy. At the heart of these efforts is the desire to improve the lives of current and future generations of Singaporeans.
- D2. Our approach to social development has served us well.
- We invest heavily to bring out the best in our people.
- We believe that access to quality education enables Singaporeans to realise their potential.
- We strive to ensure that all Singaporeans, regardless of background, enjoy a quality living environment and have good access to healthcare.
- And, we provide targeted support to those who are less advantaged, so that they can have a fair chance to succeed; and to those who fall on hard times, so they can bounce back.
- Our efforts were affirmed by the World Bank when they ranked Singapore top in the Human Capital Index last year11.
- D3. We recognise that Singapore, like many advanced economies, will have to deal with issues such as:
- Maintaining social mobility;
- Supporting healthy and purposeful ageing;
- And fostering a stronger sense of unity amid polarising forces.
- D4. Over the past decade or so, we have significantly increased our social spending.
a. Social ministries’ expenditures have doubled from $15 billion in FY2009, to $30 billion in FY201812.
- D5. The social measures in Budget 2019 are part of our long-term plan to build a caring and inclusive society. They are driven by three main strategies:
- D6. First, uplifting Singaporeans to maximise their potential and providing access to opportunities through their stages of life.
a. We pay particular attention to children from disadvantaged backgrounds, to give them a good start in life.
11 Source: World Bank Group’s The Human Capital Project, 2018.
12 Social ministry expenditures include Education; Health; Culture, Community and Youth; Social and Family Development; Communications and Information; and Manpower (Financial Security).
b. With increasing lifespans, we are helping older Singaporeans stay in the workforce, so that they can earn and save more for retirement.
- D7. Second, providing greater assurance for healthcare.
- We will continue to strengthen support for the healthcare needs of Singaporeans.
- In particular, we want to help our seniors stay active, healthy, and engaged in their silver years.
- D8. Third, fostering a community of care and contribution, through strong partnerships.
- We strive to nurture an ethos in our society, where we support one another, and give a helping hand where we can.
- Those who succeed should help to uplift others, just as they have benefitted from the support of others around them.
- As the Chinese say, “同舟共济,共创未来”. We are in the same boat, and weather the storms together. We progress together, and forge our futuretogether.
Uplifting Every Singaporean
D9. I will first talk about how we are supporting our children, workers, and seniors to access the best opportunities, through each stage of life.
Strengthening Support in Education
D10. We invest heavily to provide a world-class education for young Singaporeans. This is to bring out the best in every child, no matter his or her starting point.
- I know that this is an area of deep concern for many Singaporeans. Many of you expressed this during feedback sessions, and through your actions in giving time and money to help children in need.
- Pre-schools support parents in laying a strong foundation for children – by helping to develop children’s cognitive, language, social, and emotional skills.
- Therefore, we are spending more to enhance the accessibility, affordability, and quality of early childhood education and care.
- The Government spent about $1 billion on the pre-school sector in 2018. This is more than two and a half times of the $360 million that we spent back in 2012.
- And this support continues throughout the schooling years.
- The Government subsidises over 90% of the total cost of educating our children.
- This means that a child entering primary school in 2018 will receive over $130,000 in education subsidies by the time he or she completes secondary education.
d. Children from lower-income families get even more support, for example, through the recently enhanced MOE Financial Assistance Scheme.
- D11. Wehavebeendoingmoretobettersupportchildrenfromdisadvantagedbackgrounds, by intervening earlier, with new forms of proactive and targeted support.
- D12. One such effort is KidSTART.
- KidSTART practitioners, pre-schools, and community partners work together to provide health, learning, and developmental support for children and their families.
- Since the pilot began in 2016, more than 900 families have been supported by KidSTART.
- D13. Lastyear,wesetuptheUpliftingPupilsinLifeandInspiringFamiliesTaskforce(UPLIFT).
- This taskforce will pilot upstream interventions and partner communities to help disadvantaged children and their families, to ensure that no child is left behind.
- A recent initiative is the UPLIFT scholarship for Independent Schools.
i. This will provide a monetary award of $800 per year for eligible lower- income students in Independent Schools, to cover their out-of-pocket expenses.
c. The taskforce is also looking at how to strengthen after-school care and supportfor disadvantaged students in school-based Student Care Centres.
d. The Minister for Education will speak about this and other initiatives spurred by UPLIFT at the COS.
Supplementing Incomes of Lower-Wage Workers
- D14. Our support for Singaporeans continues into their working lives.
- D15. Workfare and Silver Support, is a key pillar of our social security system. The two schemes supplement incomes and mitigate inequality in the working and retirement years respectively.
a. The Workfare Income Supplement (WIS) scheme provides cash payouts and CPF top-ups for workers whose earnings are in the bottom 20%, with some support
for those slightly above. The scheme has raised their incomes, encouraged employment, and helped them save more for retirement.
b. We will enhance WIS to better support lower-wage workers.
- From January 2020, the qualifying income cap will be raised from thecurrent $2,000 to $2,300 per month.
- The maximum annual payouts will also be increased by up to $400. Older workers will see higher increases in payouts.
- For example, workers aged 60 and earning $1,200 a month will now receive $4,000 per year from WIS, or almost 30% of their wages.
- These enhancements will cost an additional $206 million a year.
- In total, we expect the enhanced WIS to cost close to $1 billion a year, and benefit almost 440,000 Singaporeans. (Refer to Annex D-1.)
Supporting Older Workers
- D16. As our society ages, older workers will make up an increasing share of our workforce.
- Today, about one in four of our workforce is aged 55 and above. They continue to make important contributions to our economy and society.
- Some are giving back by mentoring the younger generations, while others wish to continue working.
- D17. WearedoingmoretohelpolderSingaporeansearnmore,savemore,andhavegreater peace of mind during their retirement years.
- D18. I appreciate the concerns and suggestions regarding the retirement adequacy of older workers, raised by members of the public and the PAP Seniors Group, among others. And I thank the Members of this House for your views during the recent debate on the motions on ageing with purpose and support for caregivers.
- D19. The Government has set up a Tripartite Workgroup to study the concerns of older workers.
- The Workgroup is reviewing policies such as the retirement and re-employment age, and the CPF contribution rates of older workers.
- They will present their recommendations later this year.
- D20. TosupportemployersinhiringolderSingaporeanworkers,theGovernmentintroduced the Special Employment Credit (SEC) scheme in 2011.
a. Since then, we have extended and made changes to the SEC in response to labour market and economic conditions.
- We have also introduced an Additional SEC (ASEC) scheme, to encourage employers to hire workers who are above the re-employment age.
- I am happy that companies have responded by hiring older workers, tapping on their experiences, and supporting them in upgrading their skills.
- D21. With a tighter labour market, and more Singaporeans choosing to work longer, more companies will be hiring older workers.
- D22. The Government will study better forms of support to continue to help workers to remain productive, earn more, and save more for retirement.
- We will review the relevance and structure of the SEC and ASEC, in tandem with the recommendations from the Tripartite Workgroup on Older Workers.
- In the meantime, I will extend the SEC and ASEC for another year, until 31 December 2020.
- To support this extension, I will top up the SEC Fund by $366 million.
- D23. Taken together, Members will see that the Government has been making significant investments in education and employment for our people, from early childhood to the working years.
- Our aim is to help Singaporeans fulfil their potential at each stage of life.
- We are improving the lives of our people, by enabling them to be the best that they can be. We enhance our people’s sense of well-being and dignity, without the burden of welfare schemes elsewhere, which weaken people’s sense of agency and independence.
Greater Healthcare Assurance
- D24. As more Singaporeans enter their senior years, healthcare needs will grow.
- Over the years, we have implemented major changes to make healthcare more affordable, accessible, and comprehensive.
- We have also been providing greater social support within the community to help seniors stay active, through programmes such as the PA Wellness Programme and the Community Networks for Seniors.
- D25. Our second social strategy is to provide greater healthcare assurance.
More Affordable Care, Closer to Homes
D26. First,doctorsatourneighbourhoodclinicsprovideprimarycarethatiseasilyaccessible. This helps us stay healthy. To enhance access, we will make it more affordable to consult doctors in our neighbourhoods.
a. We introduced the Community Health Assist Scheme (CHAS) in 2012.
- CHAS subsidies help lower- to middle-income families by making primary care and basic dental care at clinics near their homes more affordable.
- Over 97% of existing CHAS and Pioneer Generation cardholders have access to more than one CHAS clinic within 10 minutes from their homes.
- We will enhance CHAS subsidies at GP clinics in three ways:
- As the Prime Minister announced at the National Day Rally last year, we will extend CHAS to cover all Singaporeans for chronic conditions, regardless of income.
- Second, lower- to middle-income Singaporeans who are CHAS Orange cardholders currently receive CHAS subsidies for chronic conditions only. We will extend subsidies for common illnesses to this group.
- Third, we will increase the subsidies for complex chronic conditions.
- CHAS makes it possible for more Singaporeans to turn to GP clinics near their homes to manage their chronic conditions.
- But we must also put in the measures to ensure that CHAS clinics are delivering good outcomes.
- To this end, the Ministry of Health (MOH) will be looking at how to helpCHAS clinics better track their patients’ progress and outcomes.
- In a similar vein, MOH will also review its clinical guidelines for care provided at CHAS dental clinics, to ensure that the care delivered is appropriate to the needs of the patient.
- With these changes, we expect to pay out more than $200 million a year in CHAS subsidies. The Minister for Health will provide more details on these changes at the COS.
Financial Protection for Long-Term Care
D27. A second way to provide greater healthcare assurance is that we will strengthen financial protection for long-term care.
a. As we age, the chances of having one form of disability or another rises significantly.
i. MOH estimates that one in two healthy Singaporeans aged 65 could become severely disabled in their lifetime, and may need long-term care.
b. Some of us face a higher risk, some lower. But regardless, low risk does not mean no risk.
c. The best way of protecting ourselves is to lead a healthy lifestyle, and take preventive actions.
d. At the same time, we need to guard against unpredictable events. The most efficient way is to help one another, by pooling risk through an insurance scheme.
D28. Today, we have MediShield Life, for all Singaporeans, to provide financial protection against large hospital bills, for life.
a. As we live longer, there is a higher chance that we will need long-term care towards the end of our lives. We need to prepare for this.
- D29. TheMinistryofHealthhasannouncedthatitwillbeintroducingthenewCareShieldLife from 2020, an enhancement of the current ElderShield scheme.
- CareShield Life will provide lifetime coverage, with higher monthly payouts of at least $600 a month for those who become severely disabled. This offsets the costs of long-term care for individuals and their families.
- The Government will provide subsidies and premium support to ensure that CareShield Life premiums are affordable.
- We will also offer participation incentives for existing cohorts, born in 1979 or earlier, to join CareShield Life, so that they are better protected should they need care in the future.
- CareShield Life will offer much greater peace of mind for Singaporeans.
- In addition, we will also launch ElderFund next year, to help severely disabled, lower-income Singaporeans who need additional financial support for long-term care. This includes those who might not be able to join CareShield Life, or have low MediSave balances.
- D30. The cost of long-term care is not only high, but will increase as our population ages.
- Last year, I earmarked $2 billion for premium subsidies and other forms of support for Singaporeans.
- This year, I will set aside another $3.1 billion.
- The Government will put this $5.1 billion into a new Long-Term Care Support Fund. This will help fund the CareShield Life subsidies and other long-term care support measures, such as ElderFund.
- This is a significant commitment to help Singaporeans with their long-term care needs.
Merdeka Generation Package
- D31. As the Prime Minister mentioned at the National Day Rally last year and the Tribute event earlier this month, we would also like to express our appreciation and support for our Merdeka Generation.
- The Merdeka Generation is a resilient and independent generation.
- They played a critical role in our nation’s development.
- The Merdeka Generation was among the earliest batches to serve National Service, build up our public services, and modernise our economy.
- They came together to forge our multi-cultural, multi-racial society.
- One member of the Merdeka Generation is Ms Barbara D’ Cotta.
- Ms D’ Cotta started work as a special education teacher at the age of 19 to help support her mother. In 1984, she was among the first batch of teachers to attain a Certificate in Special Education. Throughout her life, she continued learning, and completed her Bachelor in Special Education in 2016, at the age of 57!
- Today, she is a Specialised Teacher for students with hearing deficiencies and a volunteer interpreter. She is also pursuing her Master of Special Education. She is an excellent example of lifelong learning and giving.
- I am glad to have met Ms D’ Cotta and many others who built our nation, at our Merdeka Generation Tribute event.
- They continue to be an active generation, contributing in their various capacities– at work, in the community, caring for their families, and learning something new.
- The Merdeka Generation is a resilient and independent generation.
- D32. The Merdeka Generation Package is a gesture of our nation’s gratitude for theircontributions and a way to show care for them in their silver years. It will provide them better peace of mind over future healthcare costs, while helping them to stay active and healthy.
- D33. The Merdeka Generation Package, or MGP, comprises five key benefits.
a. First, to support their active lifestyles, all Merdeka Generation (MG) seniors will
receive a one-time $100 top-up to their PAssion Silver cards.
- They can use this to pay for activities and facilities at the Community Clubs,entry to public swimming pools, public transport, and more.
- We will also work to introduce more active ageing opportunities for seniors, such as lifelong learning under the National Silver Academy and volunteerism under the Silver Volunteer Fund.
b. Second, we will provide a MediSave top-up of $200 per year for five years. This will start from this year until 2023.
i. This will help them save more for their healthcare needs. This is on top of the GST Voucher – MediSave top-ups that eligible seniors aged 65 and above receive every year.
c. Third, MG seniors will receive additional subsidies for outpatient care, for life.
- They will receive special CHAS subsidies, for common illnesses, chronic conditions, and dental procedures. The subsidy rates will be higher than the CHAS Blue subsidies. All MG seniors will receive these enhanced subsidies, regardless of income, including those who do not have a CHAS card today.
- At polyclinics and public Specialist Outpatient Clinics, they will receive 25% off their subsidised bills. This is on top of the prevailing subsidies available.
d. Fourth, MG seniors will have additional MediShield Life premium subsidies, for life.
- All MG seniors will receive subsidies for their premiums, starting from 5% of their MediShield Life premiums, and increasing to 10% after they reach 75 years of age.
- This is on top of the means-tested subsidies that lower- to middle-income Singaporeans are already receiving. (See Table D-1.)
Table D-1: Additional Merdeka Generation Premium Subsidies for MediShield Life
* Dollar amounts shown are based on 2019 standard MediShield Life premiums. The total subsidy includes the existing premium subsidies that Merdeka Generation seniors in lower-to-middle- income households are also receiving, but excludes transitional subsidies.
e. Finally, we 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.
- In addition to the $2,500 previously announced, this means that all MG seniors who join CareShield Life will receive participation incentives totalling $4,000 each.
- This will cover a significant portion of their premiums, and is on top of the regular means-tested premium subsidies.
|
Age Next Birthday (at policy renewal) |
Additional Subsidy for the Merdeka Generation* |
Total Subsidy* |
|
60 to 75 |
5% of annual premiums ($31.50 to $48.75) |
$31.50 to $390 |
|
76 and above |
10% of annual premiums ($113 to $153) |
$113 to $918 |
iii. I hope that this will encourage our MG seniors to join CareShield Life, to have peace of mind against the risk of high long-term care costs.
- D34. The Merdeka Generation Package will benefit close to 500,000 Singaporeans.
- Those born in the 1950s and who obtained citizenship by 1996 will be eligible for the MGP.
- In addition, we will extend the MGP benefits to those born in 1949 or earlier, but missed out on the Pioneer Generation Package (PGP), if they obtained citizenship by 1996.
- All eligible seniors will receive the MGP benefits, regardless of their income.
- They will be notified by April 2019, and will receive their Merdeka Generation cards starting from June 2019.
- The Minister for Health will provide further details and the implementation timeline for the MGP benefits at the COS.
- D35. The Merdeka Generation is aged 60 to 69 today.
- Singaporeans’ lifespans are increasing – our life expectancy is now 84.8 years13.
- This is good news. It also means the Merdeka Generation will be able to enjoy the benefits for many years.
- The Ministry of Finance and MOH, in sizing the budget for these benefits, have taken this into account.
- D36. We estimate that the package will cost over $8 billion, in current dollars, over theMerdeka Generation’s lifetimes.
- This Budget, I will set aside $6.1 billion for a new Merdeka Generation Fund.
- With interest accumulated over time, this will cover the full projected costs of theMerdeka Generation Package.
- The Merdeka Generation will enjoy many key healthcare benefits for life. We hope that this will go some way in providing greater peace of mind for the Merdeka Generation and their families.
- This is a significant commitment by the Government.
- It is important that the Government of the day continues to monitor the patterns and cost of healthcare utilisation, and life expectancy over the next 30 years or more, so that the Government is able to meet this commitment.
Five-Year MediSave Top-ups
- D37. To better prepare for increasing lifespans, we should encourage everyone to set aside something for the future.
- D38. To help Singaporeans who are younger than the Merdeka Generation with their future healthcare expenses, I will provide MediSave top-up of $100 a year, for the next five years, for Singaporeans who are:
- Aged 50 and above in 2019;
- And who do not receive the MGP or the PGP. (Refer to Annex D-2.)
- D39. This is a generation who are even younger and healthier, and I hope that everyone will make the extra effort to stay active and healthy.
A Community of Care and Contribution
- D40. Our third social strategy is to foster a community of care and contribution, and build strong partnerships in our society.
- D41. The Government will continue to make every effort to care for our seniors, the disadvantaged, and vulnerable families.
ComCare Long-Term Assistance and Singapore Allowance
- D42. The ComCare Long-Term Assistance14 scheme provides basic monthly cash assistance to those who are permanently unable to work and have little family support, to support their living expenses. Additional assistance is provided for households with additional needs, such as medical supplies.
- We will raise the cash assistance rates for this scheme.
- For example, a two-person household, where both are on ComCare Long-Term Assistance, will receive an additional $130 a month. This brings the total cash assistance to $1,000 a month.
- The Minister for Social and Family Development will provide more details at the COS.
- D43. To help government pensioners who draw lower pensions, we will increase the Singapore Allowance and monthly pension ceiling by $20 per month each, to $320 and $1,250 respectively. This will benefit about 9,300 pensioners.
SG Cares
- D44. Working alongside the Government, individuals, non-profit organisations, and corporates have all been playing their part – contributing their skills, their time, and their hearts.
- D45. As we reflect on our history and culture in this bicentennial year, we see this spirit of helping one another as a community in action over time.
- In the past, our forefathers who arrived in Singapore banded together mainly within their ethnic groups, forming various clans and associations, as the support of the Government then was inadequate.
- Today, I am glad that this spirit extends across ethnic and religious lines in our society.
- In the last few months, we have received many good suggestions from members of the public on cultivating this community spirit to help those in need.
- As our society ages and new needs emerge, we hope everyone will lend a helping hand.
- D46. One good example is Mr Shaleem Khamalluden and his friends from PALS Singapore. PALS stands for Peace and Love Society, a non-profit organisation that provides a support network for Singaporean youths from all backgrounds.
- Through sports events and workshops, Shaleem and other like-minded volunteers have been helping young Singaporeans learn skills to overcome challenges such as bullying and cyber-addiction.
- To date, they have touched the lives of about 800 youths.
- D47. Another example is Dr Rose Sivam, who started My Home, Your Home.
- With her husband as the chef, Rose and her family bring together people from various backgrounds, including those with disabilities and children with special needs, to share a meal in her home.
- This is another good example of our community spirit – how we care for the less privileged and build unity in our diversity.
- D48. I am heartened that many other Singaporeans, too, have stepped forward in their own ways to make a difference within their community, and I encourage everyone to do their part.
- D49. I spoke about the SG Cares movement at last year’s Budget.
- It seeks to bring together the public, people, and private sectors in partnership;
- Create a greater collective impact;
c. And grow as a community of care and contribution.
- D50. This year, we continue to build on the SG Cares movement. We will have three measures to mobilise our people across all age groups, and across the public, private, and people sectors.
- D51. First, growing the spirit of volunteerism in our youth.
- Many of our secondary school students are already active volunteers, and are giving back to the community.
- We want to sustain this momentum, as they move to IHLs, and later into the workplace.
- We are working with Youth Corps Singapore to nurture youth community leaders in our IHLs, who can in turn rally their peers to be involved in the community on a sustained basis.
- D52. Second, our seniors have an abundance of skills and experience to make meaningful contributions.
- To enable more of them to do so, we will work with community partners and companies to encourage volunteerism among older workers.
- This will also enable our seniors to stay active and contribute to the community, at work and when they retire.
- D53. Third, the Government is encouraging all public officers to volunteer, under the Public Service Cares initiative.
- Today, each ministry has a senior officer, appointed as the Giving Ambassador, to champion volunteerism. More than 85% of public officers are making monthly donations.
- Going forward, Public Service Cares will strengthen capabilities in Corporate Social Responsibility, and create larger-scale and sustained volunteering opportunities for public officers across agencies. For example, they can take part in house visits to share healthcare and active ageing schemes, or guide seniors in using their mobile devices at digital clinics.
- This will also help Public Service officers to better understand citizens’ needs, andco-deliver services with the people and private sectors.
- This is the Public Service’s contribution to the SG Cares movement.
- D54. TheMinisterforCulture,CommunityandYouthwillbesharingmoreonSGCaresatthe COS. (Refer to Annex D-3.)
Commemorating Our Bicentennial
- D55. The spirit of giving back has a special meaning this year, as we commemorate the Singapore Bicentennial.
- D56. Therefore, I will launch two special initiatives in support of this.
- D57. First, I will set aside $200 million for a Bicentennial Community Fund.
- Today, we encourage individuals and corporates to give back to the community in various ways.
- Donations to Institutions of a Public Character (IPCs) qualify for a 250% tax deduction.
- Businesses also enjoy a 250% tax deduction on qualifying expenditure when their employees volunteer or provide services to IPCs, under the Business and IPC Partnership Scheme.
- The new Bicentennial Community Fund will provide dollar-for-dollar matching for donations made to IPCs in FY2019.
- With this, we hope to further encourage more Singaporeans, including younger Singaporeans, to embrace the spirit of giving back.
- At the same time, we are encouraging IPCs to reach out to more donors.
- The fund will be designed to ensure a good distribution of support for all donations to IPCs which currently do not receive government matching, and to increase the impact of the good work they are doing.
- We have also enhanced our one-stop platform, Giving.sg, to better match donors and volunteers with meaningful causes.
- This platform provides charities with an easy and secure way to establish an online presence, and to receive donations digitally.
- Donors, too, can quickly navigate and find a worthy cause that matches their passion and commitment, and start on their giving journey.
- Details will be shared by the Ministry of Culture, Community and Youth at a later date.
- Today, we encourage individuals and corporates to give back to the community in various ways.
- D58. Second, I will introduce a $1.1 billion Bicentennial Bonus.
- From time to time, when our finances allow, we share the surpluses withSingaporeans, and provide more help to those with specific needs.
- With this Bonus, I hope that all Singaporeans, young and old, will join us tocommemorate this significant moment in Singapore’s history.
- The Bicentennial Bonus has several components (refer to Annex D-4):
d. For lower-income Singaporeans, I will provide additional help with their daily living expenses.
- I will provide up to $300 through a GST Voucher – Cash (Bicentennial Payment). This will benefit 1.4 million Singaporeans.
- In addition, lower-income workers who received WIS payments will get aWorkfare Bicentennial Bonus. They will receive an additional 10% of their WIS payment for work done in 2018, with a minimum payment of $100. This will be given in cash.
- I will provide a 50% Personal Income Tax Rebate, subject to a cap of $200, for the Year of Assessment 2019. I have set the cap at $200 so that the benefits go mostly to middle-income earners.
- For parents with school-going children, we will provide additional support fortheir children’s education.
- Each year, the Government contributes to the Edusave accounts of all Singaporean students at primary and secondary school levels. This helps to pay for school enrichment activities, to better develop students holistically.
- This year, we will provide a $150 top-up to their Edusave accounts. This is on top of the annual Edusave contributions that they already receive from the Government.
- In addition, Singaporeans aged 17 to 20 will receive up to $500 in their Post- Secondary Education Accounts (PSEA) 15 . This will go towards helping parents to save for their children’s tertiary education.
- We will also provide additional support for older Singaporeans, who are near retirement.
- I will provide a CPF top-up of up to $1,000 for eligible Singaporeans aged 50 to 64 years old in 2019, who have less than $60,000 of retirement savings in their CPF accounts16. This will be credited into the Special Account for members aged 50 to 54, and the Retirement Account for members aged 55 to 64.
- About 300,000 Singaporeans will benefit from this CPF top-up.
- The majority of these recipients will be women. Many of them left the workforce early, and took up important roles as mothers, caregivers, or
15 Singaporeans aged 17 to 20 will receive the one-off PSEA top-up if they do not already benefit from the Edusave top-up.
16 For those aged 50 to 55, the top-up is based on their combined Ordinary and Special Account balances. For those aged 56 to 64, the top-up is based on their Retirement Account balance.
housewives. As a result, they had fewer years to build up their savings. This top-up is a way to recognise their contributions and to help them save more.
- In addition to the CPF top-up, Singaporeans in the age group of 50 to 64 who qualify for Workfare will also benefit from the WIS enhancements that I mentioned earlier.
- Most of those in the 60 to 64 age group will also receive the Merdeka Generation Package, while the rest will receive the five-year MediSave top- ups. These are all on top of the targeted benefits such as the GST Voucher.
- Together, we hope that these measures will provide greater peace of mind for our older workers now and later in their silver years.
Other Support for Households
D59. InadditiontothespecialBicentennialinitiatives,wewillprovideanotheryearofService and Conservancy Charges (S&CC) Rebate to HDB households.
- Eligible Singaporean households will receive S&CC rebates of between one and a half, and three and a half (1.5 to 3.5) months.
- This will cost $132 million and benefit about 930,000 households. (Refer to Annex D-2.)
- D60. Finally, I will top up the Public Transport Fund by $10 million, to continue helping commuters in need with their transport expenses, such as through Public Transport Vouchers for lower-income families.
- D61. The Government keeps a close watch on the cost of living.
- Over the years, we have done much to alleviate cost pressures – whether in healthcare, education, or day-to-day expenses.
- Good macro-economic management has enabled us to keep inflation low, while the Singapore dollar has been strengthening over time. Many Singaporeans who go on overseas vacations would appreciate this.
- Over and above these favourable conditions, this Budget continues to provide significant support for Singaporeans, especially our seniors and lower-income households.
- D62. Budget 2019 supports the Government’s long-term strategy to build a caring and inclusive society. This is our continued effort to improve the lives of our people and our future generations.
A GLOBAL CITY AND HOME FOR ALL
- E1. Today, our shining little red dot can hold its own on the global stage. But as the Minister for National Development has said, “we are not done building Singapore”. Infrastructure takes time to build, but once built, can serve us for a long time. We must take a long view for our development plans.
- E2. The upcoming URA Master Plan 2019 will guide our urban development over a 10- to 15-year time frame. It ensures that our limited land can be optimised to meet the needs of current and future generations. The Minister for National Development will share more details at the COS.
- E3. The long-term transformation of our city must start with our HDB estates, where mostSingaporeans’ homes are. It is important that we keep our living environment first-class.
a. Many cities have large tracts that slip into disrepair over time – we must avoid that. We must strive to make every town in Singapore green and liveable, by rejuvenating them systematically over time.
Linking Our City to the World
- E4. As our home, and a global node, our city has to be well-connected within and with the world.
- E5. Within Singapore, we now have about 230km of MRT lines. This will rise to about 360km in the 2030s when major MRT projects such as the Cross Island Line are completed.
- E6. To enhance our global connectivity, we are increasing the capacities of our airport and sea port. This will strengthen our role as a key node within Asia and to the world. Connecting to future growth, knowledge, and cultural centres in Asia and beyond will not only benefit Singaporeans, but also add to the connectivity and vibrancy in our region.
Ensuring a Sustainable Environment for All
- E7. Beyond the next decade, we must also plan for climate change. Climate change and rising sea levels threaten our very existence. As a low-lying island nation, there is nowhere to hide when sea levels rise. Other small island nations like the Maldives are already facing the risk of flooding, with severe implications.
- E8. The Government is studying the implications carefully and will come up with measures to prepare ourselves adequately. Our Climate Action Plan, which was launched in 2016, sets out the strategy for mitigating and adapting to the impacts of climate change, especially on our infrastructure.
a. In line with the Action Plan, low-lying roads near coastal areas have been raised.
b. Changi Airport Terminal 5 will also be built at 5.5 metres above mean sea level.
c. The use of polders and dikes is already being piloted on Pulau Tekong. These will help us to learn how to deal with rising sea levels.
d. To protect ourselves against climate change and rising sea levels, we will have to invest more. Together with existing infrastructure needs, our total bill for infrastructure will increase significantly. It is very difficult to project spending needs way into the future, but the different Ministries have done some preliminary estimates. We will continue to do our best to look forward, develop fiscal plans well in advance, and put in place the right approach to finance such long-lived major infrastructure. Each generation should contribute its fair share.
E9. Tackling climate change requires global cooperation. Singapore is committed to doing our part. It is the responsible thing to do for our children and future generations.
- The carbon tax will be applied on this year’s emissions. This is an important signalto companies and households to reduce emissions and adopt energy-efficient practices.
- As individuals, we too must change our way of life and work towards becoming a zero waste nation, by adopting the 3Rs: reducing consumption, reusing, and recycling.
i. The Zero Waste Masterplan will be launched in the second half of this year. Among other issues, it will look at better management of food waste, e- waste, and packaging waste including plastics. The Minister for the Environment and Water Resources will provide more details at the COS.
- E10. Given our dense urban environment, air quality and greenery are especially important. NParks has done an excellent job in greening Singapore – our island has more than 40% green cover. This improves our living environment and our air quality.
- E11. But diesel exhaust is highly pollutive, and adversely affects our people’s health17 and quality of life. Many cities in Europe have announced restrictions on diesel vehicle usage. We have taken steps to discourage diesel consumption.
- Over the years, we have implemented schemes to encourage early renewal of diesel commercial goods vehicles, and to also account for the impact of vehicular emissions. We have seen positive results. More owners are shifting towards more environmentally friendly engines such as electric hybrids. We are glad to see a drop in the numbers of new diesel cars and taxis registered.
- We also restructured diesel taxes in 2017 to shift away from an annual amount of tax towards a usage-based tax system. We permanently reduced the annual special tax on diesel cars and taxis and re-introduced the volumetric diesel duty.
17 The World Health Organisation (WHO) has classified diesel engine exhaust as carcinogenic.
c. To continue the restructuring of diesel taxes, I will raise the excise duty for diesel by $0.10 per litre, to $0.20 per litre. This takes immediate effect.
- At the same time, I will permanently reduce the annual Special Tax on diesel taxis by $850. I strongly urge taxi companies to pass on the savings to their drivers, like they did in 2017 – this will on average reduce the impact of the duty increase by more than three-quarters for taxis. I will also permanently reduce the Special Tax on diesel cars by $100. This will on average reduce the impact by more than half.
- To help businesses adjust, I will provide a 100% road tax rebate for one year, and partial road tax rebate for another two years, for commercial diesel vehicles.
- I will also provide, over three years, additional cash rebates of up to $3,200 for diesel buses ferrying school children. (Refer to Annex E.)
- E12. Building a more sustainable environment makes our quality of life better, and also creates economic opportunities.
- E13. Just as we closed the water loop, we can now turn our attention to closing the waste loop.
- There are already start-ups tackling this challenge. Two companies, UglyGood and Tria, have been working on innovative ways to convert food-related waste into useful products.
- These are good examples of opportunities in our zero waste movement. So I hope to see more of such initiatives in the coming years.
- E14. Our beautiful living environment can also be enhanced through the smart use of technology, as a part of our Smart Nation efforts.
- To reduce energy use, we have implemented district cooling in the Marina Bay area.
- To improve our quality of life, we have started rolling out pneumatic waste collection, and trialled smart urban mobility solutions.
- Buildings can also be designed to be environmentally friendly, for example, by being energy efficient and producing enough renewable energy to run itself. BCA was the first to retrofit its academy in 2009, making it the first retrofitted net-zero energy building in South-East Asia. This year, NUS’s School of Design andEnvironment launched SDE4, a brand new net-zero energy building.
- E15. These initiatives contribute towards making our environment more sustainable and pleasant. The National Research Foundation will continue to fund research and innovation in Urban Solutions and Sustainability.
Building Vibrant and Endearing Homes for Our People
- E16. Our public housing policies have also been uniquely successful because of our long-term planning.
- E17. Today, we are not just building new flats. We are improving the quality of life for Singaporeans, through the rejuvenation of our public housing estates.
- Our plans for the rejuvenation and renewal of our city includes the Home Improvement Programme (HIP), the Neighbourhood Renewal Programme (NRP) and the Remaking Our Heartland (ROH) initiative.
- For the longer term, we have announced HIP 2 and the Voluntary Early Redevelopment Scheme (VERS).
- These are plans that will keep our living environment first-class over the coming years.
- E18. The Minister for National Development will be sharing more on these plans to build endearing homes for our people at the COS.
A FISCALLY SUSTAINABLE FUTURE
Long-Term Fiscal Planning
- F1. Singapore’s ability to plan for the long term is our strategic advantage.
- F2. But the best-laid plans to develop our people and transform our city can only be realised with a sound fiscal plan.
- F3. Our fiscal discipline and prudence gave us the resources to respond decisively to unexpected challenges, such as the 2008 global financial crisis. We must not take this for granted.
Preparing for the Future
- F4. While our nation’s needs are growing significantly, we must continue to take adisciplined and prudent approach.
- F5. We will pursue new investments using a differentiated fiscal strategy, taking one approach for major infrastructure investments, and another for recurrent social and security expenditures.
- F6. First, infrastructure investments.
- Some of these are major, long-term projects, such as the development of Changi East and rail projects such as the Cross Island Line.
- Others, such as infrastructure to protect us against climate change, are contingent on the future state of the world. It is challenging to predict their exact timing and requirements.
- F7. For these large and lumpy expenditures where the benefits span many generations of Singaporeans, paying for them through some borrowing is fairer and more efficient.
- F8. Borrowing, done in a responsible and sustainable manner, will help instil financial discipline and distribute the share of funding more equitably across current and future generations.
- In the 1980s, the Government borrowed to build our first MRT lines.
- Our Statutory Boards and Government-owned companies have also continued to finance many major infrastructure projects through borrowings.
- For the development of Changi East, the Changi Airport Group will be taking up loans to fund its share of the infrastructure investments.
- To lower financing costs, the Government, with the President’s concurrence, willprovide a guarantee for Changi East borrowings. This allows us to tap on the
strength of the Government’s balance sheet to back this strategic investment. This lowers the cost of borrowing.
e. The Government is further studying the option of using government debt as part of the financing mix for long-term infrastructure projects that the Government will be taking on directly.
- F9. Second, for recurrent spending needs in areas such as healthcare, pre-school education and security.
- We must recognise that these are necessary expenditures – to take care of our elderly, give our children a good start in life, and keep Singapore safe and secure for our families.
- Many countries have taken the easier route by funding these recurrent expenditures through borrowing.
- We must not do this, as such borrowing shifts the burden of paying fortoday’s needs onto future generations.
- That is not the Singapore way.
- F10. A fairer and more robust approach is to meet recurrent spending with recurrent revenues. Hence, we must continually review our tax system to ensure its resilience.
- GST is a broad-based tax that contributes significantly to our fiscal resources.
- Last year, I announced the introduction of GST on imported services to make sure GST collections remain fair and resilient in a digital economy.
- This year, I will tighten the GST import relief for travellers, given rising international travel. For travellers who spend less than 48 hours outside Singapore, the value of goods bought overseas that can enjoy GST relief will be reduced from $150 to $100. For travellers who spend 48 hours or more outside Singapore, the relief quantum will be reduced from $600 to $500. This will take effect from tomorrow. (Refer to Annex E.)
- I will also tighten the alcohol duty-free concession for travellers from three litres to two litres. This will take effect from 1 April 2019. (Refer to Annex E.)
- F11. As I had announced at the previous Budget, we will raise GST by two percentage points sometime in the period from 2021 to 2025.
- When we raise GST, we will ensure that our overall system of taxes and transfers remains progressive and fair.
- We will continue to absorb GST on publicly subsidised education and healthcare.
- We will provide more help to lower-income households and the elderly by enhancing the permanent GST Voucher scheme.
- We will also cushion the impact of the GST increase for a period through a GST offset package. Lower- and middle-income households will get more.
- More details will be announced later.
- F12. Notwithstanding the need to raise revenues in the future, at the core of our fiscal system is our commitment to keep the overall tax burden low.
- We want workers and firms to keep as much as possible of what they earn. This leaves our citizens free to choose how they spend, save, or invest.
- Our main indirect tax, the GST, is not high by international standards, even after the planned increase to 9%. The OECD average is 19%. Among Asia-Pacific countries, many have standard GST rates that exceed 9%.
- Ultimately, a competitive tax regime helps us to attract and retain investments and talent. These in turn help to bring in good jobs for Singaporeans.
- A competitive tax regime is a key anchor to our economic growth, and the best way to sustainably increase tax revenues. I will extend and strengthen tax incentives to enhance our business competitiveness. (Refer to Annex E.)
- At the same time, I will make some adjustments to further enhance the progressivity and resilience of our tax system. The details of these changes are in the Annex. (Refer to Annex E.)
- F13. The Government will continue to plan ahead for the long term. My commitment to Singaporeans is that our overall taxes and transfers system will always remain fair, progressive, and pro-growth.
FY2018 Budget Position
- F14. Let me now summarise our overall budget position.
- F15. For FY2018, we expect an overall budget surplus of $2.1 billion, or 0.4% of GDP. This is a $2.7 billion increase from the $0.6 billion deficit forecasted a year ago. This was due to the unexpected two-year suspension of the Kuala Lumpur-Singapore High-Speed Rail Project and higher-than-expected Stamp Duty collections.
- F16. When we exclude the Government’s top-ups to funds and Net Investment Returns Contribution from past reserves, we expect a basic deficit of $7.0 billion, or 1.4% of GDP. FY2018 was hence an expansionary budget.
FY2019 Budget Position
- F17. For FY2019, our budget position remains expansionary, with a basic deficit of $7.1 billion. Ministries’ total expenditures are expected to be $80.3 billion, 1.6% higher than in FY2018. We are setting aside funds to meet Singaporeans’ long-term needs, including $6.1 billion for the Merdeka Generation Package and $5.1 billion for long-term care support. On the whole, we expect an overall budget deficit of $3.5 billion, or 0.7% of GDP. (Refer to Annex F.)
- F18. We have sufficient fiscal surplus accumulated over this term of Government to fund the overall deficit in FY2019. There is no draw on past reserves.
CONCLUSION
- G1. Mr Speaker, Sir, I will now conclude.
- First, I would like to thank the many Singaporeans, as well as businesses, unions, charities, and community organisations, who have provided your feedback and ideas.
- Also, special thanks to the talented students from Nanyang Polytechnic for the beautiful sketches that you see in my slides today.
- G2. We commemorate 2019, our bicentennial year, to learn from our past, in order to chart our future. We will have many opportunities to reflect and share in the coming months and years, but three lessons stand out for me and my colleagues:
- First, for as long as we stay relevant and useful, Singapore and Singaporeans will have our place in the world. We must develop deep capabilities, stay open and connected, and draw ideas and talents from around the globe. Singaporean talents have been making their mark in various fields, and connecting with other highly skilled individuals from around the world will make our team even stronger.
- Second, external events around us will shape and re-shape our lives. Our people have shown time and again that we can take the long view, adapt with the times, and thrive.
- Third, we draw strength from our diversity, by focusing on what we have in common. In the earlier years, our forefathers clustered around ethnic and religious groups to support one another. Today, Singaporeans support one another, regardless of race, language, or religion.
- G3. Budget 2019 draws on these key lessons. We build on our multi-cultural heritage, to foster a caring and inclusive society. We continue to nurture our young and develop our people on a lifelong basis. We seek to take better care of our seniors, so that they can stay active and healthy.
- G4. We will partner businesses and workers to transform our economy. We welcome the best MNCs and SMEs from around the world, and help our start-ups and SMEs to grow, scale, and internationalise. We will help our workers deepen their capabilities and seek new opportunities. To catch the wave of the Fourth Industrial Revolution, we are positioning Singapore as a Global-Asia node of technology, innovation and enterprise.
- G5. The changes ahead will be faster and deeper. Budget 2019 highlights the key challenges we are facing, and how we are preparing to ride on the changes, to turn challenges into opportunities, for Singaporeans and for our partners in the global community.
- G6. We are investing to keep Singapore safe and secure. We are restructuring our economy to enable our businesses and workers to thrive. We are building a more caring and inclusive society, and we are building Singapore as a global city and a home for all.
- G7. Even as we invest more, Budget 2019 maintains our fiscal discipline. Our institution of the Elected President, and the Council of Presidential Advisors, ensure that the Government of the day does not squander the reserves our forefathers have left for us. The Government will ensure that we abide by this. We must not only take care of this generation, but our children and their children. It is a core value we must uphold.
- G8. Budget 2019 lays out this Government’s approach to build a strong, united Singapore.We nurture our young, take care of our seniors, expand opportunities for our people to be at their best, and to live in a liveable, endearing home, secure and globally connected.
- G9. Together, in close partnership with all, in our public, people, and private sectors, we can, and will, continue to take Singapore forward.
- G10. Mr Speaker, Sir, I beg to move.
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WHAT HAPPENS WHEN THERE IS A BUDGET SURPLUS
The Singapore Constitution requires each term of Government to keep a balanced budget. This means that at the end of its term, a Government should not run into deficit.
However, it can accumulate surpluses over its term, which spans several FYs.
Under each term of Government, any surplus accrued at the end of an FY will be kept as current reserves which the Government can tap on, if necessary, in subsequent FYs during its term.
At the end of each term of government, the accumulated current reserves will be transferred to the Past Reserves, according to the Ministry of Finance’s website.
Past Reserves refer to the reserves accumulated during previous terms of Government, and these are protected by the Constitution.
Singapore Management University’s law professor Eugene Tan noted that the government of the day “would seek to accumulate surpluses in first two or three years of its term”. This is to ensure that it will not go into deficit when the term of government ends, he said.
Over the years, the Government have, on several occasions, shared its surpluses with Singaporeans.
Budget 2019 unveiled on Monday saw Mr Heng announce a Bicentennial Bonus, where low-income Singaporeans can receive up to S$300 in GST vouchers, for example.
Mr Heng said: “From time to time, when our finances allow, we share the surpluses with Singaporeans, and provide more help to those with specific needs”.
Last year, Mr Heng also announced a one-off SG bonus, where citizens received up to S$300 each.
The sharing of surpluses was also carried out in previous terms of government. For example, former Finance Minister Tharman Shanmugaratnam — who is now the Deputy Prime Minister — unveiled a S$1.8 billion surplus-sharing “hongbao” in Budget 2008.
This was not only done during the Budget statement. For instance, former Prime Minister Goh Chok Tong — who is now Emeritus Senior Minister — announced during the National Day Rally in 2001 that eligible Singaporeans would get between S$200 and S$1,700 worth of New Singapore Shares.
WHAT HAPPENS WHEN THERE IS A BUDGET DEFICIT
A budget deficit accrued at the end of an FY is not an issue, so long as the net fiscal position of a Government since the start of its term is in surplus, said Assoc Prof Tan.
In other words, a budget deficit for a particular FY can be offset by surpluses in the Government’s current reserves accumulated in previous FYs.
This would be the case for the estimated budget deficit for FY2019, should it come to pass.
The estimated S$3.5 billion deficit can be offset by the current term of Government’s current reserves which stand at about S$19 billion based on what has been accumulated over the past three FYs.
However, if a Government ends up with a deficit in its first year after assuming office, it would have to draw down the Past Reserves to balance the budget, and that would require approval from the President, said Assoc Prof Tan.
This would also be the case if a Government’s accumulated surplus from previous years during its current term is unable to offset a budget deficit incurred at the end of an FY.
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The curious case of missing wealth taxes in Singapore
By DONALD LOW
The missing debate on wealth taxes is not just curious, it is also unhealthy, says the author.
Published20 FEBRUARY, 2019UPDATED 20 FEBRUARY, 2019 in Today newspaper
It should come as no surprise to anyone that the Budget Statement of 2019 did not introduce any new taxes on wealth in Singapore nor raise the rates of the few existing wealth taxes.
We should also not be surprised if no Member of Parliament suggests raising taxes on wealth in the budget debate to follow. This is an indication of how dominant or hegemonic Singapore’s pro-capital stance is — that even in a Budget that is presented as a socially progressive one, no one is likely to question the low taxes on wealth.
The missing debate on wealth taxes is not just curious, it is also unhealthy.
As Singapore ages and if economic growth slows, wealth inequality will become more pronounced even as the demands on social spending rise. It is therefore important to consider whether and how wealth in Singapore should be taxed.
WHY TAXING WEALTH MAKE ECONOMIC SENSE
As the Paris School of Economics’ Thomas Piketty has explained, differences in wealth is a greater source of inequality than differences in labour income.
Wealth comes from the ownership of capital, i.e. financial and physical assets. As ownership of capita is far more unequally distributed than labour, the former is a bigger determinant of inequality.
In Capital in the 21st Century, Professor Piketty also observed that except in times of war and depression, the annual rate of return on capital has averaged nearly 5 per cent.
In mature economies, labour incomes are increasing at a much slower rate mainly because growth in these economies is well below 5 per cent.
Inequality, Professor Piketty posits, rises when the rate of return on capital exceeds the growth rate of the economy.
Singapore is now growing at below 5 per cent, even as we expect the return on capital to be close to its historical average of 4-5 per cent. If we care about rising inequality at all, we should be taxing wealth — and therefore capital income — more.
Second, the ratio of capital income — that is, capital gains, dividends, interest and rental income — to labour income increases exponentially as one gets closer to the super-rich (e.g. the top 1 per cent) in the income distribution.
In Singapore, capital is taxed very lightly: there is no capital gains tax or inheritance tax; dividend and interest income are also exempt from personal income tax. Property taxes are relatively low, and only rental income is taxed at one’s marginal tax rate.
Given that the rich derive a significantly larger share of their income from capital, the very low taxes on capital in Singapore means that capital owners may be paying a lower effective tax rate than the (upper) middle class whose main (if not only) source of income is their labour.
Admittedly, income taxes in Singapore are not high either and most wage-earners in Singapore pay very little income taxes. Most of them also own some capital in the form of their public flats.
But the fact remains that capital income in Singapore is mostly not taxed, whereas labour income and consumption are. This make the overall tax system less equitable than it should be.
The third argument for wealth taxes is the fact that in an economy that would be constantly disrupted by new technologies, we should expect inequality to increase.
This is because automation, artificial intelligence and other digital technologies are likely to disrupt labour-intensive activities more so than capital- or knowledge-intensive ones.
The productivity gains from these disruptions will also accrue more to capital owners than to labourers, even if these disruptions create more jobs than they destroy.
This is also why we hear arguments, by technologists such as Bill Gates, for governments to impose a tax on robots, a form of capital.
TAXING CAPITAL SENSIBLY
The good news for Singapore is that taxes on wealth or capital income can be quite easily introduced without creating perverse incentives.
Singapore could start with a low tax (say 5-10 per cent) on capital gains, as well as treat dividend and interest income as taxable once again.
Dividends and interest income were exempt from tax in the early 2000s as part of the government’s effort to lower income taxes to attract talent and capital to the country.
This was during the era of hyper-globalisation, when it was widely believed that governments had to reduce income and capital taxes and shrink social safety nets to compete for talent and investments.
After the global financial crisis of 2008-2009, much of this neoliberal ideology has been discredited.
Globalisation is also slowing; a recent issue of the Economist magazine was headlined “Slowbalisation” and showed how across several metrics the cross-border flows of goods, services and money are growing more slowly (or not at all).
In such a world, our stance of not taxing capital income would probably not make much difference in drawing foreign capital to our shores.
Meanwhile, the state is giving up a potentially valuable source of revenue, which may necessitate higher taxes elsewhere to finance higher social expenditures.
At low levels, taxes on capital income will not reduce savings and investment. And because ownership of capital is much more unevenly distributed than labour income, such taxes increase the overall progressiveness of the tax system.
In short, low and simple wealth taxes are efficient and equitable.
There is also a case for taxing inheritances. The estate duty was abolished in 2008 to make Singapore a more attractive place for building up wealth.
Although unpopular, taxes on inheritances are the least distorting. Unlike income taxes, they do not reduce incentives to work. And unlike taxes on consumption (such as Goods and Services Tax), they are progressive.
Even opponents of taxation in general should support taxing inheritances if revenues have to be raised somehow.
Nonetheless, the former estate duty did not raise much revenue. Its high exemption level meant that almost all estates were exempt from it.
The solution would be to treat inheritances above a certain threshold as taxable income — and to tax them at our marginal tax rates. Since Singapore’s personal income tax regime is already low and progressive, taxing inheritances this way would deliver similar benefits.
Taxing wealth should be popular since most of us aren’t wealthy enough to pay these taxes. But because of naive optimism, many of us may believe that we would eventually be wealthy.
This “false consciousness” may result in the middle class aligning themselves with the rich who, understandably, are against such taxes.
And if the middle class are opposed to wealth taxes — even though it is in their interests — we would also expect wealth to continue being taxed very lightly in Singapore, to the detriment of society.
ABOUT THE AUTHOR:
Donald Low is Professor of Practice and Director (Leadership and Public Policy) at the Institute of Public Policy, Hong Kong University of Science and Technology. He was previously associate dean of executive education and research at the Lee Kuan Yew School of Public Policy and had also served over a decade in the Singapore Administrative Service, including as director of fiscal policy at the Ministry of Finance.
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Commentary: The Singapore Budget and Heng Swee Keat’s shift away from Big Government
Under Heng Swee Keat, Singapore’s annual Budgets have shifted to give the business community more skin in the game of positioning the economy for the future, reflecting his collaborative approach in leading Singapore.
SINGAPORE: What will Finance Minister Heng Swee Keat’s leadership style look like as Prime Minister?
Since rumours he may take over the top job in the country swirled a few years back, many have been looking for signs of his cast of mind and how he would govern a Singapore facing complex challenges.
A longtime economic czar, with deep experience in the Monetary Authority of Singapore and the Trade and Industry Ministry before his move to politics, Mr Heng’s knack for collaboration has been evident in his strategy to grow the economy over the last few Budgets, including this year’s announced on Monday (Feb 18).
While most companies typically look for additional aid from the Government amid global business uncertainties in each Budget, Mr Heng focuses instead on giving the private sector more skin in the game in transforming the economy.
In Mr Heng’s track record since taking over the Finance Ministry in October 2015, a shift away from a top-down model of government to one that seeks to develop stronger partnerships to position Singapore for the future has been evident.
SKIN IN THE GAME OF COMPANIES’ GROWTH FOR THE BUSINESS COMMUNITY
Several initiatives were announced at Budget 2019, which aimed to give the larger business community a bigger stake in the growth of Singapore companies.
One example was the injection to the Co-Investment Programme (CIP), which has almost reached its goal of catalysing S$1.5 billion over 10 years to nurture Singapore-based globally competitive companies since its launch. Mr Heng said he will set aside another S$100 million.
It is not new, nor is the amount particularly large. And tax incentives and business grants, like the expanded SMEs Go Digital, still make up the mainstay of the more-than-S$1 billion government measures this fiscal year to help businesses build deep capabilities.
But the enhanced CIP builds on a concert of schemes rolled out in recent Budgets to catalyse private sector resources to help Singapore companies reach the next stage of their development, including the S$500 million of government support for the Aviation and Maritime Transformation Programmes, with matching investments from industry partners announced at Budget 2018.
Budget 2017 saw the launch of a S$600 million International Partnership Fund (IPF), which applies the principle of co-investment to help firms break into overseas markets.
At Budget 2016, Mr Heng introduced a Small and Medium-sized Enterprise (SME) Working Capital Loan scheme, to co-share half of the default risk with participating financial institutions to encourage lending to SMEs.
In this context, the enhanced CIP is a reaffirmation of the co-investment approach, which brings to bear the know-how and commercial discipline of the private sector to public sector programmes to support businesses, as one worth pursuing.
Notably, the CIP and previously announced IPF are managed by Heliconia, whose parent company Temasek’s strong reputation in taking smart investment bets will benefit backed companies, giving them a better chance of securing good investors.
This co-investment approach has so far reaped multiplier effects in nurturing a vibrant business environment. Singapore has seen over 220 venture capital deals of close to US$4.2 billion each year, a surge from the 80 worth US$136 million in 2012.
Other initiatives announced this Budget also reflect this preference for partnerships to encourage various actors to contribute to Singapore companies’ growth.
The freshly announced Innovation Agents Programme, which seeks to provide local firms access to experienced industry champions, gives the business community a larger part in their growth.
While trade associations and chambers (TACs) have long been recognised to play a leading role, this role has been strengthened after Mr Heng’s announcement that Enterprise Singapore will work on five-year roadmaps with TACs that have demonstrated strong leadership and shown ambition to do more for businesses.
SKIN IN THE GAME OF RESTRUCTURING FOR COMPANIES AND WORKERS
A second shift is the bigger stake the Budget has given to companies and workers in the economy.
Mr Heng spoke frankly on Monday to outline the sacrifices they must make and talked about restructuring, a word conspicuously missing last Budget.
Indeed, efforts over the past year to upskill workers and help companies develop capabilities have been positioned as “transformation”, shying away from restructuring – a word seemingly avoided for fear of causing uncertainty, when it implies growth will be slowed and jobs endangered.
But a forthright conversation about what is needed from companies and workers has been recently underway. PM Lee Hsien Loong just last month spoke of Singapore’s restructuring journey and highlighted that this march to achieve greater productivity and jobs growth must not let up.
Still, the Government will give stronger support for retraining, redesign and automation through enhancements to the Productivity Solutions Grant and Enterprise Development Grants, both rolled out at Budget 2018.
Detailed planning to undertake restructuring in recent years has in fact been underway over many years, taking the form of Industry Transformation Maps, the brainchild of Mr Heng, launched in Budget 2016 and applying a sector-specific approach to deepen partnerships between the Government and the industry to identify challenges and develop solutions.
That strategy was given muscle with a S$400 million Automation Support Package at Budget 2016, and a SMEs Go Digital Programme at Budget 2017, to help firms embark on automation projects and digitalise.
Workers too must own their pathway in this journey; schemes to help them take on new jobs in sectors with good growth prospects through the Adapt and Grow and Adapt and Train initiatives have been bolstered over the last few years, with a new Professional Conversation Programmes in blockchain, embedded software and prefab announced on Monday.
With these blocks in place, what the next phase of restructuring entails is for firms to undertake potentially difficult action needed to retune the economy for long-term growth.
Mr Heng’s Budget Speech was explicit on this point. He targetted an issue close to the hearts of many businesses – reliance on foreign labour.
For firms that have long lamented tight restrictions, Mr Heng has asked they bite a long-awaited bullet to address this unsustainable driver of growth.
So the foreign worker ratio for the services sector and S Pass ratio will be cut, even as the Government defers foreign worker levy raises in the fragile marine shipyard and process sectors where recovery has just begun – a deferment of four years now.
But the suite of initiatives have positioned companies and workers well to undertake this challenging restructuring task.
SKIN IN THE GAME OF INNOVATION FOR HIGHER INSTITUTES OF LEARNING
A third shift gives research partners a stronger role in enterprise development.
At Budget 2019, Mr Heng announced the creation of two Centres of Innovation in Aquaculture and Energy at Temasek Polytechnic and NTU respectively, and highlighted how closer collaboration between companies and institutes of higher learning is needed to marry “the spirit of entrepreneurship” with the rigour of research.
It might seem like a minor move but these centres are potentially backed by huge pots of money and a supporting ecosystem put in place over the years at past Budgets.
A total of S$19 billion in the Research, Innovation and Enterprise fund (RIE2020) had set aside by the Government to boost the generation of enterprise solutions by research institutes – a fund which Mr Heng topped up at Budget 2016.
New entities like SG-Innovate and agencies like A*STAR have been given bigger roles to help start-ups access talent in research institutes and aid companies to map out their operations and technology needs at Budget 2016 and Budget 2017 respectively.
A Jurong Innovation District was launched to house entrepreneurs, researchers and students testbedding new innovations at Budget 2016.
R&D can be a lifeline for companies to find innovative ways of doing old things, solve complex challenges and break into new sectors – giving them the edge in an age of disruption.
Local company Wavelength Opto-Electronic developed a patented, automated inspection system for contact lenses, reducing time taken by 10-fold, with aid from scientists at the Institute of Manufacturing Technology. Its revenue has jumped by almost 80 per cent last year.
SMRT is also partnering NTU to develop a new sensor system to detect MRT train door faults, with support from NRF, while NTU’s and NUS’ collaboration with the private sector is fueling Singapore’s space dream with the development of locally-built satellites.
READ: How Singapore can be a space power, with small satellites, a commentary
A STORY OF GROWTH, A NATIONAL CONVERSATION
All in all, if we focus on the Budget’s thrust of growing the economy, Mr Heng’s collaborative approach to rally others towards common goals, evident in his leading of Our Singapore Conversation years ago, comes through in his approach to boost growth through the Singapore Budget.
The signal Mr Heng has sent of the increasingly important role that companies, research centres and the larger business community will play over these years has set the tone for how the Government intends to work with the private sector in Singapore’s future economy.
He has placed Singapore businesses on a stronger footing and focused them on mustering support from other actors instead of relying on the Government for handouts.
Lin Suling is executive editor at Channel NewsAsia Digital News where she oversees the Commentary section.
Read more at https://www.channelnewsasia.com/news/commentary/heng-swee-keat-leadership-style-finance-minister-budget-2019-11282666
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