Minister for Finance, Heng Swee Keat, delivered the Budget speech for the Financial Year 2019 in Parliament yesterday.
After reflecting on Singapore's Bicentennial, minister Heng pointed out four key forces reshaping the global environment moving forward:
- The shift in global economic weight towards Asia.
- Rapid technological advancements.
- Changing demographic patterns.
- A decline in support for globalisation.
Domestically, there is a need to address longer-term challenges, including ageing, social mobility, inequality, economic transformation, and climate change.
The changing global and domestic landscape presents both challenges and opportunities. Hence, to continue to chart the way forward, Budget 2019 is a strategic plan to allocate resources to build a strong, united Singapore.
Budget 2019 will focus on five key things:
- Keeping Singapore safe and secure.
- Continuing to transform the economy
- Building a caring and inclusive society
- Building Singapore as a global city and home for all, keeping it smart, sustainable, and globally connected.
- Achieving these goals in a responsible and fiscally sustainable way.
#1 Enabling people to have good jobs and opportunities
- This year, new Professional Conversion Programmes (PCPs) will be launched relating to blockchain, embedded software, and prefabrication to prepare our people to move into new growth areas.
- Career Support Programme will be extended by two years to provide wage support for employers to hire eligible Singaporeans who are mature and retrenched, or are in long-term unemployment.
- Starting from 1 Apr 2020, all transformation efforts supported by Enterprise Singapore’s Enterprise Development Grant must include positive outcomes for workers, such as wage increases.
#2 Enhancing complementarities of local and foreign workers
- Workforce quota will be adjusted for the services sector.
- The services sector Dependency Ratio Ceiling (DRC) will be reduced in two steps, from 40% to 38% on 1 January 2020, and to 35% on 1 January 2021.
- The services sector S Pass Sub-DRC will also be reduced in two steps, from 15% to 13% on 1 January 2020, and to 10% on 1 January 2021.
- To support firms as they adjust to these changes, measures will be in place till FY2022. The 70% funding support level for the Enterprise Development Grant will be extended for three more years, up to 31 March 2023. Productivity Solutions Grant will also be extended till 31 March 2023. It will be enhanced to support up to 70% of the out-of-pocket cost for training, capped at S$10,000.
- 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.
- Increased Foreign Worker Levy rates for the Marine Shipyard and Process sectors to be deferred for another year as they have only begun showing early signs of recovery.
#3 Preparing people for Industry 4.0
- Prepare and develop people to make full use of Singapore’s position as a global node of technology, innovation, and enterprise.
- For students who are currently in Institute of Higher Learning (IHLs), the government will combine the local and global internship programmes into a single Global Ready Talent Programme. It will have enhanced funding support for our students interning overseas with Singapore firms.
- The Global Ready Talent 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.
- Singapore Week of Innovation & Technology and Singapore FinTech festival will be held in same week in mid November. This will bring in the global innovation community to come together in Singapore, to explore and collaborate.
- The government expects to spend S$4.6 billion over next three years on the new and enhanced capability-building measures in Budget 2019 and to support Singaporean workers. S$3.6 billion will go towards helping workers to thrive amid industry and technological changes. S$1 billion will go towards firms to build deep enterprise capabilities.
#4 Supporting lower-income workers
- For bottom 20% of workers, the Workfare Income Supplement (WIS) scheme will be enhanced to provide better support.
- Qualifying income cap for WIS will be raised from S$2,000 to S$2,300 a month. Maximum annual payouts will be increased by up to S$400. Older workers will see higher increases in payouts.
- An estimate of S$206 million a year will be spent on these WIS enhancements.
#5 Supporting older workers
- Today, about one in four of Singapore's workforce is aged 55 and above. They continue to make important contributions to our economy and society.
- The government is doing more to help them earn more, save more, and have greater peace of mind in their retirement years.
- Tripartite Workgroup to study the concerns of older workers will present their recommendations later this year.
- The government will extend Special Employment Credit (SEC) and the Additional Special Employment Credit (ASEC) for another year, until 31 December 2020. To support this extension, S$366 million will be added to the SEC Fund.
#6 Supporting firms and enabling them to scale
- 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.
- A pilot Innovation Agents programme will be launched for firms to tap on a pool of experts to advise them on opportunities to innovate and commercialise technology.
- An additional S$100 million will be set aside to establish SME Co-Investment Fund III.
- Existing financing schemes offered by Enterprise Singapore will be streamlined 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.
- 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 schemes.
- To support viable SMEs in their day-to-day operations, the SME Working Capital Loan scheme will be extended for about two more years, till March 2021. Support for working capital will be folded under the Enterprise Financing Scheme from October.
- The SMEs Go Digital programme will be expanded. Accountancy, Sea Transport, and Construction will get their own industry digital plans, with more sectors to be added later.
- The government 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.
- The Automation Support Package (ASP) will be extended by two years to help firms deploy impactful and large-scale automation technologies.
- 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.
Other interesting developmentsMore affordable healthcare with enhancement to the Community Health Assist Scheme (CHAS). CHAS subsidies for GP clinics will be enhanced in three ways:
- It will be extended to cover all Singaporeans for chronic conditions, regardless of income.
- Lower- to middle-income Singaporeans who are CHAS Orange cardholders will also receive subsidies for common illnesses.
- There will be increased subsidies for complex chronic conditions.
- The Ministry of Health has announced that it will be introducing the new CareShield Life from 2020, an enhancement of the current ElderShield scheme.
- CareShield Life will provide lifetime coverage, with higher monthly payouts of at least S$600 a month for those who become severely disabled. This offsets the costs of long-term care for individuals and their families. Subsidies and premium support will be provided.
- A one-time S$100 top-up to their PAssion Silver EZ-Link cards to support their active lifestyles.
- MediSave top up of S$200 a year for 5 years starting this year to 2023.
- Special CHAS subsidies and other additional subsidies for outpatient care for life.
- Additional MediShield Life premium subsidies for life, starting from 5% of their MediShield Life premiums.
- Additional participation incentive of S$1,500 for Merdeka Generation seniors who join CareShield Life when it becomes available for existing cohorts in 2021. This brings the total incentive to S$4,000.
Bicentennial Bonus for Singaporeans. This includes:
- Up to S$300 through GST voucher cash for lower-income Singaporeans. This will benefit 1.4 million Singaporeans.
- Those who receive WIS payments will get a Workfare Bicentennial Bonus (in cash) amounting to an additional 10% of their WIS payments for work done in 2018. Minimum payment of S$100.
- Those who pay personal income tax will get 50% personal income tax rebate, subject to a cap of S$200, for YA 2019. Cap set as S$200 so benefits go mostly to middle income earners.
- CPF top up of up to S$1,000 for Singaporeans aged 50 to 64 with less than $60,000 of retirement savings in their CPF accounts.
- Carbon tax will be applied on this year’s emissions as an important signal to companies and households to reduce emission and adopt energy-efficient practices.
- Ministry of the Environment and Water Resources (MEWR) will also introduce the Zero Waste Masterplan in the second half of this year.
- The government will also raise the excise duty for diesel by S$0.10 per litre, to S$0.20 per litre. Annual special tax on diesel cars and taxis permanently reduced by $100 and $850 respectively.
- To cushion the impact for commercial diesel vehicles, road tax rebates will be implemented for diesel commercial vehicles. Additional cash rebates will also be provided for diesel buses ferrying school children.
- Relief for those who spend less than 48 hours overseas will be reduced from S$150 to S$100. For those who spend 48 hours or more overseas, relief quantum will be reduced from S$600 to S$500. This will be effective today (19 February 2019).
- Alcohol duty-free allowance will be reduced from 3 litres to 2 litres from 1 April 2019.
Minister Heng ended by saying: "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."
Check out a snapshot of the Singapore Budget 2019 in this post shared by National Trades Union Congress’ (NTUC) Assistant Secretary General, Patrick Tay.
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Photo / 2019’s live stream