Targeted support for more impacted sectors
In a clear sign that the Singapore government will continue to provide targeted support for sectors and companies which are still hard hit by the pandemic, the Jobs Support Scheme (JSS) was extended. The current tranche will continue to cover wages up to March 2021 for most sectors. In the new budget, the JSS will be extended for sectors that continue to be hard hit, including aviation, aerospace and tourism by six months to September 2021. For retail, arts and culture, food services and built environment, JSS will be extended by three months to June 2021. The targeted support and extend cost relief for the aviation sector will cost S$870 million under the Covid-19 Resilience Package.
A significant portion or S$4.8 billion of the S$11 billion Covid-19 Resilience Package will be channelled towards public health and safe re-opening.
Learn, Adapt, Innovate and Grow
The transformation of the Singapore workforce will continue and the government has set aside S$24 billion to be allocated over next three years to enable businesses to transform, and this will include creating opportunities and redesign jobs for Singaporeans to develop their skills, creativity and talents. As part of the transformation, a wide range of capital will be available to start-ups and high-growth enterprises. In addition, mature enterprises will be able to tap on fund to adopt new digital solutions and embrace new technologies.
An inclusive and cohesive society
A S$900 million Household Support Package will provide some support to all families, with lower- to middle-income families receiving more. Groups that have been badly hit by the pandemic will also receive more long-term support.
Green effort is a key focus for a sustainable future
To build a nation that has the fiscal and social reserves for continued stability and progress, several measures were announced. Petrol duties will be raised with immediate effect and road tax rebates will help to offset increased costs. The government has recently unveiled the Singapore Green Plan 2030. This aims to create a green, liveable and sustainable nation for Singaporeans. The five broad pillars of the Singapore Green Plan 2030 are City in Nature, Sustainable Living, Energy Reset, Green Economy and Resilient Future. The government also intends to enhance charging network and promote the use of Electric Vehicles (EVs), which we discuss more below in the following section. The petrol duty was also raised with immediate effect – the first time in six years.
The government will also lead the effort to issue green bonds on select public infrastructure projects. It has already identified up to S$19 billion worth of public green projects.
No GST hike for now, likely in 2022 to 2025
The GST rate increase will not be introduced in 2021, but the government added that it will likely be introduced some time during 2022 to 2025, and sooner rather than later, subject to the economic outlook.
All in, the measures that the Singapore government is taking would be a supportive factor for the domestic equity market, but key drivers are still the global Covid-19 trajectory and the impact from overseas markets, given Singapore’s small and open economy.Disclaimer applicable to recommendation
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(1) Very Low Downside Risk, (2) Low Downside Risk, (3) Moderate Downside Risk, (4) High Downside Risk, (5) Very High Downside Risk
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Version: July 2020