Earlier today, Deputy Prime Minister & Finance Minister Heng Swee Keat delivered the Fortitude Budget, the fourth Singapore Budget for 2020.
Prior to this Budget statement, many were expecting additional support to be announced by the government to help businesses in Singapore survive through the COVID-19 pandemic, which has seen our country gone into a circuit breaker period since April 2020.
Here are 6 important announcements made during the $33 billion Fortitude Budget that business owners in Singapore need to know.
#1 Job Support Scheme To Be Extended & Enhanced
The Job Support Scheme (JSS) has been one of the most important schemes in the past few months, with the government directly supporting the local wage bills for Singapore companies up to the first $4,600 paid to local employees.
The support is based on wages paid from October 2019 and was meant to last till July 2020, with firms getting 25% in wage support for the non-circuit breaker months (i.e. Oct, Nov, Dec, Jan, Feb, March, May, June & July) and 75% for April and May. Now, all firms will get an additional 25% wage support for the month of August. In total, the JSS support wages for a total of 10 months.
For example, if you have ten local employees being paid $4,000 a month each in August, your firm will receive $1,000 (25%) in wage support for each local employee, for a total of $10,000.
For businesses that are not allowed to re-open after 1 June, wage support will continue at the 75% level, until August 2020 or when the business is allowed to re-open. This would include the likes of gym, cinema operators and retail outlets.
Lastly, there will also be higher wage support for firms in industries that have been more severely impacted. These would include firms in the aerospace sectors (75%) and the retail and marine and offshore sectors (50%).
#2 Waiver Of Foreign Worker Levy To Be Extended, Additional Rebate Given
For businesses that need to remain closed after circuit breaker is lifted, there will be a further waiver of foreign worker levy in June and July. The waiver will be 100% in June and 50% in July. This will also include all businesses in the construction, marine and offshore, and process sectors.
Also, these firms will also receive a rebate of $750 in June and $375 in July per foreign worker.
#3 Deferment Of Increase In CPF Contribution Rates For Older Workers
It was previously announced in 2019 that CPF contribution rates for older workers will increase from 1 Jan 2021 onwards. However, given the current economic climate that we face, the increase in CPF contribution rates will be deferred to 1 Jan 2022 instead.
#4 Rental Relief For SMEs
Rent has been a huge talking point in recent weeks, with many business owners lamenting about how they need to continue paying rent even during the circuit breaker period, when their workers are not allowed to go into the office.
To further alleviate some of these costs that companies are facing, the Singapore government will provide a cash grant to offset the rental cost of SME owners, which would be disbursed through landlords. It’s important to note that under the law, landlords have to pass the cash grants to their tenants.
Along with the property tax rebate that was announced in the previous budget, the government estimate that it will be offsetting about two months of the rental cost for SME tenants in commercial properties, and about one month of rent for tenants of industrial and office space.
In addition, it was also announced that a bill will be introduced next week, which would require landlords to provide rental waiver to SME tenants who have been badly affected by COVID-19. The bill will also cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges. It will also allow tenants to repay their arrears through instalments.
Government tenants (e.g. those renting under JTC, NEA) would enjoy greater rental relief. Commercial tenants and hawkers will receive an additional 2 months of rental waiver while industrial, office and agricultural tenants will enjoy an additional month of rental waiver.
#5 Financing Support For Promising Startups
To support promising startups during this challenging period, an additional $285 million will be set aside to help startups get access to financing during this period. This would support startups that have difficulty raising capital to develop their business, and to protect the jobs of employees working in these promising startups.
#6 Incentivising Businesses To Adopt PayNow & Other Technology
We previously wrote about why Singapore businesses should adopt PayNow as quickly as possible and it appears that the government also agrees. To encourage the quicker adoption of PayNow, eligible businesses can receive a payout of up to $5,000 if they adopt PayNow and e-invoicing, as well as business processes or e-commerce solutions under the Digital Resilience Bonus. This will be starting with the retail and F&B sectors first.
Stallholders can also enjoy a bonus of up to $300 per month over a period of 5 months if they adopt e-payment solutions.
Contingency Fund Of $13 Billion To Be Set Aside
As an indication that the government may still introduce more schemes in the future if need be, a contingency fund of $13 billion will also be set aside to cater for any other urgent and unforeseen expenditure needs. Depending on how the pandemic unfolds, the government may tap on further usage of the funds to tackle problems in the future.
Business owners likewise would do well to be prepared for an uncertainty business environment in the coming months ahead.
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