The Ministry of Finance (MOF) has announced that Budget 2021 will be delivered on 16 February 2021 at 3pm.
Many Singaporeans and Singapore businesses will be eagerly anticipating the announcement. However, Budget 2021 will unlikely deliver such wide sweeping measures and incur such a deficit to bolster the Singapore economy compared to Budget 2020. Remember that in 2020, there were 4 separate budget announcements and 2 Ministerial Statements to supplement it as the coronavirus situation deteriorated.
Budget 2021 will likely provide more targeted help for businesses. Many of the initiatives to help businesses that was announced in Budget 2020 has ended or will be ending at some point in 2021. And, Budget 2021 will provide clarity to what kind of help businesses (and individuals) will get going forward.
Government Schemes Announced In Budget 2020 To Aid Businesses
In recap, there were extensive measures to help businesses in 2020.
One of the biggest support measures in 2020 was the Jobs Support Scheme (JSS). At the height of its requirements during the Circuit Breaker from 7 April to 1 June 2020, the government provided 75% salary support for all Singapore employees, up to a salary range of $4,600 per employee. This was gradually lowered for different tiers of businesses and will come to an end in March 2021.
A Jobs Growth Incentive (JGI) was introduced to provide salary support for businesses who hired new local employees while retaining their existing workforce. This gave businesses 25% salary support for employees under 40 and 50% salary support for employees 40 and above, for up to 12 months and up to $5,000 salary.
The Wage Credit Scheme (WCS) was also enhanced to provide businesses with more cash flow, based on the sustained increments it had given employees in past years. The WCS is a government co-funding scheme for salary increments.
To help more companies retain profits and have more cash flow to battle COVID-19 and possibly implement initiatives to transform their businesses, the government also provided a Corporate Income Tax rebate of 25% (capped at $15,000 per company).
To help businesses with their cash flow crunch. A government-assisted SME Working Capital Loan was enhanced to provide up to $1 million (previously $300,000) was provided for businesses. This can be repaid over up to 5 years, with interest rates capped between 1% and 5%. The government will share 90% of the risk of these loans.
Read Also: Using The Government-Assisted SME Working Capital Loan To Grow Your Business
Support for small businesses locked in rental and other forms of leases were also considered. The government provided about 2 months rental relief for eligible commercial properties and 1 month rental relief for office and industrial properties through a combination of property tax rebate and cash grant to property owners. The government also required property owners to provide rental relief to SME businesses. The government also subsequently introduced the Re-Align Framework to enable small businesses to renegotiate rental terms or terminate them.
Read Also: Rental Relief For Affected SMEs: How Much Do Landlords Need To Rebate Their Tenants?
At the same time, various existing government schemes were enhanced to help businesses onboard digital solutions and improve their productivity/efficiency. Among others, this included the Productivity Solutions Grant (PSG), Market Readiness Assistance (MRA), as well as SMEs Go Digital programme.
To upskill employees, SkillsFuture credits were also provided in 2020. For employees, the next bound of SkillsFuture credits includes $500 for all Singaporeans and PRs and an additional $500 for those between 40 and 60 was provided. The government also provided businesses with a one-off $10,000 SkillsFuture Enterprise Credit (SFEC) that can be used for upgrading employees and digitalising their business.
Self-employed persons were also given up to $9,000 under the Self-Employed Persons Income Relief Scheme (SIRS).
These were just some measures, among others, that were announced in Budget 2020.
A Singaporean Core In All Businesses
To ensure Singaporeans continue to form a key component of local businesses, majority of the schemes provided target support to local employees only. This made it less viable to keep foreign employees, especially if there is a local one who can do the same job or who can be trained to do the same job.
In addition, an extensive SGUnited Jobs and Skills Package. This was meant to create 100,000 openings for traineeships and mid-career training. This package provided salary subsidies for employers to hire new graduates
Senior workers are also being encouraged to stay within the workforce. To this end, the government announced a Senior Employment Credit scheme to replace the existing Special Employment Credit and Additional Special Employment Credit. In addition, to help employers and senior employees, the 1% additional CPF contribution would be deferred. It will also be co-funded by the government when implemented. The Senior Workers Support Package was also enhanced – rewarding businesses that increase their retirement and re-employment ages ahead of the government mandated dates.
Read Also: Retirement And Re-Employment Act: What Employers Need To Know About Retaining Older Workers
During the year, the government also increased the qualifying wage criteria for Employment Pass (EP) and S Pass holders. This is to ensure more focus is put on Singapore workers, while highly skilled and quality foreign workers come in to improve the workforce.
Singapore Cannot Afford To Take It Easy
While there appears to be a light at the end of the long COVID-19 tunnel, Singapore and its people and businesses cannot afford to take things lightly. Singapore has managed the spread of COVID-19 relatively well, keeping the local transmission cases low. However, there have been spikes in coronavirus cases in many parts of the world as new strains emerge.
The global vaccination programme is also intended to lead the global population to herd immunity. However, large swathes of the population may not get vaccination until much later in 2021.
Singapore cannot let her guard down.
At the same time, Singapore will continue to be impacted – being a trade-centric and open economy. To this end, Budget 2021 is expected to be more targeted in delivering help.
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