SINGAPORE: When Finance Minster Heng Swee Keat delivers the Budget for 2017 on Feb twenty, for a longer time-phrase transformation actions to bolster Singapore’s restructuring attempts will likely continue being a essential priority.
Even as progress slows and unemployment creeps up amid lingering global uncertainties, there will be small shorter-phrase fixes, according to economists who spoke to Channel NewsAsia.
“The Budget will not be a shot of morphine, irrespective the point out of the economy’s wellbeing, but it will be a very qualified administration of lengthy-phrase vitamin nutritional supplements to ensure that Singapore thrives,” said Mizuho Bank’s senior economist Vishnu Varathan.
Offered that there is an added agenda this 12 months to flesh out information of the Committee on the Potential Economy’s (CFE) report, what will these “vitamin nutritional supplements” be and what else can Singaporeans hope from Budget 2017?
1. BE PRUDENT WITH AN EYE ON THE Potential…
First of all, the Budget, which accounts for the Government’s revenues and expenses, will continue being a prudent a single even as economists hope it to be in surplus for the financial 12 months ending March 31.
This is mostly since the Governing administration is only in the second 12 months of its new phrase and will want to conserve up in case of rainier times forward, suggested Credit history Suisse economist Michael Wan.
And this attitude of maintaining an eye on the medium to lengthy phrase is necessary as an too much aim on ongoing pitfalls these kinds of as Brexit may close up currently being counter-successful, Mr Varathan said.
“We know there are lots of uncertainties proper now, like Donald Trump’s insurance policies, Brexit and China’s slowdown. But since we really don’t know specifically how this will pan out, making an attempt to pre-empt around-phrase shocks has pitfalls and we will risk currently being premature and misguided,” said Mr Varathan.
This may well result in the squandering of methods, which could have been directed to the lengthy-phrase restructuring goals of reworking Singapore’s enterprises and workforce, he included.
Mr Liang Eng Hwa, chairman of the Governing administration Parliamentary Committee (GPC) for Finance and Trade, said: “This year’s Budget will have the included crucial task of utilizing the suggestions of the CFE. Hence, always, the aim will be more medium to lengthy phrase. I hope the Budget to carry on its prudent stance offered the uncertainties forward – that it is the most sustainable way to develop resilience.”
Singapore’s economic climate has been jogging sluggish amid a double whammy of macroeconomic pitfalls and an ongoing domestic restructuring. (File photograph: AFP/Roslan Rahman)
2. BUT THERE COULD BE SOME COUNTER-CYCLICAL Actions
Even so, just like final year’s Budget, there may be some shorter-phrase qualified initiatives to help enterprises, households and people today navigate via the current wave of economic problems.
For instance, Citi economist Kit Wei Zheng expects all planned international employee levy raises for susceptible sectors these kinds of as offshore and maritime engineering, to be held off. The Governing administration could also help to decrease or defray non-labour fees, like utilities and rentals, to “prevent unneeded decline of competitiveness”, he included in a report dated Feb ten.
Amid a softening labour industry wherever retrenchment has steadily risen over the system of final 12 months, help will also be designed available to displaced staff. Aside from skill upgrading opportunities, help could also arrive in the form of for a longer time tax repayment intervals and a a single-off own income tax rebate, said Mr Kit.
Nevertheless, offered that the progress slowdown has not been as sizeable as it was all through the global financial crisis, specialists say a repeat of drastic actions these kinds of as the 2009 Jobs Credit history Scheme will be not likely for now.
3. A ‘BUSINESS FRIENDLY’ Budget?
Organization advancement will likely carry on hogging the limelight at the future Budget. Coming into stage with the CFE’s proposals, a “company helpful” Budget is expected to consist of initiatives to help firms further leverage technology and empower innovation, said DBS economist Irvin Seah.
At the very least two initiatives announced final 12 months could return to the highlight. For a single, there could be more information about plans for the remaining seventeen industries below the Market Transformation Maps (ITMs). About the past 12 months, advancement roadmaps for 6 out of the 23 qualified industries below the S$4.five billion programme have been announced.
Mr Seah is also anticipating an enhanced model of the Automation Support Bundle – a more than S$400 million fund aimed at assisting firms automate, generate productiveness and scale up – which could entail a even bigger grant and increased risk-sharing by the Governing administration.
But investments in electronic technologies, as properly as investigation and advancement (R&D), can be a highly-priced endeavour for homegrown little- and medium-sized enterprises (SMEs). It could also be a perhaps dangerous a single when companies are presently feeling the squeeze from climbing fees, funding and manpower pressures.
“SMEs in the final couple of a long time have been preventing tightening labour lack and climbing price tag, whilst at the similar time, making an attempt to change their company,” Mr Ang Yuit, vice president of membership and teaching at the Association of Smaller and Medium Enterprises (ASME), instructed Channel NewsAsia. “A slowing progress surroundings would force them to slash back on innovation routines, and also very likely, scale down their company.”
Nevertheless, to remain pertinent amid the electronic wave, he famous that it is crucial for SMEs to “double down on innovation, company product re-engineering as properly as R&D”.
As these kinds of, ASME is contacting on the Governing administration to lengthen the Efficiency and Innovation Credit history (PIC) plan, which Mr Ang described as “a single of the best grant for SMEs to tap on”.
Aside from that, ASME hopes to see more help for SMEs to make that leap from regional to global. According to Mr Ang, current actions are “very minimal” and are often an sick match with SMEs. Citing the Double Tax Deduction Scheme for Internationalisation (DTD) as an case in point, he said: “It may be fantastic for substantial enterprises, but for SMEs searching to go abroad, it is the availability of company and opening of marketplaces that is critical.”
Even though it managed to tap grants from IE Singapore, regional restaurant 4Fingers Crispy Rooster confronted problems in spots these kinds of as recruitment, hunting for company associates and suppliers, when it first ventured into the Malaysian and Indonesian marketplaces.
As it gears up for the opening of its retailers in Australia this 12 months, comparable hurdles have re-surfaced because of to the absence of a regional network and source constraints.
Mr Steen Puggaard, CEO of the fried rooster chain, instructed Channel NewsAsia: “A single portal for enterprises to tap on to IE Singapore’s throughout the world methods for industry launches would be very effective… Aside from source support in source chain, lawful, finance and tax etc, financial support in securing these methods would also help us take care of our fees in industry entries.”
Overseas growth is a essential aim for this homegrown fried rooster chain in 2017. (Image: 4Fingers Crispy Rooster)
4. Serving to THE WORKFORCE TO Level UP
Also on the playing cards could be actions to help Singaporeans acquire further abilities to remain pertinent in a speedy-modifying labour industry upended by swift technological disruption.
Amid a expanding mismatch between employment and abilities in the regional economic climate, OCBC’s head of treasury investigation and strategy Selena Ling said that more can be accomplished on major of present schemes these kinds of as the Experienced Conversion Programme (PCP), Adapt and Mature and the Occupation Support Programme (CSP).
For instance, the present credit history sum of S$500 in the SkillsFuture plan could be amplified to inspire Singaporeans to cultivate a lifelong learning perspective, said Credit history Suisse’s Mr Wan. To stimulate firms to accommodate staff who consider on added employment or teaching, employers could obtain tax rebates or subsidies when they send out their staff members for teaching, he included.
five. BALANCING SOCIAL Spending
With the economic climate now in aim and a slew of actions these kinds of as the Silver Support Scheme presently in position, observers said the future Budget will not likely see further raises in social expenditure or the announcement of large-bang social insurance policies.
Mr Liang famous that the Governing administration is struggling with a fragile harmony to generate sufficient earnings to meet up with the ramp-up in social spending and infrastructure over the past couple of Budgets.
“As the economic climate slows, does that necessarily mean tax earnings will be decreased? We also are not able to hope the Internet Financial commitment Returns (NIR) contribution to generally be (regular) since global marketplaces do have ups and downs that influence in general returns. So the rate of progress in earnings and expenditure is anything that we require to view carefully,” he spelled out.
“At the close of the working day, we want to commit on the proper matter and physical exercise prudence.”
To be absolutely sure, the Governing administration has said that more help will be offered to the elderly, youthful family members and people today with disabilities in this Budget. DBS’ Mr Seah said households can hope to obtain a assisting hand in boy or girl education and learning fees, major-ups to numerous public support schemes these kinds of as the Comcare Fund, and rebates on utilities, company and conservancy fees.
Comply with See Kit on Twitter @SeeKitCNA