Budget 2021 – Yet Another Defining Moment for Singapore
It comes as no surprise that this year’s Budget has intensified the spotlight on resilience. As Deputy Prime Minister Heng Swee Keat rightly pointed out – every Budget is important, but Budget 2021 comes at a particularly critical juncture.
The government has once again made the tough choice to draw on its reserves, allocating S$11 billion to safeguard public health and reopen safely, as well as support workers and businesses suffering from the impact of Covid-19. It remains to be seen whether the latest Resilience Package will be the last, or if there will be a need to dig deeper into Singapore’s reserves later this year.
Rebuilding the economy for a stronger tomorrow
However, overall this year’s Budget is aimed at Emerging Stronger Together and goes well beyond just catering to the immediate needs of businesses and Singaporeans. While the Budget remains sensitive to the economic pain inflicted by the pandemic, the government is increasingly focusing on securing the long-term prosperity of Singapore post-pandemic.
Here are some key takeaways that stand out from yesterday’s Budget.
Targeted help with an end in sight
Even though the Singapore government is running a deficit, it is encouraging to note that the economy is still expected to grow between 4%-6% this year. Policymakers are viewing the current crisis as an opportunity to restructure the economy for the long-term. Their goal is to futureproof businesses and the workforce both to survive the pandemic and to benefit from future economic growth.
To cushion the impact of the crisis, policymakers took a blanket approach last year in providing financial support and schemes to businesses across the board. However, this year the support measures are targeted towards sectors that remain stressed or heavily impacted. Aviation is set to receive additional support and cost relief amounting to S$870 million this year. It is a strategic move to keep the sector afloat and use the current slowdown to upgrade and prepare for recovery. Supporting air connectivity will also help to stimulate recovery in the tourism sector, which was brought to its knees last year.
However, the government has also sent a clear message that even heavily impacted sectors cannot expect blanket support throughout this year. While the Jobs Support Scheme will be extended for selected sectors, support will taper down over time. The aviation and tourism sectors will receive 30% support for wages paid from April to June 2021, and 10% support for wages paid from July to September 2021. Other sectors such as retail, food services, arts and culture, and marine and offshore, will receive 10% wage support up to June. This is a sign the government is trying to balance reliance on financial support while encouraging companies to relook their business models.
Prioritising business transformation and skills upgrade
Investing in the future has always been Singapore’s key strength. The Budget underlined the need for Singapore businesses to transform and digitalise so they can plug themselves into the future flow of goods and capital. There is also a progressive push for Singaporeans to equip themselves with the skills and agility required to remain relevant in today’s dynamic landscape. In line with that, S$24 billion will be allocated over the next three years to boost skills and build up local workers and firms.
This year the government is looking to further bolster local businesses and the job market by incentivising business transformation and worker upskilling. To achieve this, a total of S$1 billion will be allocated to extend existing business-focused schemes and provide new digital transformation schemes.
The policy has been designed to strengthen the ecosystem by building a future-ready, resilient workforce whilst supporting local firms to innovate, transform and scale. Whether it is adopting digital tools to modernise operations or benefiting from hiring and training-related assistance, now is the time for local businesses, big or small, to find their bearings and entrench themselves in the digital era. The aim is to have all players in the value chain working together to integrate and digitalise processes and upskill workers. This includes programmes and initiatives such as Emerging Technology Programme, Chief-Technology-Officer-as-a-Service (CTOaaS) initiative and Digital Leaders Programme.
Viewing Singapore through green lens
As we progress towards a green economy, policymakers are hoping to create new jobs, transform local industries, and harness sustainability as a competitive advantage. According to the Budget, firms, especially SMEs, in the manufacturing and technology sectors can expect support to use resources more efficiently and develop green products and solutions. It is also quite clear that green finance will be a key enabler in channelling capital towards sustainable efforts.
Singapore wants to take a holistic approach towards integrating sustainability into the ecosystem and the fabric of society. This involves taking the lead on green bond financing for public infrastructure projects to catalyse sustainable development in Asia and cement Singapore’s position as a green finance hub.