SINGAPORE (May 25): Businesses and households can look forward to yet another slate of relief measures that will be over and above the $63.8 billion already doled out to tide Singapore through the Covid-19 storm.
Deputy Prime Minister and Finance Minister Heng Swee Keat will unveil this fourth round of measures when Parliament sits on Tuesday.
Already, Singapore had announced relief measures in Budget 2020 on Feb 18, the supplementary “Resilience Budget” on Mar 26 and the “Solidarity Budget” on Apr 6, a day before the circuit breaker measures restricting the operations of non-essential services kicked in.
An additional round of relief was also announced on Apr 21, when Singapore’s circuit breaker measures were extended to Jun 1, from the previously announced May 4.
Collectively, the measures were aimed at keeping businesses afloat, with employers receiving enhanced co-payment support from the government for their employees’ salaries. Individuals and households, too, received more handouts, including a $600 Solidarity payment for all Singaporeans aged 21 and above.
While the current measures amount to some 13% of Singapore’s Gross Domestic Product (GDP), it might still not be enough. This is especially since some businesses will have to remain shut even after the circuit breaker ends on Jun 1.
Starting Jun 2, Singapore will embark on phase one or a ‘safe reopening’ that will see the resumption of about a third of the workforce, up from the current 17%.
Sectors allowed to reopen include those from the manufacturing and professional services as well specialist healthcare services, motor vehicle servicing, air-conditioner servicing and basic pet services.
The reopening of other sectors will be considered when the republic kicks off phase two or phase three in the coming months. This three-phased approach serves to prevent the risk of further transmission of Covid-19 infections.
See: Singapore prepares for a 'new normal' after Jun 1 with a three phase approach
“The Covid-19 pandemic is disrupting lives and livelihoods across the world and in Singapore,” Heng pointed out in a Facebook post on Monday. “As we are re-opening our economy in phases, we will continue to support our viable businesses, especially those which are not able to open immediately”.
This fourth round of measures – dubbed the Fortitude Budget – will focus on retaining workers and retraining those who have been retrenched. “We will help you turn anxiety into action,” said Heng, adding that support will be through initiatives for upskilling and the creation of new jobs.
Traineeships and other opportunities will also be announced for individuals completing their post-secondary education this year, he added.
Aside from this, Heng says additional support will be injected to social agencies, so “they can continue to help [those] vulnerable among us and better mobilise Singaporeans to contribute their time and monies as the pandemic continues”.
Based on this, Maybank Kim Eng’s senior economist Chua Hak Bin, is expecting Tuesday’s package to amount to some $3 billion. Specifically, he expects financial support to be targeted at sectors such as retail and food and beverage which will remain shut during ‘phase one’.
He is also looking at an extension of the government’s 75% salary co-payment throughout June for the affected sectors, before falling to 25% in July.
CIMB private bank economist Song Seng Wun, agrees, saying the co-payment could be increased to 80% for businesses with restricted operations.
Presently, all companies are receiving a 75% subsidy for wages of Singaporean employees capped at $3,450. The subsidy is slated to drop to 25% for the rest of the year, starting June for all companies except those in the airline, hotel and tourism sector. These companies will continue to receive a 75%, since they have been the worst hit by the pandemic.
Chua also predicts the rolling out of schemes incentivising the hiring of retrenched workers.
Meanwhile, Selena Ling, head of treasury research and strategy at OCBC Bank says that beyond helping households and businesses, there should also be measures supporting a further diversification of Singapore’s import sources.
One instance she points out is the $30 million '30 by 30' express grant which serves to ramp up domestic production of eggs, leafy vegetables and fish over the next six to 24 months. The move is in line with Singapore’s vision to have 30% of domestic nutritional needs met locally by 2030.
‘Recovery somewhat in sight’
With some 75% of businesses to remain shut, Ling expects a more modest restart in operations.
“As businesses may still be relatively cautious about the demand recovery and the ongoing supply chain disruptions, they may not be in a big rush to restart 100% of their operations either,” she observes.
As such, she says companies may need to overcome global supply chains as an inability to procure raw materials and components may put a dent on the resumption.
At this level, Ling is looking at a further contraction in 2Q20, than what was registered in 1Q20. However, she predicts the decline – while still in the double digits – will be less severe than the 20% she initially expected.
“Since Phase 1 is likely to stretch from four to six weeks, and Phase 2 may last a couple of months, this may mean that the recovery growth momentum may be muted until the fourth quarter of this year,” she cautions.
As arduous as this is, Heng has called on Singaporeans to soldier on, with fortitude.
“The battle against Covid-19 will be a long one. The road ahead will be uncertain, with more ups and downs. Our generation must have courage in adversity, to adapt and to emerge stronger, just like our founding generation”.
