Fortitude Budget targeted to support Singaporeans and Families

Government’s stimulus package, Fortitude Budget, targeted to support Singaporeans and Families

Deputy Prime Minister Heng Swee Keat announced an additional S$33 billion COVID-19 support package in Parliament today (26 May).

Dubbed the fortitude budget, this latest support package is the fourth support package Singapore has unveiled since the COVID pandemic broke out.

Commenting on the Fortitude Budget, Mr  Desmond Sim, CBRE‘s Head of Research for Southeast Asia, said: “Overall, this stimulus package was more targeted to support Singaporeans and businesses, fortifying the original stimulus package (announced on 18 Feb 2020). It aims to provide a shot in the arm to cushion the impact and limit repercussions through the economy; relieving businesses of cashflow, credit and operational costs issues, as well as putting more cash in the hands of consumers.”

“With enhanced support for daily expenses, we expect domestic consumption to be shored up especially for non-discretionary items such as groceries and pharmaceutical products.

Landlords are expected to benefit from increased property tax rebates and highly encouraged to pass these on to tenants. All non-residential properties will enjoy a 30% property tax rebate, which is equivalent to 3% of rental relief per annum for non-residential properties. As for qualifying commercial properties such as hotels, serviced apartments, tourist attractions, shops and restaurants, the property tax rebate has been increased up to 100%. This translates up to 10% rental reprieve per annum for these qualifying commercial properties.

This additional support will further incentivise landlords to work with their tenants on easing their rental costs. In addition, both landlords and tenants can also focus on their cashflow with the deferment of income tax as well as the one-year freeze on government fees and charges. Going forward, we expect landlords to work more closely with tenants.

As the world continues to grapple with this pandemic, the Singapore government has tapped into our reserves to provide a package that aims to buffer the impact for all Singaporeans and businesses. Although it has been reported that this pandemic is likely to last for more than a year, it was mentioned that Singapore could dig deeper into our reserves for another stimulus, should the need arise. In addition to this financial stimulus, it remains of utmost importance to be socially responsible.”

On 26 March 2020, Singapore’s Deputy Prime Minister and Finance Minister Mr Heng Swee Keat unveiled the Resilience Budget, a second stimulus package in response to the COVID-19 pandemic. Together with the Unity Budget announced on 18 February 2020, the government will be dedicating close to $55 bn, amounting to 11% of Singapore’s GDP.

Drawing up to $17 bn from its reserves, this will be the second time in history that Singapore has drawn down on its reserves after 2009. The Resilience Budget will be worth $48.4 bn, surpassing the record $20.5 bn stimulus package which had helped Singapore tide over the 2009 Global Financial Crisis and is more than seven times the $6.4 bn in the first tranche of COVID-19 support measures.

This additional package was widely anticipated and seen as a necessary cushion with Singapore not spared from the pandemic; its economy contracted 2.2% y-o-y in the first quarter of 2020, according to advance estimates released by the Ministry of Trade and Industry (MTI) on 26 March 2020. MTI also further downgraded Singapore’s GDP growth forecast for 2020 to -4.0% to -1.0% from -0.5% to +1.5% previously, signifying that the economy is expected to register its first full year recession in two decades.

This Fortitude Budget consists of three main thrusts: 1) Save jobs, supporting workers and protecting livelihoods, 2) Helping businesses overcome immediate challenges, and 3) Strengthening economic and social resilience.

The central focus of this Budget is jobs. This Budget will continue to support workers and businesses who remain affected by border closures and safe distancing measures. Given the significant changes in the global economy ahead, the government will provide support to enable our businesses and workers to adapt, transform and seize new opportunities, to emerge stronger. We aim to enable workers and businesses to go through this difficult period together in a synergistic way.

1) Save Jobs, Support Workers, and Protect Livelihoods 
The schemes introduced aim to keep workers employed during this period of uncertainty. b

d) Greater flexibility on fees and loans

– One-year freeze on government fees and charges
– Student loan relief: one-year suspension of loan repayment and interest charges
– HDB mortgage arrears relief: 3-month suspension of late payment charges

This is including a slew of other policies that provide support for self-employed persons, additional training, support for the unemployed and lower- and middle-income Singaporeans.

2) Help Businesses Overcome Immediate Challenges
The government announced numerous initiatives to ease cash flow for businesses. These include:

*Property tax rebate from 1 Jan 2020 – 30 Dec 2020

To tide over this outbreak, there will be a one-year freeze on government fees and charges from 1 Apr 2020 to 31 Mar 2021. Various measures were also introduced to support affected sectors such as the aviation, tourism, food services, land transport, as well as the arts and culture industry. $90 m will also be set aside to help the tourism industry rebound when the time is right.

3) Strengthen Economic and Social Resilience
Mr Heng reassured Singaporeans during his Fortitude Budget address that Singapore has built up a healthy stockpile of health supplies as well as food. There has also been additional support to achieve the ‘30 by 30’ vision to produce 30% of our food locally by 2030 for food security.

The government acknowledges that it is costly for employers and households to implement safe distancing measures and that through stimulus measures like the Fortitude Budget, the government will offer help to cushion the impact.