Singapore unveils expansionary Budget 2019 to boost economic transformation

Singapore released its budget overnight. It includes a range of spending initiatives aimed at deepening the capabilities of its workforce. It also includes social welfare measures, especially for older Singaporeans.

The Singapore government has unveiled an expansionary budget for fiscal year 2019, focused on enhancing the capabilities of its companies and workers as the country transforms its economy for a digital future.

By Melvin Yong

In announcing the Budget, Finance Minister Heng Swee Keat said economic transformation is one of the long-term imperatives for the open and trade-dependent Singapore economy, which has an ageing population.

Deepening capabilities

Top of the list of measures is a S$4.6 billion package to deepen the capabilities of companies and workers, with the bulk of the funds (S$3.6 billion) going towards helping those employed.

“Our workforce growth is tapering, and if we do not use this narrow window to double down on restructuring, our companies will find it even harder in the future,” says Heng.

Smaller firms will also receive help to further adopt digital technologies.

To encourage employers to hire long-term unemployed or mature professionals, as well as older Singaporeans, several existing financial incentives have been extended for up to three years to 2021.

Related content: Singapore budget appropriate to help business navigate current and future challenges: CPA Australia

For a number of years now, the government has encouraged workers to upgrade their skills to remain relevant in a globally-competitive world.

Heng says Singaporeans have been making good effort to invest in their learning, with about 48 per cent of the resident labour force participating in training in 2018, up from about 35 per cent in 2015.

Node of technology, innovation and enterprise

For the next phase of Singapore’s economic growth, the minister says the country will press on with industry transformation while building its position as a “Global-Asia node of technology, innovation and enterprise”.

“This will open up new opportunities for our firms and our people to ride on the wave of the Fourth Industrial Revolution,” he says.

The efforts will be supported by investments in research and innovation, where the government will set aside S$19 billion as part of a five-year Research, Innovation, and Enterprise 2020 plan.

Celebrating the Bicentennial

Singapore celebrates 200 years of its history in 2019. To mark the occasion, Heng announced two new initiatives.

The first is a S$1.1 billion Bicentennial Bonus to share the country’s success and fiscal health with all its citizens.

The package includes several financial assistance schemes for lower-income Singaporeans, and a one-off 50 per cent personal income tax rebate capped at S$200 for the year of assessment 2019.

“From time to time, when our finances allow, we share the surpluses with Singaporeans and provide more help to those with specific needs. With this bonus, I hope that all Singaporeans, young and old, will join us to commemorate this significant moment in Singapore’s history,” Heng says.

Singapore’s Bicentennial, says the minister, is also a time for Singaporeans and companies to give back to society.

A S$200 million Bicentennial Community Fund has been set up to encourage philanthropic activity, where the government will match dollar for dollar any donations made to charities in fiscal year 2019.

“With this, we hope to further encourage more Singaporeans, including younger Singaporeans, to embrace the spirit of giving back,” Heng says. “At the same time, we are encouraging [Institutions of a Public Character] to reach out to more donors.”

Caring for active ageing

On the social front, the minister provided details of a much-awaited Merdeka Generation Package, a previously- announced healthcare subsidy scheme for Singaporeans born in the 1950s.

“The Merdeka Generation Package is a gesture of our nation’s gratitude for their contributions and a way to show care for them in their silver years,” Heng says.

“It will provide them better peace of mind over future healthcare costs, while helping them to stay active and healthy,” he adds.

The S$8 billion package would provide annual government top-ups to individuals’ medical savings for five years, additional outpatient subsidies for life, and help with the cost of medical insurance premiums.

Overall, the package is expected to benefit close to 500,000 Singaporeans.

A new Long-Term Care Support Fund worth S$5.1 billion will also be set up for all Singaporeans to help with insurance premiums for severe disability and provide other health-related support.

Tackling climate change

As a low-lying small country surrounded by seas, Budget 2019 will also invest in tackling climate change.

Finance Minister Heng says the government is coming with further measures to mitigate and adapt to the impact of climate change, including the need for relevant major infrastructure.

Singapore, he says, will also support global efforts to fight climate change. For its part, the country will apply a carbon tax on this year’s emissions to send “an important signal to companies and households to reduce emissions and adopt energy-efficient practices”.

The minister also raised excise duties for diesel and announced a number of measures to encourage companies to shift to more environmentally friendly commercial transport options.

Overall budget position

Overall, Singapore Budget 2019 is expected to result in a deficit of S$3.5 billion or 0.7 per cent of gross domestic product for fiscal year 2019.

“We have sufficient fiscal surplus accumulated over this term of government to fund the overall deficit in FY2019. There is no draw on past reserves,” says the finance minister.

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