SINGAPORE (Feb 20): Finance Minister Heng Swee Keat on Monday announced measures to support companies and sectors grappling with cyclical downturns and industry shifts in a bid to boost growth and productivity, amid global economic uncertainties.
The 2017 budget statement comes on the back of recommendations by the Committee on the Future Economy (CFE), which on Feb 9 unveiled a set of strategies aimed at ensuring annual economic growth of 2-3%.
Heng announced that the government will put aside S$2.4 billion over four years to implement strategies drawn up by the CFE.
Budget surplus for the current year FY2016 is S$5.2 billion or 1.3% of GDP, compared with an initial projection of S$3.4 billion. Excluding top-ups to funds and net investment returns from past reserves, FY2016 saw a basic deficit of S$5.6 billion or 1.4% of GDP.
As such, Heng says FY2016 was a expansionary budget.
FY2017 budget surplus is expected to be smaller, but remain expansionary at S$1.9 billion or 0.4% of GDP.
According to the government's revenue and expenditure estimates, total expenditure for the coming financial year is projected at S$75.07 billion.
To boost the construction sector, Heng says Singapore will bring forward some S$700 million of public sector infrastructure projects.
The construction sector will also receive a total of S$150 million to procure innovative construction solutions for public sector projects.
The government, however, will be pushing ahead with announced foreign worker levy increases for the construction sector.
In addition, Singapore expects to spend more than S$20 billion over the next five years to almost double the country’s train network by 2030.
Meanwhile, it is deferring increases in foreign worker levies for the hard-hit marine sector, as well as the process sector. These will include companies manufacturing petroleum, petrochemicals, speciality chemicals and pharmaceutical products.
Furthermore, Heng says the government will roll out programmes to support digitalisation and innovation to aid small and medium enterprises (SMEs).
The government is committing up to S$600 million to help firms scale up and internationalise.
It will also top up the National Research Fund by S$500 million, and the National Productivity Fund by S$1 billion.
Some S$310 million will be set aside got corporate tax rebates in 2017 and 2018.
Individual taxpayers will also get a personal income tax rebate of 20%, capped at S$500, for assessments in 2017.
Also, Heng says the government will provide support of over S$850 million to help households meet expenses.
On the environmental front, a carbon tax on direct emitters such as power stations will be introduced from 2019. The government says it is looking at a carbon tax rate of S$10-S$20 per tonne of greenhouse gas emissions.
Water prices will also increase by 30% in two phases, starting July 1, 2017.