Head of Treasury Research & Strategy - OCBC Bank
Starting the first fiscal year of the new term of government with a planned surplus
It is the start of the five-year term, and a ‘particularly-prudent’ budget has been delivered. Although the overall expenditure is expected to climb S$5.0bn, largely owing to the many new initiatives to aid businesses and pockets of society, the revenue increases from one-off revenue gains from vehicle premiums & statutory board contributions as well as higher Net Investment Returns (NIR), are expected to push the overall budget balance to a comfortable surplus of $3.4bn (estimated at 0.8 per cent of GDP).
Transforming Singapore’s industries through innovation and enterprise
As what Minister Heng aptly termed, “Budget 2016 is the beginning of a journey towards SG100”, significant emphasis on transforming Singapore’s industries has been made, through innovation and enterprise, and eventually finding new areas of growth.
Terming this new initiative as the Industry Transformation Programme, small and medium enterprises (SMEs) will cheer in knowing that support will be given for them to develop & innovate, adopt new technologies & automation, and eventually internationalise themselves.
The notable emphasis on driving Singapore to new areas of growth and innovation can also be seen from the development of the Jurong Innovation District, described to be the “future of innovation for enterprise, learning and living”.
Substantial support for businesses in time of economic softness
On the issue of the numerous wish-lists made by businesses, though not all items were granted, the budget still offers substantial support for businesses that require aid especially during this time of economic softness.
Specifically, the Transition Support Package introduced back in 2013 will continue to aid businesses, including the wage credit scheme, increasing Corporate Income Tax (CIT) rebate to 50 per cent (cap of $20,000 for each year in FY16/17), special employment credit, and a special working capital loan to provide necessary liquidity will likely be welcomed by many businesses, although the Productivity and Innovation (PIC) scheme will continue to be tapered.
Strengthening social support schemes
For households, many initiatives were also introduced to care for those “who have special needs or less well-off”, while building “a society where our seniors age with energy and dignity”.
Schemes including the Child Development Account First Step Grant, KidSTART pilot and Fresh Start Housing Scheme are targeted to aid the vulnerable while support the development of the young.
Elsewhere, support for people with disabilities is also reinforced with the provision of the Workfare Training Support Scheme, as well as benefits from WIS enhancements and Special Employment Credit (SEC) made to employers who employ them.
Lastly, the Silver Support Scheme aims to support our seniors belonging to the bottom 20 per cent to 30 per cent of society in lifetime wages, housing type, and level of household support.
“Partnering for the Future”
In summary, with FY2016 budget fittingly titled as “Partnering for the Future”, it may be viewed as a plan to prepare Singapore for the next many years to come, while providing much needed cushion to aid businesses and society in the current economic softness.
Especially as it is the first budget in the next 5-years, the expected budget surplus of S$3.4bn will at least give the government some welcomed funds for a rainy-day should the need arise in time to come.
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