Budget 2016: Budget likely to pay more attention to businesses: Chua Hak Bin

 Foreign workers in their dormitory at Terusan Lodge at Jalan Papan in Jurong.
Foreign workers in their dormitory at Terusan Lodge at Jalan Papan in Jurong. ST PHOTO: KUA CHEE SIONG

SINGAPORE - The Budget will probably focus on businesses this year, and one area it could relook are foreign worker levies, said Bank of America Merrill Lynch economist Chua Hak Bin.

While Finance Minister Heng Swee Keat has inherited a sluggish economy with weak job growth from his predecessor, Dr Chua noted: "Budget 2016 cannot be as generous as SG50 Budget 2015, which ran a basic deficit of $9.6 billion (2.4 per cent of GDP), the widest on record, with $11.7 billion worth of special transfers.

"There are fiscal constraints in the first year (of the new term of Government). The Government cannot draw upon the accumulated fiscal surpluses of the previous term, limiting the room for an expansionary policy, while revenue growth is slowing."

Dr Chua added that he does not have high expectations for Budget 2016 to have a material impact on growth or markets, and that the Government is unlikely to relax property cooling measures this round.

There is also chance that foreign worker levy hikes scheduled to kick in this year and next will be scrapped altogether.

"We believe these levy increases will be abolished altogether, given worsening economic conditions. Businesses are hoping for more help, after being somewhat neglected over the past few years in favour of social goals," wrote Dr Chua in a research note on Wednesday.

Last year, former Finance Minister Tharman deferred the planned levy increases in his Budget speech.