SINGAPORE (BLOOMBERG) - In a step toward boosting economic growth and innovation, Singapore Finance Minister Heng Swee Keat announced that he expects GDP to stay in the 1 per cent to 3 per cent range after growth fell to 2 per cent last year from 3.3 per cent in 2014 as "strong headwinds" are expected from the weakness in the global economy.
This is the first budget presentation since the People's Action Party's victory in the September election and the death of the nation's founding father and first elected prime minister Lee Kuan Yew last March.
Here are the winners and losers.
Small & Medium Enterprises (SMEs)
Corporate income tax rebate will be increased to 50 per cent from 30 per cent, targeted at SMEs - the last time the government had a 50 per cent rebate was in 2001. The government will provide a $300,000 loan per SME to support them to continue to grow.
The SME Mezzanine growth fund will be expanded to $150 million from $100 million.
The government plans to spend $12.8 billion in education, which is almost double what they spent a decade ago. Government agencies will expand job opportunities for people with disabilities at work.
Public Infrastructure Projects
Total spending this year expected to be $5 billion higher (7.3 per cent) in comparison to last year. The increases will mostly be in healthcare, education, security and urban development. Transport spending will rise more than five times more than what was spent 10 years ago to $10.1 billion.
Singapore plans to fund over $450 million for a national robotics programme over three years in a bid to build a more innovative society. Companies will also now have flexibility to write down the cost of acquiring intellectual property. A new initiative will help get more people trained for the Information and Communication Technology (ICT) sector.
A new $25 million "Our Singapore Fund" will be created to support projects that will build "a caring and resilient society." There will be a 250 per cent tax deduction on associated costs incurred for businesses that organise employees to volunteer at Institution of a Public Character (IPC) from July 2016 to end of 2018.
Marine and Process sectors
Boost in levies for work permit holders have been deferred for one year in these sectors.
Mr Heng said its "premature" to relax Singapore housing measures; the country will continue to monitor property market developments closely.
Services and Construction sectors
Government will move forward on increasing levies for foreign workers in these sectors and for S Pass holders in every sector.
Highest 1 per cent of earners
New cap on personal income tax relief starting in 2018, won't affect 99 per cent of tax residents
Mr Heng said some have asked for return to support measures seen in 2009 when the economy was already in deep recession; while the outlook is "soft," he says the government still expects positive growth in 2016 and "we must not let pessimism take hold, lest it creates self-fulfilling expectations."