2nd stimulus package may be $15b: Experts

Tax rebates, direct cash grants, and loans to SMEs could be among the measures

In a Facebook post on Friday, Deputy Prime Minister Heng Swee Keat (second from right, facing camera) said he and Trade and Industry Minister Chan Chun Sing had a dialogue with members of the Singapore Business Federation and trade associations to be
In a Facebook post on Friday, Deputy Prime Minister Heng Swee Keat (second from right, facing camera) said he and Trade and Industry Minister Chan Chun Sing had a dialogue with members of the Singapore Business Federation and trade associations to better understand their challenges.PHOTO: HENG SWEE KEAT/FACEBOOK

Singapore's second stimulus package is expected to be a hefty one, and could be more than double the initial $6.4 billion set aside last month to cushion the economic blow from the coronavirus outbreak.

The package, which is expected to be unveiled in the coming days, might be in the region of $15 billion, according to experts.

This comes as governments and central banks worldwide have announced massive stimulus measures as the virus rapidly spreads outside of China and paralyses large swathes of the world economy.

Already, global stimulus plans pitched by governments and international organisations are estimated to have soared past $2.5 trillion in total.

Singapore's upcoming round of fiscal stimulus - which will target small and medium-sized enterprises (SMEs), as well as the retrenched and self-employed - is estimated to be between $14 billion and $16 billion, according to DBS Bank senior economist Irvin Seah.

CIMB Private Banking economist Song Seng Wun has tipped the package to be worth around $15 billion.

Observers said tax rebates, direct cash grants, and loans to SMEs could be among the measures in the second package - which will provide a boost on top of the $4 billion fund rolled out to help workers keep their jobs during last month's Budget.

While help for sectors deemed to have been immediately hit by the virus, such as tourism and aviation, was a focus of the first stimulus package, other industries are now calling for support.

Manufacturing firms, for example, are reeling from the impact of recent measures, such as lockdowns imposed in other countries.

DBS' Mr Seah said in a report last week that the Government may look at drawing on past reserves to help fund this additional package, in addition to the present term of the Government's Budget surplus of about $7.7 billion.

President Halimah Yacob and Deputy Prime Minister Heng Swee Keat have not ruled out the possibility of dipping into past reserves.

During the global financial crisis, a $2.9 billion package was rolled out in November 2008, followed by a $20.5 billion Resilience Package in Budget 2009. The Government had sought the President's approval to draw $4.9 billion from past reserves to help cover Budget expenditure that year.


The Sunday Times spoke to industry experts on the measures that could be in store.


With job losses expected amid the downturn, help for the retrenched might come in the form of defraying costs of living.

This is because while help for retrenched workers has traditionally focused on helping them find new jobs and undergo retraining, it may not be sufficient given the low number of job vacancies currently, said Mr Seah.

"For retrenched workers, the need is to help them defray costs of living, especially middle-income PMETs (professionals, managers, executives and technicians) who are the most vulnerable," he added.

The Government could allow deferred personal income tax payment for retrenched workers, as well as middle-income and self-employed workers, he suggested.

Self-employed persons could benefit from direct cash grants, said Mr Song, though it will be tricky to determine the quantum of support for gig workers.

KPMG Singapore head of tax Tay Hong Beng and tax partner Harvey Koenig noted that lower-income and part-time workers might face pay cuts or reduced working hours amid the slowdown. Higher Workfare payments could be of help to them, they said.


Cash flow has been highlighted as a key concern for businesses.

SMEs have been reporting an average revenue drop of 50 per cent since the outbreak began, said Mr Ang Yuit, vice-president of the Association of Small and Medium Enterprises. One way to boost cash flow is for the Government to cover part of the employers' Central Provident Fund contributions. This would also sidestep the red tape when tapping support measures, said Mr Ang.

He noted that most of the measures introduced so far are in the form of claims which are made at a later date, which means that funds may not reach firms quickly enough and when they need it.

The temporary bridging loan programme, which has been rolled out to the tourism sector, could be expanded to a broader range of companies, said both Mr Ang and Mr Seah.

The scheme, which was introduced under the first stimulus package, allows companies to take a loan of up to $1 million, with the interest rate capped at 5 per cent and the Government shouldering 80 per cent of the loan risk.

The loan quantum could be smaller for SMEs - $50,000 to $150,000 would be sufficient for their needs, Mr Ang noted.

Deferment of taxes will also help boost liquidity. These include goods and services tax, corporate tax, personal tax, stamp duties and property tax, said KPMG's Mr Tay and Mr Koenig.

Professor Ho Yew Kee of the Singapore Institute of Technology suggested deferment of property tax, or allowing a longer repayment period, to ease cash-flow concerns.


Given that consumer confidence is muted, direct cash grants to individuals to help defray costs of living may not be as effective for now, said Prof Ho.


Part of the initial financial package last month included $1.6 billion for households to tide them over.

"Reduction of their costs of doing business or deferring their cost of doing business may be a better instrument," he noted.

Though he does not rule out a larger cash payout for individuals in this second package, Mr Song said it is more effective to help families by creating jobs.

He suggested an extension of the Jobs Support Scheme - under which the Government offsets 8 per cent of local workers' wages for three months, capped at $3,600 a month per worker - and co-shares wage costs for new hires.

"This would encourage companies to continue hiring workers, and it's important that jobs continue to be created," he added.

Ministers say protecting workers will be a key focus. In a Facebook post on Friday night, DPM Heng said he and Trade and Industry Minister Chan Chun Sing had a dialogue with council members of the Singapore Business Federation and trade associations and chambers to better understand their challenges.

Their concerns "covered many 'Cs' - cash flow, costs, capabilities and confidence", he said, adding this feedback will be taken into consideration for the second package.

He added: "As Covid-19 will be here to stay till the end of the year, or longer, we have to ensure that our measures are sustainable, to weather the impact of a prolonged outbreak. We are focusing on containing the outbreak on the medical front, to protect lives, and to protect workers and livelihoods."


A version of this article appeared in the print edition of The Sunday Times on March 22, 2020, with the headline '2nd stimulus package may be $15b: Experts'. Subscribe