Companies battling the economic slowdown will find temporary relief in a suite of Budget measures.
These include enhanced tax rebates, wage subsidies and a scheme to boost lending to small and medium-sized enterprises (SMEs).
However, a hoped-for freeze in foreign worker levy hikes did not materialise, with only firms in the beleaguered marine and process sector receiving a one-year deferment of work permit levies.
The slate of measures is targeted mainly at SMEs and aimed at addressing firms' short-term concerns while enabling restructuring.
"Some have asked for a repeat of support measures we saw in 2009. But that was when the economy was already in deep recession, and facing huge uncertainty," said Finance Minister Heng Swee Keat.
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$300,000
Maximum SME Working Capital Loan for smalland medium-sized enterprises
While the economic outlook is soft, growth is still expected to be positive this year, he noted.
"We must not let pessimism take hold, lest it creates self-fulfilling expectations," said the minister, adding that the Government will monitor the situation and stands ready to act if conditions warrant action.
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The measures
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1. Higher public spending and help
from existing measures Total spending is $5 billion higher than in the previous year - up 7.3 per cent. Companies will get $1.9 billion this month under the Wage Credit Scheme, the programme's largest payout to date.
2. Corporate income tax rebate will be raised
For the 2016 and 2017 years of assessment, the rebate will go up from 30 per cent of tax payable to 50 per cent, with a rebate cap of $20,000 each year. The increased support is expected to cost an additional $180 million over two years, bringing the total to almost $1 billion over two years.
3. Extension and modification of Special Employment Credit (SEC) scheme
The SEC, which was due to expire this year, has been extended for three years until 2019. The programme will provide wage offsets for workers aged 55 and above earning up to $4,000 a month. The SEC will cover about 340,000 workers, or about three in four older Singaporean workers. The SEC fund will be topped up by $1.1 billion.
4. SME Working Capital Loan scheme
The scheme will cover loans of up to $300,000 a company. The Government will co-share 50 per cent of loan default risk with participating financial institutions, to boost lending to SMEs. This programme will be available for three years and could give rise to more than $2 billion of loans.
5. Foreign worker levy increases for work permit holders in the marine and process sectors deferred for one year
Manufacturing work permit levies will also remain unchanged for another year, as announced in last year's Budget.
The first source of support comes from higher public spending, which is expected to translate into about 1 per cent of Singapore's gross domestic product.
Existing measures such as the Wage Credit Scheme, which co- funds 40 per cent of the pay increases given to Singaporean employees earning a gross monthly wage of $4,000 and below, will help.
The corporate income tax rebate will also be raised, a move targeted at SMEs.
The Special Employment Credit (SEC) scheme, which provides wage offsets to employers hiring older workers and people with disabilities, will be extended and modified.
The next measure, called the SME Working Capital Loan scheme, aims to improve access to finance for viable firms that have cash-flow concerns or want to expand their business.
Another $15 million a year will go towards revitalising and upgrading shops in the heartland.
Finally, in view of tough business conditions and a reduction in the number of work permit holders in the marine and process sectors, foreign worker levy increases for work permit holders in these sectors will be deferred for one year.
Manufacturing work permit levies will also remain unchanged for another year, as announced in last year's Budget.
However, levy increases for services and construction work permit holders, as well as S Pass holders in every sector, will proceed in view of the growing foreign workforce in these sectors, said the minister.
OCBC economist Selena Ling said the measures are appropriate, given that Singapore is in a patch of slower growth and not "in full- blown recession or panic mode".
"It's fairly generous and also signals a steady hand on the steering wheel...The measures are obviously very targeted at SMEs," she added.
Mr Tan Wee Jin, who owns and manages Hotel Kai in Purvis Street, welcomed the extension of the SEC and the introduction of the SME Working Capital Loan.
"We are always on the lookout for suitable older workers to hire, and these incentives make it even more attractive for us. Also, the loan is helpful as it can be tough for small companies to access capital," he said.
Mr Tan also wants some policy tweaks. "Even as they tighten the inflow of foreign workers and increase levies, I hope that companies can be allowed to have work permit holders who are legally allowed to perform multiple duties within the same firm," he said. "Small companies like ours need all the flexibility we can get."
