Budget 2025 could have focused on second child incentives, says panellist at forum

SINGAPORE – Budget 2025 would have been better nudging couples thinking of having a second child rather than the third, said a panel discussion organised by consultancy firm KPMG and the Singapore Institute of Directors (SID).

The stork might work harder going for a lower hanging fruit, said Professor Tan Cheng Han, chairman of the Singapore Exchange Regulation.

“My own sense is that when a married couple has one child, there is a great incentive to have the second one, if nothing else, to ensure that your child has a sibling,” he said.

Giving free schooling up to junior college level or offsets in costs of having the second child would still be manageable for the Government, he added.

About 40.1 per cent of Singaporean ever-married women aged 40 to 49 – perceived as the end of child-bearing years – have no children or one child, while 41.8 per cent have two, according to 2024 official figures.

The Large Families Scheme announced in Budget 2025

grants parents up to $16,000 in one-off grants for each third or subsequent child born on or after Feb 18.

“My own instinct is that trying to incentivise couples with the third child is a bridge too far,” said Prof Tan.

Keeping Singapore’s edge as the country grapples with an ageing population and declining birth rates occupied much of the 40-minute panel discussion on Budget 2025 held at the KPMG office in Asia Square on March 4.

The Government could also encourage more Singaporeans to think global from a schooling age, added Prof Tan, who is also a practising lawyer and legal academic.

“Because we are a very mature economy, the prospects of advancement are greater outside of Singapore than within Singapore. My view is that more and more Singaporeans would need to find a niche overseas,” he said.

However, there is the perennial challenge of getting Singaporeans to take up stints in less developed countries. It is the step to understanding their own region, said Mr Ng Kuo Pin, chief executive of home-grown technology company NCS.

“Asia-Pacific is not one market. It’s actually a collection of regional economies, and you will not really understand that unless you are really immersive,” he added.

For example, Japan has its edge with a long history of artificial intelligence and robotics, while Australia is a fast adopter of new technologies. While large language model DeepSeek has surprised the world with its computing breakthrough, China has in fact been investing in AI and technology for years, Mr Ng said.

“Not many people know this, but actually, China has 38,000 IP (intellectual property) registered patents over the last 10 years. And that number is higher than the combined patents of the US, Japan, South Korea and India,” he added.

Mr Ajay Kumar Sanganeria, partner and head of tax at KPMG Singapore, said that the focus for Singapore is also retaining foreign investors, with the Republic joining more than 140 jurisdictions to implement the global minimum tax.

From 2025, large corporations based here will pay the

internationally agreed minimum tax rate of 15 per cent

, higher than what many would have been used to.

While short on details for now, the Government’s $3 billion National Productivity Fund to enhance productivity, innovation and continuing education could lessen the pain, Mr Sanganeria said. The Budget also includes the

Refundable Investment Credit

, a refundable tax credit introduced at Budget 2024 that encourages corporations to invest in key economic sectors and new growth areas.

“This is important, because many countries are also looking at tweaking their incentive regimes to attract foreign direct investment. The competition is intensifying,” he added.

In the area of research and development (R&D), Singapore is spending more than most nations, including its South-east Asian neighbours.

The Republic allocated 2.2 per cent of its gross domestic output on R&D in 2023, which puts it in ninth place, tied with France, and only behind Israel, South Korea, the US, Japan, Belgium, Germany, Britain and China.

What was missed in the Budget, said Mr Sanganeria, were tax measures on the Johor-Singapore Special Economic Zone, new tax support to help companies decarbonise, and details on how the Government’s proposed carbon tax revenues would be returned to help companies do so.

That it ended with a surplus was a good surprise, he said.

In comparisons of Singapore’s $6.8 billion surplus for 2025 with three other economies, he pointed out that Hong Kong expects a $11.5 billion deficit, and Switzerland a $1.2 billion drawdown. Ireland estimates a $13.7 billion surplus, in part owing to a $5 billion windfall tax from tech giant Apple.

Budget 2025 was lauded as being one of the most significant in years, said the panellists. But the future of Singapore also rests on mundane challenges.

Ms Esther An, chief sustainability officer at City Developments Limited, said: “Actually, after Covid-19, we also encounter a different set of issues.”

Younger workers would not work long hours, or they want to work from home. And they would more likely “whistle-blow” on harsh bosses than comply with orders.

So for the future workforce, said Ms An, “we all have to learn to deal with people.”