Budget debate: S'pore monitoring Ukraine situation closely, will not hesitate to help firms and protect jobs

SINGAPORE - Singapore is monitoring the situation in Ukraine and its global impact closely, and if things worsen, the Government will not hesitate to take further action to help businesses, workers and households, Finance Minister Lawrence Wong said in Parliament on Wednesday (March 2).

In his speech to round up the Budget debate, Mr Wong said: "Singapore's direct trade linkages with Russia and Ukraine are relatively small, but the conflict will impact the global economy and global energy markets, which will in turn affect us."

Actions are being taken to support firms and help consumers cope with the uncertainties caused by the Ukraine conflict and inflation, he added.

These include enhancing the resilience of energy supplies and extending the Temporary Electricity Contracting Support Scheme to help affected consumers, especially small and medium-sized enterprises (SMEs).

Retailers are also offering more value-for-money house brands to consumers and a Committee Against Profiteering will be set up to tackle unfair price hikes.

The Monetary Authority of Singapore has also taken the pre-emptive step of tightening monetary policy in January to moderate the impact of higher global inflation, Mr Wong added.

He said: "We are monitoring the external situation and the risk for our economy closely - risk in terms of both growth and inflation.

"If the situation worsens, we will not hesitate to take further actions to protect jobs and to help households and businesses deal with increased costs."

He added that while there are near-term uncertainties in the external environment, Singapore's overall prospects remain good.

"We are operating from a position of strength and that is why we can make bold moves now, which will position us well to seize the opportunities ahead," he said.

One such step is to accelerate the decarbonisation of the economy and achieve net zero emissions by or around the mid-century, he said, which means adjusting to new levels of carbon tax to facilitate this transition.

This will bring green opportunities and investments, he added.

"We will also step up training efforts to equip Singaporeans with the right skills to take on these new green jobs," he said.

"At the same time, we will continue our research and development efforts in emerging technologies like carbon capture and low-carbon hydrogen... All of these moves will enhance and strengthen Singapore's position as a choice destination for new investments in the green economy, and ultimately create many more good jobs for Singaporeans."

In his speech, Mr Wong acknowledged the concerns of MPs that the Budget has introduced too many changes at once, including the goods and service tax (GST) hike and changes to foreign worker policies, which will add to the cost pressures that firms face in an already difficult time.

"I understand these concerns, and that is why we are continuing to provide significant support to the harder hit sectors, including through the Small Business Recovery Grant. And we are also phasing in the new requirements," he said.

He noted that the carbon tax increase and foreign manpower policies will be staggered over phases so businesses can plan ahead.

"Even as we make these policy moves over the coming years, we continue to pay very close attention to our SMEs... We will continue to help our SMEs upgrade and maintain a vibrant SME sector in Singapore. This includes our heartland enterprises."

Mr Wong added that many support and grant schemes for firms are designed to provide the most benefit to SMEs. Before the Covid-19 pandemic, smaller firms were receiving about 12 times more grants from the Government on a grant-per-dollar-of-revenue basis compared with larger firms, he noted.

The various support schemes favour SMEs that have been actively training their workers and increasing their productivity, he said.

"If the SME is prepared to make the effort, it will enjoy very generous co-funding."

If SMEs stack schemes such as the Productivity Solutions Grant and SkillsFuture Enterprise Credit, which helps to fund programmes, they pay as little as $300 for a $10,000 productivity project, Mr Wong said.

He added that the Government will proactively reach out to SMEs through agencies like Enterprise Singapore and the trade associations and chambers, so they can access information on schemes and available support.

"I recognise that the operating environment in Singapore can be challenging for businesses. We are no longer competing based on being a low-cost business location," Mr Wong said, adding: "Where we can, the Government will manage the pace of cost increases and make it easier to do business."