Singapore Strategy Another year of stimulus February 17, 2021 549

  • FY2020’s budget deficit was a record 13.9% of GDP or S$64.9bn. Without the additional spending, Singapore 2020 GDP would have contracted 12.4% rather than the reported 5.4%.
  • Another year of fiscal deficit in FY2021, at 2.2% of GDP or S$11bn.
  • GST will be raised between 2022 and 2025, to meet healthcare needs in particular. The hike mentioned in earlier budgets was from 7% to 9%.
  • Sectors such as aviation, aerospace and tourism to receive extended JSS support from April to September 2021. Land transport to benefit from Driver Relief Fund announced in December. Healthcare to benefit from the budget for COVID-19 testing and vaccination. No mention of any tightening in the property sector.

 Longer-term economic transformation

 S$24bn over three years for economic transformation. There are three key enablers:

  • Building a vibrant and connected business sector and ecosystem for innovation. Changi Airport must secure its position as a key aviation hub. Innovation through co-funding new ventures and platforms to accelerate prototyping, deployment and collaboration.
  • Catalyse a wide range of capital to co-fund businesses. Includes venture debt where the government shares lending risks. Also to co-fund the adoption of new technologies such as 5G and AI and fund large local enterprises.
  • Develop the skills and creativity of the workforce. SGUnited Jobs and Skills Package is the key pillar of the industry transformation goals. Another S$5.2bn has been allocated to the Jobs Growth Incentive, whose hiring window has been extended by seven months to September 2021. The aim is to encourage companies to bring forward recruitment through wage subsidies of 12 and 18 months. The extension will support the hiring of 200,000 locals and provide 35,000 traineeships and training opportunities this year.

 Sector snippets

  1. Extension of JSS for aerospace and aviation employees. Around S$870mn to preserve core capabilities and extend cost relief for the aviation sector.  
  2. Government to issue infrastructure bonds (SINGA) of up to S$90bn to finance long-term infrastructure projects over the next 15 years such as MRT and protection against rising sea levels. Around S$19bn to start public-sector green projects.
  3. Planned GST hike between 2022 and 2025 with a S$6bn Assurance Package that will delay the impact of the hike on Singaporean households for at least five years.
  4. Food – retail. S$100 Community Development Council vouchers will be given to 1.3mn households. They can be used at participating heartland shops and hawker centres.
  5. Part of the sector’s S$4.8bn budget will be used for COVID-19 testing and vaccinations.
  6. Land transport. A Driver Relief Fund for taxis and private hire was already announced in December. Petrol duty rates to increase but offset by petrol-duty and road-tax rebates.

Utilities. Current carbon tax of S$5 per tonne of greenhouse gas emission from 2019 to 2023 to be maintained. Planned increase to S$10-15 per tonne by 2030 to be reviewed

Emerging Stronger Together Budget 2021

  •  Covid-19 Resilience Package (S$11.0bn)
  • S$4.8bn for public health and safe re-opening, including vaccinations; S$5bn to support businesses and workers, including JSS and Recovery Grant; S$1.2bn for specific sectors such as aviation (S$870mn) and land transport (S$133mn).

Additional JSS (S$700mn)

  • Tier 1 industries (aerospace, aviation, tourism) to receive 30%* subsidies April to June; 10% subsidies July to September
  • Tier 2 industries (retail, arts and culture, food services, and built environment) to receive 10% for another three months to June 2021. 

Household Support Package (S$900mn)

  • CDC vouchers for use in heartland shops and hawker centres
  • GST voucher-cash special payments and utility rebates

 

*On first S$4,600 gross monthly wages paid to Singaporean or PR employees

Important Information

This report is prepared and/or distributed by Phillip Securities Research Pte Ltd ("Phillip Securities Research"), which is a holder of a financial adviser’s licence under the Financial Advisers Act, Chapter 110 in Singapore.

By receiving or reading this report, you agree to be bound by the terms and limitations set out below. Any failure to comply with these terms and limitations may constitute a violation of law. This report has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this report by mistake, please delete or destroy it, and notify the sender immediately.

The information and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this report has been obtained from public sources which Phillip Securities Research believes to be reliable. However, Phillip Securities Research does not make any representation or warranty, express or implied that such information or Research is accurate, complete or appropriate or should be relied upon as such. Any such information or Research contained in this report is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith.

Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this report are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this report is not indicative of future results.

This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This report should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this report has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this report is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this report involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks.

Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this report should take into account existing public information, including any registered prospectus in respect of such product.

Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this report, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this report.

Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment.

To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold an interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this report. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, which is not reflected in this report, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this report.

The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction.

This report is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this report may not be suitable for all investors and a person receiving or reading this report should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products.

This report is not intended for distribution, publication to or use by any person in any jurisdiction outside of Singapore or any other jurisdiction as Phillip Securities Research may determine in its absolute discretion.

IMPORTANT DISCLOSURES FOR INCLUDED RESEARCH ANALYSES OR REPORTS OF FOREIGN RESEARCH HOUSE

Where the report contains research analyses or reports from a foreign research house, please note:

  1. recipients of the analyses or reports are to contact Phillip Securities Research (and not the relevant foreign research house) in Singapore at 250 North Bridge Road, #06-00 Raffles City Tower, Singapore 179101, telephone number +65 6533 6001, in respect of any matters arising from, or in connection with, the analyses or reports; and
  2. to the extent that the analyses or reports are delivered to and intended to be received by any person in Singapore who is not an accredited investor, expert investor or institutional investor, Phillip Securities Research accepts legal responsibility for the contents of the analyses or reports.
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

About the author

Profile photo of Paul Chew

Paul Chew
Head of Research
Phillip Securities Research Pte Ltd

Paul has 20 years of experience as a fund manager and sell-side analyst. During his time as fund manager, he has managed multiple funds and mandates including capital guaranteed, dividend income, renewable energy, single country and regionally focused funds.

He graduated from Monash University and had completed both his Chartered Financial Analyst and Australian CPA programme.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!