Singapore Strategy Another year of stimulus February 17, 2021 449

  • 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

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About the author

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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.

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