Singapore will be providing financial support amounting to S$500 million to SMEs and workers in sectors that are “still struggling” amid the broader economic recovery including payouts for certain firms.
The Jobs and Business Support Package was announced by Singapore Finance Minister Lawrence Wong today as part of Budget 2022 themed “New Way Forward Together”.
One-off cash grants will be given SMEs that have been most affected by the Covid-19 pandemic over the past year, such as those in F&B, retail, tourism and hospitality sectors. These SMEs stand to receive S$1,000 per local employee, up to a cap of S$10,000.
Local sole proprietors and partnerships in eligible sectors and licensed hawkers, market as well as coffeeshop stallholders, who do not hire local employees, will also get a S$1,000 payout.
In addition, the Government will also extend the Jobs Growth Incentive, due to expire in March, for another six months to September this year, with “stepped-down support rates reflecting the improved labour market conditions”.
“This extension will cover those who face greater difficulty finding jobs, such as mature workers who have not been employed for six months or more, persons with disabilities, and ex-offenders,” Wong said in the Budget speech
The scheme was introduced in 2020 to encourage employers to hire locals, by providing salary support to eligible firms and workers.
Monitoring rising costs
According to Wong, the risk of rising inflation, driven mainly by a recovery in global demand amid continued supply-chain issues and a rise in energy prices is being continuously monitored by the authorities. The rise in the cost of materials and electricity prices has led to cashflow concerns for businesses.
To support their cashflow needs, authorities will extend the Temporary Bridging Loan Programme and the enhanced Trade Loan Scheme, with revised parameters, for another six months – from 1 April 1 to 30 September.
The first initiative provides businesses with access to working capital, while the latter covers their trade financing needs. The new parameters include lower maximum loan quantums, among others. Access to Project Loans for the domestic construction sector will also be extended for another year, from 1 April 2022 to 31 March 2023.
This effort is to support construction firms in fulfilling domestic projects amid rising costs and tightened cashflow.
Supporting the household
Singapore Budget 2022 also continues with the Household Support Package worth S$560 million to help Singaporeans with utility bills, children’s education and daily essentials.
The Household Support Package includes the distribution of another set of Community Development Councils (CDC) vouchers, the doubling of GST Voucher – U-Save rebates for the rest of the year, and a top-up in the relevant education account for each child under 21.
As part of the package, another set of S$100 CDC vouchers will be distributed this year to support all Singaporean households in their daily expenses. The vouchers can be used at participating heartland shops and hawkers.
The nationwide scheme was launched last December with up to 1.3 million Singaporean households each receiving S$100 in digital vouchers. Households have until the end of 2022 to claim the vouchers.
In addition, children below the age of 21 will be given a top-up of S$200 in their Child Development Account (CDA), Edusave Account or Post-Secondary Education Account (PSEA). This will be on top of the annual Edusave Government contribution that they already receive.
The top-ups to Edusave and PSEA accounts are estimated to begin from May 2022, while the top-ups to CDA accounts are slated to start from September this year.
At last year’s Budget, a S$900 million package was unveiled by then finance minister Heng Swee Keat as support for families.
GST hike postponed to 2023
In another development, Wong announced that The Government will delay the planned Goods and Services Tax (GST) hike to 2023 and stagger the increase in two steps. The first increase from 7 per cent to 8 per cent will take place on Jan 1, 2023, and the second increase from 8 per cent to 9 per cent will take place Jan 1, 2024.
Prime Minister Lee Hsien Loong had said in his New Year message in that the Government will have to start moving on the planned hike this year, given that the economy is emerging from the pandemic.
The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat’s Budget speech.
Meanwhile, Wong noted that the aviation sector will continue to get targeted assistance, including measures to ensure public health and safety at the airport, along with preserving core capabilities.
“We must preserve and enhance our status as an international aviation hub,” he said, adding that more details will be shared at the Transport Ministry’s Committee of Supply.
“As our economy reopens, the harder-hit sectors should progressively see improved prospects. Meanwhile, these support measures will provide temporary relief for our businesses and workers.”