- GDP Seen Staying in 1%-3% Range for 2016, vs 2% for 2015
- SMEs, Technology, Infrastructure, Charities Take The Trophy
In a step toward boosting economic expansion and innovation, Singapore Finance Minister Heng Swee Keat announced that he expects GDP to stay in the 1 percent to 3 percent range after growth fell to 2 percent last year from 3.3 percent in 2014 as "strong headwinds" are expected from the weakness in the global economy.
This is the first budget presentation since the People’s Action Party’s victory in the September election and the death of the nation’s founding father and first elected prime minister Lee Kuan Yew last March. Here are the winners and losers.
- Small & Medium Enterprises (SMEs) - Corporate income tax rebate will be increased to 50 percent from 30 percent, targeted at SMEs -- the last time the government had a 50 percent rebate was in 2001. The government will provide a S$300,000 loan per SME to support them to continue to grow. The SME Mezzanine growth fund will be expanded to S$150 million from S$100 million.
- Human Capital - The government plans to spend S$12.8 billion in education, which is almost double what they spent a decade ago. Government agencies will expand job opportunities for people with disabilities at work.
- Public Infrastructure Projects - Total spending this year expected to be S$5 billion higher (7.3 percent) in comparison to last year. The increases will mostly be in healthcare, education, security and urban development. Transport spending will rise more than five times more than what was spent 10 years ago to S$10.1 billion.
- Technology - Singapore plans to fund over S$450 million for a national robotics program over three years in a bid to build a more innovative society. Companies will also now have flexibility to write down the cost of acquiring intellectual property. A new initiative will help get more people trained for the Information and Communication Technology (ICT) sector.
- Charities - A new S$25 million "Our Singapore Fund" will be created to support projects that will build "a caring and resilient society." There will be a 250 percent tax deduction on associated costs incurred for businesses that organize employees to volunteer at Institution of a Public Character (IPC) from July 2016 to end of 2018.
- Marine & Process Sectors - Boost in levies for work permit holders have been deferred for one year in these sectors
- Real estate - Heng said its "premature" to relax Singapore housing measures; the country will continue to monitor property market developments closely
- Services & Construction Sectors - Government will move forward on increasing levies for foreign workers in these sectors and for S Pass holders in every sector
- Highest 1 percent of earners - New cap on personal income tax relief starting in 2018, won’t affect 99 percent of tax residents
- Pessimists - Heng said some have asked for return to support measures seen in 2009 when the economy was already in deep recession; while the outlook is "soft," he says the government still expects positive growth in 2016 and "we must not let pessimism take hold, lest it creates self-fulfilling expectations"