Budget for FY2009 Key Budget Initiatives
Resilience Package totalling $20.5 billion
- to save jobs to the maximum extent and help viable companies stay afloat
- to prepare emerge Singapore with strength when the global economy recovers
- to enhance capabilities and competitiveness for the long term
- to help avert an even sharper downturn and prevent permanent damage to economy
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Finance Minister Tharman Shanmugaratnam describes Singapore’s economic downturn and global conditions in introducing Budget for FY2009.
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Key Budget Initiatives for businesses and households
$5.1 billion to preserve jobs
- Jobs Credit – a 12% cash grant on first $2,500 of wages
- Enhancing SPUR to help PMETs re-train
- WIS Special Payment to low-income workers
$5.8 billion to stimulate bank lending
- Bridging Loan Programme to loans of up to $5 million
- New risk-sharing schemes for trade financing
Tax concessions and measures costing $2.6 billion to ease business cash-flow
To ease business cash-flow
- 40% property tax rebate for industrial and commercial properties
- Property tax deferral for land approved for development
- Loss carry-back relief enhancements
- Tax exemption of all foreign-sourced income earned
- 30% road tax rebate for goods vehicles, buses and taxis
- Waiver of Special (Diesel) Tax for unhired taxis
To strengthen competitiveness and capabilities
- Corporate Income Tax Rate (CIT) reduction to 17%
- Accelerated capital allowance for plant and machinery acquired
- Accelerated write-down of renovation and refurbishment expenses
- $200 million Test-Bedding Fund
- $400m top-up to National Research Fund
$2.6 billion additional support to Singaporean households
Direct Assistance to Households
- Doubling of GST Credits and Senior Citizens’ Bonus
- 20% personal income tax rebate capped at $2,000
- 40% property tax rebate for owner-occupied residential properties
- Additional S&CC rebates for eligible HDB households
- Additional rental rebates for eligible households in public rental flats
- Enhanced Additional CPF Housing Grant for first-time home buyers
Targeted Help for Vulnerable Groups
- Increased Public Assistance rate
- Increased Singapore Allowance for government pensioners
- $100m top-up to each of the ElderCare Fund and Medical Endowment Fund
- Enhanced Financial Assistance Scheme and new Short-Term Study Assistance Scheme for students
- $10m top-up to the Public Transport Fund
Support for Charitable Giving and the Community
- Increased tax deduction for donations madeto Institutions of Public Character and other approved institutions to 250%
- Additional $15m to Government-funded Voluntary Welfare Organisations (VWOs)
- Increased funding of $4m to self-help groups over two years
- Increased funding to $7m to the CCC Comcare Fund for the next two years
$4.4 billion construction projects in four areas
- $1.3 billion of infrastructure projects to be brought forward to 2009
- $1 billion funding for sustainable development programmes over five years
- Development of suburban nodes, road and rail networks, drainage and sewerage networks, and public housing estate rejuvenation
- Upgrade of education and health infrastructure
Budget Position
- To draw $4.9 billion from past reserves to fund Jobs Credit and the Special Risk-Sharing Initiative.
- $8.7 billion deficit for revised Overall FY2009 Budget Balance, 3.5% of GDP.
(The Basic Balance, which excludes transfers to endowment funds and contributions from Net Investment Returns, is a deficit of $14.9 billion or 6.0% of GDP.)
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still no pay freeze ala the White House? lame.
I don’t feel excited about it.
Doesn’t seem very helpful to the sandwich class like me.
Hopefully, the job credits will really help to save jobs and not be abused by some unscrupulous companies.
My wife was very disappointed that there was no angpao. Totally spoiled her CNY mood!
SK Chan
Technically, there was ang-pow, the GST credits will be doubled. So for whatever you received previously, will be 2x.
But yes, for those who are still employed, own homes and pay taxes, the main benefits are the 40% property tax rebate, 20% income tax rebate (capped at $2,000) & S&C rebates for those in HDB homes.
The main surprise is the Jobs Credit Scheme. Interesting I must say as it achieves the effect of lowering wage costs without hitting employees directly like a CPF cut would. But the Gahmen has already mutilated the CPF scheme enough with the $4,500 caps plus annuity scheme and ever-increasing minimum sum scheme as well as the cuts in employers’ CPF in past recessions.
Yes, I agree the Jobs Credit marks a departure from past measures like CPF cuts.
The problem with this is that firms may find it more cost-effective to retrench and hire later, when their orders pick up, so some jobs will still be lost. Nevertheless it’s a brilliant measure.
I think the budget’s primary objective is to save THEIR (PAP MPs) jobs not necessarily Singaporeans’ job.
The numbers seem big but in reality a huge part of it is just window dressing : moving monies from one hand of the govt to another hand. Those funds that supposedly serve the poor is often not tapped by the locals.
Also, most importantly, even if the budget is huge, how can we Singaporeans know that it serves us. For all you know, we could have make do without it and the budget is just to cover some things up. As you can probably see, 12% job credits is not a lot especially when the private sector is about the same size as the public sector.
What sickens me is this insistence on the flexibility of our systems that serve us well when it is that flexibility that causes them and us to lose monies in the banks investments and the IR. They know no shame.
They claimed they are not going to help firms whose service is not in demand etc… the usual speech, but do they know how to choose well in the first place. The bank fiasco and the IR problems are manifestation of their incompetence.
They still have the cheek to talk down to us. PM Lee said a few months ago that this recession will last only a year; now they say they are not sure. Then they still have the cheek to tell us that there will be a change in country’s order as if they know for certain and as if it is relevant in this budget speech. Their pretentious act is disgusting.
The real problem is that labour is not well regulated and banks are not very regulated. It is their failing that aggravated our suffering and they are not addressing that.
Very sickening…. I bet that the elections will take place in February or March in any case soon.
job credit is not a brilliant scheme as it seems. in the CPF game, there are at least 3 parties. The employer, the employee and the CPF board.
With this scheme, the employee didn’t lose because he got the same amount of CPF monies to service his HDB flat and finance the minimum sum.
The employer contributes less because of the credits.
However, CPF/Govt still end up getting less as in the previous cost cutting manoeuvres.
It is because of this shortfall, that they had to reduce the interest rate on the oa/ms accounts minimum interest rate to 2.5% and increase the minimum sum quickly. What makes you think that the number they quote that you will be getting at 65 from the minimum sum will meet some minimum living standards. How did they arrive at that standard? It is arbitrary and the only purpose is to cover the funding gap they have as a results of the CPF cuts that they imposed earlier in 2000s.
You’d be silly to think that it is brilliant. They are just fooling with your perception.
Looks like the perfect storm is brewing for the Singapore economy. The economists at the MAS/MTI, even if they are cognizant, are unlikely to put up a realistic forecast for fear of panicking the people. The private sector economists are too polite or too kiasu to go against the official forecast.
Let me, a non-economist, cast the first stone and stone the first cast-in-stone forecast.
The composition of Singapore’s GDP (2007) are as follows:
Manufacturing 23.7%
Financial & Biz Services 24.6%
Wholesale & Retail Trade 16.0%
These 3 sectors alone account for some 64.3% of Singapore’s economy.
Given the global financial tsunami and contraction in trade, it is realistic to assume a contraction of 15% in these sectors, which means GDP shrinking by 9.6%. Assuming a more conservative contraction of 10% for the 3 sectors, GDP will shrink by 6.4%.
So, my quick and dirty forecast for Singapore’s 2009 GDP growth – a decline of 6.4% to 9.6%. Let’s take the mid point — minus 8.0% GDP growth for 2009.
And the official MTI forecasters are still mucking around -2% to +1% growth for 2009.
You heard it here first – from a non-economist.
20 January, 2009 15:59
P/S – the above was written before the government revised its forecast (within 3 weeks of the previous one) to -2% to -5%.
I think they are still pussyfooting with their forecasts – my amateurish forecast is -8% or worse.
I find it Weird when the MSM reported
HDB Resale price went UP
when demand dropped by 24%.
Who controls the HDB resale pricing, if at all?
With the reduction in Corporate Tax, expect GST to be increased in about a year or two.
Agree with T (#7)……….contraction greater than -5%
Sigh.. no unemployment benefits to tide Singaporeans through this difficult period
It’s true. Most of us worry the most about the times when we have lost our jobs.
Our savings are not much … at least not as much as Cordon Bleu Tan.
The bills and the HDB mortgage are real issues. And worse, as age catches up, all kinds of body pain require medical attention.
How I wish there is some safety net for people in this situation. Something that allows us some dignity. I know from friends you literally have to beg for assistance. That’s really sad.
Something is amiss…
This budget is confirmed very pro-business. Don’t know whether these cost savings will translate to savings or jobs for the people or not, knowing more FT and PR will go into exodus. Will new post be filled by Singaporean or will there have any new job opportunities in place. Given the high cost of rental and HDB flats even for the average Singaporean, survival is still a problem for some. With the departure of FT and PR, we still have to solve our own internal problem: Garnering Singaporean to be a part of nation building. But given the atmosphere of fear and undemocractic regime of the LEE and elitist view of PAP and layman, how is it going to help Singapore. With failure after failure in the investment in foreign banks etc, who ultimately bear the cost of loss? The CPF and our retirement may be in jeopardy and we may have to work till we dropped death. This is the reality. And if the industry is not moving esp the tourism or IR, we will be dead. And some more we don’t support our own products but only western, so most likely what government proposed will fail unless our citizen take part in the good voting process to vote for the right governance.
I have been a sort of a nomad employee and small time entrepreneur since 1997 not by choice. My last job was with a government department before it became “messy” and got corporatized. By then I recoginized that the Government was not longer setting the policy of long term employment or welfare for its staff (or a matter of fact for the people) and such decided to move on.
Today after much struggles, as a small time boss of my business, I have no staff, because they contribute overheads cost like CPF, benefits, medical, etc. My so called empolyees are more of partners in the business and they are all freelance. My experience being, if you are to formally employ a staff, you have to contribute to their CPF and if the money is not forthcoming, you have to fork out money to pay CPF, otherwise you have committed an offence and become a criminal.
As a sole- proprietor of my business, I contribte minimally to CPF because I have to pay it back with interest in the case of paying off my housing loan or other CPF approved investments. The good news is I have paid off all my housing loan with minimal interests incurred with the CPF and at the same time beat inflation with cash on hand.
Making the hiring of Singaporeans is no doubt a lesser priority in my mind, because you can’t expect to pay singaporeans the same amount as the foreigners in our midst. Most small time bosses I know, would register their Singaporean family members, their 80 year old Ah kong and Ah ma, relatives etc as company’s employees so as to cut cost and at the same time to qualify for the MOM quota of empolying foreigners at the fraction of the local costs to run their business and factories. MOM although claims to be against this practice cannot enforce this policy on the ground because it is very difficult to establish the facts and it is counter to most successful family run businesses.
I believe that the Government by setting major economic goals towards value added industries, like wafer-fab manufacturing, financial and medical services, employing countless highly or lowly paid foreign talents have neglected the small time local business overtime, which would have absorbed the unemployed singaporeans easily and create niche brands for the interational markets, just like in Taiwan, Hongkong, Japan and even China. Anyway it may already be too late to do otherwise for Singapore, since we have already set such expectations of Singaporeans and Foreign Investors alike.
Nevertheless, I am still considered as an UNEMPLOYED even today.
With the announcement of any budget each year, it does not matter anymore, because it is a question of survival and how to get through another year.
Microsoft is laying off 5000 employees for the first time its history.
I am not surprised by the worse economic performance than expected.
Totally absolutely not surprised , not even a whisker of surprise.
I suspect that singapore economy is basically dependent on USA and the West etc. If these regions fall sick, sg falls sick. Its kind of scary to think of it this way.
CAN Sg by itself grow without these regions growing?
You have your own answers, I am sure.
And thus. Its time. to wake up. 12 noon…..
Forgot to add,
Can USA and the West grow without Sg growing.
And there u have it.
Just 1 tiny question I derived from reading this article.
If ‘Economic growth fell well below expectations’,
is there anyone responsible if not accountable?
selamat,
Grang Gor Pi
To Whom It May Concern,
So what if the budget is $20.5 billion? Only $2.6 billion (12.6%) is meant to help households. The rest, $17.9 billion (87.4%) go to businesses (under the guise of saving jobs).
Who are the main monopolies, oligarchies and dominants in the business world within Singapore? Aren’t most of the big businesses in Singapore belong to Temasek Holdings, GlC and GLCs?
So who actually get the most help, the most money from the budget, from taxpayers’ money?
As far as my family and most of my friends’ families are concerned, we get only the benefit of the GST credit which is pittance, a mere $200 or so, and the town council conservancy rebate which is only $30 or so. Income tax reduction of 20% does not benefit us because our income range between $400 to $800 per month. Property tax – we need not pay property tax because we live in low class and lousy rented HDB flats. So what other things are there to help us tide over this Big Depression ( which the gahmen prefer to refer it as a mere Recession)? Nothing else!
So, what so great about the budget? People up in the ivory towers may have 1st Class Honours in Mathematics but we, the common people, also know how to calculate in simple Arithmetic. You get it?
Don’t ever for a moment think that we can be so easily convinced.
Yours Very Unhappily,
Unhappy Citizen.
‘Economic growth fell well below expectations’ is equivalent to saying; “LHL’s government has fallen well below expectations”?.
gemami – don’t anyhow blame the government hor……
the global financial crisis is not the doing of the government hor……
the government cannot rescue the world from the global recession…….
actually they tried bailing out Merril Lynch, Citi, UBS, etc……
damned!!!!!
damned if you try; and damned if you don’t……….
don’t anyhow blame the government hor: T.
I don’t know leh ….. got global financial crisis meh?
Alamak! I still think we are in golden era!
So golden that the golden goose is now strangled for a few drops of blood?
All I know is when our triple AAA LKY was PM, our golden goose was growing healtihly, lively and strong.
Then our double AA GCT took over and the golden goose was still ok and healthy.
Then this single A took over and in less than three years, we have to squeeze it for blood. I don’t know man . . . who should we damn?
aiyoyo
not sure if anyone think about this – the ELITEs take $ & try bailing out
Merri Lyn, Citi, UBS, etc.
if the ELITEs put those $ in this country, do you think the commoners will benefit
more??
aiyoyo
Recent interview with Bloomberg. First, they used the taxpapers money for risky investments instead of helping the singaporeans, now they lost the money with more to come. Now, they say they have to to take more risk, and we taxpapers have to do our parts to foot THEIR BILLS!
Do you Singaporeans AGREE?
‘Foot the Bill’
“It’s right that governments are focusing on recapitalization in the West and they’re trying their best to incentivize new lending,” Shanmugaratnam said. “It’s too early to say how successful this will be. Governments have to take more risk, and that means taxpayers have to be willing to foot part of the bill.”
Jobs Credit only work provided companies do not exploit it like retrench some ppl & re-hire ppl who are willing to take a lesser pay.