The Ministry of Finance (MOF)’s mission is to create a better Singapore through Finance.

A total budget of $855.26 million (excluding Expenses on Investments) has been allocated to MOF in FY2009 to achieve this mission.

MOF aims to achieve the following outcomes:

• Sound Public Finances
• Growth with Opportunity for All
• High Performance Government

Sound Public Finances

MOF ensures that the government’s fiscal position is sustainable over the medium and long term. We also ensure that Singapore’s reserves are optimally managed to balance the present and future financial needs of Singapore.

To ensure fiscal sustainability, we must secure sufficient revenues to meet rising expenditure needs to develop capabilities and competitiveness, build a vibrant and distinctive living environment, and foster an inclusive society.

Thus, we have made two key changes to our revenue structure. The first was the 2% GST increase in 2007. The second was the revised framework for drawing on the investment returns on our reserves for spending each year, which will be based on total long-term returns, including capital gains, and adjusted for inflation. The new framework, which will take effect from FY2009, will provide additional resources for us to meet our spending needs, while allowing our reserves to grow in real terms.

Together, these changes will enable us to spend on important initiatives such as workfare, invest more in education and R&D, and major programmes to expand our transport infrastructure, rejuvenate the city and keeping our environment clean and green.

Growth with Opportunity for All

MOF aims to create a pro-enterprise environment by keeping taxes competitive, facilitating trade, business formation and growth, as well as encouraging innovation. We will also create opportunities for a better life for all, and build a strong community.

Enhancing Business Environment

To provide a more supportive environment for businesses, ACRA has initiated fundamental reviews of the Companies Act and the accounting profession. These reviews will enhance the legal framework for companies and better position Singapore as the leading professional accountancy centre in Asia. The Accounting Standards Council will continue to conduct regular reviews of accounting standards to ensure consistency, credibility and transparency of financial reporting.

Sustaining Jobs for Singaporeans

To sustain jobs for Singaporeans, the Government introduced a Jobs Credit which will encourage our businesses to preserve jobs in the downturn. This is a temporary scheme to help companies through an exceptional downturn. Under the Jobs Credit scheme, employers will receive a 12% cash grant on the first $2,500 of each month’s wages for each employee on their CPF payroll. This scheme, which is to be funded from past reserves, will cost $4.5 billion.

Stimulating Bank Lending

The Government launched the Special Risk-Sharing Initiative (SRI) to ensure that viable companies continue to have access to credit to sustain their operations and keep jobs. The SRI will help extend Government support to a broader segment of the credit market, especially mid-sized companies, and share in the risks of trade financing for the first time. The programmes under the SRI, which are to be funded from past reserves, will be in operation for one year, but with possible extension for another year if the situation warrants.

Corporate Income Tax (CIT) Rate Cut

To promote Singapore’s competitiveness, the Government will reduce the CIT rate from 18% to 17%. This reduction will take effect from the Year of Assessment 2010.

Encouraging investment in equipment and refitting of business premises

To support businesses intending to invest in equipment to prepare for the recovery, the Government will allow the costs of plant and machinery acquired during the financial years ended 2009 and 2010 to be written down within two years with 75% of the write-down taking place in the first year of capital allowance claim alone, instead of over 3 years as is generally the case currently. To encourage especially small businesses in the service sector to refit their business premises this year and the next, the Government will allow businesses to temporarily write-down qualifying expenses incurred on renovation and refurbishment of business premises fully within one year, instead of the current three years.

Facilitating enterprises to tap funds from all sources to finance the business financing needs in Singapore

In view of the tightness in the credit market currently, the Government will allow businesses to remit all types of foreign-sourced income earned on or before 21 Jan 2009 into Singapore during 22 Jan 2009 to 21 Jan 2010, without suffering further tax in Singapore upon remittance.

Enhancing Singapore's competitiveness as a fund management centre

To encourage more fund managers to set up and manage funds from Singapore, the existing tax incentives for funds managed in Singapore will be enhanced to remove existing restrictions (e.g. limits placed on holdings by resident non-individuals in the funds). This will allow fund managers to accept investments freely from resident non-individuals, in addition to resident individuals. Resident non-individuals will enjoy full benefits of tax exemption on qualifying income derived by the funds. This enhancement will also apply to funds that are constituted in the form of limited partnerships. To avail itself for this enhanced treatment, a fund must, amongst other conditions, have at least $50m of assets under management in Singapore at the point of application of the tax incentive. The incentive will be valid from 1 April 2009 to 31 Mar 2014.

To promote fund management and administration services in Singapore, we have simplified the rules and GST processes for specified funds that are managed by prescribed fund managers in Singapore to recover a substantial portion of the GST incurred on prescribed expenses. This change will be effective from 22 February to 31 March 2014.

Transport -Related Taxes and Fees

Road tax rebate and waiver of special tax. To help reduce costs for businesses during this economic downturn, MOF is granting a 30% road tax rebate for commercial vehicles and taxis, and is waiving the special (diesel) tax for un-hired taxis for one year. These measures will yield savings of about $46 million for businesses.

Compressed Natural Gas (CNG) special tax. MOF is extending the special tax exemption for CNG vehicles for another two years till 31 December 2011, and will introduce a CNG unit duty at $0.20 per kg with effect from January 2012.

Tax Concession for Wine Trading Activities

MOF has introduced tax concession for approved wine exhibitions and conference events to promote wine trading activities and help develop the wine industry in Singapore.

Tote Board Donations

The Singapore Totalisator Board will continue to channel its surpluses towards national iconic projects and community campaigns such as the National Art Gallery, Sports Promotion, Crime Prevention and Drug Prevention to benefit Singaporeans from all walks of life. New areas of focus for the Board moving ahead will be to look at programmes on capacity building for the social service sector and also on strategic projects with global perspective that will benefit the nation in the long run.

High Performance Government

One key competitive advantage for Singapore is our efficient and effective government. MOF ensures through various policies and systems that this remains so. As issues become more complex and intertwined, a high performing government needs to ensure not just the efficient and effective operation of its different ministries and agencies, but that they operate as one to achieve the Whole-of-Government (WOG) strategic outcomes, with innovativeness to enhance public policy and service delivery.

Building an Integrated and Innovative Public Service

The iGov2010 masterplan is a five-year masterplan to enable the Singapore Government to realize the vision of an Integrated Government (iGov) that delights customers and connects citizens through the use of infocomm technology. Currently, people and businesses can already interact with the Government on-line through a single front with different agencies on an integrated basis, offering convenience and responsive services.

The Government will build on this effort and leverage on the ubiquitous mobile phones to enhance our interaction with the public:

• Web On-The-Go will make transacting with the Government on mobile phones simple and convenient. From August 2009, the public will be able to access specially-rendered Government and private-sector e-services from a one-stop menu on their mobile phones. This initiative will make e-services easier-to-use and reach a larger audience.
• In addition, Near-Field Communications is an initiative to enable the public to make over-the-counter payments using just their mobile phones by installing a credit or stored value card of their choice in the phone. Together with Web On-The-Go, the public could soon rely on their mobile phone for most of their transactions and information needs.

More services involving the whole-of-government would be rolled out with such advance and integrated infrastructure.

Integrating Public Sector

To meet rising citizenry demand and achieve greater efficiency and effectiveness,

• The Government is harmonizing desktop, messaging and network environment across government agencies through the Standard Operating Environment (SOEasy) project.
• 11 statutory boards have come together to develop a shared HR, Finance and procurement system to reap economies of scale and leverage on best practices.
• 31 government agencies are participating in an on-going review of business licences in Singapore to strengthen Singapore's competitive advantage as the best place to do business. The review seeks to examine the need for certain business licences, streamline licensing processes and enhance the licensing experience for businesses.

To support these initiatives, we will also continue to nurture a ‘WOG mindset’ among public officers, through enhancing HR and finance policies for better integration and developing common standards and architecture within the public sector.

Ensuring Effective and Efficient Use of Resources

We will continue to stretch our finite resources and get the best value for money. We are consolidating the various operational and administrative processes as well as centralising them to reap economies of scale while allowing autonomy of decision where it is most efficiently made. We will adopt a strategic procurement perspective and build up both our capabilities in that area, as well as local capacity that would support our economic growth in the long term. We also conduct value-for-money reviews to systemically examine whether expenditures are achieving the intended outcomes and doing so in a cost-effective way.

Partnerships with the Private Sector

We will seek out expertise and partners who will bring us value. Private-Public Partnerships will be pursued wherever they are most cost effective. This applies not just in Government procurement, but in other areas. For example, tax agents play an important role in taxpayers’ compliance and serve as a valuable channel of feedback for IRAS in the formulation and refinement of tax policies. IRAS has set up a fund of $1 million to encourage tax agents to attend essential training courses offered by the Tax Academy of Singapore. Together with a further $300,000 provided by the Institute of Certified Public Accountants of Singapore, the fund will benefit more than 1,600 trainees over the 5-year period (or more than 90% of tax agents).

To find out more about the Ministry of Finance and our initiatives, visit our website at www.mof.gov.sg. You can also read our Committee of Supply speech here.