Budget 2016 to Focus on Slowdown, Economic Transition: Heng Swee Keat05 Mar 2016
By Soon Weilun
THE upcoming Budget will look at how it can help companies cope with the current economic downturn, even as it looks towards assisting all stakeholders to navigate new landscapes as Singapore's economy transitions.
"We have to continue to focus on what we need to do to manage in this slower growth environment, but at the same time, to focus on what are the medium-term opportunities that we'll continue to have," Finance Minister Heng Swee Keat told the media after a visit to Pan Asia Logistics in Tuas on Friday.
Mr Heng, in his first term as finance minister, alluded to fiscal prudence in the upcoming Budget, which will be unveiled on March 24.
"Because it's the first term of the new government, it means that we have to be particularly prudent so that we have resources when we need to act later," he said.
Already, the newly-minted finance minister has a few worries on his mind, chief of all the brittle global economic sentiment which may exert a drag on Singapore's trade-reliant economy. The government is predicting a 1 to 3 per cent growth for the economy this year.
For the global economy, the International Monetary Fund is projecting growth at 3.4 per cent this year. Even though this is 0.3 percentage points better than in 2015, recent actions taken by governments and central banks have shown that confidence is still weak. For one, the Bank of Japan has introduced negative interest rates as it tries to fight economic challenges from abroad, with poor economic data coming out from neighbouring China as one of its topmost concerns. Just this week, rating agency Moody's cut its outlook for China from "stable" to "negative", flagging weakness in the world's second-largest economy's fiscal strength.
Mr Heng said finance ministers have raised concerns about the global economy at a recent G20 meeting in Shanghai which he attended.
While he noted that the slowdown has had varied impact on different industries in Singapore's economy, it would be difficult to tailor specific measures for those that were particularly hit. But even as the government looks to mete out budgetary measures that will be "useful across the board", its eyes are still fixed on how Singapore's economy can transition in terms of building up competitive strengths for the economy, said Mr Heng, who is also chairman of the high-level Committee on the Future Economy.
The committee is tasked with seeing how Singapore can chart its economic transition. It is due to issue its recommendations only later this year.
In this sense, the upcoming Budget is likely to put in place initiatives that will help gear such transformation towards the committee's vision.
For example, on top of helping small and medium enterprises (SMEs) cope with immediate challenges, Mr Heng said the Budget will help them on the "restructuring journey". Some issues being considered are how SMEs can innovate, tap into new markets, and improve on business efficiency.
The Budget will likely look at how it can help workers prime themselves for the future, too.
Mr Heng said that there was a need to, through the SkillsFuture framework, help workers learn new skills to cope with changes, or to enter new industries.
"The more ready we are to (global) changes, and adapt and respond to these significant shifts around us, the better we will be, we will be in a stronger position," said Mr Heng.