Keeping Jobs, Building for the Future22 Jan 2009
The Minister for Finance, Mr Tharman Shanmugaratnam, delivered the Budget Statement for the Financial Year (FY) 2009 on 22 January 2009.
2. A Resilience Package totalling $20.5 billion was announced in the midst of grave economic crisis. The Package aims to save jobs to the maximum extent possible and help viable companies stay afloat. It also prepares Singapore to emerge with strength when the global economy recovers, and enhance our capabilities and competitiveness for the long term.
3. The Resilience Package will not get Singapore out of recession as long as global economic conditions continue to deteriorate. However, it aims to help avert an even sharper downturn and prevent permanent damage to our economy.
4. The Package has five components:
(a) Jobs for Singaporeans
The Budget will help Singaporeans stay employed so they can continue to support their families. The Government will spend $5.1 billion to preserve jobs by:
- Introducing Jobs Credit - a 12% cash grant on the first $2,500 of the wages of each employee on the CPF payroll; it is for one year, payable quarterly beginning from March 09;
- Enhancing SPUR (Skills Programme for Upgrading and Resilience) to help professionals, managers, executives and technicians (PMETs) re-train, through increased subsidy rates for eligible courses;
- Providing a WIS Special Payment to low-income workers that is worth an additional 50% of the WIS payments in 2009; and
- Expanding recruitment across the public sector by 18,000 jobs over the next two years.
(b) Stimulating Bank Lending
The Government will extend $5.8 billion of government capital to stimulate bank lending. This will be done through enhancing existing schemes and a new Special Risk-Sharing Initiative (SRI). The SRI comprises two components:
- The new Bridging Loan Programme (BLP) to cater to loans of up to $5 million, with Government's risk-share of these loans raised to 80%; and
- New risk-sharing schemes for trade financing, including 75% government risk-sharing for trade loans.
It is estimated that these measures could help generate $11 billion of loans.
(c) Enhancing Business Cash-flow and Competitiveness
The Government will implement various tax concessions and measures costing $2.6 billion to ease business cash-flow and sharpen Singapore's competitiveness.
- Measures to ease business cash-flow include:
- A 40% property tax rebate for industrial and commercial properties in 2009;
- Property tax deferral for land approved for development for up to two years;
- Loss carry-back relief enhancements for losses incurred for Years of Assessment 2009 and 2010;
- Tax exemption of all foreign-sourced income earned on or before 21 January 2009, if remitted within a year;
- A 30% road tax rebate for goods vehicles, buses and taxis for one year; and
- Waiver of Special (Diesel) Tax for unhired taxis for one year.
- Measures to strengthen competitiveness and capabilities for innovation include:
- Corporate Income Tax Rate (CIT) reduction to 17% with effect from Year of Assessment 2010;
- Accelerated capital allowance for plant and machinery acquired in this year and the next;
- Accelerated write-down of renovation and refurbishment expenses incurred for Years of Assessment 2010 and 2011;
- A $200 million Test-Bedding Fund; and
- A $400m top-up to National Research Fund.
(d) Supporting Families
The Government will spend $2.6 billion to provide additional support to Singaporean households and the community during this downturn. The measures will be in addition to the help that the households will derive from the Jobs initiatives (mentioned above). These include:
Direct Assistance to Households
- Doubling of GST Credits and Senior Citizens' Bonus in 2009;
- A 20% personal income tax rebate for tax residents capped at $2,000 for Year of Assessment 2009;
- A 40% property tax rebate for owner-occupied residential properties in 2009;
- 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;
- A $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; and
- A top-up to the Public Transport Fund to $10m.
Support for Charitable Giving and the Community
- Increased tax deduction for donations made in 2009 to 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.
(e) Building a Home for the Future
To continue to develop Singapore as an extremely liveable global city and the best home for Singaporeans, the Government will spend $4.4 billion in four areas:
- $1.3 billion worth 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; and
- Upgrade of education and health infrastructure.
5. The current global financial and economic crisis is unprecedented, and it is uncertain how long it will last. This is the type of severe contingency that our reserves are accumulated for, and justifies a draw from past reserves. The President has given his in-principle approval for the Government to draw $4.9 billion from past reserves to fund the two temporary and extraordinary measures – the Jobs Credit and the Special Risk-Sharing Initiative.
6. The revised Overall Budget Balance for FY2009 is a deficit of $8.7 billion, which is 3.5% of GDP. The Basic Balance, which excludes the transfers to endowment funds as well as the contributions from Net Investment Returns, is a deficit of $14.9 billion or 6.0% of GDP, imparting a large fiscal boost to the economy this year.
7. To learn more about all the initiatives introduced in Budget 2009, visit the Budget 2009 website (www.singaporebudget.gov.sg), where you can read and download the Budget Speech and the Key Budget Initiatives.
MINISTRY OF FINANCE