Budget 2021: Emerging Stronger Together16 Feb 2021
Emerging Stronger Together
Deputy Prime Minister, Coordinating Minister for Economic Policies, and Minister for Finance Heng Swee Keat delivered the Singapore Government’s Budget Statement for Financial Year 2021 in Parliament on Tuesday, 16 February 2021.
2. Budget 2021: Emerging Stronger Together sets out the Government’s plans to continue to tackle our immediate challenges, and build a stronger Singapore that is economically vibrant, socially cohesive, and a sustainable home for all. The Government will commit a total of $107 billion in Financial Year (FY) 2021 to support these plans.
Relief for Recovery
3. An $11 billion COVID-19 Resilience Package (CRP) will address Singapore’s immediate needs to safeguard the health of Singaporeans, continue support for workers and businesses where needed, and provide more targeted support for worst-hit sectors. This includes $4.8 billion dedicated towards public health and safe re-opening measures. The remainder is channelled towards support for workers and businesses that continue to face difficulties.
4. The Jobs Support Scheme will be extended for sectors that continue to be hard-hit at a total cost of $2.9 billion in FY2021, including earlier committed amounts. Worst-hit sectors, including aviation, land transport, arts and culture, and sports, will receive further support to maintain and upgrade capabilities for the eventual recovery. The CRP will also meet commitments under the first tranche of the SGUnited Jobs and Skills Package, which includes the Jobs Growth Incentive and financing schemes for enterprises. It also funds the COVID-19 Recovery Grant, which provides support to workers and self-employed persons who lost jobs or experienced significant income loss.
Emerging Stronger with Skilled Workers and Innovative Businesses
5. Over the next three years, $24 billion will be allocated to enable our firms and workers to emerge stronger.
6. The Government will build a vibrant business sector and an ecosystem for innovation. This includes deepening Singapore’s position as a Global-Asia node, by positioning Singapore’s aviation sector for recovery, and investing in platforms that enable our businesses to innovate and collaborate across borders, especially with ASEAN nations.
7. The Government will facilitate access to capital to enable businesses to innovate, transform, and scale. For high-growth enterprises, including start-ups, the Enterprise Financing Scheme – Venture Debt programme will be extended and enhanced to support them. For mature enterprises, including small and medium enterprises (SMEs), the Government will co-fund the adoption of digital solutions and new technologies. For large local enterprises, the Government will co-invest in a Local Enterprises Funding Platform with Temasek – to provide equity to support transformation and overseas expansion.
8. For the next phase of industry transformation, the Government will move beyond support for individual companies to focus on the transformation of entire value chains, starting with the Built Environment sector through the new Growth and Transformation Scheme.
9. Looking ahead, as companies and industries transform and new growth areas emerge, Singaporeans will need new knowledge and skills to emerge stronger. To help individuals take on new jobs in growth sectors, the Government will allocate an additional $5.4 billion to a second tranche of the SGUnited Jobs and Skills Package, including an extension of the Jobs Growth Incentive. The SGUnited Skills, SGUnited Traineeships, and SGUnited Mid-Career Pathways programmes will also be extended to support workers who require additional support before landing a job.
10. The Government will moderate Singapore’s reliance on foreign labour, as well as complement the local workforce with foreign specialist skills and expertise. The Capability Transfer Programme will also be extended to support foreign-to-local skills transfer.
Strengthening Our Social Compact
11. A $0.9 billion Household Support Package was introduced in Budget 2021 to provide families with additional support, with lower- to middle-income families receiving more. Eligible households will receive a GST Voucher – Cash Special Payment, GST Voucher – U-Save Special Payment, and Service and Conservancy Charges Rebate. Singaporean children below the age of 21 in 2021 will each receive a one-off $200 top-up to the Child Development Account, Edusave account, or Post-Secondary Education Account, depending on his/her age and/or academic level. All Singaporean households will also each receive $100 in CDC Vouchers, to support heartland shops and hawker stalls.
12. The Government will continue to support vulnerable groups, such as lower-wage workers and lower-income families. ComLink will be expanded over the next two years to cover 14,000 families with children in rental housing. For children with special needs, an Inclusive Support Programme will be piloted, integrating the provision of early intervention and early childhood services for those requiring up to moderate levels of support.
13. To encourage Singaporeans to give back to the community, the 250% tax deduction for donations to Institutions of a Public Character (IPCs) will be extended until the end of 2023. The Business and IPC Partnership Scheme, Tote Board’s Enhanced Fund-Raising Programme, as well as ComChest’s SHARE as One matching grant will also be extended. In addition, a new $20 million Change for Charity Grant will be introduced to encourage businesses to facilitate donations from their customers, in the course of daily transactions. $50 million will also be set aside to match funds raised for Community Development Councils’ Care and Innovation Fund, which will provide support for bottom-up, innovative initiatives benefiting the community.
Building a Sustainable Home for All
14. Budget 2021 introduced several measures under the Singapore Green Plan 2030 to harness technology, promote green finance, and for the public sector to lead by example. This includes setting aside $60 million for a new Agri-Food Cluster Transformation Fund to support technology adoption in the agri-food sector.
15. A car-lite society will continue to be the main goal for domestic transport. Along with investments in public transportation, the Government will introduce various measures to encourage the adoption of electric vehicles (EVs) and discourage the use of internal combustion engine vehicles. This includes the installation of 60,000 charging points at public carparks and private premises by 2030, and setting aside $30 million over the next five years for EV-related initiatives.
16. Sustainability efforts will also require capital. The Government will take the lead by issuing green bonds on select public infrastructure projects. For a start, up to $19 billion of public sector green projects have been identified.
17. The public sector will commit to more ambitious sustainability goals under the new GreenGov.SG initiative.
Our Fiscal Strategy
18. As DPM Heng said in his Budget 2021 statement, the Government’s fiscal approach must strike a careful balance between addressing Singapore’s immediate needs and meeting our longer-term structural needs in a responsible manner. The Government proposes to fund the COVID-19 Resilience Package through a draw on Past Reserves, given the extraordinary and temporary nature of the measures. President Halimah Yacob has given her in-principle support.
19. The Government intends to issue new bonds under a proposed Significant Infrastructure Government Loan Act (SINGA), to finance major, long-term infrastructure that benefit current and future generations. Safeguards will be in place to ensure such borrowing is done in a prudent and sustainable manner. The Government will table a Bill in Parliament on this later this year.
20. In the coming years, Singapore’s fiscal situation is expected to tighten as its needs continue to grow. To finance Singapore’s recurrent spending needs, the Government announced in Budget 2018 that we would need to raise the GST rate sometime from 2021 to 2025. This will not take effect in 2021, as announced at the Unity Budget in February 2020, but the move will be needed some time during 2022 to 2025, and sooner rather than later, subject to the economic outlook.
21. As the economic and fiscal outlook is subject to considerable uncertainty, the Government has briefed the President on the fiscal approach should the public health and economic situation deteriorate. In such a scenario, the Government intends to continue investing in our future, which may entail a further draw on Past Reserves. The President has expressed her understanding towards the Government’s approach, and will consider the Government’s specific proposals, should there be a need to draw on Past Reserves.
22. For FY2020, the Government expects an overall budget deficit of $64.9 billion (13.9% of GDP). This is the largest budget deficit since our nation’s independence. The deficit is driven by lower revenues due to dampened economic activity, and the significant expenditures needed to mount a decisive response to COVID-19.
23. For FY2021, the Government expects an overall deficit of $11.0 billion (2.2% of GDP). Our budget position remains expansionary as we continue to tide Singaporeans and our businesses over this crisis with the COVID-19 Resilience Package.
24. More details of Budget 2021 are available at www.singaporebudget.gov.sg.
Ministry of Finance
16 February 2021