A. Economic Performance And Outlook
- 1 I beg to move that Parliament approve the financial policy of the Government for the financial year 1 April 2022 to 31 March 2023.
Mr Deputy Speaker, Sir
Living with COVID-19
- 2 Sir, it has been more than two years since COVID-19 upended our lives.
- 3 During this period, we mounted multiple public health responses that pushed us to new limits. We faced a major economic challenge and fought to save lives and jobs. All of us adapted to different restrictions as the virus threat evolved. Some had to put plans on hold. Others were kept apart from loved ones.
- 4 Throughout these challenges, Singaporeans have rallied together and supported one another. I want to express my deep appreciation to:
- a. Our stout-hearted healthcare workers who have been unwavering on the frontlines.
- b. As well as many others who have kept Singapore going – our public officers, our transport workers and those in social services, our safe distancing ambassadors, our hawkers and F&B operators, as well as our migrant workers.
- c. Most of all, I thank all Singaporeans for your strong cooperation and support – complying with our measures, coming forward to get vaccinated, trusting the government, and keeping faith with one another.
- 5 The last two years have shown us that there is nothing predictable about this virus. But as the global pandemic enters its third year, we will have to adjust to the new normal. We cannot let it change our hopes, our aspirations, our values.
- 6 We are much stronger now compared to when the virus first emerged. We have improved our public health defences and strengthened our collective resilience.
- 7 We have one of the highest vaccination rates in the world. And we continue to invest in and secure access to a wider range of booster and treatment options.
- 8 So as we navigate this Omicron wave and any future wave of infection, I am confident that we can overcome whatever lies ahead, and make further progress in our journey to live with COVID-19.
Economic Performance in 2021
- 9 We are starting the year on a positive note. Our economy has rebounded strongly from our worst recession since independence.
- 10 We worked together to cushion the effects of COVID-19. We planned, we consulted, we took action. We committed close to $100 billion over the past two years to support Singaporeans and businesses through the uncertainties of COVID-19. The close tripartite partnership between the unions, employers and the Government enabled us to take decisive and timely actions to preserve jobs and create new ones even through this crisis.
- 11 Our measures have borne fruit.
- 12 The resident unemployment rate has come down to 3.2%, close to pre-COVID levels. The median income1 of full-time employed residents grew by around 1% in real terms2 last year, after a decline of 0.4% in 2020.
Outlook for 2022
- 13 We expect to see steady recovery this year.
- 14 Singapore will continue to benefit from the pick-up in the global economy. This will be supported by more widespread vaccination and booster efforts in the major economies like the US and Eurozone. The recovery of our key trading partners in the region will also support our growth.
- 15 That said, 2022 is not free of risks.
- 16 The global economy is still vulnerable to pandemic-related risks, and further supply-chain disruptions. Geopolitical and security risks loom, including the rising tensions in Eastern Europe.
- 17 We may also see a slowdown in external demand as the major economies scale back their pandemic support, and central banks tighten their accommodative monetary policies to deal with the threat of inflation.
- 18 We will continue to watch these potential threats. We stand ready to respond should the situation turn for the worse. Barring fresh disruptions, I expect the Singapore economy to continue to do well. Our economy should grow by 3% to 5% this year. Our investment pipeline is also strong. This will support our efforts to create more good jobs and secure the livelihoods of all Singaporeans at all levels of the workforce.
Immediate Support for Households, Businesses & Workers
- 19 While the overall outlook is positive, I recognise that there are still segments of the economy that are still struggling.
- 20 I will therefore provide targeted help for our workers and businesses in these sectors, through a $500 million Jobs and Business Support Package. (See Annex A-1.)
- 21 As part of this Package, I will provide a Small Business Recovery Grant for SMEs that have been most affected by COVID-19 restrictions over the past year, like those in the F&B, Retail, Tourism and Hospitality sectors.
- 22 SMEs in the eligible sectors will receive a payout of $1,000 per local employee, up to a cap of $10,000 per firm. Local sole proprietors and partnerships in eligible sectors, as well as SFA licensed hawkers, market and coffeeshop stallholders, who do not hire local employees, will also receive a $1,000 payout.
- 23 In addition, workers who continue to face income loss due to COVID-19 can apply for the COVID-19 Recovery Grant, which we have extended to the end of this year.
- 24 I will also extend the Jobs Growth Incentive by six months to September this year, with stepped-down support rates reflecting the improved labour market conditions. This extension will cover those who face greater difficulty finding jobs, like mature workers who have not been employed for six months or more, persons with disabilities, and ex-offenders.
- 25 Aside from this Package, I will continue to extend targeted assistance for the aviation sector. This includes measures to ensure public health and safety at the airport, as well as to preserve core capabilities. We must preserve and enhance our status as an international aviation hub. The Minister for Transport will share more at the COS.
- 26 As our economy reopens, the harder-hit sectors should progressively see improved prospects. Meanwhile, these support measures will provide temporary relief for our businesses and workers.
- 27 We are also closely monitoring the risk of rising inflation and cost of living. The rise in prices comes after an extended period of low inflation over the past decade. It has been driven mainly by the recovery in global demand amidst continuing supply chain dislocations, and especially by the rise in energy prices.
- 28 We are also seeing the effects of the expansionary macro-economic policies pursued by the US and other developed countries to revive their economies, following the onset of the pandemic.
- 29 This is why the MAS had taken the pre-emptive step of raising the rate of appreciation of its exchange rate policy band in October last year, and again last month, to help dampen inflationary pressures.
- 30 I recognise the immediate concerns of businesses and households and will provide significant additional support in this Budget to help them tide over the current period of higher prices.
- 31 For businesses, the spike in the cost of materials and electricity has led to cashflow concerns. To support companies with their cashflow needs, I will extend the Temporary Bridging Loan Programme and the enhanced Trade Loan Scheme, with revised parameters, for another six months, from 1 April to 30 September this year. (See Annex C-1.)
- 32 I will also extend access to Project Loans for the domestic construction sector for another year, from 1 April this year to 31 March next year. This is on top of the Foreign Worker Levy rebates that construction firms are receiving currently. (See Annex C-1.)
- 33 For households, I will introduce a Household Support Package.
- 34 As part of the Package, I will double the GST Voucher – U-Save rebates for the rest of this year. Eligible HDB households will receive additional rebates of up to $285.
- 35 I will provide children below the age of 21 with a top-up of $200 each in their Child Development Account, Edusave Account or Post-Secondary Education Account. This will be on top of the annual Edusave top-ups they already receive.
- 36 I will also distribute another set of $100 CDC Vouchers this year to support all Singaporean households in their daily expenses, and the vouchers can be used at participating heartland shops and hawkers.
- 37 All these amount to a significant package of $560 million to help Singaporeans with their utility bills, children’s education, and daily essentials. (See Annex A-2.)
- 38 Details of the Jobs and Business Support Package, and the Household Support Package are in the Annex. (See Annexes A-1 and A-2.)
1 Pertains to median gross monthly income from work (including employer CPF) of full-time employed residents.
2 Deflated by Consumer Price Index for all Items at 2019 prices (2019=100).