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Budget 2016: Three main thrusts to deal with challenges in Singapore economy
THIS year's Budget has three key thrusts to address the challenges in Singapore's economy, said Finance Minister Heng Swee Keat in Parliament on Thursday.
The government will adopt an "expansionary fiscal stance" to provide some counter in a bid to address cyclical weaknesses. Taking into account the higher expenditures and extra measures introduced in the Budget, Mr Heng said this would likely amount to a positive fiscal impulse of slightly over 1 per cent of GDP.
Second, there will be more resources devoted to help firms build deeper capabilities, develop their people, scale up and internationalise. The government will launch the Industry Transformation Programme to strengthen enterprises and industry, and to drive growth through innovation.
The aim, said Mr Heng, is to enable our firms to emerge stronger to benefit from the broader global recovery when it takes place.
Lastly, the government will support Singaporeans through change, by enabling them to learn new skills, particularly in new and fast-growing sectors and in facilitating employment and job-matching.
Here are the key initiatives and issues Mr Heng addressed in Parliament on Thursday:
1. Addressing near-term concerns
a) Higher Corporate Income Tax Rebate, from 30 per cent of tax payable to 50 per cent of tax payable, with a cap of S$20,000 rebate each year for the Years of Assessment 2016 and 2017.
b) Special Employment Credit for companies modified and extended to the end of 2019 to provide employers with a wage offset for workers aged 55 and above who are earning up to S$4,000 a month.
c) Introduction of SME Working Capital Loan scheme, for loans of up to S$300,000 per SME.
d) Enhancement to Revitalisation of Shops scheme to better support promotional activities and upgrading projects in HDB town centres and neighbourhood centres. This enhanced initiative is expected to cost S$15 million annually.
e) Foreign worker levy to go up for services, construction sectors; deferred for marine sector
f) Monitoring the property market - it is "premature" to relax property cooling measures, Mr Heng said.
2. New Industry Transformation Programme to help firms and industries create value and drive growth
a) Transforming enterprises
- Business Grants Portal to be launched in Q4 2016 to help enterprises gain access to government agency schemes. The portal will start with grants from IE Singapore, Spring, STB and Design Singapore, and progressively include grants from other government agencies.
- New Automation Support Package to help companies automate, drive productivity and scale up.
- SME Mezzanine Growth Fund to be expanded from S$100 million to a total fund size of up to S$150 million.
- Extend non-taxation of companies' gains on disposal of their equity investments until May 31, 2022.
- Extend the Double Tax Deduction for Internationalisation scheme to Mar 31, 2020.
b) Transforming industries
- National Trade Platform to be developed as a one-stop trade information management system.
- More than S$450 million to support the National Robotics Programme over the next three years.
- Build on existing Local Enterprise and Association Development (Lead) programme with new Lead-Plus programme to help Trade Associations and Chambers (TACs) strengthen their outreach.
- Up to S$30 million set aside over the next five years to support TACs in developing their capabilities.
c)Transforming through innovation
- A top-up of S$1.5 billion to the National Research Fund this year.
- New entity called SG-Innovate to be set up in order to match budding entrepreneurs with mentors, introduce them to venture capital firms, help them to access talent in research institutes, and open up new markets.
- Launch of a new development called Jurong Innovation District which will house learning, research, innovation and production. The first phase is slated for completion around 2022.
- A further S$1 billion top-up to the Changi Airport Development fund.
d) S$4.5 billion set aside for the Industry Transformation Programme, to support enterprises and industries.
e) Lower cash payout ratio under Productivity and Innovation Credit Scheme from 60 per cent to 40 per cent for expenditures incurred on or after Aug 1, 2016.
3. Supporting people through change
a) Adapt and Grow initiative to help people adapt to changing job demands and grow their skills.
b) TechSkills Accelerator to be set up as a new skills development and job placement hub for the ICT sector.
4. Family- and youth-oriented initiatives
a) Child Development Account (CDA) First Step Grant for all Singaporean children. Parents will automatically receive S$3,000 in the child's CDA. This applies to eligible babies born from Mar 24, 2016.
b) New intiative, KidSTART, for children in their first six years.
c) Fresh Start Housing Scheme to provide a grant of up to S$35,000 to help eligible families with young children own a two-room flat, with a shorter lease.
d) New National Outdoor Adventure Education Masterplan which will include building a new Outward Bound Singapore campus on Coney Island.
5. Assistance for low-wage workers and people with disabilities
a) More payouts and higher qualifying income ceiling for Workfare Income Supplement scheme
b) Widening of Workfare Training Support scheme for low-wage workers with disabilities to include those under the age of 35.
7. Other measures for households
a) Increase in basic monthly cash allowance under the Public Assistance scheme.
b) Increase in Singapore Allowance and monthly pension ceiling to help government pensioners who draw lower pensions.
c) A one-off GST Voucher - Cash Special Payment of up to S$200 for 1.4 million citizens.
d) S$86 million worth of service and conservancy charges rebates.
e) Cap on personal income tax relief at S$80,000 a year
8. Social measures
b) Dollar-for-dollar matching for any additional donations to Community Chest's monthly donation programme, Share, over and above the FY2015 level.
c) Up to S$25 million set aside for new fund called Our Singapore Fund, to support projects that build the spirit of caring and resilience, nurture the can-do spirit, and promote unity and sense of being Singaporean.