Singapore Budget 2016: Singapore may abandon raising foreign worker levies as economy slows: BOA

SINGAPORE may abandon increases in foreign-worker levies altogether, given worsening economic conditions and calls for greater responsiveness to businesses, a report from Bank of America Merrill Lynch said on Wednesday.

But broadly, there are no high expectations for Budget 2016 to have a material impact on growth or markets, said the bank's Asean economist, Chua Hak Bin, pointing out that a slowing economy may limit the fiscal room for 2016.

"Businesses are hoping for more help, after being somewhat neglected over the past few years, in favor of social goals. The focus will be on whether Minister Heng remains left-of-center and be more responsive to businesses," said Dr Chua, referring to Minister for Finance Heng Swee Keat.

Budget 2016 is unlikely to relax property measures, as the government reflected fears that easing cooling measures now could lead to a market rebound. But the government may fine-tune foreign worker policies.

"Former finance minister Tharman deferred levy increases planned for last year to 2016-17. We believe these levy increases will be abolished altogether, given worsening economic conditions," said Dr Chua, referring to Tharman Shanmugaratnam, who is now Deputy Prime Minister and Coordinating Minister for Economic and Social Policies.