Singapore's response to Covid-19 today will shape next 5 to 10 years of growth: Heng

HOW Singapore responds to Covid-19 today will shape the country's growth in the coming five to ten years, Deputy Prime Minister and Finance Minister Heng Swee Keat said in Parliament on Monday.

In a ministerial statement, he gave an overview of the government's approach to Covid-19 over the next six months - including extensions to schemes and support - and its refreshed economic strategy for the future.

"We are at a critical juncture in our economic development and the stakes are high," he said. In the next few years, how economies respond to transition will determine whether Covid-19 brings benefits or disadvantages - whether at the firm level, sector level, or across the economy.

"We must take the actions now that will allow us to not just get through Covid-19, but more crucially, gain ground that will pave the way for our next lap of economic growth in the next five to ten years," he said.

Mr Heng's statement was delivered to give context for a supplementary supply bill, to be tabled and debated later. The bill reallocates budgetary resources for the additional Covid-19 support measures that he announced in August.

With close to S$100 billion committed in support measures, the Monetary Authority of Singapore estimates that without this year's four Budgets, Singapore would have seen an additional 5.6 per cent contraction in gross domestic product in 2020, and a further 4.8 per cent in 2021.

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Mr Heng gave a recap of existing support and announced some extensions of schemes, with these additional moves remaining within earlier-announced budgetary sums.

The Enhanced Training Support Package will be extended a further six months until the end of June 2021, and now covers the marine and offshore sector as well.

Various grants - the Market Readiness Assistance Grant, the Productivity Solutions Grant, the Enterprise Development Grant, and the PACT programme - will also be extended or enhanced, with details in the coming weeks.

Other schemes will be extended or adjusted to help firms with financing, including the Temporary Bridging Loan Programme, which will be extended for six months until September 2021, at reduced levels.

Beyond these near-term efforts, Mr Heng spoke on preparing for the next lap of growth, building on the progress made with Industry Transformation Maps since 2017.

The "refreshed economic strategy for a post-Covid-19 world" has three priorities: remaking Singapore as a global-Asia node of technology, innovation, and enterprise; redoubling efforts to foster inclusive growth; and investing in economic resilience and sustainability as a competitive advantage.

For the first aim, Singapore must improve links to build up its role at the heart of Asia's growth. This includes reviving its air hub and restoring air connectivity, with Transport Minister Ong Ye Kung to share more about reopening plans on Tuesday.

Maritime trade, regional trade and logistics, and digital connectivity are other aspects of this thrust.

For inclusive growth, the approach is to equip workers with relevant skills and support vulnerable workers. This includes the expansion of the progressive wage model to more sectors, and using "micro-jobs" to bring job openings to the heartlands.

As for economic resilience and sustainability, these are not just strengths in their own right, but also potential business opportunities.

Developing the agri-food sector, for instance, does not only improve Singapore's food supply resilience, but also allows for the export of technologies created here.

Similarly, while aiming to "decarbonise" the economy and be more sustainable, Singapore can establish itself as a carbon services hub in Asia.

Even as Singapore refreshes its economic strategy, Mr Heng reiterated its commitment to its spending philosophy.

The new term of government is starting "from a most challenging fiscal position", with operating revenues now expected to be 16 per cent lower than initial estimates in February.

Singapore's revenue position is expected to stay weak for a number of years, as Covid-19's effects on the global economy linger and Singapore's economy slows, said Mr Heng. Expenditure will rise as the government continues to support households and businesses.

Nonetheless, the government will continue to pay for recurrent needs with recurrent revenues, and keep "a disciplined and judicious use of borrowing", reserving it for long-term infrastructure which benefits many generations.

Noting that Singapore's past reserves have been critical in the fight against Covid-19, he said: "We have avoided this outcome, because successive generations have built up strong reserves ahead of this crisis. We must have the discipline to start earning, saving, and investing for the future again."