Budget measures will make Singapore a more attractive 'magnet global city'
WHILE some measures in Budget 2022 will inevitably raise costs for businesses and households, this year's Budget also seeks to strengthen and renew Singapore's social compact and bring the country into a new phase where it can "fortify (its) resilience", said Second Minister for Trade and Industry Tan See Leng.
This is as the bulk of tax revenues will be channelled back to people and the economy, with the progressive nature of the system thus helping to build the social compact, said Dr Tan, who is also Minister for Manpower.
He was speaking at The Business Times - Budget Dialogue 2022 alongside OCBC's head of global commercial banking Linus Goh. The hour-long session was presented by OCBC Bank.
After last Friday's Budget statement, companies were generally enthusiastic about extended support such as the Jobs Growth Incentive and various financing schemes, but were concerned about higher costs from the Progressive Wage Model, the impending goods and services tax hike, and higher minimum qualifying salaries for Employment Pass and S Pass applicants.
While costs may go up, Dr Tan said what is key is that productivity should rise as well.
"As the costs move, the value-addedness, the productivity will also improve, and will increase pari-passu (Latin for 'on equal footing') with the increase in the cost structure," he said.
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Furthermore, "what is also comforting is that the government will not hesitate to implement all kinds of support measures necessary". For instance, in the case of the Progressive Wage Model, the government came up with a Progressive Wage Credit scheme to help offset the cost of the transition.
Ultimately, the progressive nature of Singapore's tax system allows the government to collect revenues from the better-off, and channel these back to those that are less financially able, said Dr Tan.
This renews and strengthens the social compact, "particularly when we are emerging from a pandemic crisis, such as the one we've just gone through", and allows Singapore to build its resilience and "fortify the togetherness" to overcome future crises together, he said.
"And I think that allows Singapore to become an even more attractive magnet global city - to attract even more talent, even more people who are financially able to come here to invest and build together."
Meanwhile, OCBC's Goh stressed that businesses should continue with the transformation that they have undergone during Covid-19, in areas such as digitalisation and sustainability.
"We have seen many companies jump forward (to) embrace sustainability, because it provides them differentiation and because it gets them the contracts," said Goh, noting that many businesses, even smaller ones, have jumped at the opportunity to take a green loan.
He also said that many SMEs are at the forefront of pushing the sustainability agenda.
"Many of them are the change agents themselves. They are the enablers. They are the ones providing the R&D, the consulting, the services in climate change, in carbon, in energy efficiency, so they are helping even bigger companies like us to make that shift," said Goh.
Singapore is working to ensure that the local workforce is equipped with the right skills for the green future.
"That is one of the initiatives that we're pursuing with the Ministry of Education," said Dr Tan, noting that the green transition is expected to create millions of jobs globally.
To keep pace - or indeed, to "leapfrog and move ahead" - the government is working with institutes of higher learning on courses related to environmental sustainability and greening, such as the employment of cleaner energy types such as hydrogen, carbon capture, utilisation, storage and transport.
While Singapore is "growing (its) own timber", it will also bring in complementary talent that can transfer the relevant technology and skill sets to local workers. At the same time, an overseas global attachment scheme will allow local talent to gain skills overseas and bring them back.
Dr Tan said that such a transfer of skills is what Singapore intends to achieve with its Employment Pass framework, "which focuses on making sure that ... the high-calibre, diverse talent that we bring in here can actually complement our workforce, nudge them, motivate them and also train them and to bring them to the next level".
"Likewise with the S Pass, we want to make sure that the right quality with the right proportions is coming in, to complement... and make sure that we win this competition collectively," he said.
READ MORE:
- Carbon tax hike a 'strong signal' that Singapore is serious about green targets: Tan See Leng
- Many companies still looking to expand abroad once borders reopen: OCBC's Linus Goh
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