Govt to 'extend and taper' Covid-19 support for firms and workers; details to come on Monday

Singapore

EVEN as Singapore extends support for firms and workers amid the Covid-19 pandemic, such support will "evolve and taper", and details on this will come on Monday, said Deputy Prime Minister and Finance Minister Heng Swee Keat on Friday.

"We will continue to support our workers and firms through this crisis, but we are not able to sustain the same level of support indefinitely," said Mr Heng, who is also Coordinating Minister for Economic Policies.

"As more sectors re-open gradually, we will have to evolve and taper the support provided. We will continue to provide targeted support to sectors that are hardest hit, including helping them pivot to new opportunities in growth areas."

Economists commented that this approach will avoid jeopardising the tentative recovery and help firms get back on their feet. Businesses, reacting to Mr Heng's remarks, expressed hope for more help in their efforts to transform their business models.

Mr Heng's ministerial statement on Monday will be broadcast on CNA, CNA938, and Mediacorp MeWatch at 3.30pm on Monday; the full statement will be published on the Singapore Budget website after delivery.

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He said on Friday that, with the pandemic continuing its run in many countries, the global economy has taken a major hit and could worsen.

Singapore could see more job losses and retrenchments in coming months, and it would be "many more months" before the economy recovers fully. Recovery will be uneven and uncertain, with some sectors unlikely to recover for years.

Noting the concerns that people have shared with him about their livelihoods and their uncertainty over support schemes that are expiring, Mr Heng said he would speak about how the government will "evolve and extend" support for firms and workers in his Monday statement.

Welcoming the news of continued support, Singapore Business Federation chief executive officer Ho Meng Kit said: "As recovery is uneven across sectors, a sector-specific approach to provide varying degrees of targeted relief measures may be more appropriate than continuing with massive broad-based support."

Apart from the Jobs Support Scheme (JSS) wage subsidy, firms hope for extended rental relief, he added. "Besides short-term measures to support businesses, we hope to see some assistance for businesses to pivot to new sectors," he said.

With the economy picking up slowly, small and medium-sized enterprises (SMEs) are worried about the expiry of the JSS and rental support, said Association of SMEs (ASME) vice-president for strategies, development and digitalisation Ang Yuit. "Basically, support is ending, but the market isn't picking up as fast as we all hoped."

Yet SMEs must adapt to the new normal, and cannot simply hope for support and a return to pre-Covid times, he acknowledged. "So from our perspective, a tapering-off of direct support such as JSS and rental, together with increasing support in other areas such as digitalisation grants and training support, will enable SMEs to transform their business models."

OCBC Bank chief economist Selena Ling said it is important to taper off support instead of abruptly cutting it off to avoid the risk of a "cliff effect". The pace of tapering will be key, since the recovery is still tentative and uneven, she said, suggesting that the support could be cut by half.

CIMB Private Banking economist Song Seng Wun said support could be scaled back more for sectors that are rebounding with the lifting of the "circuit-breaker", such retail or food and beverage.

He also warned against cutting off support, given that firms are only beginning to get back on their feet: "The risk of economic growth momentum stalling is real."

Support is also crucial given that labour market conditions are expected to worsen before they get better, he added.