New Finance Minister Lawrence Wong not likely to rock fiscal-policy boat: observers

Singapore

LAWRENCE Wong is not expected to rock the fiscal policy boat when he starts his new job as Finance Minister on May 15, said observers after his appointment was announced on Friday as part of a major Cabinet reshuffle.

The 48-year-old - who is leaving the Ministry of Education for a post that Prime Minister Lee Hsien Loong described as "a key ministry" - could be called to step in if the pandemic in Singapore worsens.

Otherwise, he is tipped to follow the path of Deputy Prime Minister Heng Swee Keat, who has stepped down as leader of the People's Action Party's (PAP) fourth-generation team earlier this month.

Chris Humphrey, executive director of the EU-Asean Business Council, described Mr Wong's new post "a logical and welcome move", adding: "I do not foresee significant changes in policy unless the pandemic situation worsens."

That's as Mr Wong had already been Second Minister for Finance from 2016 - a background that meant "he has the experience, and is a natural fit for the job", as Mr Lee told a virtual press conference held at the Istana.

Mr Wong later wrote on Facebook that he would try to "build on the good work" of Mr Heng, even as the economy is weak and "we must continue to find ways to finance our spending needs in a sustainable manner".

"But there are opportunities even in the midst of crisis - to build a better Singapore that is more fair and just; greener and more sustainable; and more inclusive and united," he added.

One question is how much Mr Wong will loosen the national purse-strings, after Mr Heng delivered a record five Budgets in 2020 to deal with the impact of the pandemic.

Fresh Covid-19 cases were found this week among foreign labourers in a dormitory, which Barclays economist Brian Tan wrote in a note "will likely keep policymakers cautious".

Given an entry ban on non-residents with recent travel to India that came into effect on Friday night, the authorities are also expected to work on relief for affected employers, with the support of the Ministry of Finance.

Meanwhile, Mr Wong - as the incoming Finance Minister - will also oversee an increase to Singapore's goods and services tax (GST) rate, which Mr Heng has previously said will rise from 7 per cent to 9 per cent by 2025.

But Mr Tan told The Business Times: "Our base case remains for the GST hike to take place next year. Top personal income tax rates may also be raised eventually, especially towards the end of this government's five-year term."

US-Asean Business Council regional managing director Michael Michalak added that Mr Wong "will face a wide range of strategic policy decisions" that need close coordination, such as green financing, digital identity, and financial inclusion.

Mr Wong also continues to lead the government's response to Covid-19, as co-chair of the multi-ministry taskforce alongside new Health Minister Ong Ye Kung.

At the same time, Bilveer Singh, political science deputy department head at the National University of Singapore, noted that "instability in the PAP leadership", geopolitical uncertainties, United States-China tensions and the pandemic all pose great challenges.

Yet, observers agreed that it is still too early to tell whether Mr Wong - after taking over Mr Heng's portfolio - will also assume the mantle of heir-apparent.

The 60-year-old Mr Heng announced his exit as Finance Minister on April 8, declaring that he had "too short a runway" to master the demands of the job of the prime minister. After Friday's reshuffle, he still remains Deputy Prime Minister and Coordinating Minister for Economic Policies.

"Politically, the Finance Ministry is regarded as a heavyweight portfolio and there is some expectation that the appointment... primes (Mr Wong) as the leading candidate," remarked Andrew Yeo, head of strategic consultancy Global Counsel Singapore.

Mr Yeo, however, did not rule out both Mr Ong, the new Health Minister, and former army chief Chan Chun Sing, the new Education Minister, as contenders to be chosen as the new 4G leader.