Budget 2025 delivers SG60 goodies while keeping long-term needs in sight – and with funds to spare
Finance Minister Lawrence Wong unveils a generous Budget tackling immediate concerns, while laying out long-term plans for Republic’s future
SG60 “goodies” and support for large families were two highlights of a generous Budget that tackled immediate cost concerns and laid out long-term growth plans – while still running a hefty S$6.8 billion surplus.
Targeted moves to bring multinationals here and help local companies go abroad featured in Finance Minister Lawrence Wong’s first Budget speech as prime minister, delivered on Tuesday (Feb 18).
Singapore must find new ways to navigate a turbulent external environment while charting the next phase of its growth, said PM Wong.
In their fierce contest for supremacy, the United States and China are prepared to take more assertive actions to advance their own interest – even at the expense of international norms, he noted.
Such pressures will reshape the world economy and dampen prospects for global growth – and Singapore is sure to feel the impact.
Tackling cost anxieties
“But despite the uncertainties, we can look ahead with a degree of confidence,” said PM Wong.
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He noted Singapore’s strong, well-diversified economy, supported by a highly skilled workforce; its military and diplomatic prowess; and its social cohesion.
Singapore’s strong economic performance in 2024 – including easing inflation – also provides “good momentum for our next phase”.
Yet, though inflation is expected to ease further, Singaporeans are still adjusting to elevated price levels, he noted. Both households and businesses will get help to tackle costs.
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Households will get an extra S$800 in Community Development Council vouchers, along with more rebates for utilities. Families with children will get additional help to defray household expenses.
For businesses, a 50 per cent corporate tax rebate will help with cash flow, while enhancements to the Progressive Wage Credit Scheme will defray wage increases.
In the long term, however, “the best way to adjust to higher prices is to grow the economy and increase productivity”, said PM Wong.
Spurring growth
Singapore must redouble efforts to grow the economy, and keep it dynamic and vibrant, he said.
To that end, Budget 2025 includes moves to enhance “technology and innovation engines”, as these are key drivers of growth.
Singapore lacks the scale of larger economies but can excel in specific areas, with “considerable strengths” in industries – such as semiconductors and life sciences – where large multinationals have a local presence.
To keep these going, Singapore must anchor more high-quality investments, even as other governments invest heavily to do the same.
“We cannot afford to outbid the major economies, but we do need to set aside sufficient resources to maximise our competitive strengths,” he said, announcing a S$3 billion top-up to the National Productivity Fund.
To drive research and development (R&D), a separate S$1 billion will go towards enhancing related infrastructure, with a new national semicon R&D fabrication facility and refreshed biotech facilities.
Local firms will also get help to grow – including more access to capital, with a new S$1 billion Private Credit Growth Fund and tax incentives to encourage listings on the local bourse.
Globally, private credit funds offer innovative financing solutions, but few focus on Asia and Singapore-based enterprises, noted PM Wong. The new fund thus addresses this gap for high-growth local enterprises.
Planning for the future
Growth also requires world-class infrastructure and the overcoming of resource constraints, he said.
As a hub economy, Singapore must ensure excellent connectivity with the rest of the world, including air links. Another S$5 billion will thus be added to the Changi Airport Development Fund. The government will also provide a guarantee to Changi Airport Group to lower borrowing costs for the upcoming Terminal 5 and supporting infrastructure.
As for resource constraints, clean power is a key priority as the nation’s energy needs continue to grow.
To support efforts ranging from low-carbon electricity imports to exploring alternatives such as nuclear power, the Future Energy Fund will be topped up by S$5 billion.
This is while the Republic works to decarbonise pollutive sectors such as transport, which accounts for about 15 per cent of total emissions.
Cleaner energy versions of heavy vehicles have seen slower take-up due to limited availability, higher upfront costs and less accessible charging infrastructure.
Two new initiatives aim for progress in this area: incentives for low-emissions heavy vehicles, and co-funding for charging infrastructure.
But PM Wong warned: “As we do our part to reduce emissions in Singapore, we also have to assume the worst, and take steps to protect ourselves against climate risks.” The Coastal and Flood Protection Fund will receive an additional S$5 billion to protect against rising sea levels.
Workers and families
Budget 2024 saw big moves to bolster Singapore’s skills and training ecosystem. Budget 2025 continued this theme, but through enhancing rather than introducing programmes.
The training allowance under the SkillsFuture Level-Up Programme, for mid-career workers, will be extended to cover part-time courses.
This was in response to feedback from workers who prefer to continue working while upskilling, he said. They can now do so with a monthly S$300 allowance for part-time courses.
Meanwhile, Workfare Skills Support will be enhanced for lower-wage workers pursuing long-term training.
Employers will also get help to train workers, with a SkillsFuture Workforce Development Grant that streamlines existing schemes and a redesigned SkillsFuture Enterprise Credit.
On the social front, beyond broad-based cost support and SG60 “goodies”, Budget 2025 had targeted measures for seniors and persons with disabilities, and incentives to encourage individual and corporate giving.
But perhaps the biggest social move was the Large Families Scheme for parents with three or more children, which provides financial support to defray pre-school, healthcare, pregnancy and household expenses.
“Budget 2025 sets out clear plans for us to continue this journey with confidence,” said PM Wong. “It is a Budget for all Singaporeans, because when Singapore thrives, every citizen benefits.”
But this was also achieved with “sound and healthy public finances”, bolstered by tax changes earlier in this term of government. Better-than-expected corporate income tax takings boosted the surplus for the last financial year, with FY2025 expected to run a similarly large surplus.
This sends a positive and clear signal to investors and the financial markets on Singapore’s prudent approach to public finances, said UOB associate economist Jester Koh.
EY Singapore country managing partner Liew Nam Soon noted that Budget 2025 balances fiscal prudence with “decisive and inclusive” investments to secure Singapore’s relevance and competitiveness in an uncertain world.
“Measures that fortify our social compact and uplift targeted segments of our community, coupled with initiatives that drive new frontiers of innovation and technology, energise our enterprise ecosystem and accelerate infrastructure developments, will position us nimbly and steadily for the next lap of sustainable growth,” he added.
For more Budget stories, visit businesstimes.com.sg/singapore-budget-2025
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