After an unprecedented four Budgets in 2020 (namely Unity, Resilience, Solidarity and Fortitude) to cushion the impact of COVID-19, Singapore is in a better position to Emerge Stronger Together, an apt name for Budget 2021.
Other than setting the direction for Singapore for this financial year, the Budget too provided a glimpse of challenges and opportunities for Singaporeans in the coming future.
This year’s Budget is not solely about bouncing back and recovery, but an anticipation of and preparation for what is to come next.
This article gives an overview of the policies that were introduced in the Budget and what they mean for the future.
After a 5.8 percent contraction of Singapore’s economy last year as compared to 1.3 percent growth in 2019, Singapore slid into its worst recession in history1.
Even after much intervention by the government through various efforts, such as Jobs Support Scheme (JSS), SG Traineeships and others, some sectors are still badly affected, namely aviation, hospitality and the arts2.
With that, the government will continue to support these industries through the JSS for the next six months and have allocated S$700 million for it. Other targeted assistance and packages are also injected to support workers and businesses in the aviation, aerospace, private hire drivers and the arts.
S$5.2 billion was also allocated for the Job Growth Incentive (JGI), which will be extended to September this year. The JGI is expected to increase hiring of up to 200,000 locals.
As the schemes targeted workers and industries, S$4.8 billion was allocated to the healthcare industry to support operations in our road to recovery – such as vaccination, contact tracing and COVID-19-related facilities.
This is a reminder that as much as the government tries to cushion the impact of COVID-19 on our economy and livelihood, challenges will persist. Some industries may never fully recover. The question is how long and how much more can the government support the various industries while dealing with the long-term impact of the pandemic on Singapore’s economy.
The outlook, however, is not all doom and gloom.
Some industries and jobs have shown signs of recovery after a year. However, changes are abound.
RECREATE, REDESIGN, REVIVE
Digitalisation has been the buzzword for a few years now and Budget 2021 does entail support for companies and Singaporeans to embrace and adopt digitalisation.
For starters, the Digital Leaders Programme will fund companies that hire workers who are able to digitally transform companies while the Emerging Technology Programme will co-fund companies in adopting new technologies. Another initiative, Chief Technology Officer (CTO)-as-a- Service, will give access for companies to engage IT experts and consultants in adopting digital solutions.
Beyond the digital push and transformation, innovation seems to be a key driver for companies in Singapore for the future.
The Corporate Venture Launchpad will be initiated to push new innovative ventures for companies. The Open Innovation Platform will also match companies with consultants to find solutions and give the perspective of a startup.
Indeed, COVID-19 has accelerated the push for digital adoption but how quickly can companies transform? This is especially concerning for companies or businesses that have yet to adopt digital transformation processes. As the country pushes for digital adoption and transformation, traditional brick- and-mortar businesses that have been in existence might lose out.
It is ever more important then to ensure a more equitable vision of digital transformation across the various business sectors.
BEYOND THE ECONOMY
The Budget covered quite a fair bit on businesses, but it did not neglect the social and human aspects of living in Singapore.
To support costs of living, eligible Singaporeans and households will receive the Goods and Services Tax (GST) Vouchers, as well as U-Save rebates. In addition to that, there are also top-ups made to the Child Development Account, Edusave Account and Post-Secondary Education Account to support the costs of raising children in Singapore for couples.
Another announcement that was made was the need to raise GST in the coming future. DPM Heng mentioned that the hike was not going to be implemented this year as the pandemic took a hit on Singaporeans but that it will be raised in the near future3.
Understandably, raising taxes is an unpopular move all around the world but it seems to suggest that Singapore needs to find more sources of revenue to sustain itself in the future. Yes, we have a healthy reserve for use in times of need, such as last year, but as we move forward, there are other challenges that lie before us that require a good amount of resources.
FACING CLIMATE CHANGE
We have seen in the Budget a glimpse of what the future holds – digitalisation, the need to increase revenue, and living post-COVID-19.
The Budget speech also included an important aspect that highlights another focus for the coming year: tackling climate change.
Policies were laid out during the Budget to ensure that Singapore remains committed to its sustainability goals.
With that, there is a push to develop green transport infrastructure, as well as agriculture transformation in Singapore. The government will also encourage the use of more electric vehicles by lowering the registration fee and adjusting the road tax for electric vehicles (EVs).
Other than encouraging the adoption of EVs for a greener Singapore, the government will also increase petrol prices by 10 and 15 cents per litre, according to its grades. This is to reduce reliance on private vehicles and to encourage a greener future for Singapore.
As laid out in the Budget, the increase in petrol prices, the push for EVs and developing the EV infrastructure signal that Singapore is committed in combatting climate change and there will be more initiatives and policy rollouts in the coming years.
HOW WILL THE FUTURE LOOK LIKE
Overall, based on Budget 2021, it seems like Singapore is firm on the path of digitalisation and sustainability. In the meantime, the battle against COVID-19 and its impact still remains a concern, particularly how well and quickly our economy will recover. ⬛
1 Phua, R. Singapore Economy Shrinks a Record 5.8% in a Pandemic-Hit 2020. CNA. Accessed 2021, March 30: http://www.channelnewsasia.com/news/singapore/gdp-singapore-economy-2020-q4-contract-covid-19-13888300
2 Phua, R. Budget 2021: Aviation Sector to Get S$870 Million in Aid This Year. CNA. Accessed 2021, March 30: https://www.channelnewsasia.com/news/singapore/budget-2021-aviation-travel-sector-870-million-aid-arts-sports-14208646
3 Co, C. Budget 2021: GST Hike to Happen Between 2022 and 2025. CNA. Accessed 2021, March 30: https://www.channelnewsasia.com/news/singapore/budget-2021-gst-hike-to-happen-between-2022-and-2025-14208872
Muhammad Faris Alfiq Mohd Afandi is a Research Analyst at the Centre for Research on Islamic and Malay Affairs (RIMA). He specialises in the discourse on Islam in Singapore, Malaysia and Indonesia, sociology of Islamic law, and political Islam. He holds a Bachelor of Arts in Malay Studies from the National University of Singapore (NUS).