• The fight against Covid-19 is not yet over, Deputy Prime Minister Heng Swee Keat said
• The Government will provide more targeted help to industry sectors instead of broad-based aid
• Measures to help self-employed workers will have to “taper towards normalcy”
• A GST hike cannot be deferred indefinitely as well, he said
• Singapore crucially needs to stay open and cannot afford to close its doors to foreigners, he added

SINGAPORE — It may seem that Singapore has turned a corner now that the number of coronavirus infections are low and the economy is showing early signs of recovery, but the nation is still not out of the woods, Deputy Prime Minister Heng Swee Keat cautioned on Thursday (Oct 15).

Wrapping up two days of parliamentary debate on the latest supplementary budget for this year, Mr Heng underscored the need to stay vigilant as the world recorded the largest one-day rise of Covid-19 cases last week, and the jobs situation is likely to remain murky for some time.

“Our battle with Covid-19 is far from over, and the road ahead in a post-Covid world will be uncertain.”

In a speech lasting roughly an hour, Mr Heng, who is also Finance Minister and Coordinating Minister for Economic Policies, addressed the wide range of topics brought up by Members of Parliament (MPs) in the past two days.

There were suggestions on providing more financial support for households, individuals and businesses, and questions over the right economic strategy for a post-pandemic world. 

Laying out the considerations behind the next six months of Singapore's pandemic response, Mr Heng said that:

• Teams have been set up to look into supporting workers and households

• An economic task force is pressing on with industry-wide partnerships to seize growth opportunities for Singapore

• The Government has begun consultations for the next year’s Budget

“I am confident that if we stay open and united, we will continue thriving as an exciting and vibrant global city and emerge stronger as a more cohesive and resilient nation.”

ECONOMIC SUPPORT

Where the economy is concerned, there will be more targeted support for industry sectors instead of the broad-based assistance that have been given so far.

Companies in sectors that will recover quickly after the pandemic will be incentivised to hire more Singaporeans and aided in their expansion, while those in industries where business models are fundamentally changed by the Covid-19 crisis will be urged to reinvent themselves.

The Government will not rule out the need for any state action to rescue any company that brings strategic capabilities to Singapore but now face annihilation due to the crisis, Mr Heng said.

It will also prioritise job creation over job retention.

“We will continue to monitor the situation and adjust where needed. Taken together, these measures will help our firms recover, in a more targeted and efficient manner.”

SELF-EMPLOYED, LOW-WAGE WORKERS

The Government is also studying ways to help those working in self-employed jobs, such as freelancers, taxi drivers, and private-hire car drivers.

The Self-Employed Person Income Relief Scheme (Sirs), which provides affected individuals with three quarterly cash payouts of S$3,000 each, is meant to cover this group of workers until end-December, Mr Heng said. 

Some 195,000 people have received all three payouts under Sirs by the end of this month. “But like other support schemes, we will need to taper towards normalcy,” he added.

Mr Heng singled out those earning low wages in his speech, stating that details on measures to support this group will come after a tripartite workgroup has presented their findings on the matter.

In the meantime, the Government will expand the Progressive Wage Model — which is intended to raise wages of certain low-income jobs — to cover more sectors “while making sure that businesses can absorb this change”.

Mr Heng agreed with Mr Zaqy Mohammed, Senior Minister of State for Manpower, and Dr Koh Poh Koon, deputy secretary-general of the National Trades Union Congress, that Singapore should avoid “a blunt approach especially when we are in the midst of battling this crisis”. The two men had debated over a universal minimum wage with Workers’ Party Members of Parliament on the same day.

GST INCREASE UNAVOIDABLE

On the timing of the previously announced Goods and Services Tax (GST) hike that was brought up by several MPs, Mr Heng said the Government will continue to study it carefully.

He had earlier announced that GST rates will remain at 7 per cent in 2021 instead of going up to 9 per cent as originally planned, given Singapore’s weaker economic conditions in the midst of the pandemic.

However, the increase cannot be deferred indefinitely, owing to future needs in healthcare and pre-school education, he added. 

GST collections this year are projected to drop by 14 per cent from its original estimate before the start of the year and will continue to be lower than usual for at least a couple of years, he revealed.

This was mainly due to travel disruptions and the impact of stay-home curbs in April and May. More than 60 per cent of net GST revenue from individuals and households come from foreigners residing in Singapore, tourists and “the top 20 per cent of households”, he explained.

REPAYING NATIONAL RESERVES

While the latest S$8 billion round of support measures were funded entirely from budget reallocation, with no draws on past reserves, Singapore’s fiscal situation will still get tighter, Mr Heng said.

Government revenues in the medium term will be subdued, with global tax revenues expected to intensify since countries need to repay the high amounts that they are borrowing now.

“In Singapore, we are fortunate to have a rainy-day fund built up over the generations that has allowed us to mount a quick and strong response,” he said, referring to the S$52 billion the Government drew on past reserves to fund its Covid-19 response so far.

When Workers’ Party MP Gerald Giam asked how the Government intends to repay this, Mr Heng said that it is not possible to be definitive on a timeline.

The scars that the crisis will leave on the economies of Singapore and other countries are still unknown, he added, and he is prepared to propose to President Halimah Yacob further draws on past reserves should it be necessary to do so.

“But I can say that (the time needed to repay the S$52 billion) will not be two years, and I certainly hope it will not take us 50 years.

“How long it will take depends on the choices we make as a country and Government, whether we continue to manage our resources prudently.”

OPENNESS TO FOREIGNERS

In his speech, Mr Heng also took pains to explain why, unlike other global cities that are its competitors, Singapore crucially needs to stay open and cannot afford to close its doors to foreigners.

These global cities — Frankfurt, London, Mumbai, New York and Shanghai — can draw talent from millions and billions of their nationals but Singapore cannot, he said.

Instead, Singapore needs to assemble the “best possible team” to stay useful in a world economy driven by innovations and technological change.

This does not mean that Singapore is disadvantaged. Its dual identity as both a city and a nation has given it “agency, nimbleness and unique strengths”, Mr Heng stressed.

“But it has also conferred upon us some unique challenges that we have turned into successes. 

“In the face of new threats and opportunities, we must continue to stay open as a global city yet close-knit as one people and one nation.”