Fortitude Budget eyes to support workers, business

The $33 billion budget will provide support for workers and businesses to transform, adapt and seize new opportunities.

Deputy Prime Minister and Minister for Finance Heng Swee Keat on Tuesday (26 May) unveiled this year’s fourth budget, known as the “Fortitude” Budget.

The $33 billion budget will provide support for workers and businesses to transform, adapt and seize new opportunities.

It also provides funding to frontline agencies as well as additional support for the community and households.

To help workers, the government made three enhancements to the Job Support Scheme (JSS) – the first of which is the one-month extension of the JSS payouts for all firms.

Companies that cannot resume operations immediately following the circuit breaker will continue to be provided with wage support, which stands at 75% until August this year or when they are allowed to reopen – whichever is earlier.

Support for some affected sectors, such as retail, aerospace sector, marine and offshore, will also be increased from 25% previously to either 50% or 75%.

An SGUnited Jobs & Skills Package will also be launched to create 40,000 jobs in the private and public sectors, 30,000 skills training opportunities and 25,000 traineeships.

Incentives for employers hiring local workers who completed eligible traineeship and training programmes will be expanded to include workers of all ages.

For eligible workers under 40 years of age, the incentive stands at 20% of their monthly salary for six months, capped at $6,000 in total.

For workers 40 and above, the incentive will cover 40% of their monthly salary for six months, capped at $12,000 in total.

The government also set aside an additional $800 million for the Covid-19 support grant, which covers Singaporeans and PRs who lost their jobs, face significant reduction in salaries or are placed on no-pay leave.

Eligible recipients will get up to $800 per month for a period of three months.

To help businesses, the government extended the foreign worker levy waiver and rebate by up to two months for businesses which are allowed to resume operations on-site following the circuit breaker.

In June, a 100% waiver and $750 rebate will be provided, while a 50% waiver and $375 rebate will be rolled-out in July.

Meanwhile, the government also decided to defer the higher CPF contribution rates for senior workers by one year, from 1 January 2021 to 1 January 2022.

The government also provided a $2 billion cash grant to help SMEs with their rental costs.

Along with the property tax rebate, the government will offset another two months of rent for qualifying SME tenants of commercial properties and one month of rent for qualifying tenants of office and industrial properties.

An additional rental waivers will also be provided to commercial and other non-residential tenants of government properties – which include stall holders at hawker centres and markets, tenants of industrial, commercial and office buildings as well as agricultural tenants.

Heng revealed that a new bill will be introduced next week, which mandates landlords to contribute by granting a rental waiver to SME tenants within their properties.

The government also set aside $285 million in additional financing support for startups.

To encourage the adoption of e-payments, a monthly bonus of $300 over five months will be given to stallholders in hawker centres, coffee shops, wet markets and industrial canteens. A digital resilience bonus will also be offered to the food services and retail sectors, which comprise a $5,000 payout for those adopting PayNow and e-invoicing.

To help households with expenses, a one-off $100 Solidarity Utilities Credit will be rolled out for every households with at least one Singapore citizen. To cover all property types, this will be credited in the households’ July or August utilities bills.

To help charities and social services agencies, the government announced an Enhanced Fund-Raising Programme that provide dollar-for-dollar matching on eligible donations that were raised from 1 April 2020 to 31 March next year, capped at $250,000 per charity.

“The Fortitude Budget has been anticipated to support the four-week extension of the “circuit breaker” period as well as to wean companies back into the reopening of the economy,” said Desmond Sim, Head of Research for Southeast Asia at CBRE.

“While the extent of the pandemic remains unknown, the unprecedented fourth Budget announcement aims to cushion the economic impact on the private sector by dipping into public funds, especially for sectors adversely affected by this pandemic e.g. retail and construction.”

According to him, CBRE expects property owners to actively engage with their tenants as well as utilise the support packages.

Christine Li, Head of Research for Singapore and Southeast Asia at Cushman & Wakefield, described the announcement on a new bill requiring landlords to contribute by granting rental waivers to SME tenants as a “welcome one”.

“The expanded rental relief for SMEs is a welcome one, as SME tenants in commercial properties are also part of the ecosystem of the real estate sector,” she said.

However, Li noted that the reality has changed for asset owners and commercial real estate operators.

“Many asset owners and operators are faced with drastically reduced operating income, arising from concessions and rebates they have to dish out to save struggling tenants. Assets that thrive on the intensification of real estate and human interactions could also experience a much longer-term fundamental drop in the future demand. By subjecting them to the mandatory rental waiver for their tenants, it could create a bigger problem down the road when these asset owners are unable to re-position their properties in time to tide through the difficult period.”

She explained that the additional burden of having to support SME tenants may lead to financial difficulties for landlords, particularly smaller landlords with a bigger proportion of SME tenants within their properties.

“The new bill should not make things too onerous for commercial landlords, as some could have been hit hard themselves due to their tenants not being able to operate and pay rental during the extended circuit breaker period,” she added.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg