Tuesday 21 February 2017

Budget 2017: Moving Forward Together

A budget for today - and tomorrow
• Water prices to go up 30% • Carbon tax from 2019 • Income tax rebate • Fund to help firms go global
By Yasmine Yahya, Assistant Business Editor, The Straits Times, 21 Feb 2017

Against a backdrop of rapid technological change and global uncertainty, Finance Minister Heng Swee Keat delivered a Budget yesterday that addresses Singaporeans' immediate concerns while laying the groundwork for future growth.

The speech kicked off with MPs thumping their seats in a show of support for Mr Heng, who had made a remarkable recovery to speak in Parliament for the first time since suffering a stroke last May.

The Budget offered several talking points of its own. These included an increase in water prices to fund the higher costs of desalination and Newater production, the first rise in 17 years; this was offset, for some, by a permanent increase in the GST Voucher - Utilities-Save (U-Save) rebate for eligible HDB households, ranging from $40 to $120, depending on flat type.

Young home buyers received cheer in the form of generous hikes of up to $20,000 in the CPF Housing Grant for resale flats from a Budget in which expenditure is expected to touch $75.1 billion.

But underpinning it all is a message Singaporeans should find familiar - the Republic has to adapt and thrive as the world undergoes deep shifts that will create new challenges, but also open up new opportunities. It continues the theme of the report by the Committee on the Future Economy (CFE), co-chaired by Mr Heng, released earlier this month.

"It is critical that we take decisive action to re-position ourselves for the future," Mr Heng told MPs in a packed House, noting that the Budget would take a "learning and adaptive approach", trying new methods, keeping those that worked and learning from experience. "That is the Singapore way."

Mr Heng noted that while the economy grew 2 per cent last year - from 1.9 per cent in 2015 - there was an "uneven performance" across sectors. Similarly, overall unemployment remained low at 2.1 per cent, but redundancies rose.

The Budget measures, he said, aim to see Singapore through this period of transition. "We can aim for quality growth of 2 per cent to 3 per cent, if we press on in our drive for higher productivity and work hard to help everyone who wishes to work, find a place in the labour force," he said.

Workers will be offered programmes to help them retrain and find new jobs. Businesses struggling with tough times will receive immediate relief. The construction sector, for example, will benefit from $700 million worth of infrastructure projects brought forward.

Companies will get help to embrace digital technology and innovate. A new $600 million International Partnership Fund will see the Government co-investing with Singapore-based firms in opportunities to expand overseas.

In all, the Government is setting aside $2.4 billion over the next four years to implement the strategies set out in the CFE. This is on top of the $4.5 billion earmarked last year for programmes to transform industries here, he said.

There will also be a personal income tax rebate of 20 per cent of tax payable, capped at $500, for income earned in 2016.

The Government will spend an additional $160 million in the next five years on community mental health efforts. Medifund will get a $500 million top-up.

There were also measures to make Singapore more environmentally sustainable - a new carbon tax to be introduced in 2019 will levy between $10 and $20 per tonne of greenhouse gas emissions by heavy emitters - and measures to encourage a move to greener vehicles.

It was, in short, an expansionary Budget, with ministries' expenditures expected to be $3.7 billion, or 5.2 per cent, higher than last year. However, it included a permanent 2 per cent downward adjustment to ministry budget caps from this year on.

Responding last night, the Singapore Business Federation said it was disappointed with the "inadequate short-term support" to lower business costs. But it welcomed steps to boost innovation and help firms go international.

Others were more upbeat. "It creates opportunities for Singaporeans to chase their dreams and excel internationally, while also providing protection in the current uncertain climate," said Mr Low Hwee Chua, regional managing partner for tax, Deloitte Singapore and South-east Asia.

Parliament will debate the Budget and government spending plans over two weeks from next Tuesday.

Water prices in Singapore will increase by up to 30 per cent in two phases, on July 1 this year and July 1 next year
Price hike to secure future supply
First price hike in 17 years, to be implemented in two phases over two years, to reflect true costs of supply; higher rebates to soften impact
By Lin Yangchen, The Straits Times, 21 Feb 2017

Water prices in Singapore will increase by up to 30 per cent in two phases, on July 1 this year and July 1 next year, in the country's first price hike for water in 17 years.

The hikes will apply to potable water for both domestic and non-domestic users and shipping customers, as well as Newater and industrial water.

In addition, a 10 per cent water conservation tax will be imposed on Newater from July 1, to encourage conservation of Newater among industrial users.

And instead of having two separate fees - one based on volume of used water discharged and one based on the number of sanitary fittings - there will now be one fee based on the volume of water used.

The sanitary appliance fee for potable water supplies will be combined with the waterborne fee based on the volume of used water discharged.

Finance Minister Heng Swee Keat, in announcing the hike yesterday, said: "Water sufficiency is a matter of national survival.

"We need to update our water prices to reflect the latest costs of water supply."

He spoke of the importance of investing in costlier methods of water production like desalination and Newater plants to supplement reservoir sources that depend heavily on the weather, to ensure the availability of water supply in the light of increasing demand.

But he also noted that the cost of infrastructure had increased, for instance, because of the need to lay deeper pipes through an increasingly urbanised environment.

The water price increase is one of the various measures the Government is taking to protect the environment and keep the country in good shape for future generations, he added. "It is the right thing to do, even though some of these measures will lead to increases in household costs," he said, adding that the Government will help families, especially low-income households.

To soften the impact of the increase, families in one- and two-room HDB flats will receive $380 in the Government's Utilities-Save rebate annually compared to $260 currently, while families in three- and four-room flats will receive $340 and $300, up from $240 and $220 respectively.

After the rebates, 75 per cent of all households will see their monthly water bills go up by less than $18, while the same proportion of HDB households will see their bills increase by less than $12, he said.

Those in one-room and two-room flats will see a fall of $1, on average, from $26 to $25.

The average bill for a four-room HDB household now is $42, and with the additional U-Save rebates, it will go up to $47 after the hike - assuming water use stays the same.

Professor Asit Biswas of the National University of Singapore's Lee Kuan Yew School of Public Policy said that given the water security challenges Singapore faces, the price should have been increased by 50 per cent for domestic users and doubled for industrial users.

"Even after this price increase, their water bills will constitute only about 0.5 per cent of the average household income," he said.

Singapore's average monthly household income last year was more than $10,000, according to the Department of Statistics Singapore.

Civil servant Ong Chun Yeow, 40, practises water-saving habits at home and sees the price hike as a move which recognises the preciousness of water.

Singaporeans will save water if they feel the pinch, he said.

At home, Mr Ong waters his plants using water that has been left over from washing vegetables. He has also improvised a filter from pebbles, sand and cloth to clear up dirty water for flushing the toilet.

Ms Olivia Choong, co-founder and president of environment group Green Drinks Singapore, said the price increase was bigger than what she expected. But she understood the reasons for it.

The resident of a landed property in Sennett Estate already uses low-flow shower heads and places bottles of water in the toilet cistern to reduce its flushing capacity.

"It is really a luxury to have clean water," said Ms Choong, adding that it was an opportunity to get that message across .

But senior promotions executive Khor Si Hui, 25, who lives in a four-room flat with her mother and elder sister, was surprised by the 30 per cent increase. Their monthly water bill is about $30.

"It would have been less of a shock if it was a 10 per cent jump. And it would have been better if the increase was spread over a longer timeframe than two years," she said. "Still, we can't not pay, so I will try to take shorter showers."

Additional reporting by Audrey Tan and Rachel Au-Yong

Carbon tax on greenhouse gas emissions from 2019
By Chong Zi Liang, The Straits Times, 21 Feb 2017

Singapore plans to introduce a carbon tax on the emission of greenhouse gases from 2019, in a move to maintain a high-quality living environment and do its part in fighting climate change.

The Government is looking at a tax rate of between $10 and $20 per tonne of greenhouse gas emissions, a range that is within that adopted by other countries.

"The impact of the carbon tax on most businesses and households should be modest," Finance Minister Heng Swee Keat said when making the announcement.

The reason: The tax will generally be applied to power stations and other large direct emitters of greenhouse gases, not electricity users.

For businesses, the tax rate will be equivalent to a 6.4 per cent to 12.7 per cent rise in current crude oil prices, said the National Climate Change Secretariat (NCCS).

During oil price fluctuations from 2011 to last year, the prices rose by as much as 35 per cent.

As for households, there will be a 2.1 per cent to 4.3 per cent increase from current electricity tariffs, which means an extra $1.70 to $3.30 for an average family in a four-room flat with a $72 electricity bill, the NCCS said. Electricity prices have fluctuated up to 10 per cent between 2010 and last year.

But the final tax rate and exact implementation schedule will be decided after consultations with stakeholders and further studies.

Consultation with industries has started, while public consultation will begin next month, Mr Heng said.

The Government has studied the option of a carbon tax for several years and believe it is "the most economically efficient and fair way to reduce greenhouse gas emissions".

The tax will create an incentive for industries to cut their emissions, spur the growth of the clean energy sector and generate revenue to fund other measures to reduce greenhouse gas emissions.

It will also help Singapore achieve its commitments, under the Paris climate change pact, to curb its emissions "efficiently and at as low a cost to the economy as possible", he added.

The carbon tax is among measures announced in the Budget to protect the environment, including higher water prices and changes to schemes that encourage the use of cleaner vehicles.

Professor Euston Quah, head of the economics department at Nanyang Technological University, said a carbon tax is a good mechanism for controlling greenhouse gas emissions as it is straightforward and easy to understand.

"The more pollutants one produces, the more one pays. Most people can understand this," he said.

Another option would have been to set up an emissions trading scheme where companies can buy permits to emit greenhouse gases. But Singapore's market is too small to support that, he said.

Setting the right tax rate is key to the effectiveness of the tax.

He added: "The cost of reducing emissions should be lower than the tax a company has to pay. Otherwise, firms may simply conclude they are better off paying the tax."

Shell Singapore said it has long supported carbon pricing as it is essential to tackling climate change.

But policies must address the need for strong economic growth and must not undermine the competitiveness of Singapore companies, said its spokesman.

"It must ensure companies can compete effectively with others in the region which are not subject to the same levels of carbon costs," the spokesman added.

HDB households to get extra help
Additional $850m for measures including utility bill rebates and one-off cash payment
By Nur Asyiqin Mohamad Salleh, The Straits Times, 21 Feb 2017

About 880,000 eligible Singaporean households will get extra rebates on utilities to help them cope with the upcoming hike in water prices.

It was one of a number of measures aimed at supporting households amid rising costs and a slowing economy.

The Government will provide more than $850 million in additional funds this year to lend households a hand. These will go into measures ranging from rebates on utility bills and personal income tax, to a one-off cash payment set to benefit more than 1.3 million Singaporeans.

The key announcement was the permanent $40 to $120 increase in the GST Voucher - Utilities-Save (U-Save) rebate, depending on the type of Housing Board flat that the recipient lives in. The benefit announced yesterday means that 75 per cent of all HDB households will face a rise in their monthly water bills of less than $12 on average - if their water use is unchanged.

Families in one- and two-room flats - who are set to receive $380 worth of rebates each year, up from $260 now - will have no increase in water expenses on average.

In total, the changes will cost an additional $71 million a year.

Finance Minister Heng Swee Keat said: "The U-Save rebate will soften the impact of the water price increase. Even as we provide this assistance, we should not lose sight of the scarcity of water, and thus should conserve it."

The rebate is one of three components under the annual GST Voucher scheme introduced in Budget 2012 to help lower- and middle-income households with their expenses.

The other two parts are a cash payment and Medisave top-ups.

One-off, additional payments are occasionally given. This year, Singaporeans will get a "cash special payment" for the second year running.

More than 1.3 million people are set to receive a one-off GST Voucher of up to $200.

This means that eligible recipients - Singaporeans aged 21 and above, who earned $28,000 or less in the Year of Assessment 2016 - could get up to $500 in cash this year.

The special payment will cost about $280 million.

The third measure to support households involves the service and conservancy charges rebate.

This was introduced in Budget 2016 as a one-off rebate, but it will be extended this year and increased.

About 880,000 HDB households will now get 1.5 to 3.5 months of rebates for financial year 2017 - up from one to three months previously. The measure will cost the Government $120 million. Last year, $86 million in rebates went to about 840,000 households.

There will also be a 20 per cent rebate on tax payable for income earned in 2016, capped at $500.

The permanent increase in U-Save rebates and other future GST Voucher payments will be supported by an additional $1.5 billion going into the GST Voucher Fund.

There will also be a $500 million top-up to Medifund, which helps the needy pay healthcare bills, bringing its total to $4.5 billion.

This will support rising Medifund utilisation, which has increased by an average of 9 per cent per year from financial year 2013 - when the last top-up of $1 billion was made - to financial year 2015.

Finally, an additional $200 million will go to the Community Care Endowment Fund, set up in 2005 to fund assistance programmes for low-income Singaporeans.

Resale flats: First-time buyers get higher subsidies
By Rachel Au-Yong, The Straits Times, 21 Feb 2017

First-time buyers looking for a resale HDB flat cheered when they found out they would get higher subsidies for their purchase.

The CPF Housing Grant has been raised to $50,000 for couples who purchase two- to four-room flats from the resale market, and $40,000 for couples who purchase five-room or bigger flats. The grant was previously capped at $30,000.

Finance Minister Heng Swee Keat said the move was part of a package to "keep Singapore a great place for families".

In his Budget statement yesterday, he noted that while most couples apply for highly subsidised Build-To-Order (BTO) flats, some have to turn to the resale market where flats are typically pricier.

Eligible couples can now receive up to $110,000 in subsidies after factoring in the Additional CPF Housing Grant and Proximity Housing Grant.

Mr Zhuang Changzhong, 26, and Ms Valencia Soh, 24, welcomed the news. The trainee lawyers will wed in December and are looking for a four-room flat that costs around $600,000 in Bishan, which is near the home of Mr Zhuang's parents, the church the couple go to and their workplaces.

"The added $20,000 is very significant - it could help to offset the 5 per cent down payment if we find the right flat," Mr Zhuang said.

In a Facebook post, National Development Minister Lawrence Wong said the higher subsidies will help those who wish to move into their own home quickly to start a family, or those wanting to live near their parents in mature estates with fewer BTO flats.

In a statement yesterday, the Ministry of National Development and the HDB said singles will enjoy a similar grant increase. They will receive half the quantum couples get.

The measure will cost the Government an additional $110 million a year. It applies to eligible resale flat applications received from 3.30pm onwards yesterday.

Industry watchers said the increased grant would make resale flats more affordable and attractive to first-timers. Last year, about 6,600 households benefited from the CPF Housing Grant.

The increased grant is timely as more resale flats are coming onto the market, said Ms Christine Li, research director at Cushman & Wakefield Singapore. Some 18,000 BTO units reached their minimum occupation period last year - 80 per cent higher than in 2015.

"The grant can help to soak up additional resale supply, particularly for those who need to dispose of flats after they take possession of new BTOs, executive condominiums and private properties."

R'ST Research director Ong Kah Seng expects the grant to boost flat prices by about 0.4 per cent in mature estates, and have little impact on prices in non-mature estates. He said it is unlikely to affect demand for BTO flats. "Most young couples will be prudent. Also, BTO flats are generally seen as fresher and more comprehensively planned."

Pre-school teacher Kristi Ng, 28, who is looking for a five-room flat around Bukit Timah with her husband, said: "The grant won't offset that much for us, but all help is welcome. It would help with the renovation budget and conveyancing fees."

Some buyers who submitted their resale flat applications recently and before the 3.30pm cut-off time took to Facebook to complain.

The HDB told The Straits Times that it will not implement the grant retroactively, but added that those with ongoing transactions can ask for assistance.

One-off tax rebate capped at $500
By Lorna Tan, Invest Editor/Senior Correspondent, The Straits Times, 21 Feb 2017

Taxpayers will get a one-off rebate of 20 per cent of tax payable for the 2017 Year of Assessment but the handout will be capped at $500.

The rebate, which applies to income earned in the 12 months to Dec 31 last year, will cost the Government $385 million.

Taxpayers with a chargeable income of $67,856 - with tax payable of $2,500 - will get the maximum rebate of $500. Anyone with assessable incomes above $67,856 will be restricted to the same amount.

Mr Panneer Selvam, partner with the people advisory services at Ernst & Young Solutions, said the rebate will benefit those earning more than $42,500, who comprise about 70 per cent of all taxpayers.

He worked out this income level based on certain assumptions, such as a taxpayer with two dependent children and a non-working wife.

"The tax rebate of 20 per cent, capped at $500, will benefit a taxpayer who earns more than $42,500 (that is, monthly income of $3,270, including a 13th month annual wage supplement)," he said. This is because the chargeable income after deducting personal reliefs is likely to be $20,000, which attracts zero tax.

Ms Sabrina Sia, tax partner at Deloitte Singapore, said: "Due to the cap, the rebate is expected to benefit the lower and middle-income groups more than the higher- income earners. This is in line with the Government's position that more should be done to help the lower-income earners rather than those who can better afford to pay taxes."

KPMG Singapore's head of personal tax and global mobility services BJ Ooi noted that the $500 cap is lower than in past budgets, when the limits have ranged from $1,000 to $2,000.

"I was hoping the Government would give more. Still, it is welcome news for many," he said.

Tax rates move up progressively. Those with a chargeable income above $320,000 pay 22 per cent.

More bursary support for post-sec education
By Calvin Yang, The Straits Times, 21 Feb 2017

In the pursuit of post-secondary education, less well-off students will not be left behind.

The Government will be raising the annual bursary amounts for students attending post-secondary education institutions, such as the universities, polytechnics and the Institute of Technical Education (ITE), Finance Minister Heng Swee Keat said yesterday.

"The amount of increase will be up to $400 for undergraduate students, up to $350 for diploma students and up to $200 for ITE students," he said.

"For ITE students, existing bursaries already more than cover their course fees."

The bursaries will also be extended to more families, after a revision in the income eligibility criteria.

About 12,000 more Singaporean students are expected to benefit, taking the total number of beneficiaries to 71,000.

In total, bursaries for students at post-secondary education institutions will increase to $150 million a year, up from about $100 million.

More details will be released soon by the Ministry of Education.

Dr Timothy Chan, director of SIM Global Education's academic division, said the change will be welcomed by less well-off families.

"This is in line with the Government's pledge that no deserving Singapore students will be denied post-secondary education in Singapore," he said.

More help for the disabled and their caregivers
A school-to-work scheme for disabled will be expanded and a caregiver centre set up
By Priscilla Goy, The Straits Times, 21 Feb 2017

More people with disabilities will receive help to be better prepared for work, and their caregivers will have more support too.

A school-to-work transition programme - now open to students with mild intellectual disabilities and autism - will be extended to those with moderate intellectual and multiple disabilities.

A centre will also be set up for caregivers of people with disabilities, to offer information, respite care, training and peer support.

These initiatives, announced by Finance Minister Heng Swee Keat in his Budget speech yesterday, are part of the Government's measures to promote inclusivity.

Together with existing schemes, the Government is likely to spend about $400 million per year to help people with disabilities, he said.

"All of us have something to offer, be it time, expertise or the extra attention, to care for each other. It takes all of us to build an inclusive society," he added.

The new initiatives are also part of the Government's response to recommendations made by a panel who drew up the third Enabling Masterplan, a road map for disability services from this year until 2021.

The first one ran from 2007 to 2011, while the second ran from 2012 to last year. The report for the latest one was released in December last year.

People in the disability sector welcomed the new initiatives.

Mr Victor Tay, president of the Association for Persons with Special Needs (APSN), said the school-to-work scheme has benefited students, but hopes more firms would join the scheme too.

"It takes two hands to clap - the students can receive training, but companies must be willing to hire them too. Giving them more incentives to do so would help," he said.

APSN runs Delta Senior School, one of five special education schools on the scheme, which was developed by the Ministry of Education, the Ministry of Social and Family Development, and disabilities support agency SG Enable.

A spokesman for SG Enable said the scheme will be expanded to eight schools by next year .

Charity Awwa's director for family and caregiver support, Mr Manmohan Singh, said he was glad to hear that the new caregiver support centre will work with welfare organisations to pilot schemes for caregivers of people who are newly diagnosed with disabilities.

"When parents find out that their child has special needs, their aspirations and schooling plans for the child have to be reviewed. They usually have lots of questions, conflicting information, and are stricken with despair or confusion. Offering support to this group is vital."

While a physical centre would help to build a support network among caregivers using the centre, there should also be online help for them, he added.

Increased aid to tackle dementia, mental health issues
By Priscilla Goy, The Straits Times, 21 Feb 2017

More towns will have residents and businesses trained to recognise and help people with symptoms of dementia.

Three dementia-friendly communities were launched last year - in Hong Kah North, MacPherson and Yishun - and more will be set up.

Voluntary welfare organisations will also receive government help to establish more community-based teams - beyond the 36 set up with help from the Health Ministry since 2012 - to support people with mental health conditions and also educate the public on these issues.

Meanwhile, the Health Ministry will provide mental healthcare services in polyclinics, and the National Council for Social Services will lead efforts to integrate people with mental health issues into the workplace and community.

Finance Minister Heng Swee Keat said people "must rally around those with mental health conditions, including dementia".

"Mental health issues may not be easy to talk about, but we can make good progress when the community comes together," he added.

The Government will spend $160 million more in the next five years on community mental health efforts.

Alzheimer's Disease Association chief executive Jason Foo said doing more to help people with mental health issues is vital, given the rising incidence of the disease.

The condition affects about 40,000 people in Singapore today, but this number is expected to double by 2030 as the population ages.

Said Mr Foo: "I'm glad the Government is putting more resources in community mental health efforts, because such efforts are resource-intensive. You need more staff and time to reach out to the wider community and train them."

1,000 additional infant-care places
By Calvin Yang, The Straits Times, 21 Feb 2017

Around 1,000 additional infant-care places will be made available by 2020 to meet growing demand.

There are around 7,000 places now, although only about 4,000, or 8 per cent, of all infants are enrolled in centre-based care.

The increase is part of government efforts to improve the accessibility of pre-school education.

Generally, childcare centres cater to children aged 18 months to six years old, while infant care is for those below 18 months old.

The number of childcare places has been expanded by over 40 per cent to about 140,000 over the past five years. "Now, there are enough places for more than half of all children between 18 months and six years of age," said Finance Minister Heng Swee Keat yesterday.

The Ministry of Social and Family Development will provide more details later.

National University of Singapore economics lecturer Kelvin Seah said couples may be discouraged from having as many children as they want or delay childbearing plans due to a lack of suitable, high-quality, infant-care provision.

"By making infant care more accessible, more women will now be able to enter the labour force without worrying that the needs of their children might be compromised," he added.

IT manager Danny Tan, who is expecting to welcome a first child in July, is considering infant care as an option. "It gives us more choices when my wife eventually returns to work," he said. "I am glad there is more support given to young families like ours."

Lift for charities, sports and arts programmes
By Charissa Yong, The Straits Times, 21 Feb 2017

There is more cash in the pipeline for charities, self-help groups and sports and cultural programmes. The aim of the additional funding is to strengthen community bonds and get more people taking part in activities like sports or arts and heritage causes. People with greater needs will especially benefit from the new funding.

The VWOs-Charities Capability Fund, which helps volunteer welfare organisations and charities train their staff and expand their reach, will get an extra $100 million in total over the next five years.

The fund has helped around 400 groups since it began in 2002. More than $180 million has already been committed to the fund.

Four self-help groups - the Chinese Development Assistance Council, Mendaki, Sinda and the Eurasian Association - will receive $6 million over the next two years to help needy families and children.

And $50 million has been set aside to make it easier for Singaporeans to participate in sports. The Sports-In-Precinct programme, which develops sporting facilities in neighbourhoods, will be expanded so more people can play sports near home.

The SportCares programme, which helps disadvantaged youth by encouraging them to pick up sports, will also be expanded.

Aspiring athletes will get an extra $50 million in grants over five years.

The Government will also match up to $50 million in sports donations from the private sector, dollar for dollar.

Finance Minister Heng Swee Keat noted that cultural activities build bonds among Singaporeans, and many people not only visit museums and attend performances, but also participate as guides and donors. To sustain this momentum, the Government will top up the Cultural Matching Fund by $150 million. Under the fund, the Government matches private cash donations to cultural institutions dollar for dollar.

About $150 million has been committed to the fund since it began in 2014, and donations to arts and heritage causes have more than doubled.

More details on these programmes will be outlined in the coming weeks.


More near-term help for companies
Together with existing measures, firms will get more than $1.4b in help in the year ahead
By Jacqueline Woo, The Straits Times, 21 Feb 2017

More help is on the way for companies in sectors that are struggling against economic headwinds.

Notably, foreign worker levy increases for the beaten-down marine and process sectors will be deferred by one more year, in view of the continued weakness in these two industries.

The process industry includes firms that manufacture petroleum, petrochemicals, speciality chemicals and pharmaceutical products.

The deferments for these sectors will now be extended from July 1 this year to June 30, 2018.

The levy for marine basic tier R1 workers will stay the same at $300 and, for R2 workers, at $400. The levy for basic tier R2 workers in the process sector will remain at $450.

The construction sector will also be given a leg up by the Government bringing forward the start date for about $700 million in public-sector infrastructure projects to this year and 2018. Construction firms will be able to bid for these projects, which include the upgrading of community clubs and sports facilities.

But the Government will proceed with planned levy increases for the construction sector, so as to "sustain the momentum for productivity improvement", said Finance Minister Heng Swee Keat.

The levy for basic tier R2 construction workers will be raised from $650 to $700 in the period starting July 1 this year to June 30, 2019.

There will be no change to work permit levies for the manufacturing and services sectors. The levies for S Pass holders across all industries will also remain unchanged.

These targeted measures are part of the Government's increasing focus on providing specific support for firms across various industries.

"Given the uneven performance across different sectors, we need to go beyond general stimulus, and target the specific issues faced by different sectors," said Mr Heng.

More broad-based measures will also be rolled out to support businesses, including raising the cap for the corporate income tax rebate from $20,000 to $25,000 this year.

The rebate, which will remain at 50 per cent of tax payable, has also been extended for another year to 2018, but at a lower rate of 20 per cent of tax payable.

The enhanced and extended corporate income tax rebate will cost the Government an additional $310 million over the next two years.

There will be more support for companies hiring older workers as well, with the Additional Special Employment Credit extended until the end of 2019. Under the scheme, employers receive wage offsets of up to 3 per cent for workers earning less than $4,000 a month, and those not covered by the new re-employment age of 67, which kicks in from July 1 this year. Together with the existing Special Employment Credit, employers will receive support of up to 11 per cent for the wages of their eligible older workers.

The move is set to benefit around 120,000 workers and 55,000 employers, and will cost the Government $160 million.

Meanwhile, firms will continue to receive near-term support from the continuation of existing schemes, such as the Wage Credit Scheme and Special Employment Credit.

The SME Working Capital Loan, where the Government co-shares 50 per cent of the default risk for loans of up to $300,000 for each small and medium-sized enterprise (SME), will also remain available for the next two years.

The extra measures, coupled with the existing ones, will allow companies to get more than $1.4 billion in government help in the year ahead.

However, the Singapore Business Federation (SBF) said that the short-term measures were a disappointment, given the "inadequate short-term support to lower business and compliance costs".

Said Mr Lawrence Leow, chairman of the SBF-led SME Committee: "While it is comforting to know that this year's Budget has a strong focus on preparing our SMEs for the future economy, the current business outlook remains challenging. The business community requires immediate stimulus."

Fund to boost innovation in construction sector
By Wong Siew Ying, The Straits Times, 21 Feb 2017

More help is on the way for the construction sector, which has been struggling amid a slow property market and economic uncertainty.

A $150 million Public Sector Construction Productivity Fund will be set up to allow government agencies to procure "innovative and productive" building solutions to help develop capabilities in the sector.

"The fund will allow these solutions to enter and gain traction in the market," said Finance Minister Heng Swee Keat yesterday, adding that these solutions may have higher costs as they "may be nascent and lack scale".

The Singapore Contractors Association (Scal) hailed the move.

"From the contractors' point of view, the market is quite suppressed... Many firms are more worried about survival than investing in new technology. This initiative, with the Government taking the lead, will help," Scal president Kenneth Loo told The Straits Times.

Consultancy PwC Singapore said tech trends such as the Internet of Things could be used to collect data - including identifying equipment needing repair - and then using it to improve construction processes.

"Companies are also using virtual reality or augmented reality technology to detect errors (and) drone-generated surveys to preview job-site conditions," noted Mr Tan Tay Lek, corporate tax partner at PwC Singapore.

Mr Heng said $2.4 billion will be set aside over the next four years to implement strategies crafted by the Committee on the Future Economy. This includes a $500 million top-up to the National Research Fund to support innovation, and a further $1 billion for the National Productivity Fund to drive industry transformation.

The funding is on top of the $4.5 billion put aside last year for the Industry Transformation Programme to help firms build up capabilities and grow through innovation.

Mr Heng also touched on the need for forward-looking regulations to facilitate innovation. "Our regulatory agencies must balance managing risk and creating the space to test innovations," he noted, citing examples of such efforts.

These include a recent move by the Monetary Authority of Singapore (MAS) to simplify rules for venture capital funds that will help to enhance financing for start-ups.

Mr Heng said "regulatory sandboxes" - which involve setting boundaries within which some rules can be suspended - will encourage greater experimentation.

Apart from MAS' regulatory sandbox for financial technology, the Land Transport Authority also set out specific zones where self-driving vehicles can be tested on roads.

Also, regulators can make their risk assessments for new products and services swifter. The Health Sciences Authority is doing this via an upcoming priority review scheme to evaluate new medical devices.

Mr Heng noted: "This will accelerate the commercialisation process and make Singapore a preferred location to launch these devices."

Fund to help businesses scale up globally
Managed by Temasek's private equity unit, it will help local firms acquire regional peers
By Marissa Lee, The Straits Times, 21 Feb 2017

A generous $600 million of government money is being ploughed into a new fund to help local businesses move into overseas markets via acquisitions.

The International Partnership Fund will be managed by Temasek Holdings' private equity unit Heliconia Capital Management.

The fund will support firms that intend to grow by acquiring their regional peers, but which may not be large enough to swallow a whole acquisition alone. It will hold the opportunity window open for smaller local firms by letting them link up with Heliconia as a consortium partner that is able to co-invest in the target company alongside the Singapore acquirer.

By coming in purely as a financial investor, Heliconia will not compete over ownership. Firms that have not identified an acquisition target can also get Heliconia's help to source deals by tapping its deep networks, which only large private equity funds can maintain.

Logistics firm Keyfields chief executive Kenny Tan welcomed the initiative: "We have acquired three companies in the past 13 years, and I am in Yangon now to meet a company that will be our sales and marketing arm." Acquisitions are faster than growing organically, he said.

To draw on the fund, firms must be Singapore-based with their headquarters here and annual revenues of no more than $800 million.

The creation of the fund is part of an effort to develop a "smart financing ecosystem" here, said Finance Minister Heng Swee Keat.

More funding support is also being targeted at infrastructure developers to help them undertake more overseas projects, said Mr Heng.

In particular, trade agency IE Singapore will enhance its Internationalisation Finance Scheme, which helps firms secure bank loans for overseas investments through government risk-sharing.

The changes are to bridge gaps in financial markets for project finance in the region, to the benefit of all local infrastructure players.

Road maps to transform 17 industries on the way
By Marissa Lee, The Straits Times, 21 Feb 2017

Industry transformation was one of the centrepieces of last year's Budget, and Singapore is not dropping the pace of such efforts this year.

Over the next 12 months, 17 industry-specific blueprints will be released, outlining the Republic's jobs and growth strategy for various clusters. These will target the marine and offshore, construction, transport, healthcare, education, financial services and professional services sectors, among others.

"The industry transformation maps are integrative platforms, bringing together various stakeholders - trade associations and chambers, unions, and Government - so as to align our efforts around a common plan to transform each sector," said Finance Minister Heng Swee Keat in his Budget speech yesterday. "We will keep this going at a good pace."

A total of 23 sectors accounting for 80 per cent of the economy will get a revamp under the $4.5 billion Industry Transformation Programme announced last year.

So far, six road maps have been launched and new partnerships forged in the hotel, retail, food services, food manufacturing, logistics and precision engineering sectors.

But these road maps are "live" rather than fixed, said Mr Heng, and will be adapted so Singapore seizes opportunities as they arise.

A key thrust of the transformation programme is that firms should come together in partnerships to share expertise and tackle common challenges.

Yesterday, Mr Heng once again urged firms here to look beyond developing individual capabilities.

Telco Singtel drew praise for collaborating with government agencies to groom talent in the information technology space. "Singtel... also works with the Cyber Security Agency of Singapore and the Infocomm Media Development Authority... to develop mid-career talent for the broader cyber security industry," said Mr Heng.

More help for SMEs to go digital
New tech hub will offer specialised advice; Industry Digital Plans give step-by-step aid
By Lee Xin En, The Straits Times, 21 Feb 2017

Small and medium-sized enterprises are getting an over $80 million nudge to go digital with a new SMEs Go Digital Programme.

The initiative includes the building of an SME Technology Hub set up by the Info-communications Media Development Authority. It will complement the existing network of SME Centres, where firms can get free business advice and access information on government schemes.

While companies can approach advisers at these centres for off-the-shelf technology solutions, firms that require more specialised advice will be able to do so at the new tech hub.

Also announced yesterday were sectoral Industry Digital Plans, which will give SMEs step-by-step advice on the technologies to use at each stage of their growth.

The plans will start with targeted sectors: retail, food services, wholesale trade and logistics, among others. These were chosen as they are "sectors where digital technology can significantly improve productivity", said Finance Minister Heng Swee Keat in his speech yesterday.

Mr John Cheng, director of sugar manufacturer Cheng Yew Heng Candy Factory, said the new SME technology hub "definitely fills a gap" in the ecosystem, as it provides a one-stop shop for SMEs wanting to get help in going digital.

He hopes the help at the tech hub can go beyond "traditional" solutions such as digitising accounting systems - to include help in more advanced areas such as social media marketing and data analytics.

Experts said the programme would be helpful in ensuring that more companies build digital capabilities, but that the measures did not go quite far enough.

Association of Small and Medium Enterprises president Kurt Wee said the creation of the SME Tech Hub and connecting it with the network of SME Centres are meaningful.

"Structurally, they have got it right because the SME Centre is an outreach platform that has reached out to thousands of SMEs, and is a good platform to hand- hold SMEs through digitisation. Connecting it to the tech hub helps to ensure you do not duplicate what has been done before," he said.

However, he said he expected "a bit more", as digitisation is significant in boosting the capabilities of SMEs.

The sum of over $80 million may not be enough, and the Government may need to consider expanding the programme, especially if take-up is good, he added.

Mr Lennon Lee, a tax leader for entrepreneurial and private clients at PwC Singapore, said the programme appears to be targeted at the SMEs that have not embarked on digitisation, as the targeted sectors named have been deemed as "not making sufficient progress in productivity growth".

He, too, felt that "given the size of the funding and the target industries", the programme will help companies to increase productivity, but that it would not be enough to be a game changer.

Mr David Ngoh, chief executive of RMA Group, an SME that helps firms with digitisation efforts, said the Government's initiative was laudable, but emphasised the need for a "hand-holding approach".

"A comprehensive hand-holding approach throughout the entire life cycle of the process would ensure that any money spent will be worth it, bearing in mind that we are dealing with SMEs that tend to lack the necessary resources and know-how in making sure that digitisation will help them," he said.

"I believe that the Government is well aware of this, which can be seen from the 'in-person' help at SME centres and the new tech hub."


Early training for jobs in growth sectors
Workers can prepare themselves in new Attach and Train scheme
By Joanna Seow, The Straits Times, 21 Feb 2017

Workers keen to move into sunrise sectors, like digital technology, can go for training and work attachments under a new initiative that will boost their chances of getting jobs.

Even if companies in these industries with good growth potential are not hiring, workers can turn to the new "Attach and Train" scheme to get themselves ready.

This latest initiative is part of government efforts to help people adjust to the changing economy, especially those workers who want to move to a new sector, said Finance Minister Heng Swee Keat.

Details of the scheme will be disclosed later.

Enhancements were also announced to several programmes for professionals, managers, executives and technicians (PMETs), as well as rank-and-file job seekers.

The changes are to meet the challenges in the labour market.

While the unemployment rate stayed low last year, redundancies are rising and more workers are taking longer to find jobs.

The Career Support Programme - which encourages employers to hire mature and retrenched or long-term jobless Singaporean PMETs for mid-level jobs - will be improved for more small businesses to qualify.

Professional conversion programmes will be enhanced to help more PMETs get the skills to make a career switch.

The Work Trial programme, which offers attachments for rank-and-file workers and prospective employers to try out arrangements, will have longer trial periods.

The change is to help long-term unemployed people and those with disabilities especially, as they may need more time to settle down in new jobs.

More retention bonuses and wage support will be given as well, when employers hire people who had been jobless for more than 12 months under the programme.

These schemes will receive up to $26 million more a year from the Lifelong Learning Endowment Fund and the Skills Development Fund. The improvements build on the Adapt and Grow initiative announced last year, which rolled out more professional conversion programmes and expanded the Career Support Programme to cover more jobless Singaporeans.

Efforts to help workers upgrade their skills continue.

More modular courses, especially those using e-learning, will be offered to make training more accessible. This was among the recommendations made recently by the Committee on the Future Economy.

Singaporeans can receive funding support for approved courses under SkillsFuture, and union members can also get subsidies for certain courses through the National Trades Union Congress Education and Training Fund.

"As our companies innovate and digitalise, we will also help our people acquire and use deep skills," said Mr Heng, adding that this builds on the SkillsFuture movement for lifelong learning.

To help match skilled workers to suitable jobs, the national Jobs Bank will be improved to make it more useful. The Government will also work with private placement firms to deliver better services for professionals.

Mr Heng also encouraged employers, unions and trade associations and chambers of commerce to develop more structured training programmes for workers, like those offered by the Singapore Hotel and Tourism Education Centre set up by the Singapore Hotel Association.

Funding support is available for this from statutory board SkillsFuture Singapore.

Labour MP Patrick Tay, who chairs the Government Parliamentary Committee for Manpower, supports the new measures, saying the new Attach and Train programme could link workers with start-ups, new companies and small and medium-sized enterprises which may not have the capacity to hire yet.

Funds to spur innovation, groom leaders
By Calvin Yang, The Straits Times, 21 Feb 2017

More than $100 million will be set aside to groom workers and help companies here better seize growth opportunities abroad.

Part of the sum will go towards supporting the Global Innovation Alliance, a network to promote innovation and harness new ideas.

It will also go to the SkillsFuture Leadership Development Initiative, which aims to develop the next generation of business leaders.

The Global Innovation Alliance will be set up for Singaporeans to "gain overseas experience, build networks and collaborate with their counterparts in other innovative cities", Finance Minister Heng Swee Keat said in his Budget speech yesterday.

Under the alliance, Singapore tertiary institutions and firms will link up with overseas partners in major innovation hubs and key markets.

It was one of the recommendations made by the Committee on the Future Economy, which released its report earlier this month.

The committee noted the importance of innovation in ensuring that Singapore becomes a connected global centre with empowered workers and sustainable businesses.

Three programmes will be run under the alliance, Mr Heng said.

First, an Innovators Academy will allow tertiary students to build networks and capabilities overseas.

This idea builds on the National University of Singapore (NUS) Overseas College programme, which connects students to start-ups overseas. It sends some 300 NUS students each year to colleges overseas in the United States, Europe and Asia.

"Many of these students have gone on to start companies or pursue interesting careers," noted Mr Heng. "The Innovators Academy will go further by making these opportunities available to students from other Singapore universities."

Over the next five years, the Government plans to grow the annual intake from 300 to 500 students.

Second, Innovation Launchpads will also be established in selected markets abroad. This enables entrepreneurs and business owners to connect with mentors, investors and service providers.

Third, through Welcome Centres, innovative foreign firms can link up with Singapore partners to collaborate, test new products here, and expand in the region.

Mr Heng said the Global Innovation Alliance is a "novel collaboration among educational institutions, economic agencies and businesses". In the initial phase, it will be launched in Beijing, San Francisco and various Asean cities. The Ministry of Trade and Industry will give more details at its Committee of Supply parliamentary sitting.

Under the SkillsFuture Leadership Development Initiative, programmes will be expanded to support firms in grooming Singaporean leaders. This includes sending promising individuals on specialised courses and overseas postings.

For a start, the initiative aims to develop 800 potential leaders over the next three years.

"Firms that want to expand overseas need capable leaders who have spent time in these markets, with insights and connections that can help their businesses scale up globally," Mr Heng said.


Penchant for pricey bikes prompts tiered ARF
Buyers will soon pay more for motorcycles with an open market value exceeding $5,000
By Adrian Lim, The Straits Times, 21 Feb 2017

The growing number of motorcycle buyers going for expensive bikes has prompted the Government to introduce a tiered additional registration fee (ARF), similar to that for cars.

And certificates of entitlement (COEs) from deregistered bikes will no longer contribute to the supply of COEs in the Open category - a move that will stabilise the declining numbers of motorcycles.

Buyers with COEs obtained from the upcoming bidding exercise - which closes on Friday - and from exercises in the future will pay a higher ARF once the open market value (OMV) of their motorbikes exceeds $5,000.

All motorcycles now incur a flat ARF of 15 per cent.

Under the tiered structure, the first $5,000 of a bike's OMV will still attract 15 per cent, but the next $5,000 will incur an ARF of 50 per cent. The remaining OMV above $10,000 will incur an ARF of 100 per cent.

Finance Minister Heng Swee Keat said: "A small but rising number of buyers are buying expensive motorcycles - their motorcycles have OMVs similar to those of small cars."

Just as additional ARF tiers were introduced for cars in 2013, to "improve progressivity", the same is being done for pricier motorcycles.

A spokesman for the Land Transport Authority (LTA) said that the tiered ARF is "calibrated to ensure that the majority (about 60 per cent) of newly registered motorcycles will be unaffected".

The Government will also address the falling motorcycle population, which dropped from a decade high of 147,282 in 2010 to 142,439 last year.

With effect from the first COE bidding exercise in May, deregistered motorcycle COEs will not go towards the COE supply in the Open category.

The Open category COE can be used for any vehicle type, but is typically used for big cars.

Right now, 10 per cent of all deregistrations from each COE category feeds into the Open category - but this will cease for motorcycles.

SIM University economist Walter Theseira said that this change will stop the "bleeding" of motorcycle COEs, which flow to the Open category but are not returned to the motorcycle population.

The Singapore Motor Cycle Trade Association's honorary general secretary, Mr Norman Lee, said that the move should lower the high motorcycle COE prices, which hit a record $6,889 in January last year.

He said that, combined with the tiered ARF, COE prices could fall to $3,500 by the middle of the year.

However, Mr Eugene Mah, managing director of Mah - which sells high-end bike brands such as Aprilia and Triumph - said: "We are looking at an increase of $30,000 on ARF alone for some of the premium models."

Yesterday, the LTA also said that it was studying other means of bidding for Open category COEs.

One method being considered is "differential bidding", in which bidders bid on the basis of the additional premium that they are willing to pay on top of a reference point - such as the prevailing quota premium, which is the average of a COE premium over three months.

Diesel duty to curb usage, pollution
By Christopher Tan, The Straits Times, 21 Feb 2017

A diesel duty was re-introduced at the pumps yesterday in a bid to encourage drivers and fleet owners to use the fuel more judiciously and, consequently, pollute the air less.

Finance Minister Heng Swee Keat announced a 10-cent-per-litre duty on automotive diesel, industrial diesel and the diesel component in biodiesel. It was effective yesterday, although fuel stations have not adjusted prices.

"Today, motor fuels such as petrol and compressed natural gas are taxed based on how much is used," he said. "This approach incentivises users to reduce consumption and manufacturers to develop more energy-efficient vehicles.

"However, for diesel, we levy a lump-sum special tax on diesel cars and taxis, regardless of the amount of diesel used."

In his Budget speech, Mr Heng said various cities are taking action to curb the ill effects of diesel usage, including banning diesel vehicles.

Observers said the eventual change will include GST and, hence, is likely to result in diesel pump prices rising by more than 10 cents a litre.

Duty on automotive diesel was removed in the aftermath of the Asian financial crisis in 1998 to help businesses weather the rough patch.

To soften the blow, the minister reduced the annual special tax on diesel cars and taxis by $100 and $850, respectively.

"In this way, we shift from an annual amount of tax to one which is related to usage," he noted. "The special tax reduction will offset the impact of diesel duty for the majority of drivers. I strongly urge taxi companies to pass on the special tax reduction to taxi drivers."

Yesterday, ComfortDelGro Corp, the largest taxi fleet operator here with more than 60 per cent market share, said it would pass the savings to its cabbies.

SMRT Taxis and Private Hire Services will also pass on savings to its cabbies, said its managing director, Mr Tony Heng.

"The introduction of eco-friendly taxi models, which account for nearly half of our fleet, has reduced SMRT Taxis' reliance on diesel fuel," he said.

Owners of private diesel buses and goods vehicles will also be granted road tax rebates for a three-year period from Aug 1.

For the first year, the rebate is 100 per cent, followed by a 75 per cent reduction in the second and 25 per cent cut in the third. The road tax savings amount to around $430 for a small van to nearly $3,000 for a very large trailer.

Diesel school buses and private-hire or excursion buses used to ferry schoolchildren will receive additional cash rebates for the same three-year period.

Commenting on the move to re-introduce diesel duty, Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "If the government wants a road map towards a greener, cleaner environment, the 10-cent duty is not enough to make people change their habits.

"I hope it is just a start."

Budget caps for ministries lowered to set prudent tone
By Marissa Lee, The Straits Times, 21 Feb 2017

The budget caps set for ministries and organs of state will take a 2 per cent downward adjustment in the new financial year starting April 1.

The move is to signal the need for prudence as Singapore faces higher healthcare and public infrastructure costs in the years ahead.

Another change that appears set to take place is with the goods and services tax (GST) regime. The Government is studying other countries' GST practices for e-commerce.

Finance Minister Heng Swee Keat said: "Like all finance ministers before me, it is my duty to take the long view. Our domestic needs will grow over time and the global environment will shift. We must study the implications and prepare our options early."

In the last five years, Singapore's annual healthcare spending has more than doubled to reach around $10 billion in financial year 2016.

A large part of it is due to subsidies being enhanced and services expanded to meet the needs of an ageing population.

Public infrastructure spending has risen too.

Work is under way to double the MRT network to 360km by 2030. This is expected to cost more than $20 billion in the next five years.

And the new Terminal 5 at Changi Airport is expected to cost tens of billions of dollars.

Expenditure needs are poised to rise rapidly in the coming years, said Mr Heng, so leaner ministry budgets will help keep public spending prudent and effective.

Exceptions will be made for the Home Affairs, Health and Transport ministries, which are expanding their services significantly, as well as the Defence Ministry, which serves security needs.

For these four ministries, the 2 per cent budget cap reduction will be phased in over the next two financial years.

Prudent spending is one half of the equation and Singapore must also grow its revenue base in a sustainable way, Mr Heng said.

"We will have to raise revenues through new taxes or raise tax rates. We are studying the options carefully," he said.

The taxman must respond to domestic needs as well as shifts in the global environment, he indicated.

One global development affecting tax systems worldwide is the Base Erosion and Profit Shifting project, Mr Heng said.

This is a revamp of international tax rules by developed nations in a bid to ensure companies are taxed fairly, based on where their substantive economic activities are performed.

"We are, in consultation with businesses, refining our schemes and implementing the relevant standards," the minister said.

Another trend is that of countries adjusting their GST systems to account for a rise in e-commerce and digital deals, to ensure a level playing field between local businesses that are GST-registered, and foreign-based ones which are not.

"We are studying how we can do likewise," Mr Heng said.

Singapore’s fiscal position

Spending up, but surplus still likely
Extra outlays offset by $14b from net investment returns
By Wong Wei Han, The Straits Times, 21 Feb 2017

Expenditures will likely be higher this year due to outlays in areas such as public housing, healthcare and security but there should still be an overall budget surplus.

While the extra spending will more than double this year's primary deficit compared with 2016, sustained contributions from net investment returns (NIR) will be the key to ending in the black.

The NIR framework allows the Government to spend up to half of the long-term expected real returns from the GIC, the Monetary Authority of Singapore and Temasek Holdings.

A total expenditure of $75.07 billion was pencilled in for 2017, up from 2016's $71.39 billion, according to the fiscal position figures. The increase will more than offset the rise in operating revenue from $68.67 billion last year to $69.45 billion. National development expenditure will jump by $1.3 billion to $4.8 billion on higher public housing spending, while healthcare outlays will rise by $0.9 billion. Home affairs spending will go up by $0.7 billion to $5.8 billion, mainly to enhance security capabilities.

As a result, the Government is eyeing a primary deficit of $5.62 billion this year, a marked increase from 2016's $2.72 billion.

Still, the 2017 Budget will end with an overall surplus of $1.91 billion, thanks largely to $14.11 billion of NIR contribution - comparable to last year's record high of $14.37 billion.

The NIR framework was changed in 2015 to start including contributions from Temasek Holdings to help finance increased levels of social and infrastructure spending.

"As we expect expenditures to continue rising in the long term, this budget position is prudent, while supporting firms and households in the midst of continued economic restructuring," Finance Minister Heng Swee Keat said.

DBS senior economist Irvin Seah agreed, calling the Budget "balanced and prudent".

"The Government can't keep depending on high levels of NIR (contribution) because it will fluctuate, which is why they are looking at growing revenue, for example, through the new carbon tax," Mr Seah said. The tax will likely kick in from 2019.

"It also makes sense for the Government to tighten control over ministry budget caps if they plan to maintain spending on restructuring efforts and social support," he added, referring to a permanent 2 per cent reduction to the budget caps of all ministries and organs of state.

Aside from the higher expenditure, the Government is also ramping up special transfers for many of its schemes.

About $2.07 billion will be set aside for special transfers to businesses this year, including $910 million for the Wage Credit Scheme. Around $1.5 billion will be injected into the GST Voucher Fund this year to help households.

Meanwhile, the National Research Fund will receive a $500 million top-up while the National Productivity Fund will get $1 billion to support industry transformation.

But Mr Heng warned: "We will have to raise revenues through new taxes or raise tax rates. We are studying the options carefully."

UOB economist Francis Tan said: "This is a very strong message to pre-empt Singaporeans. The Government didn't touch the tax regime too much to avoid rocking the boat amid the economic challenges. But those changes are imminent - the hint cannot be stronger."

Welcome back, Mr Heng
Finance Minister greeted by loud, spontaneous thumping in House as he made his way to rostrum
By Tham Yuen-C, Assistant Political Editor, The Straits Times, 21 Feb 2017

In the nine months since Finance Minister Heng Swee Keat collapsed during a Cabinet meeting in May last year, Parliament has sat seven times - and yesterday's Budget 2017 sitting was as keenly anticipated for his return as it was for the Government's spending plans.

With a sweeping, confident wave, he signalled it was business as usual yesterday as he entered with his characteristically purposeful stride of old into Parliament House to deliver the Budget speech.

Mr Heng was making his first appearance in the House after suffering a stroke from a burst aneurysm on May 12 last year. Some had wondered then if he would be able to recover and deliver another Budget this year.

So, as he made his way to the rostrum from his seat in the front row, it was clear the House was happy to see him back. Even before he began to speak, a loud thumping broke out spontaneously as Members of Parliament from both sides of the aisle tapped the armrests of their chairs in welcome.

A grin spread across his face as he looked around to acknowledge his colleagues, and asked: "Before I begin the Budget statement, may I express my deepest thanks to the House?" Of course, he could.

As he went on to thank Speaker of Parliament Halimah Yacob, Prime Minister Lee Hsien Loong and members of the House for their get-well wishes when he was not well, a palpable feeling of goodwill swept the gathering. The minister, who appeared to have gained weight since giving his first public interview in December, continued: "Thank you also to all friends and colleagues, the residents of Tampines, fellow Singaporeans and friends from overseas. Your kindness and encouragement are both humbling and uplifting to me and my family. I am happy to be back in the chamber and grateful for the opportunity to continue alongside members of this House to serve Singapore and Singaporeans to the best of our ability."

Although Mr Heng returned to work at the Finance Ministry last August, he has mostly stayed away from public events on the advice of his doctor, as his lungs were still recovering from an infection picked up in hospital.

Still, the road to recovery after a stroke is not an easy one, let alone for a man in charge of a country's finances. But any concerns were dispelled as, appearing relaxed and steady, Mr Heng outlined the Government's financial plans and policies for the year.

For 11/2 hours, he spoke without a break, stopping briefly for a drink of water only when materials were being handed out to MPs.

In the even, purposeful manner with which he delivered his first Budget a year ago, he explained how the policies would address the immediate concerns of Singaporeans and companies, while laying the groundwork for a rapidly changing world.

At the end of his speech, a relieved House burst into thumps again. Heng Swee Keat was back.

Said Mr Liang Eng Hwa (Holland- Bukit Timah GRC): "He was more relaxed (than during last year's Budget), and he paced it very nicely and delivered it very smoothly."

Mr Zaqy Mohamad (Chua Chu Kang GRC) said some people wondered if Mr Heng had intentionally spoken for a shorter time this year. His maiden Budget speech as Finance Minister last year lasted over two hours. But Mr Zaqy said the length had more to do with there being no "major blockbuster announcements".

Political observer Zulkifli Baharudin said many would have been watching for the slightest pause or sign of strain. "People want to be confident that he can carry on in the job and do it well," he said. He added: "It is not just about him, it is about how Singapore keeps to its word that it will always pick the best person for the job, so if he had shown signs he was not up to it, people would have lost confidence."

Former Nominated MP and law don Eugene Tan said Mr Heng had been able to sustain his energy level throughout the session. "You look at his posture, his voice, his demeanour, no one would have suspected that he had suffered a stroke."

He pointed out that next week's Budget debate will be a lot more demanding for Mr Heng, as MPs typically make about 50 speeches.

Many Singaporeans disagree with water price hike, but more now express support after knowing why: REACH poll

By Nur Asyiqin Mohamad Salleh, The Straits Times, 22 Mar 2017

Singaporeans polled by government feedback unit REACH strongly supported measures in this year's Budget to lend a hand when it comes to housing, social support and jobs, but many disagreed with the water price hike.

In a media release on Wednesday (March 22), REACH said overall, 52 per cent of the 1,111 citizens it polled were supportive of initiatives announced in the Budget, with more than two-thirds backing various measures.

But the water price hike was an initial point of concern.

REACH found that 43 per cent of those polled disagreed with the impending hike, which is meant to fund higher costs of water production and encourage water conservation. Only 32 per cent agreed, while 24 per cent indicated they were neutral.

"The results show that Singaporeans largely welcomed the social measures in Budget 2017, in particular the initiatives to assist families with the costs of raising a family," said REACH chairman Sam Tan.

"We also hear the suggestions of some Singaporeans to improve communication on the water increase, and to do more public education so that everyone can work collectively to understand the need for water conservation," added Mr Tan, who is Minister of State in the Prime Minister's Office and Ministry of Manpower.

The price of water will go up by 30 per cent over two years, but HDB households will also get additional rebates that will see monthly bills go up by less than $12 for most, with no rise for those in the smallest flats.

REACH said that many Singaporeans at its Listening Points - feedback booths where the public can find out more about national policies and issues and give their views - had voiced their unhappiness on the water price hike.

But, it added, after various agencies and political office holders explained the reason behind the move, more people at these booths said at the end of February and March that they supported the increase.

"They understood the rationale behind the move and accepted that water is vital to our country's survival and that it should be priced properly," REACH said in its statement.

Added Mr Tan: "We understand Singaporeans' concerns."

He said there are measures to help households cope with rising costs through extra U-Save rebates. These mean that one- and two-room HDB households will not see any increase on average, while bills for other HDB households will go up by $2 to $11 per month.

REACH conducts a telephone poll to gauge reactions to the Budget each year. This year, the exercise was conducted from Feb 22 to March 3, after the Budget was unveiled on Feb 20, and involved 1,111 randomly selected citizens aged 20 and above. The sample of citizens was weighted by gender, age and race to make it representative of the national population.


Other initiatives announced at the Budget went down well with Singaporeans.

About eight in 10 respondents agreed that the move to enhance post-secondary education bursaries would better support lower- and middle-income households.

Meanwhile, seven in 10 believed the increase in the CPF Housing Grant for couples purchasing their first resale flat would provide young families significant support. This grant was previously capped at $30,000 but has gone up to $50,000 for first-time home buyers who are purchasing four-room or smaller flats from the resale market, and to $40,000 for those buying five-room or bigger flats.

Two-thirds of those polled also agreed that an increase in the number of infant care places will make Singapore a more conducive place to raise a family. There will be about 1,000 more infant care places by 2020 to meet rising demand.

And 72 per cent agreed that the third Enabling Masterplan, a road map for disability services from this year until 2021, will help persons with disabilities better integrate into the workforce and society.

Help on the jobs front drew strong support as well.

A total of 66 per cent of those surveyed agreed that enhancements to the Adapt and Grow initiative, which aims to help Singaporeans adapt to changing demands and grow their skills, as well as other training support under SkillsFuture would help create better employment opportunities for Singaporeans.

And 58 per cent agreed that the extension of the additional special employment credit scheme till the end of 2019 will encourage employers to continue hiring older workers. Under the scheme, employers receive wage offsets of up to 3 per cent for workers aged 55 and above and earning less than $4,000 a month.

Mr Tan said the survey results also show Singaporeans largely welcomed social measures in this year's Budget, in particular, initiatives to help families with the cost of raising a family.

Similarly, those who gave their views on REACH's engagement platforms supported these family measures, he said. Some felt the quality of childcare should not be compromised, even as more infant care and childcare places are added, and said that measures to support families must be in tandem with other efforts, such as encouraging work-life balance.

On the steps to help those with disabilities, contributors on REACH's platforms also suggested that the integration process could start from the schools, to instil a cohesive mindset, said Mr Tan.

"Building an inclusive society is a continuous effort, and we should strive towards a society with no pre-conceived notions on issues such as disabilities," he added.


Singapore Budget 2017
Budget 2017: Moving Forward Together
2017 Budget Statement debate in Parliament
Budget 2017 Committee of Supply Debate: MINDEF, MHA, MFA, MTI, MinLaw, PMO
Budget 2017 Committee of Supply Debate: MOE, MND, MOF, MOM, MCI
Budget 2017 Committee of Supply Debate: MOH, MCCY, MOT, MEWR, MSF
Budget 2017 Debate Round-Up Speech By Minister For Finance Heng Swee Keat on 2 March 2017

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