SINGAPORE (Feb 18): Singapore Finance Minister Heng Swee Keat delivered a budget that included more health-care and military spending, ahead of a general election that could come as early as this year.
Heng unveiled more support for the aging population on Monday, as well as measures to help local businesses and “transform” the economy for the year starting April 1. The government expects to spend S$4.6 billion (US$3.4 billion) over three years to boost Singapore’s growth, he said. The Parliament will discuss the plan next week.
The finance minister opened his speech by talking about the changing global and domestic landscape and the importance of planning for the long term, while being open to diversity. Weaker demand and U.S.-China trade tensions saw Singapore’s export-reliant economy grow at a slower pace than expected in the fourth quarter.
“Budget 2019 is a strategic plan to allocate resources to build a strong, united Singapore,” he said. The city state needs to stay safe and continue to transform its economy, he added.
Here are some winners and losers from the budget plan:
Heng’s budget announced a slew of support measures for Singaporeans as they age, including a plan to make it more affordable for citizens to visit clinics in their neighborhood. The government expects to pay out more than S$200 million a year in Community Health Assist Scheme subsidies and will increase health-care spending by more than 10%, compared with revised estimates for 2018.
Companies that could benefit from the positive sentiment in the sector include listed providers Raffles Medical Group Ltd, Thomson Medical Group Ltd and OUE Lippo Healthcare Ltd.
The finance minister highlighted the generation that came of age during Singapore’s independence era in the 1960s, a large portion of the population. He announced a package that primarily includes health-care support, and said the government would set aside S$6.1 billion for a new Merdeka Generation Fund that would benefit about 500,000 citizens.
He emphasized the increasingly uncertain geopolitical environment as he outlined a plan to allocate 30% of spending to defense, security and diplomacy efforts, increasing spending by 4.8%. While Singapore is one of the safest cities in the world, “we must not be complacent”, Heng said. Having strong armed forces remains important, he added, citing cyber and terrorist attacks as growing threats.
Building on the success of its startup incubator program, Singapore plans to help local companies in their journey to expand beyond the country, Heng said. The government will set aside another S$100 million to establish a co-investment fund for small and medium enterprises to help firms that are “ready to scale up.”
Creative Technology Ltd, which was cited in Heng’s speech as an example of a local company “at the cusp of a major breakthrough,” pared losses to 3%, from 6.3%.
Heng spoke at length about the importance of planning for climate change, saying the government is studying its implications “carefully” and will have to “invest more.” It expects to increase spending on the environment and water resources by almost 29%. Singapore will apply a carbon tax on this year’s emissions and double its excise duty for diesel taxes to 20 Singapore cents per liter with immediate effect.
While the government will provide support to help businesses adjust, this could hit companies including Singapore’s largest taxi operator, ComfortDelGro Corp.
Singapore will introduce a S$1.1 billion “bicentennial bonus” in rebates and payouts to citizens, as the country celebrates the 200th year since Sir Stamford Raffles arrived on the island. This will include as much as S$300 in payouts for lower income Singaporeans and a personal-income tax rebate of up to S$200 for all individuals.
Heng said Singapore’s reliance on foreign workers is not a long-term solution, and that the country has to calibrate policies to raise productivity. While keeping the foreign-worker quotas for manufacturing and shipping intact, companies in the services sector have to reduce the number of foreigners they hire. This could impact restaurants such as Koufu Group Ltd, Jumbo Group Ltd, Kimly Ltd and BreadTalk Group Ltd.
Starting Tuesday, travelers going overseas will receive less relief for their spending due to “rising international travel”, Heng said. He also announced a cut to the alcohol duty-free allowances to two litres from three litres. These could affect Duty Free International Ltd, which operates a chain of duty-free retail shops.