Fortitude Budget: How This Impact Businesses And Jobs
The Singapore Government has announced a fourth budget named “Fortitude” in additional to the earlier 3 budgets “Unity”, “Resilience”, “Solitarity” in response to the COVID crisis to support businesses, save jobs and alleviate economic impacts to households. The global toll is high with five million cases and over 340,000 losses as of May 2020. The global economy has also been disrupted by the lockdown and movement restrictions imposed by many countries. Many economies has suffered major job losses and a number of sectors will go through structural changes while Singapore’s GDP growth forecast has similarly been downgraded to -7% to -4%. Our previous ways of doing business will likely never be the same again.
As Singapore prepares to end Circuit Breaker measures and re-open the economy progressively, the Fortitude budget was announced to provide more cash flow support for businesses, save jobs and support households through these tough times. We have covered the Unity and Resilience budgets in our blogs and similarly, we will be focused on covering the initiatives for businesses.
1. Protecting Jobs And Livelihoods
The Jobs Support Scheme (JSS) will be extended 1 more month to cover August 2020. All companies paying CPF to Singaporean and PR will be provided with 25% wage support up to the a salary of $4,600. Businesses that cannot resume operations immediately after the Circuit Breaker will be given 75% wage support until August 2020 or when they are allowed to re-open, whichever is earlier. Enhanced wage support will also be given to selected sectors which have been more adversely affected by COVID-19. Sectors such a Aviation, Tourism, Built Environment, Aerospace and MICE organisers will be given 75% wage support while businesses in sectors such as Food Services, Retail, Arts & Entertainment, Marine & Offshore and Land Transport will be given 50% wage support.
The wage support is given to encourage business to keep their workforce instead of letting them go. Incentives & subsidies such as SkillsFuture are designed for employers to train and upskill workforce during this lull time to improve workers’ productivity. Companies do not need to apply to be eligible for the JSS as the payout will be given based on CPF contributions in the preceding months.
2. Creating Jobs And Upskilling For The Future
SkillsFuture will be top-up with $500 credit for Singaporeans aged 25 and above, special $500 SkillsFuture credit will also be provided for Singaporeans aged 40 to 60. SGUnited Jobs wil be enhanced to create 40,000 jobs by end-2020, including 15,000 jobs from the public sector and 25,000 jobs from the private sector. SGUnited Traineeships program will provide opportunities for 21,000 traineeships for first time local jobseeker in high-demand areas such as information technology, engineering, software, artificial intelligence. 4,000 traineeships positions will be created for local mid-career jobseekers to learn new skills and start new careers. Employers hiring local workers who have completed eligible traineeship and training programmes will be given enhanced hiring incentives. Incentives will cover workers of all ages and more support will be provided for workers aged 40 and above.
SGUnited Skills will support 30,000 jobseekers with training courses and allowance (of $1,200/month during course duration). Course fees will be highly subsidised and can be offset by SkillsFuture credits. In a similar manner, self-employed persons training support scheme will be extended till end-2020 to help self-employed persons train and up-skill. Training allowance is increased to $10/hour.
3. Helping Businesses with Expenses, Cash Flow And Credit
Businesses will also get support to reduce its cost and improve cash flow in order to tide over the crisis. For businesses that are unable to resume operations, foreign worker levy will be waived and additional $750 rebate will be provided in June 2020. This will be reduced to 50% waiver and $375 rebate in July 2020. Levy rates will be restored in August 2020 onwards when workers can work again, whichever earlier. The planned increased in CPF contribution rates for senior workers will be deferred 1 year to 1 January 2022.
Cash grants amounting to $2 billion will be give to SMEs via landlords to alleviate rental cost, together with the property tax rebate announced earlier, SMEs will get 2 months of rental waiver. The Government will also legislate that landlords pass on rebates to tenants. In addition, SMEs facing significant revenue drop by benefit from 4 months of rental relief, shared equally between Government and landlords. The new Bill will also seeks to cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges. The Singapore Government typically does not intervene in contracts, but this is an exceptional situations where targeted actions are taken to safeguard the economic structure for the common good.
In addition to the Temporary Bridging Loan and Enterprise Financing Schemes announced in previous budgets, the Government has announced an additional $285 million to match private investments for promising start-ups. These start-ups can also utilize the SGUnited incentives to hire and upskill workers to continue innovating and build up their talent pool.
4. Incentives For Digital Transformation
Businesses will be encouraged to continue on their digital transformation journey. COVID-19 has accelerated digital transformation for many firms, while telecommuting and online food delivery have grown to be the norm. More than $500 million will be allocated to incentivise businesses to transform. Bonus of $1,500 will be granted to stallholders in hawker centres, coffee shops, canteens to adopt e-payments.
Up to $5,000 Digital Resilience Bonus will be given to F&B and retail businesses who are adopting PayNow Corporate and e-invoicing. An additional tier of $5,000 will be provided for F&B and retail businesses adopting advanced solutions such as data-driven operations / analytics. More details on the Digital Resilience Bonus will be announced later.
We Will Get Through This!
The Fortitude Budget will draw again on Singapore’s past reserves for a total of $52 billion. This reflects the seriousness of the COVID situation, and both big and small enterprises should be looking at how to preserve their business set-up and at the same time, make use of the opportunity to transform for the future. Sprout will continuously review the various schemes so that we can advise our clients the best ways to adopt digital tools for their businesses.
Schedule a call with Sprout for a complementary consultation. We can provide insights on how we can add value by providing more insight into your business' financial performance and cash flow, allowing you to make better decisions.
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