Singapore Budget 2018: Live Updates

Vulcan Post

February 19, 2018

Finance Minister Heng Swee Keat will be delivering the Budget at 3:30pm, and we’ll be updating this article live with pointers mentioned during the speech.

Longer term goals of economic restructuring and transformation are expected to be covered this year.

In the meantime, watch this video and find out more about the purpose of the annual Budget!

Join us at 3:30pm, and watch the livestream here, or keep refreshing this page for the Budget’s pointers as they are delivered.

Budget 2018

Singapore’s GDP grew by 3.6% last year, up from 2.4% in 2016, exceeding Govt’s forecast of 1% to 3%.
We’ve been experiencing good productivity growth – highest since 2010
As a result of good productivity, real median income growth for Singaporeans rose by 5.3% last year
With the support of businesses, Trade Associations and Chambers (TACs), and unions, Govt has launched 21 out of 23 Industry Transformation Maps (ITMs)
Industries such as construction and marine & offshore engineering will still face some resistance in growth
Budget must be strategic to identify future needs and preparations
Budget looks to pull resources together and integrate efforts across all stakeholders
Govt must prepare for 3 major shifts in the coming decade: rise of Asia, emerging tech, and ageing society
First shift – global economic weight towards Asia
Advanced economies are now focusing inward in reaction to domestic pressures
Brexit and the recent US tax changes and trade pacts are fuelling anxieties worldwide
Asia will play a larger role in global trade and investment flows
Cited China’s Belt and Road Initiative, India’s economy reformation, and ASEAN countries rising up the value chain as examples
All developments represent opportunities for us – ride on and contribute to Asia’s growth
Potential threats to our stability and growth – tensions on South China Sea and Korean peninsula
Second shift – emergence of new technologies
New technologies are changing the way we live, work and play
Industry 4.0 and the rapid rise of e-commerce and a sharing economy
Interacting with traditional businesses – they can be seen as competitors but can also be complementary enablers
Focus more on intellectual property, first-mover advantage are key
Securing better jobs and higher wages will not be just about how well we do in school, but how well we adapt and grow
Third shift – the ageing population
Significant increase in healthcare, and resident workforce will shrink
Need to support our workforce with calibrated inflow from abroad
Continue to invest in education and skills upgrading
Promote sports, arts and heritage, and volunteerism and philanthropy
These shifts will present new opportunities – tech will help older workers stay productive and for companies to meet demands of tech-savvy consumers
These shifts will present new challenges – older workers may feel marginalised, rising discontent over technological disruptions, and increase in risk of cyberattacks
Anchoring Singapore as a Global-Asia node of technology
Welcome investments and talents to Singapore and be bold in venturing out into the world
Develop deep capabilities and strengthen relationships locally and abroad
Build a smart, green and liveable city to improve the quality of lives of Singaporeans
Be more carbon-efficient as a society
Foster a caring and cohesive society through collective efforts
Govt to continue to strengthen social safety nets to tackle ageing population issues
Preparing for a fiscally sustainable and secure future needs more resources amidst geo-political uncertainty and increasing tax competition

Vibrant And Innovative Economy

Need to ensure we have enough resources to do everything we need to do
Must support firms and workers to capture new opportunities and near-term challenges
Though economy picked up last year, we remained concerned about business costs
Wage growth is good for Singaporeans, but we need to keep improving productivity and achieve quality growth
Govt will extend the Wage Credit Scheme (WCS) which co-funds wage increases for Singaporean employees up to a gross monthly wage of $4,000
20% co-funding for 2018, 15% for 2019, 10% for 2022
Set to spend about $1.8 billion over next 3 years
Govt will enhance and extend the Corporate Income Tax (CIT) rebate to YA2019, will cost $475 million over the next 2 years
For YA2018, CIT rebate will be raised to 40% of tax payable, capped at $15,000
For YA2019, CIT rebate will be at a rate of 20% of tax payable, capped at $10,000
Will benefit all tax-paying companies especially smaller ones
Govt will defer the increases in Foreign Worker Levy rates for another year for sectors in the Marine Shipyard and Process that still face weakness
Strengthen support for workers – for lower to middle income support
Those facing career transitions can stay employed and employable through the Adapt and Grow initiative
Convert Work Trial scheme into a Career Trial scheme
Our companies must keep up and workers must adapt as the skills required are evolving
Need to differentiate themselves and venture abroad
Reduce manpower demand while enabling older works to continue contributing
Made a good start with ITMs, need more cluster-based approach
First key enabler: Innovation. Must make innovation pervasive for firms of every size, and make use of technologies
One of the Singaporean companies lauded for innovation: Pan-United
This Budget will support firms across the entire value chain
Support businesses to buy and use new solutions, streamline existing grants supporting the adoption of pre-scoped, off-the-shelf technologies into a single Productivity Solutions Grant (PSG)
Will raise the tax deduction on licensing payments for the commercial use of intellectual property (IP)
Tax deduction on licensing payments reverts to 100% for YA2019 and beyond as the Productivity and Innovation Credit (PIC) scheme expires
Licensing payments raised to 200%, capped at $100,000 per year
To encourage businesses to innovate originally – tax deduction for IP registration fees raised from 100% to 200%, capped at $100,000 of IP registration fees per year
Tax deduction for R&D done in Singapore for IP raised from 150% to 250%
Govt will pilot the Open Innovation Platform – virtual crowd-sourcing platform, where companies can list specific challenges that can be addressed by digital solutions
Sustained public sector R&D spending at 1% GDP annually
Maritime and aviation transformation – will provide support of up to $500M for these two programmes
National Research Foundation (NRF) and Temasek Holdings will launch an NRF-Temasek IP Commercialisation Vehicle
New investment venture will bring together Temasek’s global investment networks and NRF’s connections with the Singapore R&D community, to grow companies that draw on IP from publicly-funded research
At least $100 million from Govt and Temasek Holdings
Implement National Robotics Programme – particularly in the construction industry
Second key enabler: Building deep capabilities. Our firms and workers to have capabilities to internationalise, digitalise, and be more productive
In April, we will merge SPRING and IE Singapore into Enterprise Singapore
Combine IE’s Global Company Partnership grant with SPRING’s Capability Development Grant, to form an integrated Enterprise Development Grant (EDG) that will provide up to 70% co-funding
Double Tax Deduction for Internationalisation (DTDi) – Startup Tax Exemption (SUTE) and Partial Tax Exemption (PTE)
SUTE – Will exempt 75% of tax instead of 100% for startups for their first $100,000 wef YA2020
PTE & SUTE – Restrict tax exemptions to the first $200,000 of chargeable income
Corporate tax will remain low for startups and SMEs – Taxable income of $100,000 is 4.3% for startups and 8.1% for older firms
Under the SME Go Digital programme, more than 650 SMEs have benefitted
Developed nationwide e-invoicing framework to enhance cashflow and improve productivity
27,000+ people have taken up the Tech Skills Accelerator (TeSA) programme since 2016
TeSA will expand into sectors like manufacturing and services
Will set aside $145 million for TeSa over the next 3 years
More emerging skills like AI, IoT, cybersecurity and data analytics
Infineon applauded for training their workers
SkillsFuture Earn and Learn Programme and Go Southeast Asia award matches undergrads with regional internships
SkillsFuture Mid-Career Enhanced Subsidy and Professional Conversion Programmes (PCPs) such as the PCP for Southeast Asia Ready Talent programme prepare Singaporeans with work experience to do well regionally
Since the SkillsFuture Leadership Development Initiative (LDI) started last year, 200 Singaporeans have been trained with 180 in the pipeline
ASEAN Leadership Programme will be launched this year under the LDI for business leaders
The Singapore Business Federation (SBF) and the Singapore Management University (SMU) will pilot the SBF-SMU LEAD-CHARGE Initiative targeted at SMEs
As workforce ages, firms must harness the experience of these people
Re-employment age raised to 67
Extended Special Employment Credit and enhanced WorkPro
Singapore’s employment rate for residents aged 65 and above rose from 14.4% in 2007 to 25.8% in 2017
Govt will continue to encourage age-friendly workplaces and review support for older workers
The Capability Transfer Programme (CTP) to support skills transfers from overseas trainers to Singaporeans
Third key enabler: Forge strong partnerships
Ascendas-Singbridge and IE Singapore led a group of Singaporean SMEs specialising in Industry 4.0 tech solutions to set up a Singapore Manufacturing Innovation Centre in Guangzhou, China
Centre provides SMEs with a platform to co-create their solutions and reach out to the large Chinese market
PACT scheme – companies can receive up to 70% co-funding for projects undertaken in partnership with others
$800 million will be set aside over the next 3 years for PACT, the Productivity Solutions Grant, and the Enterprise Development Grant
Global Innovation Alliance (GIA) is for S’poreans to build network overseas
Local unis have expanded overseas internship programmes to 8 new countries
Launched GIA Beijing and established Block 71 in Suzhou and Jakarta
Bring global innovation to Singapore through initiatives like the Singapore Week of Innovation and Technology (SWITCH)
Developing an ASEAN Innovation Network to strengthen innovation between countries
To contribute to Asia’s infrastructure development, they will set up an Infrastructure Office
An Infrastructure Office will be set up to bring together local and international firms to develop, finance, and execute infrastructure projects in Asia
Importance of Trade Associations and Chambers (TACs) – understand members’ challenges and opportunities better than Govt
Examples of TAC leadership and partnerships – the Trade Association Hub (TA Hub) and Trade Association Committee
Logistics Alliance formed by Republic Polytechnic, SPRING, and 4 TACs – launched the Transport Integrated Platform (TRIP) last year
Govt will continue to support such efforts, through the Local Enterprise and Association Development (LEAD) programme
$45 million has been spent for some 50 projects under LEAD in the last 2 years

Smart, Green And Liveable City

Work on providing a high quality living environment
More than 40% of our island is covered in greenery
Govt designed HDB estates with common spaces, enacted laws against pollution, and cleaned up the Singapore River
“We became innovators in water treatment – even otters have returned to our waterways!”
Our reputation as green city has attracted tourists and investments to our shores
Adaptable, flexible and innovative cities always did well
The Govt is embarking on strategic national projects to lay the foundation for the Smart Nation movement
Building a Smart Nation Sensor Platform that uses sensors and IoT devices to enhance municipal service delivery
Increasing adoption of e-payments islandwide
Developing a National Digital Identity system to enable citizens to authenticate their identities securely. Will set aside $250 million for this
Opening up digital platforms for private sector to develop
The Urban Solutions and Sustainability is one such strategy under the Research, Innovation and Enterprise (RIE) 2020 plan
Cities of Tomorrow R&D programme – use tech to reduce waste
Closing the Waste Loop project – use tech to reduce environmental impact of waste we generate
Energy Grid 2.0 to launch this year – to develop grid architectures that can react efficiently to energy demand changes
Govt will set aside $250 million for the above three programmes
Tackling climate change
A low-lying island, Singapore is vulnerable to rising sea levels
Govt is investing in building a weather-resilient infrastructure and redesigning our flood management system
Manage our greenhouse gas solution
Make Singapore car-lite – further reduce emissions to combat climate change
Implement carbon tax from 2019 on companies producing 25,000 tonnes or more of greenhouse gas emissions a year
First payment will begin in 2020 based on 2019 emissions
Currently will charge $5 per tonne of emission from 2019 to 2023
Will review carbon tax rates by 2023 – intend to increase it to a rate between $10 and $15 per tonne of emissions by 2030
Carbon tax will apply to all sectors, with no exemptions
Major emitters that account for about 80% of Singapore’s emissions affected
Govt is looking at how to account for the remaining 20%
No additional carbon tax on diesel, CNG, and petrol but will continue to review and adjust current excise duties
Expects to collect carbon tax of nearly $1 billion in the first 5 years; Govt is prepared to spend more than this to support this move
In the first five years, set aside funds from 2019 to support companies to be more energy-efficient
Provide more grants and support to households
Eligible HDB households will receive $20 more per year from 2019 to 2021
MEWR will help households save more energy. MTI and MEWR will share more details later date
Govt has designated 2018 as the Year of Climate Action to encourage all Singaporeans to fight climate change
The Community in Bloom movement brought together over 36,000 gardening enthusiasts to cultivate more than 1,300 gardens all over Singapore
Kayak Waterway Clean-Up Programme run by non-profit Waterways Watch society, brings volunteers together to clean up our waterways while raising environmental awareness

Caring And Cohesive Society

SG Cares Movement to create a more caring society
To provide all children access to quality education regardless of background
Will increase annual Edusave contributions from $200 to $230 for each primary school student; $240 to $290 for each secondary school student wef January 2019
Increase support to students from lower-income families
Raise annual bursary for pre-U students from $750 to $900
Cover more meals for secondary school students
Students in special education schools will also benefit
Overall, education enhancement schemes will cost almost $200 million per year
Will plan a financial education curriculum in polytechnics and ITEs in the future
Enhance existing services for Singaporeans when they buy flats or retire so that they can be informed
Will review Eldershield
Provide premium subsidies for middle and lower income Singaporeans
Budget will support family members to live with or near each other
Increase Proximity Housing Grant (PHG) for families buying resale flat to live with their parents or children to $30,000
Those buying a resale flat near parents or children will continue to get PHG of $20,000
Singles who buy a resale flat to live with parents will get PHG of $15,000, up from $10,000
Singles who buy a resale flat near parents will now receive a PHG of $10,000
Revise criterion of what’s near – radius to increase to 4km (so nearby towns are also included)
Will take immediate effect and cost an additional $80 million a year
A first-timer applicant can now receive up to $120,000 in housing grants when buying a resale flat to live with parents
Will support households with expenses; extend these rebates till next year. Will cost $126 million and benefit about 900,000 households.
Foreign domestic workers (FDWs) have increased by 40% over the past 10 years – 240,000 in 2017
Avoid an over-dependency on FDWs – but some families need FDWs, so they will reduce the levy
Young children, elderly or family members with disabilities retain monthly concessionary FDW levy of $60 – 80% of FDW employers benefit from this
Raise qualifying age for levy concession under the aged person scheme from 65 to 67 years – persons aged 65 and 66 before 1 April 2019 will continue to pay the monthly $60 levy
Non-concessionary FDW employers and multiple FDWs employers – levy raised from $265 to $300 and $400 for first and second FDW respectively
Changes will take place on 1 April 2019
Community Networks for Seniors (CNS) pilot in 2016 had helped an elderly couple with rehabilitation and social life
CNS pilot showed them how to streamline and improve the delivery of services for seniors – the Ministry of Health (MOH) will now be in charge of this wef 1 April 2018
Pioneer Generation Office will be renamed to Silver Generation Office, and Ambassadors will now be called Silver Generation or SG Ambassadors
Top-up $300 million to the Community Silver Trust (CST) and will expand the CST to match donations for active ageing programmes
Will top-up $100 million to the Seniors’ Mobility and Enabling Fund (SMF) which provides subsidies for assistive devices for seniors
$150 million will be spent over the next 5 years for transport to support subsidised eldercare and dialysis
Volunteerism rate has doubled from 17% to 35% over the last decade
Donations have increased to $2.7 billion in 2015
Govt will extend 250% tax deduction for people who donate to Institutions of a Public Character (IPCs) for another 3 years until 31 December 2021
Giving.sg will be enhanced to better match donors and volunteers with charities
Govt matches $3 for every $1 that the CDCs raise, up to a cap of $24 million annually
Govt will increase current annual matching grant cap for CDCs to $40 million from FY2018 onwards
Encourage corporates to get staff to donate or volunteer
Business and IPC Partnership Scheme (BIPS) will be extended three more years until 31 Dec 2021
Businesses that support their staff to volunteer to IPCs will receive a 250% tax deduction
More than 440 new companies have come aboard for the SHARE scheme that allows businesses to donate to the Community Chest
Dollar-for-dollar matching for the next 5 years. SHARE as One scheme will be extended until FY2021
$190M a year to support these enhancements and encourage philanthropy and volunteerism

Fiscally Sustainable And Secure Future

Believes Singapore has a financially sustainable and secure future with a “sound fiscal footing”
Overall Govt expenditures is estimated to be $89.1 billion in FY2018
Govt has sufficient resources to meet planned spending needs till 2020
Spending needs will continue growing across all sectors. Healthcare more than doubled since 2011 from $3.9 billion to an estimated $10.2 billion in FY2018
Average Govt healthcare subsidies received by an elderly person is more than 6x that of a young person
By 2030, total number of elderly increase by about 450,000, to 900,000
To build more nursing homes and eldercare
Overall healthcare to rise from 2.2% of GDP today to almost 3% GDP over the next decade
Within the next decade, healthcare spending is expected to overtake education
Increase infrastructure spend to an estimated $20 billion in FY2018
Building and upgrading flats, expanding rail and transport, and keeping public transport fares low
Over the next 5 years, annual subsidies for all public transport operations will be comparable to the cost of pre-employment training in polytechnics and ITE
Rail network to expand by over 100km
Redevelop Jurong Lake District, Punggol Digital District, and Woodlands North Coast
To build Changi T5, KL-Singapore High Speed Rail, Tuas Port – massive investments to anchor Singapore as a centre of economic development
Invest in security, especially cybersecurity. Need to leverage on technologies to enhance response
Sustain investments in education to give young good start
Spending more per child to reach his/her potential – $12.8 billion for education in FY2018
Will spend $1.7 billion per year on preschool sector by 2022, double the annual spending now
Continue to invest in lifelong learning for Singaporeans to reskill and upskill
Fundamental strategy is to grow and strengthen the economy; estimated overall Govt expenditure is 19.0% of GDP in FY2018 is leaner than most developed economies
Moderation of Ministries’ budget growth; rates of block budgets to grow will be reduced from 0.4 times to 0.3 times from FY2019
LTA has designed a 4-in-1 facility that integrates one bus and three rail depots – freed up to 44ha of land and saved costs
JTC Corp has co-developed a robot with NTU to facilitate building inspection works, reducing manpower and time required by 50%
Govt to save ahead in preparation for large upfront investments to reduce burden in future years
There is now $4 billion in the Changi Airport Development Fund that was started in 2015 to save up for Changi T5
Govt to set up a Rail Infrastructure Fund this year – start with an injection of $5 billion in FY2018, and can be topped up in future
Govt to look at borrowing money from stat boards and Govt-owned companies which build infrastructure
Will look at borrowing for Changi T5, KL-Singapore High Speed Rail, and JB-Singapore Rapid Transit System Link
Govt will consider providing guarantees for some long-term borrowings for critical national infrastructure
The reserves will be used to invest in healthcare, security, and social spending
Responsible way is through taxation on citizens
Should not rely on borrowing money for recurrent spending – Govt plans to raise GST from 7% to 9% sometime from 2021 to 2025
Increase in GST will generate revenue of almost 0.7% of GDP per year
Exact timing will depend on the state of economy, how much expenditures grow, and how buoyant existing taxes are
Plans to implement GST hike in a progressive manner
Govt will absorb GST on publicly-subsidised education and healthcare
Govt will enhance the permanent GST Voucher (GSTV) scheme to provide help to lower-income households and seniors
$2 billion top-up to the GSTV Fund this year
Present an offset package to help Singaporeans adapt to the change
GST on imported services will be introduced with effect from 1 Jan 2020
For the import of goods, Govt will review international discussions, before deciding on the measure to take
Change will ensure imported and local services have the same treatment
Implement 10% increase across all tobacco products from today
Overall budget surplus – increase of $7.7 billion, primarily from MAS and increase stamp duty collections from housing industry pickup
Would use some of exceptional surplus this year to save for future spending
Set aside $5 billion for rail infrastructure and $2 billion for premium subsidies when the Eldershield review is complete
Will declare a one-off SG bonus, all S’poreans aged 21 above this year will receive an ‘angbao’ of $100, $200, and $300