Singapore's 4th Set of COVID-19 Relief Measures
An Overview of Singapore's Latest Stimulus Package
Singapore's S$33 billion supplementary budget, announced on 26 May 2020, is the fourth since February 2020 and functions as a stimulus package. As Singapore begins its phased exit from its circuit breaker period from 2 June 2020, the budget puts in place key measures focused on jobs and the following three main areas:
- Support for workers and businesses to adapt and seize new opportunities
- Support for households and community
- Funding to frontline agencies
Is this the canary in the mineshaft for further economic pain for Asia?
The COVID-19 pandemic has greatly disrupted the global economy. As a small and open economy, Singapore has been massively impacted as well. The local economy has been further buffeted by the circuit breaker measures – a set of strict social distancing restrictions imposed by the Government running from 7 April 2020 and set to be eased in three phases starting from 2 June 2020.
On 26 May 2020, the Ministry of Trade and Industry further downgraded Singapore's GDP growth forecast to "-7% to -4%"1, even as the nation continues to grapple with the virus under the restrictions put in place by the previously announced circuit breaker measures.2
Singapore's Finance Minister referred to this contraction as the "worst economic contraction since independence". More ominously, an analyst at Singapore's local bank OCBC warned that Singapore’s growth estimate is like the canary in the mineshaft and warns of further economic pain to come for other Asian economies as well.3
Saving Jobs
In response, the Government has unveiled a S$33 billion (c. US$23.41 billion) Supplementary Budget on 26 May 2020, coined the Fortitude Budget. The central focus of the budget is on jobs and these three main areas:
- Support for workers and businesses to adapt and seize new opportunities
- Support for households and community
- Funding to frontline agencies
The following sections set out the measures unveiled for workers, businesses and the community respectively.
For Businesses
In helping businesses, the Fortitude Budget focused on supporting businesses in going digital, and provides additional support in the 3 Cs – Cashflow, Costs and Credit:
Cash Flow
- Wage subsidies extended by 1 month: Under the Jobs Support Scheme ("JSS"), firms will receive wage subsidies for local (Singaporean and PR) staff for ten months (up from nine). The wage subsidies will now last until August 2020. This support will be at the same levels as those provided during the non-circuit breaker months. Payout will be in October 2020.
- Increased support for some affected sectors: The amount of wage subsidies is tiered in accordance with a business's sector. The different tiers receive different levels of support (25%, 50% or 75%). Certain sectors will receive increased levels of wage support, including those in the aerospace, retail and marine and offshore sectors. The built environment sector (including construction) will receive 75% wage support for wages paid between June and August.
- Supporting firms that are not able to open immediately after circuit breaker: These firms will get wage support at 75% until August 2020 or when they are able to open, whichever is earlier.
Costs
- Foreign worker Levy Waiver and Rebate: The Government previously announced waivers and rebates on foreign worker levies. This has been extended for up to two months for businesses that cannot resume operations on-site immediately after the circuit breaker is lifted.
- CPF (Singapore's mandatory social security savings scheme) Contribution rates for Senior workers: A previously announced increase in CPF contribution rates for senior workers has been deferred for a year to 1 January 2022.
- Rental Relief: In addition to the Property Tax Rebates provided in the Unity and Resilience Budgets, a cash grant will be given to qualifying Small and Medium Enterprises ("SME"), to be disbursed through property owners. This equates to 2 months of rental for qualifying SME tenants of commercial properties, and 1 month of rental for those occupying industrial or office properties.
- Landlords to contribute: Legislation will be enacted in the week of 1 June 2020 mandating, among other measures, for landlords to grant a rental waiver to SME tenants who have suffered a significant revenue drop in the past months.
- Rental Relief for Government Tenants: Additional rental relief will be provided to government tenants such as commercial tenants and hawkers, and industrial, office and cultural tenants of government agencies. The extensions are as follows:
- For stallholders of hawker centres and markets: increased to five months (up from three)
- For commercial tenants: increased to four months (up from two)
- For industrial, office and agricultural tenants: increased to two months (up from one)
Credit
- Support for promising Startups: S$285 million of additional financing support will be set aside, and the government will seek to crowd in at least another S$285 million in matching private sector investments. This is in addition to the S$300 million funding under the Unity Budget for deep-tech startups through the Startup SG Equity scheme. Startups can also make use of the SGUnited Traineeship Scheme.
- Support for Built Environment Sector: Government will co-share additional costs incurred by businesses in this sector to meet additional requirements to resume existing projects safely.
Digital transformation
The Fortitude Budget commits S$500 million to support businesses in their digital transformation. S$250 million would be set aside to help businesses digitalise in partnership with digital platform solution providers and industry champions. Support comes in three prongs:
- Incentives of S$300 per month over 5 months will be provided for stallholders in hawker centres, wet markets etc. to use e-payments systems
- Digital Resilience Bonus of up to S$5,000 for eligible businesses to adopt PayNow Corporate and e-invoicing
- Digital Resilience Bonus provides an additional payout of S$5,000 for F&B and Retail businesses that incorporate advanced solutions
Assisting Workers
Creating opportunities
The Fortitude Budget launched the SGUnited Jobs and Skills Package to create close to 100,000 opportunities in three areas – jobs, traineeships and skills training.
- 40,000 Jobs – with 15,000 in the public sector and 25,000 in the private sector by end-2020
- 25,000 Traineeships – 21,000 for local first time job seekers This builds on the SGUnited Traineeships programme first announced in the Resilience Budget. The Government also aims to create 4,000 positions for local mid-career jobseekers
- 30,000 Skills Training spots – allowance of S$1,200 per month given for course duration (between six to twelve months)
Incentives to hire local workers
The SGUnited Jobs and Skills Package also provides hiring incentives to employers to hire local workers who have gone through eligible traineeship and training schemes. Incentives are shown in the table below:
| Age of worker | capped at | amount |
|---|---|---|
| Under 40 | 20% of monthly salary for 6 months | S$6,000 |
| 40 and above | 40% of monthly salary for 6 months | S$12,000 |
Community
COVID-19 Support Grant
The last three budgets provided direct support for all Singaporeans. The Fortitude Budget similarly provides direct assistance through the COVID-19 Support Grant, for which S$800 million has been set aside. This grant is meant to support Singaporeans and PRs aged 16 years and above who:
- have lost their jobs;
- are placed on no-pay leave; or
- face significantly reduced salaries in the coming months
due to COVID-19.
Eligible Singaporeans and PRs can get support of up to S$800 per month for up to three months.
Solidarity Utilities Grant
A one-off S$100 Solidarity Utilities Credit will be provided to each household with at least one Singapore Citizen. This covers all property types and will be credited in the July or August utilities bill.
This comes on top of the Solidarity Payment of S$600 and the Care and Support package announced in previous budgets.
Charities
The Tote Board's Enhanced Fund-Raising Programme will allow charities to apply for dollar-for-dollar matching on eligible donations up to a cap of S$250,000 per charity.
A top-up of S$18 million is also made to the Invictus Fund which supports social service agencies.
Separate relief measures by MAS
Further, the Monetary Authority of Singapore has also announced various relief measures for individuals which we discussed in this update.
Moving Forward
The Government has also set aside S$13 billion in Contingencies Funds. This would allow the Government to respond quickly to developments down the road relating to COVID-19.
Further Thoughts
Aptly named, the Fortitude Budget's measures seek to strengthen businesses and workers in Singapore to face upcoming challenges. A key focus has been to facilitate the digitalisation of businesses, and the continued upskilling of the domestic workforce.
The measures reveal the Government's game plan against the economic problems that have surfaced, especially over the circuit breaker period. We see that from the push to digitalise businesses within the F&B and retail sectors, especially for SMEs in those sectors, such as hawkers and wet-market stallholders.
Although the circuit breaker is set to end on 2 June 2020, it is contemplated that easing out of the circuit-breaker will be done in a graduated manner. Certain businesses continue to be shuttered during Phase 1 of easing of these measures. With the dates of Phase 2 remaining up in the air, the support measures in the Fortitude Budget suggests there is a possibility that moving onto Phase 2 might take effect .in August 2020, or later, although there have been remarks by the Multi-Ministry Task Force that this issue is being closely monitored with a reference to "Phase 2 could take place before end of June" in a recent statement.
Looking ahead, much uncertainty surrounds the easing of the circuit breaker measures. We expect continued changes and developments in this space. The Singapore government has taken a fairly active approach in rolling out relief measures to smoothen and reduce the impact of COVID-19 on affected persons and businesses.
In particular, new legislative changes are expected in the first week of June 2020 to make it mandatory for landlords to contribute by granting rental waivers to their SME tenants. Further legislative changes on temporary relief from onerous contractual terms such as excessive late payment interest or charges are also anticipated.
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Sign upThis publication is co-written by ADTLaw LLC and Ashurst LLP who together form Ashurst ADTLaw in Singapore. Ashurst LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary. The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.
