Covid-19 Updates: Businesses on a tight rope, fourth budget to cushion possible fall

Fortitude Budget at a glance (for businesses and workers)

With Circuit Breaker measures set to end on the 2nd of June 2020, Singapore is taking a cautious and well-considered approach to reopening her economy for fear of a possible second resurgence of the COVID-19 infection in the local community.

A fourth budget, the Fortitude Budget was announced earlier this week on the 26th of May 2020, targeted at providing yet another cushion for enterprises. The core agendas supporting the fourth bout of relief measures revolve around creating jobs and building skills and Boasting transformation for enterprises. In this article, we will provide you with a summary of what is to be expected in budget Fortitude and how you might benefit from each respective component offered!

Creating Jobs and Building Skills for workers

  • Enhancement to JSS

Post Circuit Breaker Singapore would be reopened in 3 main phases, with Phase 1 predicted to last at least another 4 weeks. Under Phase 1, many of the strict measures and restrictions implemented during the Circuit Breaker remain, such as prohibition of social gatherings, dining-in at all eateries and unnecessary travel. Inevitably, businesses would still continue to face uncertain and trying circumstances at least for the foreseeable future. In a survey published by Chope, it was found that worryingly 2 in 5 restaurants and eateries are unable to survive past 2 months at current levels of costs and revenues. This fate is shared amongst many businesses, leaving many enterprises cutting lean by retrenching its workers or placing them on no-pay leaves.

In the bid to retain reasonable levels of employment despite trying times, the Government has stepped up enhancements to the Job Support Scheme (JSS). Previously addressed in the Solidarity and Resilience budgets, the JSS is a scheme in which the Government will co-fund amounts between 25%-75% of the first $4,600 of gross monthly wages paid to each local employee, depending on the sector and the severity of impact suffered (see below). These aids will be paid through cash subsidies supplemented over 3 phases in April, July and October, with a one-off special payment in the month of May which covers 75% of wages regardless of sector type (to tide through the Circuit Breaker period).

JSS support tiersEligible sectorEligible firms
Tier 1

 

75% of the first $4,600 of gross monthly income per local employee

Aviation and AerospaceAirlines, Airport ground handler, Airport operators, Aerospace maintenance, repair, and overhaul (MRO) operators, Aerospace manufacturing operators, Major suppliers of parts and services for aerospace MROs and manufacturers, Airline fleet management services operators, Operators providing training for pilots and crews
Tourism, Hospitality, Conventions and ExhibitionsQualifying licensed hotels, Qualifying licensed travel agents, Qualifying gated tourist attractions, Cruise lines and Cruise terminal operator, Purpose-built Meetings, incentives, conferences and exhibitions (MICE) venue operator, MICE and tourism event organisers, Money changers, Regional ferry operators, IRAS-certified central refund agencies

 

Tier 1 (only from June 2020 to August 2020 wages)

 

75% of the first $4,600 on gross monthly wages per local employee

Built environmentBuilt environment contractors, Built environment consultants
Tier 2

 

50% of the first $4,600 of gross monthly wages per local employee

Food ServicesLicensed food shops and food stalls (including hawker centres)
RetailQualifying Retail outlets
Arts and EntertainmentCinema operators, film distributors, arts and culture organisations
Land TransportRail operators, Point to Point transport operators, Private bus and limousine services
Marine and OffshoreMarine and Offshore

 

Tier 3

 

25% of the first $4,600 of gross monthly income per local employee

All other employeesN/A

Post Circuit Breaker, some firms and enterprises will continue to shut their doors till further announcement. These include firms in sectors such as aviation, tourism and marine. Hence, the government will continue providing wage supports capped at 75% until August 2020 or when the business is allowed to open, whichever earlier. The Government has also ramped up support for sectors such as aerospace, retail and offshore-related businesses by increasing wage co-funding amounts from 25% to 50% or 70%.

  • SGUnited Jobs and Skills Package

While it seems that nations around the world are seeing more furloughed workers as a result of the pandemic, Singapore challenges the norm by setting her sights on creating more jobs. With the aim of creating a total of 40,000 at the end of 2020, with the public sector accounting for 15,000 estimated jobs and the remaining to be found in the private sector, Singapore is taking her chance to retrain and upgrade its workforce.

Under the SGUnited Traineeship program, jobseekers are presented with an opportunity to learn new skills and possibly start new careers. Under this program, a total of 21,000 trainee opportunities will be made available to first-time job seekers (e.g university graduates), and another 4,000 to local mid-career jobseekers seeking to transition in their career pathways or learn new skills.

For those who may not qualify for the SGUnited Traineeship program, yet are looking to retrain or upgrade their skillsets, the Government has made sure that these individuals are not forgotten. With a training allowance granted of $1,200 per month for courses ranging between 6-12 months, 30,000 of such jobseekers may utilise the allowances granted to upgrade their skills while also searching for a new job.

  • Hiring Incentive

To supplement the above SGUnited Traineeship and SGUnited Skills programmes, hiring incentives are set in place for employers to hire local workers of all ages who have completed the relevant eligible traineeship and training programmes. Do refer to the table below for the respective incentive offered.

Age of Eligible WorkerAmount of IncentiveCapped at
Under 4020% of monthly salary for 6 months$6,000 in total
Above 4040% of monthly salary for 6 months$12,000

Boosting Enterprise Transformation

  • Helping with cash flows, costs and credit

For businesses that depend on labour contributions by foreign workers, under the Fortitude Budget, levies will be waived and rebated will be provided. For businesses that are unable to resume its services immediately after the Circuit Breaker period, levy waivers and rebates will be extended 2 months. In the month of June 2020, affected businesses will be eligible for 100% levy waivers and a $750 rebate. In the following month of July 2020, the same affected businesses will only be eligible for 50% of waivers and $375 rebates.

With senior workers often chosen as the first group of workers to be faced with retrenchment, the Fortitude Budget seeks to incentivise the retention of these seniors by deferring higher CPF contributions for a year from 1 January 2021 to 1st January 2020.

Another major source of overhead costs for most enterprises would be traced to rental costs. With majority of Small-Medium Enterprises (SMEs) unable to operate physical stores during the Circuit Breaker period, rental reliefs have been introduced to ensure that businesses owners are protected. $2 billion in cash grants have been granted to SME tenants and along with the Property Tax Rebate, the Government will offset 2 months’ worth of rental fees for qualifying SME tenants of commercial properties. For SME tenants of industrial and office properties, they will receive 1 month of rental waivers.

For tenants under Governmental agencies such as NEA, additional rental waivers will be granted. Refer to the table below for the respective rental waivers.

Tenant TypePreviousNewTotal
Stallholders of hawker centres and markets3 months2 months5 months
Commercial2 months2 months4 months

 

Industrial, office and agricultural1 month1 month2 months

To give a leg up to promising startups, the Government perseveres in its support for up and coming enterprises by pledging a further $285 million on top of the existing $4.5 billion procured through Government financing schemes (e.g Temporary Bridging Loan Programme, Enterprise Financing Scheme). The Government will work with the private sector to co-invest in such entities.

  • Digital Transformation and Innovation

As Singapore moves towards becoming a technologically empowered city, the pandemic has presented an opportunity for e-payments to be encouraged amongst stallholders in areas such as Wet Markets, Coffeeshops, Hawker Centres and Industrial Canteens.

To further deepen the reliance on digital platforms, the first-ever Digital Resilience Budget is announced which is to be piloted starting with businesses in the Food and Beverage (F&B) and Retail sectors. Payouts of up to $5,000 will be provided to help businesses digitalise via platforms such as PayNow Corporate, e-invoicing, business process or e-commerce solutions. An additional payout of $5,000 will be granted for businesses that adopt advanced solutions.

Lastly, more National Innovation Challenges and campaigns will spring up across the nation to encourage and foster greater partnerships with the private sector for industry-led solutions that can help Singapore reopen safely. 

Even as Singapore is inches away from the end of the Circuit Breaker period, we have yet to claim victory over the virus. Let us all remain vigilant and responsible during such a challenging time, and together, we will overcome this one day. Stay home, stay safe!

For more detailed information on budget Fortitude, do refer to MOF’s official website.

Clive Chng

Clive graduated on the Dean’s list from Nanyang Technological University with an Engineering degree. Prior to joining Redbrick, he not only served as a Project Manager for Keppel Shipyard where he oversaw multi-million dollar marine projects, but was also the Vice President for Keppel Young Leaders, focused on the development of future leaders. Being a fan of low-cost Index Funds, his passion in Investing and strong interest in understanding how financial markets shape economies ultimately fuelled his move from the field of engineering into the financial industry where his personality trait as a servant leader further allows him to service his clients effectively.
Clive Chng

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