SINGAPORE: More wage subsidies, relief on rent and foreign worker levy, as well as broader bridging loan programmes are among the types of aid that business owners, industry groups and economists hope the Government would prescribe in its second stimulus package.
Amid a deepening global spread of COVID-19, they are also hoping for help to be dished out sooner and extended to other sectors beyond tourism and transport.
Last week, Deputy Prime Minister Heng Swee Keat said a second package of support measures is being worked on as both the global economy and the novel coronavirus outbreak have worsened since the first – a Stabilisation and Support Package worth S$4 billion – was announced during Budget 2020.
Helping workers to keep their jobs will remain a key part of the second package, he said, alongside other measures to support those retrenched and tide small and medium-sized enterprises (SMEs) through the crisis.
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The Singapore Business Federation (SBF) said firms will welcome more tax rebates, financial support in hiring, training and retaining workers, as well as access to health care supplies and equipment given how COVID-19 might linger “for a more protracted period”.
“We expect that the second package would enhance the various schemes in the Stabilisation and Support package, offering more generous support and over a longer period of time,” said CEO Ho Meng Kit.
Top on the wish list of businesses that spoke to CNA is an expansion of the Jobs Support Scheme. Announced as part of the relief package last month, the temporary cash grant will help employers to offset 8 per cent of the wages of their local employees from October to December 2019, up to a monthly cap of S$3,600 per worker.
Mr Logan Wong, founder of Pure Senses that distributes Yankee Candle in Singapore, hopes for the cash grant to be doubled to 16 per cent and extended to cover the first three months of 2020 when business was “hardest hit”.
“The additional cash grants will go a long way in helping SMEs keep jobs in this tough economy,” he said.
Reliefs for foreign worker levy and employer Central Provident Fund (CPF) contributions will also help with manpower costs, which account for the “most significant fixed expense” for hotels, said Mr Patrick Fiat, general manager of Royal Plaza on Scotts.
“We are hoping for a three-month relief to start off,” he said. “If hotel occupancy goes below 30 to 35 per cent, the business will be in the red. The relief can help hotels avoid imposing unpaid leaves, salary cuts and eventually retrenchments, if businesses continue to run at a loss.”
Echoing that, Singapore Manufacturing Federation’s (SMF) president Douglas Foo said support in employer CPF contributions will help to defray wage costs, while “acting as an incentive (for) companies to keep their workers” at a time when there are fewer orders.
Mr Foo, citing feedback from SMF’s members, also called for grants for employers when staff are issued with longer medical leave and stay-home notices, as well as rebates for utility bills given how cleaning of plant facilities, for instance, has been ramped up.
The squeeze on cash flow, as a result of revenue drop and delayed payments, is also an area of concern and more can be done, such as disbursing rebates more speedily to reach businesses by end-April, said Mr Ang Yuit, vice president of strategies, development and digitalisation at the Association of Small and Medium Enterprises (ASME).
If not, many SMEs, which typically only have about 3 months of working capital, will face issues after seeing sudden and drastic declines in their businesses since COVID-19 emerged in Singapore on Jan 23.
The speed of aid was also mentioned by Ms Margaret Heng, executive director of the Singapore Hotel Association, who asked for the second tranche of support to be “easily accessible … and disbursed as soon as possible because cash flow is paramount to staying afloat”.
Meanwhile, Mr Ang also proposed a six-month moratorium on principal repayments for business loans, as well as more rental rebates that will reach businesses “directly”.
On the latter, he said the property tax rebate, also announced in the Budget last month, relies on landlords of private commercial properties passing them on to their tenants.
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The 15 per cent tax rebate is also “quite small” in dollar terms and “isn’t enough to help businesses”, Mr Ang said.
For micro businesses like hawker food vendors, the Government should also consider giving direct cash support on top of the one-month rental waiver, said DBS senior economist Irvin Seah.
BROADEN HELP TO OTHER SECTORS
Many also mooted expanding the temporary bridging loan programme to other sectors. The initiative, part of the support targeted at industries that have taken an immediate hit from COVID-19, helps eligible tourism businesses to borrow up to S$1 million with an interest rate capped at 5 per cent per annum. The Government will take on 80 per cent of the risk of the loan.
SBF’s Mr Ho said while much attention has been focused on the hard-hit travel and tourism-related sectors, other industries such as manufacturers and those in logistics have also felt the strain from supply chain disruptions. Event companies have also had to bear with cancellations.
“If the economy enters a protracted slowdown, we can expect more sectors to be hit. The more generous support measures for the travel and tourism-related sectors should be extended to other sectors,” he added.
The manufacturing sector has been a victim of trade tensions last year and now faced with COVID-19, there is “no room for recovery”, said Mr Foo, citing the food and beverage (F&B) manufacturing industry as one of those that have been affected by the disease outbreak.
“Some members have feedback that they are afraid their customers may default payment or cancel orders even though there are some measures from the Government to assist them,” he said.
Besides support for businesses, economists also called for more to be done to help retrenched workers and middle-income households.
“We need to be mindful of possible pick-ups in retrenchments and what can we do to help these workers,” said Mr Seah.
“In a typical economic situation, you can say there are measures to re-deploy those displaced to jobs elsewhere but in such situations, there’s no vacancies around. Helping them to find another job is not the solution anymore.”
Instead, helping retrenched workers with the cost of living will be key and Mr Seah suggested a deferment in personal income tax payments to do so.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said the Government could consider easing some macro-prudential measures, such as the loan-to-value (LTV) ratio limits which can provide middle-income households “easier access to cheaper liquidity needs” amid the crisis.
SECOND PACKAGE: HOW BIG, HOW SOON?
Given these, economists told CNA that the second stimulus package will likely be bigger than last month’s S$4 billion special package.
The spike of COVID-19 infection cases around the world and recent financial market gyrations have added to the need for a “more aggressive” policy response to shore up the Singapore economy, said Maybank Kim Eng’s Ms Lee.
The US Federal Reserve’s larger-than-expected interest rate cut over the weekend also seemed to imply the possibility of a global recession, she added.
Ms Lee, based here in Singapore, reckons the second package could be between S$7 billion and S$10 billion.
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Also expecting a package bigger than S$4 billion, Mr Seah from DBS said the Government “definitely has the fiscal resources” to do so given the fiscal surplus accumulated over this term of Government.
The long-time watcher of the Singapore economy also thinks the Government “will most definitely” draw upon past reserves for a contingency fund.
“Seeking the president’s permission to draw on the reserves does not necessarily mean they have to deploy the amount – this can be seen as a contingency fund,” he said, noting how the Government had sought approval from former President S R Nathan in 2009 for a draw of S$4.9 billion from past reserves to fund the Resilience Package.
This was returned to the reserves a year later after the economy rebounded sharply.
“A similar kind of policy response can be expected this time round. If they were to roll out a second package then they may as well get permission for a contingency fund just in case the situation continues to deteriorate or the outbreak lasts for the rest of the year,” said Mr Seah.
As to how quickly the second stimulus package could be announced, Ms Lee thinks it could be as soon as before the end of this month, given global developments in the COVID-19 outbreak, especially in Southeast Asia, and Singapore’s latest travel restrictions.