Heng Swee Keat
Singapore
“In a world heading towards greater contest and fragmentation, amid rapid advances in science, technology and innovation, Singaporeans can play a valuable part as bridge-builders and connectors, and Singapore can be a trusted and neutral Global-Asia node of technology, innovation and enterprise.”
“The National Quantum Office has identified specific goals under the National Quantum Strategy (NQS), with resources and efforts directed towards specific quantum areas and technologies accordingly.”
“Mr Speaker, Sir, I would like to thank Member Ms Denise Phua for her comments because her comments reminded me of the tagline that I always said when I was in MOE – that you can learn from anyone, anytime, anywhere. In fact, peer learning is a very important aspect of that learning.”
“But I have laid out the strong basis for my optimism that a small and open economy like Singapore can continue to thrive and secure our next bound of growth. By serving as a trusted node and connector, we can create value by facilitating connections and building new linkages in today's fractured global landscape.”
“Secondly, one other very important thing the Member must bear in mind is that AI is a very rapidly developing field and it is something which our researchers are working hard on, to look at the different techniques of AI – it is not just GenAI, but the whole range of different AI systems that are being used – and how that can be used in c…”
“Assoc Prof Jamus Lim, you do not need an invitation. You are free to provide your suggestion. After all, are you not from WP? And by the way, let me make it clear that I have heard MPs on both aisles speaking about workers, and we have a very strong presence of our union MPs here and they will be speaking even more on this.”
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“But bear in mind that this is a Budget Debate and if we do not talk about a tax increase, we do not debate the tax increase in this very forum, in this very session for the Budget Debate, then where else are you going to do it? And to suggest that you do it at the election rally is just a complete distraction. Right? Does the Member want to be constructive and say that in any election we talk about serious things, about how we are going to position Singapore for the future, how we are going to create a better life for all Singaporeans? Rather than to seize on issues that will make people unhappy and say, "Oh dear, you know, the Government is going to tax you and all that and, therefore, you know, this is a bad move." You must square your position. Does the Member accept, first and foremost, all that we said, that we do need to spend more, whether it is preschool, whether it is SkillsFuture, whether it is healthcare, whether it is revamping the economy, whether it is security? Do we need to provide for that? And if it is, as I said, very clearly, in today's debate, in my round up, I said that even the two-percentage point increase in GST does not fully cover the expected increase in healthcare expenditure. Is it not right for us to say that we know that there is one item that is definitely going up and we will not even have enough to manage that one item? Can we take one measure first, and look at how we can meet that? So, Mr Pritam Singh's argument about "I can't support this at this point because it is so far away, I don't know your revenue pattern, I don't know your spending pattern and, therefore, I don't know what you can do and, therefore, I'm not going to support it." I do not think it is a rigorous or an honest position. It cannot be, right?”
“I thank the Member, Ms Sylvia Lim, for her question. First, on the first point about my reference to Mr Low Thia Khiang's point. Actually, when I was listening to him yesterday, I thought, I was very happy that he supported the point that I made, about making Singapore a Global-Asia node of technology, innovation and enterprise. He went on to talk about the various moves that the Government made over the years to look ahead and position Singapore to be able to meet new challenges and secure new opportunities because the world is changing very quickly. So, he made a very good speech on our engagement, particularly with China. I was very surprised that towards the end of that very good speech, he then got distracted by this statement. He said: "Sir, the unfortunate thing about this Budget is that it is looking forward too hastily for future revenue streams by prematurely announcing the GST hike. This has become an unnecessary distraction from the vision articulated in this Budget, and is a real distraction causing the Government to lose its focus in getting buy-in for the vision". This is, in fact, a real distraction because, in fact, if the Workers' Party truly believes that all the things you and your Members have advocated − spend more on this, spend more on this group, spend more on these others − and that you agree that all these will require new revenue measures, then why do you not just say that "Yes, we are very happy to support this so let's now talk about how we are going to position Singapore for the future." I will be very happy to discuss this with the Member, who can file a Motion, a separate Motion, to discuss that.”
“Our Reserves have been painstakingly built up over half a century by our Pioneers and previous generations. We have inherited this nest egg and must act as responsible stewards. That is why, over the years, we have carefully deliberated and developed a comprehensive set of rules to safeguard and manage the use of our Reserves. Our Constitutional rules protect our financial assets and land as past Reserves. As land sales convert physical assets into financial assets, the proceeds from land sales are rightly fully protected as past Reserves as well. This principle of asset conversion is sound. It is irresponsible to mislead people that the principle suddenly does not apply when we use just, say, 20% instead of 100% of land sales proceeds.”
“Indeed, we aim to live within our means. We should not over-borrow and burden future generations with unsustainable debt, as we have seen in other countries. The stark difference is that unlike some other countries, we borrow not to spend on recurrent needs like healthcare, education and security, but to invest in long-term infrastructure. Such long-term investments will continue to yield economic benefits and position Singapore well for the future. We are strategically leveraging the strength of our financial position to optimise our borrowing. To reduce financing costs, the Government is considering the provision of guarantees to back borrowings by our Statutory Boards and Government-owned companies. The Government is consulting the President's Office and the Council of Presidential Advisors (CPA) on this proposal, including the details of how it will be structured. So, many of the points that Mr Saktiandi mentioned earlier on will be discussed in great detail. This way, we can tap on the Government's triple-A credit rating and the strength of our Reserves without directly using it. This is how we are helping the current and future generations. We are able to do so only because we have planned our finances soundly and accumulated strong Reserves. We are one of only 11 countries in the world, and the only Asian country, which has a triple-A credit rating, which represents the solid foundation and safety net that our forefathers left for us. We do not and cannot take our credit rating for granted. I am glad that Members, like Mr Sitoh Yih Pin, Mr Liang Eng Hwa and Mr Ong Teng Koon, think that this is a sensible approach and recognise the value in this. Now, I will talk about the third way we have been financing our needs, which is our Reserves.”
“We are a small and open economy, subject to the full forces of competition in a globalised economy. It is important for us to remain a competitive and business-friendly location. In 2017, $9.4 billion of fixed asset investments and $6.5 billion of total business expenditure were committed. When the projects are fully implemented, about 22,500 jobs will be created. The increase in GST is not expected to impact our competitiveness significantly, which is a concern raised by Dr Lim Wee Kiak. The future GST rate of 9% is not high by international standards as this chart shows. The OECD average is 19%. So, our new rate is less than half of that. Among countries in the region, many others have GST standard rates that exceed 9%. Some countries are also contemplating raising GST. Japan, for example, plans to raise its consumption tax rate from 8% to 10% in October 2019. In summary, we have taken a principled approach to meet the general population's future needs through a broad-based GST increase, while ensuring that our overall system of taxes and transfers remains fair and progressive and is supportive of growth. I have spoken at length on the first way of financing our needs through taxes for recurrent needs. Let me now move on to the second way, which is borrowing. Borrowing is a reasonable option for major long-lived capital investments with high capital expenses, because the benefits of these assets are enjoyed mainly by future generations, in fact, many years down the road. This is an option that we are pursuing for major long-term projects like Changi Terminal 5. Ms Tin Pei Ling and Mr Saktiandi Supaat raised concerns on whether borrowing will result in unsustainable debt and interest payments and they have raised an important point.”
“On the introduction of GST on imported services, Mr Thomas Chua mentioned the $225 billion worth of imported services reported by the Department of Statistics. I wish to clarify that this includes all business-to-business (B2B) services, and vastly overstates the imported services which we will introduce GST on. Our move to levy GST on imported services will not affect most businesses. This is because most businesses can claim full refund of the GST they incur on inputs that they procure for their businesses, including imported services. Thus, businesses affected by the GST on imported B2B services are primarily financial institutions and residential property developers which do not get such full refunds. Mr Pritam Singh asked if this will yield additional revenues. We estimate it could yield additional revenue of about $90 million per year. But let us be clear that this is a move to defend our current revenue base from being eroded as more transactions move online. Finally, let me talk about keeping our fiscal system pro-growth. Dr Intan Mokhtar has made suggestions to raise corporate income tax rates, particularly for MNCs and large firms. Let me elaborate more about our environment today. Around the world, there are significant changes and uncertainties in the global tax environment. There is ongoing discussion worldwide on international tax rules for combating tax avoidance under the Base Erosion and Profit Shifting (BEPS) project. In 2018, the US reduced its headline corporate income tax rate from 35% to 21%. It also made other changes to make it more attractive for US companies to invest at home. This may spur cuts in corporate income tax rates around the world. Singapore must remain sensitive to these global trends that impact us.”
“Just yesterday, Hong Kong has announced a reduction in PIT in their Budget. We will be moving in the opposite direction if we are to raise PIT when all jurisdictions are competing for talent, including our Singaporean talent. We will continue to monitor and review our rates but, for now, our view is that PIT rates are reasonable for us to remain attractive, given the intense global competition for talent. Mr Ong Teng Koon and Mr Yee Chia Hsing suggested that we look closely at wealth taxes. Aside from taxing income, our current approach to taxing wealth is mainly through taxes on assets that cannot be tax-planned away easily, unlike other methods like estate duties. That is why we have enhanced our property tax regime in the last decade to make it more progressive, and to meet our spending needs. For residential properties, 86% of property tax collected comes from non-owner-occupied residential properties, and owner-occupied residential properties with an annual value of $30,000 and above. In this Budget, we have made moves to improve the progressivity of our stamp duty regime, so that those who can afford a higher-value residential property pay more taxes on their purchase. I thank Mr Seah Kian Peng and Mr Yee Chia Hsing for their strong support for this move. On average, we collected about $8 billion in recent years from property tax and stamp duty. This is a significant proportion of our revenues. We will continue to review this area closely. Mr Yee Chia Hsing and Ms Foo Mee Har suggested reviewing taxes on alcohol and gambling. We regularly review such duties and we will take these suggestions into consideration.”
“When we last raised the GST in July 2007, most businesses did not use GST as an excuse to raise prices beyond the GST increase. The then-CAP looked into the complaints to manage profiteering. Similarly, when we raise the GST to 9%, we expect businesses not to exploit the situation and use the GST as a cover to raise prices. If necessary, the Government is prepared to convene a similar CAP. There have also been concerns that consumers may choose to shop abroad for daily products and there will be more attempts to evade GST. Today, we limit the value of goods that can be brought into Singapore for their personal use without GST. Customs and Immigration and Checkpoints Authority (ICA) officers enforce this, and we will continue to have an appropriate level of enforcement when the GST is raised. While we have announced the GST increase this time, we continually consider all other taxes and sources of revenues to meet our expenditure needs. Some Members have asked if we are doing enough to tax wealth, and if those with higher income are contributing a fair share. Dr Intan Mokhtar has suggested raising personal income taxes (PIT). We have raised PIT in recent years to further enhance progressivity. We increased the marginal tax rates for higher-income earners with chargeable income exceeding $160,000 and raised the top marginal rate from 20% to 22% for those with chargeable income exceeding $320,000. This took effect from YA2017. We also introduced a cap of $80,000 on PIT reliefs, taking effect from YA2018. Under the present PIT structure, about half of our workers do not pay personal income tax. Among those who do, the top 10% pay about 80% of our PIT revenue. Any review of PIT rates must ensure that Singapore remains attractive.”
“In addition, we have schemes and programmes to support the less well-off. This includes the Workfare Income Supplement and Silver Support. From education to healthcare and housing, our social programmes provide higher levels of support for the lower- and middle-income households than they do for the well-off, with lower-income households benefiting the most. We also provide support for the middle-income. First and foremost, our approach to supporting the middle-income is to create good economic growth, as the best form of social security is a good job. Second, we keep the tax burden low, so that Singaporeans get to keep as much as possible of what they earn. Finally, in recent years, we have expanded the support for Singaporeans to take care of their children and aged parents, easing the burden on the "sandwich generation" which Mr Desmond Choo spoke about. So, when you look at the overall balance of taxes and transfers, lower- and middle-income households receive significantly more benefits from transfers than what they pay in taxes. The middle-income group gets $2 in benefits for every dollar of tax that they pay. The lower-income group gets about $4 in benefits for every dollar of tax. As I have mentioned in the Budget Statement, we will continue to absorb GST on publicly subsidised education and healthcare. When we eventually raise the GST, we will enhance the permanent GST Voucher scheme to provide more help to lower-income households and seniors. We will also implement a transitional offset package, with lower- and middle-income households receiving more support, to help them adjust. Mr Lim Biow Chuan and Er Dr Lee Bee Wah also asked if we intend to set up a Committee Against Profiteering (CAP) to combat any illegal profiteering due to GST hikes.”
“As mentioned, a two-percentage point increase in GST rate is expected to raise revenues worth about 0.7% of GDP per annum. This estimated amount is before we account for the amount needed to fund the enhanced GST Voucher (GSTV). On the other hand, the expenditure drivers that I earlier mentioned – healthcare, security and preschools – already exceed this amount. These are serious commitments that we must budget for, and there are risks that overall spending could rise further. So, the two-percentage point GST increase will not fully cover our expenditure needs, but only make the fiscal gap more manageable, in conjunction with other measures to manage expenditure. It is thus the prudent and responsible approach to raise GST in good time, instead of hoping for expenditure to fall. Third, let me address concerns over the fairness and progressivity of an increase in GST. I understand that some are worried about the impact of a GST increase on the cost of living, not just among the lower-income, but also among many middle-income households. Let me assure everyone that we are mindful of the impact of tax changes on households, particularly the lower-income, and will help them to adjust while maintaining a fair and progressive system of taxes and transfers. As I have mentioned in my Budget Statement, GST should be seen together with the rest of our taxes and transfers system, including the GST Voucher scheme. The Government provides structural GST offsets through the GST Voucher. This is a permanent scheme, an integral complement to GST. For the lower-income, we provide substantial offsets. This is a targeted way of making the GST package a progressive one. For retiree households, they also get significant GST offsets.”
“We seek to understand major trends holistically and how they may affect Singaporeans. We assess carefully what we need to do in response and how we should find the resources to support our plans. This is how we had determined that we will need to raise GST sometime in the period from 2021 to 2025. By announcing the GST increase early, we are being honest and upfront about our national needs and setting out what needs to be done. We are giving ample notice to citizens and businesses that we will need to raise GST. Members of Parliament (MPs), such as Mr Lim Biow Chuan and Asst Prof Mahdev Mohan, have spoken about why we need to do this, to set out a clear direction for the future. I hope that it helps everyone to understand our shared challenges in the coming years. Indeed, we must have such important discussions about our future, well in advance. This is important because it is not just Government finances that will be impacted by trends like ageing, but individual citizens and their families. We must all prepare for what is to come. This will also help us to better determine an appropriate offset package that can help with the adjustment. But we know that there are always uncertainties. That is why we have given a timeframe of 2021 to 2025 as to when this increase would need to take place. I would like to assure Members that, just as the decision to raise GST was not made lightly, the Government will exercise care in deciding the timing for its implementation. Before we move to raise GST, we will carefully assess the prevailing economic conditions as well as our needs at that point. Second, let me address questions over how the GST increase is sized relative to our needs.”
“But we should also consider the costs and how to fund them. Looking ahead, we have needs that occur year after year. The responsible way for us to fund such spending is to raise taxes. As Er Dr Lee Bee Wah pithily reminded us, you do not fund recurrent spending needs by hoping to strike 4D. Or by borrowing with your credit card. Each generation should strive to pay for its own spending through sustainable means, instead of drawing down more than is prudent from the Reserves or by borrowing and passing on the cost of current spending to future generations. In particular, for the broad-based needs that I have mentioned, a broad-based tax like the GST is appropriate. As then-Minister for Trade and Industry, Mr S Dhanabalan, said at the Debate on the GST Bill in 1993, it is critical to have a “tax system that will make an immediate and direct connection between demands for public service and the private purse”. This is important so that we understand that whenever we increase demands for public services, we should also pay more. Mr Lim Biow Chuan gave us all a timely reminder that when the Government pays, it is the taxpayers who pay. Let me now address some key questions that have been raised with respect to the GST increase and other tax changes: first, how we decided on the timing of the GST increase and its announcement; second, how we sized the GST increase relative to our needs; third, how we take care of our lower-income and ensure that our overall taxes and benefits system remains progressive; fourth, how the tax changes will affect our competitiveness. First, there have been questions on the timing of the GST increase that I have announced. In planning our finances, we take the long view.”
“There are essentially three ways of doing so: raise taxes; borrow; or draw on our Reserves. Each of these ways serves a purpose; each involves risks and tradeoffs. We have decided on our approach only after deep and serious study – first, of our spending needs, followed by the options available to fund them. Mr Louis Ng can be assured that in the process, many public officers from MOF, MOF agencies like the Accounting and Corporate Regulatory Authority (ACRA), Customs and the Inland Revenue Authority of Singapore, and other agencies spanning different policy and operational areas, debated the ideas rigorously with me and their own bosses. In the process, they pushed back on many ideas but also gave me fresh perspectives and feedback. They were certainly not afraid of speaking up or disagreeing with me or with the other Ministers for that matter. So, let me now turn to the roles of each of these methods – taxes, borrowing and Reserves. Let me, first, explain why we have decided to raise taxes. This is not an option that we have taken lightly. Not just because raising taxes is unpopular, but because the Government should, as far as possible, avoid taking people’s hard-earned money and deciding on their behalf how the money should be spent, unless it has to do so for critical social, economic or national needs. Certainly, we should not shy away from addressing the need for taxes, where we see areas of collective need that can be better met by Government provision. These include areas like healthcare, supporting the elderly and retirees, investing in our people through preschools and SkillsFuture, and strengthening our security. As Mr Liang Eng Hwa reminded us, many Members in this House have fought for the Government to do more in these areas.”
“The Ministry of Finance (MOF) will elaborate more on how we are doing so at the Committee of Supply. While we must instill prudence as a value in managing our resources, we must also appreciate that the major structural expenditure drivers that I have spoken of will entail billions of dollars of additional spending a year. The needs they address cannot be met by just squeezing more out of every dollar. Having explained why we need to spend more, let me now talk about how we plan to finance this in a fair and sustainable manner. Ms Tin Pei Ling and other commentators have asked if we could fund the increased spending for the future with a windfall surplus like the one we had in FY2017. The surplus in FY2017 was largely due to one-off, exceptional factors that we do not expect to occur every year. The main increase came from an exceptional Statutory Board Contribution from MAS due to unexpected currency translation gains and investment gains from a global rally in equity and bond markets. The increase in Stamp Duty collections was generated by the recent property market pick-up. We cannot fund our plans to secure Singapore’s future on the basis of episodic windfalls. If we are fortunate to have these occasional windfalls, we should do the responsible thing and save most of it for our future needs. We should not plan for our future in the hope that markets will always continue to move in Singapore’s favour. That is why we are reserving the bulk of the FY2017 surplus for future needs like the Mass Rapid Transit (MRT) development plans and ElderShield subsidies. The Government is also sharing some of the surpluses through the SG Bonus. Let me explain at this point our approach to financing our needs.”
“In education, we achieve good outcomes because we have invested in our schools and a dedicated corps of educators who believe in developing every child to their fullest potential. We have engaged parents who do their best for their children’s education. We have community groups, charitable foundations and individual donors who support students and families in need. In healthcare, we are able to lead long and healthy lives because we have a well-designed healthcare system and dedicated healthcare professionals, with a system of incentives aimed at delivering value, rather than volume of treatments. We have citizens who take responsibility for their own health and strong families who look after their aged parents. And we have caring and dedicated voluntary welfare organisations (VWOs) that run many services in the community. In security, we enjoy safety today, not only because we have built up robust and sophisticated systems and a strong corps of Home Team officers. It is also because we have National Servicemen and volunteers who serve with pride, and a united, law-abiding and vigilant community that stands against crime. This is the power of partnership, and of a whole system that encourages everyone to take responsibility. It explains how a tiny country like Singapore with no natural resources can have world-leading outcomes with moderate levels of taxation and spending. This is the Singapore way and we must continue to build on this ethos. In particular, managing the cost of healthcare must be a whole-of-nation effort. We all need to do our part to keep healthcare cost growth sustainable. In this respect, I appreciate the useful suggestions by Ms Sun Xueling on how we can be more efficient, effective and smart in spending.”
“It is not just in taking tests that our students do well, but other skills like collaborative problem-solving. And this does not capture the immeasurable character-building work that our schools do in cultivating traits in our students, such as perseverance, responsibility and valuing hard work. The next chart shows healthy life expectancy against government and statutory healthcare spending. Countries to the right of the chart spend more of their GDP on healthcare, while those to the left spend less. The higher up a country is on the chart, the longer its residents live in good health. Green points represent the younger societies, while red points are the more aged ones, and amber ones are somewhere in between. Many governments spend around 6% to 10% of their GDP on healthcare. As Members can see from the charts – 6% to 10%. Compared to other countries shown on this chart, Singapore spends less on healthcare, yet achieves a high healthy life expectancy, higher than the OECD average. Even with population ageing, we expect to spend less than other countries with similarly aged populations. Similarly, we are able to get effective outcomes for our spending on policing. We were ranked top in the 2017 Gallup Global Law and Order Index, which gauges people’s sense of personal security and their experiences with crime and law enforcement when living in their respective jurisdictions. This is despite our spending being at the lower end when compared to various jurisdictions. That said, Singapore must stay vigilant as a society and as a country. How have we been able to achieve this so far? It is through a whole-of-society effort.”
“A sudden escalation in terrorist threats or geopolitical tensions could significantly increase the security spending required. A decade ago, we could not have predicted the rise of ISIS and the speed with which terrorism has spread and evolved around the world. Our responsibility is to ensure that we make timely decisions and have enough revenues to meet our future expenditure needs readily, amid an uncertain future. In making the additional investment, we are doing so on a strong foundation. Government spending to date has achieved good outcomes. Indeed, as Miss Cheryl Chan has noted, it is not about how much we spend, but how well we spend. We achieve very credible outcomes, with overall expenditures of about 19% of GDP in FY2018. This is less than half of what the OECD countries typically spend. We think carefully about how to design and organise our underlying delivery and funding systems and consider the roles of all stakeholders. Let me illustrate this in three areas: education, healthcare and law and order. This is a chart showing how 15-year-olds from different countries do on the Programme for International Student Assessment (PISA) test for science, compared with how much the government spends on education. One group is the Nordic countries, which typically spend about 7% to 8% of GDP. Various OECD countries form a second group, around the OECD average. They typically spend about 4% to 6% of GDP. A third group comprises East Asian societies – Japan, Hong Kong, South Korea. They tend to spend less, with PISA scores on the higher end. Where is Singapore? We spend about 3% of GDP and do well compared to other countries. The conclusion is the same even after we consider private expenditure on education, such as enrichment classes.”
“This threat has come closer to our shores, given the Islamic State of Iraq and Syria's (ISIS’) ambition to establish a caliphate in the region encompassing Singapore. As ISIS loses ground in Syria and Iraq, ISIS fighters’ return to Southeast Asia presents a serious threat to Singapore. The recent Marawi crisis in southern Philippines is a sign that extremist terrorism is now endemic in the region and may take many years before the security problem is rooted out. Around the region and at home, we have also seen more cases of self-radicalisation. In addition, the range of threats has widened. In recent years, we have seen an increasing number of high-profile and damaging cyberattacks around the world, like the WannaCry ransomware incident, which affected computer systems around the world. With rising security threats and a wider range of threats, we will need to continue to invest in security to keep Singapore safe. Preschool spending is expected to double in the next five years to $1.7 billion a year in 2022, an increase of about 0.1 percentage point of GDP from today. This is a vital investment in our future generations, ensuring that they have a good start in life. Two in three preschoolers will have a place in a Government or Government-supported quality preschool, up from one in two today. Apart from these recurrent expenditures, we are investing in key infrastructure to build a better home and ensure we remain one of the world’s leading global cities. And we have to be prepared that expenditures could rise further than what we project now. Healthcare spending, even in countries that are prudent like Japan and Germany, is around 10%-12% of GDP. New medical technologies could accelerate spending trends.”
“Second, I will talk about the urgency of transforming our economy. Third, I will speak about how we can, together, build a more caring and cohesive society. Let me start with our fiscal strategy. In this debate, two main questions have been raised: why do we need to spend more? What are the roles of taxes, Reserves and borrowing in meeting our revenue needs? First, let me explain why we need to spend more. I explained in the Budget Statement that we face structural and sustained increases in expenditure in a number of areas – healthcare, security and other social spending. Government healthcare spending is projected to rise by nearly 0.8 percentage points of GDP from 2.2% of GDP today to around 3% in the next decade. That is $3.6 billion more in today’s dollars. Why this rise? First, we will spend more due to an ageing population. Already, Government subsidies for seniors' healthcare needs are more than six times that of a young person. From now till 2030, the number of seniors will double from about 450,000 to 900,000. This alone will increase healthcare spending significantly. Second, the number of citizens who have chronic conditions is rising. Without taking action on diabetes, the number of diabetic patients aged 18 and above could rise from 450,000 in 2015 to 670,000 in 2030. We are working hard to arrest these trends. Third, new medical technologies, new treatments, procedures, diagnostic tools and drugs can lead to a higher quality of life, but they could also cost more. Next, annual security spending is also expected to rise by about 0.2 percentage points of GDP as we invest more to counter rising threats. The scale and magnitude of terror attacks around the world in recent years are signs that the terrorism threat has heightened.”
“I am glad that the Budget has sparked many thoughtful conversations among citizens and fellow Singaporeans. Many Singaporeans have shared their perspectives with me in the course of various consultations and engagements, as well as with the other Ministers. I am grateful for the feedback that has helped us to refine our thinking and ideas along the way. This is important because the Budget is not an accounting exercise. It is a strategic and integrated plan for the future, about how all of us can come together to achieve our shared aspirations. As we learned in Our Singapore Conversation, many aspire for a home where we can make a good living and fulfil our potential, regardless of where we start in life; where we can live purposeful lives, and enjoy our silver years surrounded by the care of family and community; and where we feel assured that our aspirations and needs can be met. This Budget is about how we allocate resources to achieve these aspirations, through: (a) a vibrant and innovative economy, with diverse opportunities for all; (b) a smart, green and liveable city that we can be proud to live in; (c) a caring and cohesive society where people look after one another, especially the disadvantaged and the vulnerable; and (d) a sound fiscal system that provides for Singapore’s needs in a fair and sustainable way. Our Budget theme is "Together, a Better Future". I am glad that many Members agree that we can achieve a better future if we work together. I would like to cover three key themes in this debate. My Ministerial colleagues will talk about the respective issues under their purviews at the Committee of Supply (COS). First, I will explain our approach to revenues and taxes, and why this is the sustainable, responsible and fair way to meet our future needs.”
“Mr Speaker, Sir, first, let me thank Members of the House for the thoughtful and wide-ranging debate over the past two and a half days. As you said, over 50 Members have spoken for more than 10 hours, and if I were to do a point-to-point discussion, it will take us beyond 10.00 pm tonight. So, in line with my Ministry's policy of limiting Ministries' budget growth to 30% of gross domestic product (GDP) growth, I shall try to keep it to about 30% of 10 hours. [Laughter.]”
“Singapore is a city state and our security spending has to cover both national defence and homeland security. So, it would not be appropriate to compare our security expenditure with that of other major cities. We ensure prudent use of our security budget for cost-effective and sustainable solutions. Our security agencies also work together to share intelligence, develop joint operational commands and conduct joint exercises, for optimisation of resources. We do not expect the increase in Government spending in security to have a direct impact on the cost of living for Singaporeans, as security spending is not part of the typical consumer basket of goods and services that households consume. More importantly, the resources allocated to security assure Singaporeans of a safe and secure home to live and raise our families in.”
“This will support the ELF’s work to fund programmes in skills upgrading and employment for the most vulnerable in society. In total, we will set aside around $190 million per year to support these enhancements to encourage philanthropy and volunteerism [Please refer to Annex C-4].”
“sg, to better match donors and volunteers with charities that need support [Please refer to Annex C-4]. In addition, I will increase support to our five Community Development Councils (CDCs). Today, the Government matches $3 for every $1 that the CDCs raise, up to an annual cap of $24 million. From financial year (FY) 2018 onwards, I will increase the current annual matching grant cap for CDCs from $24 million to $40 million [Please refer to Annex C-4]. At the same time, we will encourage corporates to support their staff to volunteer or donate. In 2016, we piloted the Business and IPC Partnership Scheme (BIPS). Businesses that support their staff to volunteer and provide services to IPCs receive a 250% tax deduction on associated costs incurred. An example of an IPC that has benefited is the Shared Services for Charities (SSC). So, through SSC, accounting firms provide pro bono services, such as reviews of internal controls, risk assessment and audits, to charities. These firms receive tax deductions while enabling their staff to volunteer meaningfully. I will extend BIPS for another three more years, until 31 December 2021 [Please refer to Annex C-4]. Corporates can also support their staff to donate regularly to the Community Chest through SHARE. Since we launched SHARE as One at Budget 2016, which provides dollar-for-dollar matching on donations to SHARE, more than 440 new companies have come on board. To encourage more companies to support SHARE, I will extend the SHARE as One scheme until FY2021 [Please refer to Annex C-4]. Finally, I will provide dollar-for-dollar matching on donations received by the Empowering for Life Fund (ELF) under the President’s Challenge, for the next five years.”
“Our SSOs will also improve work processes and the sharing of information among organisations for better coordination. These efforts will bring quicker and more effective assistance to our citizens, to help them get back on their feet. The Minister for Social and Family Development will elaborate at COS. Even as we strengthen support for our seniors and vulnerable, at the core of a caring and cohesive society are people who have the heart to give back to the community and make a difference to the lives of others. Take Mdm Patma, for example. Mdm Patma has been a member of the Choa Chu Kang Residents’ Committee for almost two decades. She also volunteers as a befriender with Fei Yue Community Services. Mdm Patma looks out for her neighbours, cares for sick and lonely seniors and organises activities that bring the community together. Many of her neighbours look forward to the delicious home-cooked food she brings to the Cosy Corner at her HDB block. In the process of helping others, Mdm Patma has found a stronger sense of fulfilment and purpose in life. Many of us share Mdm Patma’s spirit and are actively giving back to the community. I am heartened that over the last decade, our volunteerism rate has doubled, from around 17% to 35%6. At the same time, total donations have increased from around $2 billion in 2011 to $2.7 billion in 20157. To foster this spirit of giving in our people, we will enhance support for measures that encourage everyone to contribute to the community. I will extend the 250% tax deduction for donations made to Institutions of a Public Character (IPCs) for another three years, until 31 December 2021 [Please refer to Annex C-4]. We will also enhance our one-stop platform, Giving.”
“To reflect its enhanced role, PGO will be renamed “Silver Generation Office”. Our friendly Ambassadors will continue to knock on doors wearing their familiar shirts, only they will now be called the Silver Generation or SG Ambassadors. I am certain seniors will continue to welcome them warmly. This Budget, I will also top up two funds that support our seniors to age confidently in the community. First, I will provide a $300 million top-up to the Community Silver Trust (CST), which provides dollar-for-dollar matching for donations to eligible VWOs providing long-term care services. Since 2011, the CST has matched around $500 million in donations raised by more than 80 VWOs. To support more programmes, we will also expand CST to match donations raised for active ageing programmes [Please refer to Annex C-4 ]. Second, I will provide a $100 million top-up to the Seniors’ Mobility and Enabling Fund (SMF), which provides subsidies for assistive devices and consumables for seniors. Another $150 million will be spent over the next five years for transport to subsidised eldercare and dialysis centres. We will review SMF in the coming years, to ensure that subsidies remain targeted. Besides improving support for our seniors, we will also improve the delivery of social services to other groups in society. Over the next five years, we will strengthen the role and capabilities of our Social Service Offices (SSOs) to better coordinate the efforts of Government agencies, VWOs and community partners in providing more holistic and citizen-centred support to those in need. Our SSOs will work with these partners to harness and optimise community resources and identify areas where volunteers can complement service delivery.”
“Mr and Mrs Fox, who are in their 80s, told our Pioneer Generation (PG) Ambassadors that Mr Fox tired easily and had to use a wheelchair frequently. Our PG Ambassadors referred them to CNS, which enrolled them in the Care Line, a 24-hour tele-befriending service launched by the Eastern Health Alliance. CNS also referred Mr Fox to the Evergreen Circle Senior Activity Centre, where he now participates in weekly exercises and enjoys healthy soups cooked by volunteers! Mr Fox now feels stronger and healthier and has almost stopped relying on his wheelchair. He and Mrs Fox are also enjoying making new friends. I believe that the CNS model can meaningfully improve the lives of many other seniors. To reach out to and serve more seniors, we will expand CNS nationwide by 2020. The CNS pilot also showed us how we can streamline and improve the delivery of services to our seniors. Social and healthcare needs are closely inter-related and both have an impact on the well-being of our seniors. To enable these services to be planned and delivered holistically, we will consolidate social- and health-related services for seniors under the Ministry of Health (MOH). From 1 April this year, the Ministry of Social and Family Development (MSF) will transfer its social aged care functions under the Senior Cluster Network and other programmes to MOH. With this transfer, the Agency for Integrated Care (AIC) will be designated the central implementation agency to coordinate such services for seniors and their caregivers. In addition, to support the expansion of CNS nationwide, we will merge the Pioneer Generation Office (PGO) with AIC. PGO will serve as AIC’s outreach arm in implementing CNS. It will reach out not only to Pioneers, but to all seniors aged 65 and above.”
“All households with persons aged 65 and 66, which are enjoying or have enjoyed the levy concession under the aged person scheme before 1 April 2019, will continue to pay the monthly levy rate of $60. For employers who do not qualify for the levy concession or employ multiple FDWs, we will raise the FDW levy. For the first and second FDW employed without levy concession, the monthly levy will be raised from $265 today to $300 and $450 respectively. These changes will take effect from 1 April 2019, to give employers time to adjust. To help meet demand for part-time household services, the Ministry of Manpower (MOM) is also piloting the Household Services Scheme [Please refer to Annex C-3 ]. I just spoke about how the Government will support our people to prepare for their future and care for one another. Let me now speak about how we will strengthen the Government’s partnership with the community to better care for our seniors and those in need. Our community partners play an important role in this. Being on the ground, they are more attuned to the specific needs of local communities and can respond more nimbly and quickly. At the same time, the efforts of the Government and our community partners need to be well coordinated. Our "many helping hands" need to work "hand-in-hand". In 2016, I announced the pilot of the Community Networks for Seniors (CNS). CNS brings together Government agencies and community partners to do ABC. A is for Active Ageing, to encourage seniors to remain active and stay healthy. B is for Befriending, to link up lonely seniors with new friends. And C is for Care, for frail and vulnerable seniors. CNS has helped many seniors, including Mr Willie Fox and Mrs Lena Fox.”
“To give applicants more choices when choosing a resale flat to live near their loved ones, including flats in nearby towns, we will revise this criterion to simply "within four km". These enhancements will take immediate effect and cost an additional $80 million per year. Together with the recently-enhanced CPF Housing Grant and the Additional CPF Housing Grant, a first-timer applicant can now receive up to $120,000 in housing grants when buying a resale flat to live with their parents, a 50% increase compared to three years ago. We will also support households with their expenses. Last year, eligible HDB households received 1.5 to 3.5 months of rebate on their Service and Conservancy Charges (S&CC). We will extend these rebates for another year. This will cost $126 million and benefit about 900,000 households [Please refer to Annex C-2 ]. Finally, we will make adjustments to the foreign domestic worker (FDW) levy framework. Over the past 10 years, the number of FDWs in Singapore has increased by about 40%, to 240,000 in 2017. We must ensure that FDW demand is commensurate with need and avoid an over-dependency on FDWs. At the same time, we recognise that some families may need help caring for young children, the elderly or family members with disabilities. Today, such families enjoy a monthly concessionary FDW levy of $60. About 80% of Singaporean FDW employers benefit from this concession. We will retain this monthly concessionary levy rate of $60. In light of the improving life expectancy and health of Singaporeans, we will raise the qualifying age for the levy concession under the aged person scheme from 65 to 67 years.”
“We will pilot a new financial education curriculum at our polytechnics and Institutes of Technical Education (ITE). We will also enhance existing services to Singaporeans at HDB when they buy a flat, and at Central Provident Fund (CPF) Board when they approach retirement, to enable them to make better informed decisions at these major milestones. We will support Singaporeans to prepare for their healthcare needs in old age. We are reviewing ElderShield, an insurance scheme that helps those with severe disabilities cope with the financial demands of their daily care. To ensure that the enhanced scheme remains affordable, we will provide premium subsidies for lower- and middle-income Singaporeans. We will provide an update later in the year, after the ElderShield Review Committee delivers its final recommendations. This Budget, we will also strengthen support for family members to live with or near one another. We will enhance the Proximity Housing Grant (PHG). First, we will increase the PHG for families buying a resale flat to live with their parents or children to $30,000. Those buying a resale flat near their parents or children will continue to receive a PHG of $20,000. Second, we will enhance the PHG for singles, who are often a key source of caregiving support within their families. Singles who buy a resale flat to live with their parents will now receive an enhanced PHG of $15,000. Those who buy a resale flat near their parents will also now receive a PHG of $10,000. Third, we will simplify the criterion for determining what is "near". Currently, it is defined as living in the same town or within two kilometres (km).”
“Second, we will strengthen partnerships between the Government and the community to support our seniors and those in need. And third, we will encourage a spirit of giving in our people. I will first talk about how we will better support Singaporeans and their families. Education helps our children realise their full potential. We invest heavily in every child, to ensure that everyone, regardless of background, has access to a quality education. This Budget, we will increase support for education in three ways. First, we will increase the annual Edusave contributions provided by the Government from $200 to $230 for each primary school student, and from $240 to $290 for each secondary school student. This will take effect from January 2019. Second, we will update the income eligibility criteria for the Edusave Merit Bursary and the Independent School Bursary, to benefit more students from lower- to middle-income families [Please refer to Annex C-1 ]. Third, we will increase the support to students from lower-income families. We will enhance the Ministry of Education (MOE) Financial Assistance Scheme by raising the annual bursary quantum for pre-university students from $750 to $900 and updating the income eligibility criteria. We will also cover more meals for secondary school students under the School Meals Programme. Students in special education schools will also benefit from these enhancements. Overall, these schemes will cost close to $200 million per year. The Minister for Education (Schools) will provide more details at COS. Besides education, we will support our people to prepare for their financial needs at key stages of their lives. This starts from giving our youths a good foundation in financial literacy.”
“Mr Speaker, Sir, I earlier spoke about how we will grow our economy and improve our city. What ultimately matters is having a united people with a common purpose – to build the kind of society we want to live in and pass on to our children to improve. When I first entered politics, one of my first projects was Our Singapore Conversation. It gave me and my colleagues a unique opportunity to converse with Singaporeans about their aspirations for themselves and for Singapore. One of the things that struck me was the deep sense of responsibility that Singaporeans felt and shared – a responsibility towards the future of their family, community and country. As Singapore undergoes demographic and societal changes that place greater demands on families, the community and the Government, we must face these changes together and respond collectively as one. Over the past decade, the Government has increased support for our citizens, providing greater assurance through schemes like MediShield Life and the Pioneer Generation Package, while giving extra help to those with less through Workfare and Silver Support. The Government will continue to strengthen social safety nets for those in need. At the same time, individuals, families and the community play an important role in looking out for and supporting one another. That is why we launched the SG Cares movement: to bring together the public, private and people sectors; create greater collective impact; and build a more caring and cohesive society for ourselves and future generations. Budget 2018 will build on the SG Cares movement in three ways. First, we will support individuals and families to better prepare for the future and care for one another.”
“And the Kayak Waterway Clean-Up Programme, run by the non-profit Waterways Watch Society, brings volunteers together to remove debris from our rivers and reservoirs while raising environmental awareness. In ways big and small, we can all contribute to building a smarter, greener and more liveable city for all Singaporeans to enjoy. Mr Speaker, Sir, with your permission, I will continue later with the measures we will implement to foster a caring and cohesive society and ensure a fiscally sustainable and secure future for Singapore.”
“The support for companies will be done through schemes like the Productivity Grant (Energy Efficiency) and the Energy Efficiency Fund [Please refer to Annex B]. More support will go to projects that achieve greater emissions abatement, beyond the basic enhancements. MTI and MEWR will share more details at a later date. For our households, the impact of the carbon tax will be small, at about 1% of total electricity and gas expenses, on average. Still, to help households adjust, I will provide additional U-Save for three years. Eligible HDB households will each receive $20 more per year, from 2019 to 2021. The increase in U-Save will cover the expected average increase in electricity and gas expenses for HDB households arising from the carbon tax [Please refer to Annex B]. MEWR will also work with the community to help households save energy and will announce more details at a later date. We have designated 2018 as the Year of Climate Action to encourage all Singaporeans to fight climate change. The Minister for the Environment and Water Resources will speak more on our other plans to reduce energy use and carbon emissions at COS. Ultimately, measures like the carbon tax, along with our R&D programmes and Smart Nation investments, are to make Singapore a more liveable and sustainable city. In this effort, everyone has a role to play. I am heartened to see various community efforts in this area. For instance, the Community in Bloom movement has brought together 36,000 gardening enthusiasts to cultivate more than 1,300 gardens all over Singapore, beautifying our landscape and fostering community spirit.”
“For petrol, diesel and compressed natural gas (CNG), we have excise duties, which already encourage reduction of the use of these fuels and, therefore, reduce greenhouse gas emissions. Hence, I will not levy an additional carbon tax on petrol, diesel and CNG. I will also not increase their excise duties at this point in time, but we will continue to review and adjust them periodically. The carbon tax will encourage businesses to take measures to reduce carbon emissions. Companies that do so will be more competitive, as more countries impose tighter limits on their carbon emissions, and international agreements on climate change like the Paris Agreement take effect. There will also be new opportunities in areas like sustainable energy and clean technology. We have to start preparing early so that industries have more time to adapt. To give companies and households a strong push in the first five years when we introduce the carbon tax, we will provide more grants and support to help them enhance energy efficiency and reduce emissions. We expect to collect carbon tax revenue of nearly $1 billion in the first five years. To achieve our goal of reducing emissions intensity as soon as possible, I am prepared to spend more than this in the initial five years, to support worthwhile projects which deliver the necessary abatement in emissions. I urge companies to do their part for a higher quality living environment for all, by putting in meritorious proposals for emissions abatement and energy efficiency. Our agencies will evaluate these rigorously. I will set aside funds starting from 2019 to enhance support for companies, including SMEs and power generation companies, to improve energy efficiency.”
“Singapore produces less carbon emissions per dollar of GDP than most countries. We intend to further reduce our emissions intensity to make a bigger effort to combat climate change. To encourage companies to further reduce emissions, I announced last year that we intend to implement a carbon tax from 2019. I will proceed with a carbon tax on all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year. It will be levied on the total emissions of each of these facilities. The first payment will be in 2020, based on emissions in 2019. The carbon tax will be $5 per tonne of greenhouse gas emissions in the first instance, from 2019 to 2023. We will review the carbon tax rate by 2023. We intend to increase it to a rate of between $10 and $15 per tonne of emissions by 2030. In doing so, we will take into account international climate change developments, the progress of our emissions mitigation efforts and our economic competitiveness [Please refer to Annex B.] The carbon tax will apply uniformly to all sectors, without exemption. This is the economically efficient way to maintain a transparent, fair and consistent carbon price across the economy to incentivise emissions reduction. This means our initial carbon tax rate of $5 cannot be directly compared with that in other countries. Jurisdictions with higher headline carbon prices often also have significant exemptions for particular sectors, which lowers their effective carbon prices. The carbon tax will be levied on major emitters, which account for about 80% of Singapore’s emissions. The remaining 20% is contributed by many other sources of varying sizes. We will study how to account for these emissions and take action where necessary.”
“Last year, we launched the Cities of Tomorrow R&D programme to drive innovation in urban development, such as ways to improve the sustainability, maintainability and reliability of buildings, raise construction productivity and create new spaces that we can live in. We also started the Closing the Waste Loop project, to use technology to minimise the environmental impact of the waste we generate. This year, we will embark on Energy Grid 2.0, to develop next-generation grid architectures that can respond quickly and reliably to changes in energy demand and supply. For these three programmes, we will set aside $250 million [Please refer to Annex B]. To improve our living environment, we must also address one of the most pressing challenges the world faces – climate change. Climate change is more than just record-breaking temperatures, dry weather or more intense rain. As a low-lying island, Singapore is particularly vulnerable to rising sea levels. That is why the Government has invested significantly to improve our infrastructure, including protecting our coasts and critical assets, building a weather-resilient water supply and redesigning our flood management system. We must play our part to address the underlying cause of climate change to make Singapore a more liveable and sustainable city, and as a responsible member of the international community. Over the years, we have made various efforts to manage our greenhouse gas emissions. The Energy Conservation Act was enhanced last year to improve the energy efficiency of our industries. We are investing in public transport to make Singapore car-lite, and green-certified buildings have become a hallmark of our urban landscape. Our early measures to be a green city have shown results.”
“We must continue to improve our city and our environment and make Singapore an even better home to live, work and play in. History has shown that the most enduring cities are those that are adaptable, flexible and innovative. I spoke earlier about the emergence of new technologies as a major shift. Our Smart Nation movement aims to make the best use of these new technologies to improve our city, uplift our quality of life, enhance our economic competitiveness and promote social inclusion. This transformation will require a national effort by the Government, together with the private and people sectors. The Government is embarking on several strategic national projects to lay the foundation for a Smart Nation. We are building a Smart Nation Sensor Platform to deploy sensors and "Internet of Things" devices to enhance municipal service delivery. We are developing a National Digital Identity system to enable citizens to authenticate their identities securely and easily when making online transactions. We are also increasing the adoption of e-payments island-wide, to allow everyone to make simple, swift and seamless payments. At the same time, we are opening up digital platforms for the private sector to build innovative services and will share more data with the public to facilitate co-creation [Please refer to Annex B ]. The Minister-in-charge of the Smart Nation initiative will elaborate more at COS. Besides building a Smart Nation, we are also collaborating with academics and corporates in research and innovation, to take Singapore’s sustainable development story to the next level. One of the strategic domains in our Research, Innovation and Enterprise (RIE) 2020 plan is Urban Solutions and Sustainability.”
“By fostering pervasive innovation throughout our economy, building deep capabilities in our firms and people, and forging strong partnerships locally and abroad, we can succeed in our economic transformation. We can create and sustain a more vibrant and innovative economy. Mr Speaker, Sir, a strong economy is not an end in itself. It is a means to build a better home and provide a better quality of life for all our people. We will, therefore, continue to improve our living environment and make Singapore a smart, green and liveable city. Our founding Prime Minister Mr Lee Kuan Yew once said, "a blighted urban jungle of concrete destroys the human spirit". Indeed, our urban planners recognised early on that with limited land, we had to build our city with foresight, so we could provide a high-quality living environment even in a dense urban landscape. We designed our Housing and Development Board (HDB) estates with common spaces, parks and playgrounds, so that everyone has easy access to amenities and public spaces. We planted thousands of trees and toiled to transform Singapore into a Garden City and now a City in a Garden. We may be highly urbanised, but we are not a concrete jungle. More than 40% of our island remains covered in greenery. We also enacted laws against pollution and cleaned up the Singapore River. Along the way, we became innovators in water treatment and waste management. Today, Singaporeans enjoy the comforts of a modern city, along with clean air, clean water and verdant spaces. Our reputation as a clean and green city is a source of pride for Singaporeans and attracts tourists and investment to our shores. Even otters have returned to our waterways!”
“Our TACs play an important leadership role in forging partnerships and driving industry-level advancements. Through close interactions with their members, TACs understand their industries’ challenges and opportunities better than the Government can. We have seen various examples of TAC leadership and partnerships, which have helped their members uplift capabilities and overcome resource constraints. For instance, SCCCI, with support from JTC and SPRING, has set up a Trade Association Hub (TA Hub) at Jurong Town Hall, where more than 30 TACs share facilities and resources. The TA Hub, along with the Trade Association Committee that SCCCI also set up, will encourage TACs to collaborate with and support one another. In logistics, four TACs, along with SPRING and the Centre of Innovation for Supply Chain Management at Republic Polytechnic, have come together to form the Logistics Alliance. Last year, it launched the Transport Integrated Platform (TRIP), which integrates several existing systems into a single digital platform, to enable easier tracking of container trucks and reduce idling time. The Government will continue to support such efforts, through the LEAD programme. In the last two years, about $45 million has been committed through LEAD for some 50 projects. I look forward to even more TACs and businesses coming on board. Mr Speaker, Sir, ultimately, all our firms and workers face the same major shifts in the global environment, which will bring greater competition and a faster pace of change. The specific challenges and opportunities will differ from industry to industry, which is why we have taken a sectoral approach for the ITMs. But the key enablers in every industry and ITM are the same – innovation, capabilities and partnerships.”
“Our universities have expanded overseas internship programmes to eight new locations, including ASEAN countries. We also launched GIA Beijing and established BLOCK71 in Suzhou and Jakarta. Besides venturing abroad, we will also bring global innovation to Singapore through initiatives like the Singapore Week of Innovation and Technology (SWITCH). As ASEAN Chairman this year, we hope to make a meaningful contribution by developing an ASEAN Innovation Network. We hope this will strengthen the linkages among the innovation ecosystems in the region, and spark new collaborations and solutions. The Minister for Trade and Industry (Trade) will speak more about our ASEAN plans at COS. In particular, as Asia’s growth will raise infrastructure demand, we seek to forge stronger partnerships in infrastructure development and enhance connectivity in the region. China’s Belt and Road Initiative, Japan and India’s Asia-Africa Growth Corridor, and the World Bank's Infrastructure and Urban Development Hub in Singapore are just some examples of efforts to promote infrastructure development in our region. To contribute to Asia’s infrastructure agenda, we will set up an Infrastructure Office. This Office will bring together local and international firms from across the value chain, including infrastructure developers, institutional investors, multilaterals and legal, accounting and financial services providers, to develop, finance and execute infrastructure projects. The Office will enable infrastructure players to better tap on opportunities in the region while supporting Asia's infrastructure development and economic growth [Please refer to Annex A-3]. The Minister for Trade and Industry (Industry) and the Senior Minister of State for Law and Finance will give more details at COS.”
“0 technology solutions, to set up the Singapore Manufacturing Innovation Centre in Guangzhou, China. The Centre provides these SMEs with a platform to co-create advanced manufacturing solutions with prospective Chinese clients, allowing the SMEs to reach out to the large Chinese market. We will continue to encourage our companies to form strong partnerships, both locally and abroad. Industry partners, like the Singapore Chinese Chamber of Commerce and Industry (SCCCI), have made similar suggestions. We will integrate various partnership support measures into a single Partnerships for Capability Transformation (PACT) scheme. Under PACT, companies can receive up to 70% co-funding for projects undertaken in partnership with others [Please refer to Annex A-3]. For the three schemes that I mentioned earlier – PACT, the Productivity Solutions Grant and the Enterprise Development Grant – I will set aside $800 million over the next three years. We will also strengthen our partnerships with overseas counterparts and anchor Singapore as a Global-Asia node of technology, innovation and enterprise. This way, our firms and people can remain plugged into the latest developments all over the world and create new ideas by interacting with people from diverse backgrounds. Industry partners, like the Singapore Malay Chamber of Commerce and Industry, have pointed out that as our region grows, there will be important needs to address in infrastructure, healthcare and other areas. We need to develop a good understanding of these needs, so that we can innovate meaningful solutions to contribute to our region’s development. That is why we launched the Global Innovation Alliance (GIA) last year, for Singaporeans to gain experience and build networks overseas. We have made early progress.”
“I am also happy to hear that SBF and the Singapore Management University (SMU) will pilot the SBF-SMU Local Enterprise and Association Development (LEAD)-CHARGE Initiative this year, to help SME leaders transform their organisations. Finally, as our workforce ages, firms must reconfigure how they operate to harness the experience of their older workers and allow them to continue contributing meaningfully. To support our older workers, we have raised the re-employment age to 67, extended the Special Employment Credit and enhanced WorkPro. With the close cooperation of the tripartite partners, Singapore's employment rate for residents aged 65 and above rose from 14.4% in 2007 to 25.8% in 2017. We will continue to encourage age-friendly workplaces and review how we can better support our older workers. As we develop our people’s capabilities, we may find that skillsets in certain important fields are lacking. To plug these gaps quickly, we are piloting the Capability Transfer Programme (CTP), to support the transfer of skills from foreign specialists to Singaporean trainers and trainees. The Minister for Manpower will elaborate at COS. Mr Speaker, Sir, I have spoken about our efforts to make innovation pervasive and to build deep capabilities. The third key enabler is to forge strong partnerships. Competition is not the only driving force in our economy. Cooperation is also key. Where synergies exist, we can achieve more when we work together and draw on one another’s strengths to address common challenges and capture bigger and better opportunities. For example, Ascendas-Singbridge, along with IE Singapore, brought together a group of Singaporean SMEs specialising in Industry 4.”
“As Infineon upgraded its production processes, it also redesigned her job and trained her to use new machines. When I spoke to Mdm Esah, she told me cheerfully, "I'm happy, I’m confident, I can do new things." Mdm Esah’s example shows that enterprise capabilities and human capital must be developed in tandem and be integrated with a company’s overall growth strategy. We will continue to work with industry partners to help the whole spectrum of our workforce develop deep skills. This will help our people to stay relevant and develop the cross-cultural skills needed to capture opportunities in the region and beyond. For the young, we have schemes like the SkillsFuture Earn and Learn Programme, a work-learn programme, as well as the Go Southeast Asia Award, which matches undergraduates with regional internships. For those with more work experience, we have schemes like the SkillsFuture Mid-Career Enhanced Subsidy and the PCPs. In particular, the PCP for Southeast Asia Ready Talent will equip Singaporeans with the know-how to do well regionally. For our corporate leaders, it is important that they have the skills needed to drive the transformation of their businesses and industries. To develop the next generation of corporate leaders, we have the SkillsFuture Leadership Development Initiative (LDI). Since it started last year, companies have committed to train almost 200 Singaporeans, with over 180 more in the pipeline. This year, we will launch a new ASEAN Leadership Programme under the LDI to help our business leaders build networks and plan business expansions in Southeast Asian markets.”
“Industry partners, like the Association of Small and Medium Enterprises (ASME), have brought this up. Since we launched the Tech Skills Accelerator (TeSA) in 2016, over 27,000 training places have been taken up or committed. Alvin is one of those who took up the training. Retrenched after 17 years as a systems engineer, he took up TeSA's programme for cybersecurity, which equipped him with the skills needed to join ST Electronics as a white hat hacker, that is, someone who tests ICT systems for security loopholes. We will expand TeSA into new sectors like manufacturing and professional services where digital technologies are increasingly important. TeSA will also support more people to learn emerging digital skills, such as in data analytics, artificial intelligence (AI), the Internet of Things (IoT) and cybersecurity. We will set aside an additional $145 million for TeSA over the next three years [Please refer to Annex A-4]. The Minister for Communications and Information will speak more about this at COS. Besides digital capabilities, we must also build deep skills for workers of all ages. There must be depth in whatever we do, because this gives us the foundation to innovate and the ability to compete. This is the essence of SkillsFuture. Industry partners have a big role to play here. Ultimately, the capabilities of a firm depend on the capabilities of its people. I recently visited Infineon, a semi-conductor manufacturer, which takes training very seriously. Infineon plans its employee training and technology adoption in parallel, so that employees acquire relevant skills and new technologies are used effectively. I was pleased to meet Mdm Esah. Mdm Esah started out doing manual work in the assembly line 42 years ago.”
“This will take effect from YA2019 [Please refer to Annex A-5]. As we strengthen support for firms to build capabilities, I will make adjustments to two broad-based tax schemes – the Start-up Tax Exemption and the Partial Tax Exemption. These schemes help lower costs for smaller firms and startups, but do not directly help firms develop capabilities. In addition, every profitable company should pay some taxes. This is sound and equitable. So, starting in YA2020, I will make two changes to the schemes. First, I will restrict the tax exemptions under both schemes to the first $200,000 of chargeable income. Second, for startups, I will exempt 75%, instead of 100% currently, of their first $100,000 of chargeable income from corporate tax [Please refer to Annex A-5]. Even with these adjustments, corporate tax will remain low for startups and smaller firms. For a taxable income of $100,000, the effective corporate tax rate is 4.3% for startups and 8.1% for older firms, as compared to the headline rate of 17%. In addition, companies, including startups and smaller firms, can tap on a wide range of Government support measures to build capabilities and grow their businesses. As digital technologies transform our economy, all firms must develop digital capabilities. Since we launched the small and medium enterprises (SMEs) Go Digital Programme last year to support companies to digitalise, more than 650 SMEs have benefited. This year, we are studying, with the Singapore Business Federation (SBF) and other industry partners, the development of a nationwide e-invoicing framework. This can help companies improve productivity and enhance cash flow. Besides our firms, we must train our people in digital skills.”
“To improve our labour productivity, we will also expand the National Robotics Programme (NRP), to encourage wider use of robotics in the built environment sector, particularly in construction [Please refer to Annex A-2]. Let me move on to the second key enabler – building deep capabilities in our firms and workers. In particular, capabilities to internationalise, digitalise and be more productive will be critical. For our firms, we will provide more targeted support to help them build capabilities to meet their needs. Broad-based measures, such as the Productivity and Innovation Credit (PIC) scheme have been useful in kickstarting a wider movement to improve productivity and to innovate. I am heartened that many firms have embarked on this journey. We will now build on this base and take a more targeted approach to help firms deepen the capabilities they need to continue growing. In April, we will merge the Standards, Productivity and Innovation Board (SPRING) and International Enterprise (IE) Singapore into Enterprise Singapore. Enterprise Singapore will provide integrated support to companies, for internationalisation as well as the development of other capabilities, so as to help them compete better both locally and abroad. We will combine IE’s Global Company Partnership grant with SPRING's Capability Development Grant, to form an integrated Enterprise Development Grant (EDG). EDG will provide up to 70% co-funding for companies to develop a range of capabilities [Please refer to Annex A-3]. To further support firms to internationalise, I will enhance the Double Tax Deduction for Internationalisation (DTDi). I will raise the amount of expenses that can qualify for DTDi without prior approval, from $100,000 to $150,000 per year of assessment.”
“We have built a strong research and knowledge base in our universities and the Agency for Science, Technology and Research (A*STAR) institutes, which provides a solid foundation for an innovative economy. To maintain this competitive edge, we have sustained our public sector R&D spending at 1% of GDP annually. We have various programmes to translate our public sector research efforts into commercially viable applications, and we will build on these. This year, the National Research Foundation (NRF) and Temasek will launch an NRF Temasek IP Commercialisation Vehicle. This 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 will go into this joint venture – $50 million from the Government, and at least $50 million from Temasek [Please refer to Annex A-2]. We will also continue to harness our R&D resources to drive greater adoption of digital technologies, automation and robotics. To strengthen our status as an air and sea hub, we will launch an Aviation Transformation Programme (ATP) and a Maritime Transformation Programme (MTP) this year. Through these programmes, our airport and seaport will become platforms for companies to develop, test and use new technologies. The solutions that emerge can be rapidly adopted in other parts of Singapore, or even exported overseas. We will provide support of up to $500 million for the two programmes, with additional matching investments expected from industry partners [Please refer to Annex A-2].”
“First, we will support businesses to buy and use new solutions. We will streamline existing grants supporting the adoption of pre-scoped, off-the-shelf technologies into a single Productivity Solutions Grant (PSG) [Please refer to Annex A-3 ]. In addition, I will raise the tax deduction on licensing payments for the commercial use of intellectual property (IP). With the expiry of the Productivity and Innovation Credit (PIC) scheme, the tax deduction on licensing payments has reverted to 100% for YA2019 and beyond. I will raise this to 200%, capped at $100,000 of licensing payments per year. This cap ensures that smaller businesses will benefit more from this measure [Please refer to Annex A-5 ]. Next, to support businesses to build their own innovations, I will raise the tax deduction for IP registration fees from 100% to 200%, to help firms protect their intangible assets. This will be capped at $100,000 of IP registration fees per year [Please refer to Annex A-5]. I will also raise the tax deduction for qualifying expenses incurred on R&D done in Singapore, from 150% to 250% [Please refer to Annex A-5]. Finally, to help businesses find partners to co-create solutions, we will pilot the Open Innovation Platform this year. This is a virtual crowdsourcing platform, where companies can list specific challenges that can be addressed by digital solutions. They will then be matched with info-communications and technology (ICT) firms and research institutes, to co-develop solutions [Please refer to Annex A-2 ]. Besides supporting our firms to innovate, we will do more to harness our national research capabilities to enhance our economic competitiveness.”
“Third, we must forge strong partnerships both locally and abroad, so that our firms and people can work together to address common challenges and access new opportunities in our region and beyond. By strengthening these three enablers, we can anchor Singapore as a Global-Asia node of technology, innovation and enterprise. Let me start with the first enabler – innovation. With the rapid pace of change and greater competition, we must make innovation pervasive throughout our economy. Firms in every sector and of every size need to embrace innovation and make the best use of new technologies as a competitive advantage. Take Pan-United, a local concrete and cement company. It has invested significantly in research and development (R&D), innovating new products to meet customer needs. For example, it has developed a new type of flexible concrete that can cushion the landing impact of aircraft, reducing wear and tear of airport runways. This concrete complies with the latest specifications set by the US Federal Aviation Administration. Pan-United also has a range of concrete varieties catering to different specifications, including one that shields against proton radiation. Such product innovations have helped Pan-United expand into regional and global markets. Pan-United, you might say, is a concrete example of how innovation can help a firm cement its position as a market leader. This Budget, we will support more firms to innovate across the entire value chain, whether they buy new solutions, build their own, or partner others to co-innovate. Industry partners, like the Singapore International Chamber of Commerce and the Big Four accounting firms, have given us useful suggestions. We have studied and will implement some of them.”