PSP PROPOSES ADDITIONAL $11 BILLION BOOST TO FEND OFF IMPACT OF COVID-19 ON SINGAPOREANS AND LOCAL BUSINESSES

Key elements of Progress Singapore Party’s (PSP) COVID-19 Economic Stimulus Package Proposal:
• Roll out stimulus package in a timely manner without delay
• Enhance job support scheme by providing larger salary subsidies
• Larger rental fee reduction for tenants of Government properties
• Tax cuts of 50% for landlords who reduce rents for tenants
• $11 billion economic stimulus package to protect the community and help protect jobs in the face of the COVID-19 outbreak

NEED FOR BETTER FORESIGHT
The Covid-19 pandemic coupled with the oil price slump has brought about a global economic crisis. The Governments of the world are trying to respond to this setback, not only to deal with the health emergency but also to address a possible meltdown of financial markets and the ensuing economic issues.
Prior to the Covid-19 pandemic, the economic uncertainties caused by the ongoing United States-China trade tensions started rocking the boat here. It contributed to the situation of residential property owners defaulting on their bank loans last year, leading to one of the greatest number of mortgagee-sale listings seen in recent years .
With the Covid-19 situation and the oil price slump, the situation may become markedly worse with Singapore businesses defaulting on loan repayments and going into liquidation. We may be headed into a situation of total financial meltdown not seen since the last great financial crisis in 2008.

BUDGET 2020 UNIMAGINATIVE TO ADDRESS COVID-19 CHALLENGES
While the major economies have responded aggressively with exceptional and massive injections of funds into their economies to deal with the health problems and to address the ensuing economic issues to soften the harsh impact on financial markets, the Singapore government’s response has been lukewarm and unimaginative at best.
For example, while Singapore’s Budget 2020 provided for very conservative measures like tax rebates, Wage Credit Scheme, Jobs Support Scheme and (up to) 80% of risk of loans provided to Singapore businesses, Canada provided for C$10 billion credit facilities for SMEs . Germany on the other hand, pledged to lend as much as €550 billion to companies to ensure they survive the pandemic and shield their workers from its impact, and Switzerland assured 10 billion Swiss francs of aid for its companies .

IMMEDIATE ASSISTANCE FOR SINGAPOREANS AND LOCAL BUSINESSES
The Singapore Government under-estimated the impact of Covid-19 and so its measures to address it in Budget 2020 fell far short of addressing it effectively. There are several gaps in Budget 2020, one of which is the amount and timing of the payouts for businesses. Time is of the essence for many SMEs whose businesses have been hit badly because of Covid-19 and receiving the Job Support Scheme payouts only in July 2020 does little to help mitigate immediate cash-flows issues these SMEs are facing.
PSP proposes that the measures of the Stimulus Package be rolled out to Singaporeans and to our local businesses without any delay and/or red-tape.

ENHANCE JOB SUPPORT SCHEME
The proposed Job Support Scheme would only help with 8% of local workers’ salaries (up to 3 months, and up to $864 per worker). Many SMEs who are struggling with cash flow due to delays in production and sales resulting from interruptions in supplies or manpower are already forcing employees to take no-pay leave or are retrenching them. The Job Support needed is many times larger than what was given in Budget 2020.
PSP proposes that the Job Support Scheme be enhanced by subsidising 30% of Singaporean workers’ salaries for up to 6 months or till the end of the Covid-19 crisis ends.

RENTAL FEE REDUCTION
Besides labour cost, cost of rental or mortgage payments is one of the largest items on most businesses’ obligations. Budget 2020 had only provided for NEA to provide a month’s rental waiver to stallholders in NEA-managed hawker centres and markets, a 15-30% property tax rebate to qualifying commercial properties, and half month’s rental waiver to tenants in some government agencies’ facilities.
The measures provided in Budget 2020 to address this issue is lesser than the measures provided during the Global Financial Crisis (GFC). Singapore’s Budget 2009 gave 40% in rental rebates to qualifying owners of commercial and industrial buildings to address the effects of the GFC . Besides the rental rebates promised in Budget 2020 being insufficient to properly address the effects of Covid-19, there is also this issue of commercial landlords not passing on the property tax rebates to their tenants during this challenging period .
PSP proposes that the stimulus package offer tenants of government property a rental fee reduction by two-thirds until the Covid-19 crisis ends. In addition, we propose that landlords who reduce rent for their tenants, to receive a tax cut on income and corporate taxes on 50% of the deducted rent (regardless of a landlord’s income or rent amount). Such a measure, if adopted, will require landlords to show that they are helping tenants first before the government chips in.

BE FAR-SIGHTED
Barely 3 weeks since implementing Budget 2020 the Government acknowledges that the Budget measures are insufficient and that our economy has been seriously impacted, which requires a second stimulus package to support businesses and workers. This is the reason why the Progress Singapore Party (PSP), in responding to Budget 2020, proposed for additional relief to be provided to those that are affected by Covid-19 .
PSP hopes that the new off-Budget Stimulus Package will be far-sighted and generous to provide better relief to Singaporeans and our local businesses to stay afloat in these uncertain times. Our actions must be meaningful and strong enough to kick-start our moribund economy.
The Economic Stimulus Package must provide generous support to those who have lost their jobs or suffered severe pay cuts. SMEs must be sufficiently supported to bridge this crises without having to lay-off more staff or go into liquidation.
PSP expects the various economic stimulus package measures together with the job support scheme, rental fees reductions and tax rebates to cost the Government $11 billion.

Mr Leong Mun Wai, Assistant Secretary-General of PSP says, “The Government must stand ready to do whatever it takes to keep people safe and ensure our economy withstands this storm. Our first priority must always be the health of the people and the Government must look after the families and jobs of Singaporeans. The $11 billion Economic Stimulus Package will protect jobs and save our local businesses in these very trying times.”

 

 

Links

‘More prime district home owners defaulted on loans in 2019’ , The Straits Times dated Jan 27, 2020

‘Coronavirus: Trudeau announces economic aid package to help Canadians amid outbreak’ , Global News dated March 13, 2020

‘Germany lines up $600 billion virus aid as EU backs stimulus’ , Pensions & Investments dated March 13, 2020

‘Landlords To Pass Rebates To Tenants’ , Propertyguru dated Oct 22, 2009

‘Short-sighted of landlords not to pass on tax rebates’ ,The Straits Times, dated Mar 4, 2020

‘PSP proposes tough questions for Budget 2020’ , PSP dated Feb 19, 2020