What to expect of Singapore’s budget & economic strategy in 2017

What to expect of Singapore’s budget & economic strategy in 2017

Michelle Zhu
06/02/17, 12:51 pm

SINGAPORE (Feb 6): DBS Group Research is expecting this year’s impending Committee on the Future Economy (CFE)  report to “map out the longer-term future of the economy”, while projecting Budget FY17 to feature more “bite” for the near- to medium-term.

CFE is a 30-member committee which aims to promote domestic enterprise development and skills to ensure local enterprises and Singaporeans are “future-ready”, based on what it defines as the five pillars of Singapore’s future economy. These pillars comprise: city connectivity, growth industries & market, capabilities & innovation, as well as jobs & skills.

In a Monday report, analyst Irvin Seah shares his predictions for developments which could possibly take place in Singapore’s economy for the year ahead following announcements of CFE’s report and Budget FY17 in the coming weeks.

Further future-proofing
Seah foresees more efforts from CFE aimed at making Singapore a ‘Smart’ city via digitisation and innovation, as well as promoting sustainable living. The Skillsfuture scheme, for example, could be broadened and enhanced. Particularly, he expects CFE to continue its domestic enterprise development work in helping local companies to not only develop capabilities across industries and disciplines of technologies, but also to scale up and internationalise.

(See also: Is Singapore a Smart Nation yet?)

New government initiatives
For one, a new stock exchange could “raise the visibility of Singapore as a global centre for startups and entrepreneurship,” says Seah. Other possible short-term initiatives include tax rebates and subsidies to defray costs or send workers for training; further enhancements of existing hard infrastructure; as well as initiatives to support areas including the Internet of Things (IoT), digital network and Smart Mobility.

More support for the financially impaired
Noting a softening labour market, DBS reckons a temporary deferment, one-off tax rebate or extension of income tax payment could help to alleviate the cost burden of retrenched professionals, given that the bulk of recent retrenchments were skilled workers. The government could also introduce more subsidies on education, utilities, service and conservancy charges (S&CC) as well as top-ups to various public assistance schemes.

(See also: Singapore registers lowest labour force growth in 2016 in over a decade as layoffs continue to rise)

Budget FY17 to be ‘business friendly’
The budget for 2017 is slated for release on Feb 20 next month. Overall, DBS expects this year’s budget to emphasise on helping companies and citizens cope with immediate economic challenges, while maintaining an eye on medium-term restructuring of the economy. “It can be seen as a continuation of last year’s, whereby the focus is predominantly on enterprise development instead of social issues, which had been the theme for the previous years’ budgets,” adds Seah.

Conservative fiscal policy, modest deficit
DBS specifically projects a modest deficit of $0.3 billion for FY17 as fiscal policy remains conservative, while both revenue and expenditure are likely to rise marginally. It also estimates FY16’s government surplus to come in at about $4.3 billion, higher than the budgeted amount of $3.5 billion, largely due to a less-than-projected operating and development expenditure arising from low inflation in 2016.

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