SINGAPORE (Feb 22): Maybank Kim Eng maintains its 2017 gross domestic product (GDP) estimates at 2.5% following the release of the Singapore Budget 2017 on Monday , noting that this year’s Budget is “more conservative than expected”.

(See also: Budget 2017: Singapore aims to boost economic growth, support weak sectors)

In a Tuesday report, analysts Chua Hak Bin and Lee Ju Ye describe the $2.4 billion which the government has committed to set aside to support Committee on the Future Economy (CFE) strategies over the next four years, as “modest” compared to the $4.5 billion allocated to the Industry Transformation Map next year.

As such, this suggests limited impact to both structural and cyclical growth.  

While Chua and Lee observe some targeted help for the marine & process industries and small medium enterprises (SMEs), they point out that such assistance is not broadly for most other sectors such as services or manufacturing.

They also highlight the absences of deferment of foreign worker levy rates for construction, which is set to increase on Jul 1 this year; cuts to levies for services or manufacturing; as well as extension of the Wage Credit Scheme.

Instead, the analysts speculate that environment measures in this year’s Budget may have “stolen the limelight” from CFE supporting measures, given how numerous taxes and schemes to reduce emissions will be introduce over the course of 2018-2019.  

“Future changes from introduction of the carbon tax (by 2019) and tax system review (possibly by next Budget, possible corporate tax cuts with GST adjustments) could have a more material impact on companies and consumers,” say Chua and Lee.  

“Discussion on the tax review suggests a possible cut in corporate taxes and increase or adjustments in the GST system. The tax review is undergoing and will likely be announced in next year’s Budget.

Finance Minister also highlights the Base Erosion and Profit Sharing (BEPS) project, which seeks to ensure that companies are taxed where substantial economic activities are performed.”