SINGAPORE -- Singapore on Monday earmarked a further SG$8 billion ($5.8 billion) worth of support for businesses and residents after the city-state's economy saw its worst quarter on record -- contracting 13.2% on the year in the three months through June.
Gross domestic product is forecast to shrink by 5% to 7% for the full year, and the government is rushing to shore up the most vulnerable sectors as the coronavirus pandemic leaves a trail of business closures and job losses in its wake.
Finance Minister and Deputy Prime Minister Heng Swee Keat held up aviation, aerospace and tourism as the areas that needed the most help, as he announced extended wage subsidies for these industries until next March.
"These sectors are important parts of our economy, and they are multipliers for other sectors," he said in a televised address. "In particular, Singapore's position as a global business node depends on our connectivity as an air hub."
The three sectors stand to get 50% wage offset payouts. The construction industry will receive 50% payouts in September and October, before that drops to 30% from November to March. Other hard-hit segments -- retail, food services and the arts -- will receive 30% offsets.
"Seven more months is quite generous and will help tide [over] distressed companies during this challenging time," said Selena Ling, head of treasury research and strategy at OCBC Bank, in a note. "Hopefully, by March 2021, there may be greater clarity that things are turning around, especially if a vaccine has been found and more economic activities have normalized."
This comes on top of the more than SG$90 billion in support already introduced in four rounds of stimulus. The finance minister unveiled the new plans about a month after his ruling People's Action Party won a general election in which the opposition made unprecedented gains. During the campaign, the PAP had made steering Singapore out of the COVID-19 crisis a key part of its platform.
The pressure to deliver on the promises only mounted after the second-quarter GDP figures came out. The slide into recession coincided with a broad, weekslong economic shutdown to contain coronavirus transmissions.
"Regardless of your circumstances, the government will help you to rebuild from this crisis," Heng said on Monday. "Together, we must continue to adapt to the rapidly changing situation. We designed our measures to give us flexibility for adjustments as the crisis progresses."
In aviation, an extra SG$187 million has been set aside to provide cost relief for airlines, ground handlers, cargo agents and airport tenants. Businesses in the sector are struggling to stay afloat under prolonged border restrictions -- though the city-state's border with neighboring Malaysia partially reopened on Monday.
To revive tourism, SG$320 million will be used for what the government is calling SingapoRediscovers Vouchers -- credits locals can use to explore their small home city.
In growth sectors like biomedical sciences and financial services, the government is also launching a billion-dollar scheme to help companies hire local talent over the next six months.
It will co-pay up to 25% of salaries for all new Singaporean hires for a year, subject to a limit. For mature workers aged 40 and above, the co-payment scheme will be cranked up to 50%. Heng said the Manpower Ministry will give more details on the initiative later in August.
"It is a difficult journey ahead, but you will not walk alone," Heng assured Singaporeans. "We have the resilience to weather the difficulties, turn challenges into opportunities, and prepare for the future."