SINGAPORE -- The government here is doubling down on its war against the coronavirus outbreak, earmarking 5.6 billion Singapore dollars (US$4 billion) to help businesses and households as the epidemic threatens to throw the city-state's trade-dependent economy into reverse.
Finance Minister Heng Swee Keat on Tuesday announced a slew of tax rebates and other financial breaks to help companies and individuals cope with the outbreak's fallout.
The measures are part of the government's 2020 budget.
In addition to the SG$5.6 billion package, Heng said Singapore will spend another SG$800 million -- the bulk of which will be allocated to the city-state's Health Ministry -- to fight the COVID-19 epidemic.
"The duration and severity of this outbreak and the impact on the global economy are still unclear," the minister warned in parliament as he presented the government's budget.
The total SG$6.4 billion to be spent on countering the outbreak -- from its threat to public health and safety to the trickle-down economic damage to households -- dwarfs the $165 million (SG$230 million) worth of relief measures Singapore announced in 2003 to deal with the severe acute respiratory syndrome epidemic.
SARS, also a coronavirus, emerged in China's Guangdong Province before spreading to 29 countries and killing 774 people, including 33 in Singapore, one of the worst-hit nations.
COVID-19, which originated in the Hubei Province capital of Wuhan, has so far spread to 27 countries, killing nearly 1,900. There are more than 73,300 confirmed cases around the world, the great majority in China. There have been more than 70 confirmed cases in Singapore.
In announcing the financial measures on Tuesday, Heng said all taxpaying companies in the city-state will be granted a corporate income tax rebate this year at a rate of 25% of tax payable, capped at SG$15,000 per company. The finance minister said this measure alone will cost the government SG$400 million.
In addition, the tourism, aviation, retail, food services and point-to-point transport service sectors will get extra support. Hotels and meeting venues will be eligible for a property tax rebate of 30% this year.
International cruise and regional ferry terminals will receive a 15% property tax rebate, while gaming operators Genting Singapore and Las Vegas Sands, the operators of Singapore's two casinos, are in line for a 10% property tax rebate for each of the resorts they manage in the city-state.
Singapore's Changi Airport, run by the Changi Airport Group, will receive a 15% property tax rebate plus rebates on aircraft landing and parking charges, and rental rebates for shops and cargo agents.
Singapore has projected that international visitor numbers could fall 25% to 30% this year now that the government is restricting entry to Chinese passport holders in an effort to contain the outbreak.
The city-state is one of the most popular foreign destinations for Chinese travelers.
"Given the recent COVID-19 outbreak, it is reassuring to see specific initiatives [under Singapore's 2020 budget] for businesses in the travel and hospitality space, such as the substantial property tax rebate," Amit Saberwal, chief executive of hotel management company RedDoorz told the Nikkei Asian Review.
As the coronavirus crisis drags on, Singapore's economic growth for the year is projected to come in anywhere from -0.5% to 1.5%, the government said on Monday.
Last year, gross domestic product expanded 0.7%, down from 3.4% in 2018 and marking its lowest rate since 2009, the year after the global financial crisis struck. The slowdown was due to the U.S.-China trade war.
The latest projection for 2020 is a downgrade from the previous growth estimate of 0.5% to 2.5%. This year's growth rate is expected to come in at around 0.5%, the midpoint of the latest forecast range, though Prime Minister Lee Hsien Loong has said he does not rule out a recession.
"The virus outbreak has also disrupted supply chains and created ripple effects on other sectors, especially now that our economy is so much more integrated with China's," Heng said on Tuesday.
The tax rebates for companies under this year's budget are part of a SG$4 billion "Stabilization and Support Package," he said.
The measures, Heng said, are partly designed to help workers retain their jobs. He announced a scheme to help companies defray wage costs by offsetting 8% of wages for every local worker in employment, capped at SG$3,600 monthly, for three months.
"With over 1.9 million local employees in Singapore, this will cost the government SG$1.3 billion and benefit all enterprises and their local employees," Heng said.
Singapore had previously announced that its Goods and Services Tax, or GST, will increase by 2 percentage points, from 7% to 9%, sometime before 2025. The levy is paid by all consumers, including foreigners who visit or work in the country.
Heng on Tuesday said the increase will not be implemented before 2022. In addition, when it does kick in, he said adult Singaporeans will get cash payouts of SG$700 to SG$1,600 over five years -- tiered according to household income level.
Some analysts had expected the budget might contain measures that would help the prospects of the ruling People's Action Party ahead of an impending election, which must be held by April 2021. The expectations centered on financial relief for people struggling to cope with the cost of living in the city-state, which has garnered a reputation for being one of the world's most expensive places to live.
"The announcement of the deferred GST hike is a welcome move considering the economic slowdown due to the ongoing COVID-19 situation and the worsening global economic outlook," said Lam Kok Shang, head of indirect tax at auditing company KPMG Singapore. "It will allay the fears of additional expenditure on GST by Singaporeans."
Heng said Singapore will not draw on its financial reserves to fund the budget as it has a sufficient fiscal surplus. "Our budget position will be more expansionary," he noted, "with a larger basic deficit of SG$12.3 billion. This, together with the Stabilization and Support Package, will impart a considerable fiscal boost to the economy to address near-term concerns."