​Deeper wage offsets, foreign worker levy waivers on wish list

Deputy Prime Minister and Finance Minister Heng Swee Keat said last Wednesday that the Government was working on a second package as the global situation had worsened since the Budget was presented last month.

It will be aimed at helping workers keep their jobs, he said.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said global market developments have highlighted the cash crunch firms are facing while smaller companies may not have the same access to credit facilities as larger ones. 

"We are starting to see a demand slowdown, partly because of fears of (new) waves of outbreaks, which are affecting industries like entertainment, personal services and food and beverage."

A broad-based bridging facility or loan for sectors beyond the tourism industry, for which the temporary bridging loan programme was announced in last month's Budget, could help ease cash-flow concerns, Ms Ling noted.

Singapore Business Federation chief executive Ho Meng Kit said that the chamber expects the second package to enhance the various schemes in the $4 billion Stabilisation and Support package, "offering more generous support and over a longer period of time".

"Given that we might have to live with the virus within the community for a more protracted period, businesses

would also benefit from greater access to the procurement of healthcare supplies and equipment," he added.

Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye said in a report earlier last week that "a second package can be bolder, addressing immediate cash-flow needs and helping firms survive this crisis", adding that handing out cash to households has limited impact due to weak consumer sentiment.

They suggested waiving three months of foreign worker levies for the worst-hit sectors - hospitality, aviation and some tourist-sensitive retail segments.

"Some companies are facing a severe plunge in cash flow and at risk of cutting workers or shutting down altogether. A brief waiver of foreign worker levies - including those under mandatory quarantine - will add to the bottom line, help companies stay afloat, and prepare them for the upturn when the recovery materialises," Dr Chua and Ms Lee noted.

Professor Foo Maw Der of Nanyang Technological University's Nanyang Business School suggested that the oil and gas industry and the manufacturing sector could be among those getting more support.

Some companies are facing a severe plunge in cash flow and at risk of cutting workers or shutting down

altogether. A brief waiver of foreign worker levies - including those under mandatory quarantine - will add to

the bottom line, help companies stay afloat, and prepare them for the upturn when the recovery materialises.

The fall in oil demand, recent drop in crude prices and disruptions to global supply chain networks mean that companies in these two industries are in need of more immediate help, he added.

Prof Foo suggested that the Government could look at mediation measures to help self-employed people in situations where they are not paid or face delayed payment due to customers facing cash-flow issues.

Associate Professor Lawrence Loh from the National University of Singapore's Business School said a

"horizontal" approach is needed to augment the "vertical" approach targeted at selected sectors.

"A good starting point is deeper wage offsets beyond the current 8 per cent and higher corporate income tax rebates above the 25 per cent in place," he said.

This is a reference to the corporate tax rebate and the Jobs Support Scheme, which will offset 8 per cent of the wages of every Singaporean or permanent resident employee for three months, up to a monthly cap of $3,600, announced in the Budget.

Ms Christine Li, Cushman & Wakefield's head of research for Singapore and South-east Asia, noted that the Budget's 15 per cent property tax rebate could "seem inadequate" in actual dollar terms and a second package is "needed in order for (businesses) to stay afloat".

Ms Li cited an example where the retail rent is $20 per sq ft a month. A 15 per cent rebate on the property tax, which is 10 per cent of rent, would be 30 cents. This means a post-rebate monthly rent of $19.70 per sq ft. "The 30 cents rebate (in this case) hardly makes any difference to retailers who are currently facing

challenges to sustain the business over the next six months or beyond," she said.

The Singapore Government announced last week it was working on a second stimulus package as the global situation had worsened since the Budget was presented last month. 

Some analysts suggested waiving three months of foreign worker levies for the worst-hit sectors - hospitality, aviation and some tourist-sensitive retail segments.

Source: The Straits Times, 16 March 2020