Singapore: short and long-term measures to boost business
SINGAPORE - Singapore's astounding S$10.9 billion (US$7.79 billion) overall budget deficit to boost the economy and help businesses tide through the COVID-19 outbreak, whilst approved by industry watchers and local newspapers, is receiving a quiet response from the MICE trade.
SACEOS' Business Sentiments Survey comprising 40 companies showed that many have concerns about keeping businesses going, the lack of income, supply chain challenges, unexpected costs to adhere to advisories, finding new business, and mental distress.
Many in the industry are still trying to digest the implications of the budget announcement which was made early this week. Deputy prime minister and finance minister, Mr Heng Swee Kiat, placed priority in addressing first the measures to mitigate and help industries most affected by the virus. S$4 billion will be allocated to the Stabilisation and Support Package comprising S$1.3 billion for Jobs Support Scheme for over 1.9 million local employees, 25% corporate income tax rebate, and property tax rebates for hotels and MICE venues, among others.
The Job Support Scheme will provide 8% of the wages of local employees up to a cap of S$3,600 per person, for three months starting in July 2020. The Enterprise Financing Scheme's Working Capital Loan component will be raised from S$300,000 to S$600,000 for one year. Analysts said these schemes will help businesses to weather the storm as long as they are seaworthy in the first place.
Besides offering a S$500 credit to help workers upgrade their skills, a new one-off S$10,000 credit for eligible employers will help them to transform their businesses during the lull period.
STR regional manager, Southeast Asia, Mr Bernard Kee said: "Air travel is at the top of the travel food chain, thus when it is impacted by the current health predicament, the effect to other supporting travel trade is substantial. Singapore Airlines has just announced their cut back on major air routes right up to May.
"The government budget is not designed to stimulate inflow of travellers, it will be futile to do so. Rather it has set in clear measures for the industry to take advantage of a lower demand to upskill their workforce.
"Singapore as a nation will emerge more ready for the upswing when COVID-19 blows over. The government has taken quick and decisive actions to help the travel trade ride through this period. Some may use the incentives to defray temporary costs, while others will use the credits and offsets to equip themselves with new skills and come up with innovation during the downtime."
Singapore hotel occupancy (%) plummeted from the 80's in the beginning of January 2020 to 30's in mid-February. However, STR observed that this round, hotels are still holding on to their rates.
"It is a wise decision not to drop rates on two grounds: lowering rate will not drive demand in this situation; and the recovery will be easier and faster post the situation," said Mr Kee.