The Singapore government will set aside an additional S$300 million to co-invest in deep-tech startups, Deputy Prime Minister and Finance Minister Heng Swee Keat said on Tuesday.
Unveiling his budget plan for 2020, Heng also announced financing support, tax relief and wage subsidies as part of S$4 billion of measures to help businesses and workers cope with the impact of the COVID-19 novel coronavirus outbreak.
Heng said that deep-tech startups – particularly those in areas such as pharma, bio and medicine, advanced manufacturing and agri-food – require government support because they typically struggle to attract investors.
The deep tech funds will be invested through the Startup SG Equity programme, which is run by SEEDS Capital and SGInnovate. Heng expects the top-up to attract more than S$800 million of private funding over the next 10 years.
Deloitte Singapore tax partner Wong Chee Ming called the focus on deep tech an “encouraging” bid to “seize economic growth opportunities in the digital age”.
Virus care package
The measures aimed at mitigating the impact of the viral outbreak were the most closely anticipated. Overall, Heng’s proposed budget is estimated to run a fiscal deficit of S$10.9 billion, or 2.1 per cent of GDP. If the estimate is accurate, this would be the largest fiscal deficit in nominal dollars ever for Singapore since its independence in 1965.
Heng said “the sudden storm of a virus outbreak” forced the country to lower its official growth forecast for 2020 to between negative 0.5 per cent and positive 1.5 per cent, from the initial range of between positive 0.5 per cent and 2.5 per cent. This would represent a further decline from the 0.7 per cent GDP growth recorded in 2019, which was already the slowest rate of economic expansion for Singapore since the 2008 financial crisis.
RedDoorz chief executive and founder Amit Saberwal, whose startup operates budget hotels, welcomed the relief.
“Looking beyond the current crisis, the foreseeable economic climate in Singapore and across the region seems relatively subdued,” Saberwal said in an e-mail.
“Whilst it’s impossible to predict how long the outbreak will last, it’s clear that both short-term immediate solutions and long-term initiatives will be vital in order to combat the decline in tourist visitors, and to build a more robust and vibrant ecosystem. Given the recent COVID-19 outbreak, it is reassuring to see specific initiatives for businesses in the travel and hospitality space.”
Quest Ventures, through a spokesperson, said the virus measures will soothe the right pain points.
“No other country we know of in the world besides China are actively ensuring the long-term viability of businesses and the broader economy from both operating expediture and staffing angles,” the spokesperson said.
JLL head of research and consultancy Tay Huey Ying welcomed property tax rebates for affected industries, and highlighted the importance of ensuring that the benefits trickle down.
“It is hoped that landlords who have yet to extend assistance will pass on savings from the tax rebates to their tenants,” Tay said.
Key virus relief measures
- The government will take up to 80 per cent of the risk of loans of up to S$1 million with interest rates capped at 5 per cent under a new temporary bridging loan programme for a year.
- An existing working capital loan programme will also see the quantum cap doubled to S$600,000, with the government’s share of risk raised to 80 per cent.
- Companies will enjoy a 25 per cent tax rebate, capped at S$15,000 for income earned in 2019.
- Companies may write down investments in plant and machinery and renovation and refurbishments at a faster rate for taxes on 2020 income.
- The government will offset 8 per cent of wages, up to a monthly wage cap of S$3,600, for three months.
- A scheme to co-fund wage increases will be enhanced to increase the amount of subsidies available.
- Targeted help
- Companies in the transportation, aviation, retail, food and beverage and tourism industries will benefit from sector-specific policies, including property tax rebates.
Environmental sustainability and climate change emerged as key priorities on the Singapore government’s agenda.
- Climate change and environmental sustainability
- Singapore will create a coastal and flood protection fund with an initial S$5 billion injection.
- Singapore will commit almost S$1 billion for research in urban solutions and sustainability.
- Singapore will make a push to phase out internal-combustion engine vehicles by 2040 with vastly improved infrastructure for electric vehicles and incentives for electric vehicle adoption.
- Singapore is setting aside S$1 billion to build up the government’s cyber and data security over the next three years.