SINGAPORE - Singapore presented a bigger budget for the coming year, providing support for the struggling sectors, but keeping a surplus in case global economic conditions worsen and put the city-state's growth at risk.
Following up on recommendations by a key advisory panel this month, the budget unveiled projects to invest in infrastructure, deepening the workforce's tech skills and digitalising the economy.
Firms will get help to scale up and invest overseas to tap into the growing markets around Singapore, as the government aims to maintain an average 2-3% annual growth rate over the next 5-10 years.
Singapore's budget surplus for the fiscal year beginning April 1 is expected to be 0.4% of economic output, compared with an estimated 1.3% in 2016/17. Expenditures would be 5.2% higher than in the current year, at S$75.07 billion ($52.9 billion).
"When I presented the last budget, Brexit seemed remote and the US had just started the process of electing their new president. Events since then are a stark reminder of how quick and unpredictable change can be," Finance Minister Heng Swee Keat told parliament on Monday.
"As we expect expenditures to continue rising in the long term, this budget position is prudent, while supporting firms and households in the midst of continued economic restructuring," Mr Heng said.
Singapore's wide-open economy is highly dependent on trade, and Washington's pullout from the Trans-Pacific Partnership trade deal has been a major blow to the island's growth plans.
The first water price hikes in almost two decades and a 2019 carbon tax will later aid the revenue side. The budget contains extra funds to help lower-income households handle their bills.
The overall budget surplus for the coming budget year is expected to be S$1.9 billion.
Previously-announced foreign workers levy hikes in the marine sector were deferred, but the government will proceed with hikes in the construction sector.
To aid construction, the government announced that S$700 million in infrastructure projects will be brought forward to 2017 and 2018.
The measures come at a time when labour market conditions have worsened amid lacklustre economic growth, with job redundancies in 2016 hitting a seven-year high and total employment recording the smallest increase in 13 years.
Singapore posted its fastest growth in more than six years in the fourth quarter, expanding at an annualised 12.3% from the previous three months. But full-year growth in 2016 remained anaemic at 2%.
Bloomberg listed some of the biggest winners and losers of the Singapore budget.
Winners
Jobs - Skills training support will be provided to aid in improving workforce productivity. More than S$600 million will be paid out to help companies cope with rising wages.
The Ministry of Manpower will extend employment age to 67 from 65. Enhanced corporate tax rebate cap would be raised to S$25,000 at 50% of tax payable. The tax rebate would be extended by another year, capped at S$10,000, 20% of tax payable.
The National Research Fund will be topped up by S$500 million and National Productivity Fund will be increased by S$1 billion.
Small and medium-sized enterprises (SMEs) - Programmes to support digitalisation and innovation will be rolled out to aid SMEs.
Public infrastructure investment - The government will bring forward S$700 million in infrastructure projects to support the construction sector. A total of S$150 million will be spent to procure innovative construction solutions for public sector projects.
Marine and processes - Foreign worker levy increases will be deferred for one more year to aid employers in these sectors.
Healthcare - Including existing initiatives, the government will spend S$400 million per year to provide support to persons with disabilities and their caregivers in areas of early intervention and education, employment, care services, "assistive" technologies and improving healthcare accessibility. Additional S$160 million to be spent on supporting those with mental health conditions over the next five years.
Cyber security - Government will spend more than S$80 million on programmes to strengthen capabilities in data and cyber-security.
Singapore-based firms - S$600 million in government capital will be allocated for a new International Partnership Fund to help Singapore-based firms in scaling up and internationalisation.
Losers
Power stations, utilities - Government plans to implement a carbon tax between S$10-S$20/tonnes of greenhouse gas emission from 2019 on power stations, large direct emitters instead of electricity consumers
Consumers - Water prices will increase by 30% in two phases, starting July 1.
Prices haven’t been raised in 20 years and costs need to be reflected.