Budget Surpluses from 2011
The government has about $3B to $4B fiscal surplus from the 2011. This puts the government in a good position to start their 5year economic plans and to have enough reserves to absorb any shocks should the economy go southwards.
The projected growth rate of 1% to 3% for Singapore is above the target for mature economies by World Bank, which is set at 2.2%. However, with high inflation rates, any prospect of growth will be offset by rising costs of living and therefore communities in the fringes such as SOHO, SMEs and others may be vulnerable to economic shocks.
The budget should have sufficient impetus to prop up the economy and specifically for target groups identified below for the next one year to ensure that we do not go into the negative territory.
Subsidies for essential goods and services
We are faced with the possibility of lacklustre economic performances coupled with rising inflation. Although there is no danger of communities slipping into abject poverty, there will be however, quarters in our communities who will slip into sustenance or below sustenance levels. The government needs to focus its attention in keeping costs low for food, transport and housing through either direct or indirect subsidies.
SOHO & SMEs
More grants and investment schemes should be made available for small and medium sized businesses and call for a greater participation from local companies in the economic pie.
Currently, the GLCs and MNCs dominate industries and they get the lion’s share of the government projects. We need to ensure that local companies benefit from our economic success through capability development and a more comprehensive development of the industry eco systems. Though there are economic arguments supporting a more open economy, there are also arguments that suggest that hyper competition can be counterproductive. We hope the government takes a balanced and calibrated view on this.
Focus on Those at The Fringes of Society
The aged, single parent and families with members who have permanent disabilities or chronic illnesses are most vulnerable to economic shocks. The government needs to have a particular focus on these groups to ensure that they do not become susceptible to shocks in the economy. The government needs to set aside funds to assist these special fringe communities.
There are official figures that seem to indicate that the economy is humming at full employment. In fact, there were recent reports that there are more than 70,000 job vacancies. However, employers are favouring cheaper foreigners to locals. The government needs to either raise the taxes for foreigners in the form of levies and/or subsidise employee CPF contribution for locals to neutralise market forces.
We will have a more in depth coverage of the budget as we get feedback from the business community, the civil society and from the alternative parties.