Former People’s Action Party Member of Parliament (MP) Inderjit Singh remarked that the measures announced as part of the budget was “far from sufficient”, and prompted aggressive action from the government in the second stimulus package.
Mr Singh, who is also a serial entrepreneur, wrote a column in South China Morning Post on 24 March as he foresees long-term structural issues and short-term issues caused by the COVID-19 pandemic.
“We will see an acceleration of structural changes in our economy. How the government responds will either cause further stress or allow Singapore to tap opportunities in these uncertain times,” he wrote.
He indicated the measures announced as part of the budget “far from sufficient”, and believes that the government can do more in the second stimulus package that is expected to be announced by finance minister Heng Swee Keat on Thursday (26 March).
“These are extraordinary times, and the government’s second stimulus package should be aggressive enough to address the issues faced by companies and individuals in Singapore,” Mr Singh noted.
Mr Singh went on to suggest a few immediate off-budget actions that the government can take to support the country’s economy and people.
Suggestions to support working individuals
Mr Singh suggested that a range of S$200 to S$300 per month should be provided to each working individual, for a one-year duration, perhaps half in cash and half in grocery vouchers. Priority should be given to those who have lost their jobs, the self-employed, and gig economy participants.
To supplement employees’ loss of income, Mr Singh suggested an additional employment allowance for every worker a company keeps hired, even at a reduced salary.
“This will encourage companies to keep people hired, even if they cut salaries to what they can manage. It is a win for all, with employers keeping their skilled people at a cost they can afford and Singaporeans keeping their jobs,” said Mr Singh, adding that it is better than opting to retrench workers.
In addition, a mortgage moratorium of three months should be imposed with the option of extending payments for a few years, as well as the enforcement of emergency legislation to stop banks from calling back loans.
“To do this, the government may also need to shore up support to financial institutions to ensure they can manage the loss of income during the extended period of delay,” Mr Singh noted.
Suggestions to support companies
As for companies, Mr Singh hinted that the government can incentivise the companies to hire employees by providing 50 per cent to 70 per cent of the first year’s salary and sponsor their training, which can be done via the existing Jobs Support Scheme.
“While companies must try to find new areas and new markets to generate future demand, the government has already stepped in, allowing companies to claim an 8 per cent cash grant on the gross monthly wages of each local employee (citizens as well as permanent residents) for the months of October 2019 to December 2019, subject to a monthly wage cap of $3,600 per employee,” he said, adding that it needs to be done for at least a year, with a possible extension of six months to a year.
Mr Singh also suggested the government to help pay all or part of the contributions to the Central Provident Fund (CPF) for both employees and employers, to support employees financially as well as to help companies reduce costs and improve cash flows.
He further suggested providing a direct rental-rebate cheque to companies, which is a one-time payment to help reduce costs. While to ensure tenants are paying fair rentals, rental laws should also be enforced or new laws gazette if needed.
“Cut charges for Electronic Road Pricing, fuel tax, utilities tax and halve the 7 per cent goods and services tax (GST) across the board – or, better still, reduce it to zero for the next two years, as this will help households too,” Mr Singh proposed.
Companies should be able to retain government GST payment for the next three months to help them with cash flow, while bridging loan scheme for amounts ranging from S$3 million to S$5 million should also be extended for a minimum period of two years to help the medium-sized enterprises.
He added, “The Monetary Authority of Singapore should work with banks to stop them calling back loans, by assuring them that these will not be counted as non-performing loans for the next few years.”
Suggestions to support small and medium-sized enterprises
Mr Singh also encouraged the government to back all old loans under its new Loan Insurance Scheme whereby 80 per cent to 90 per cent of loans are guaranteed by the government.
“This means going to banks and allowing them to move old loans under this scheme, while there could also be a one-time loan securitisation scheme under which the government could buy the loans of small and medium-sized enterprises (SMEs) from banks, to be sold back when things stabilize,” he explained.
To assist SMEs and start-ups, Mr Singh suggested providing some form of direct government grants or loans, or expand existing government schemes such as the Growth Enterprise Fund.
“It may be worth converting these vehicles into venture debt structures, expending schemes like convertible loans and debts or even direct equity injection into companies that are assessed to have longer-term viability,” he said.
He also suggested delaying income tax payments for individuals and companies for the next one to two years.