Posted by: bigtalksingapore | January 30, 2009

Singapore Budget 2009

Singapore budget is out and it seem like everyone is taking about it being “Bold”, “Aggressive”, “Creative”, “Ingenious” and “Well Targeted”.

I will try to look at it at different angles.

And I will “Big-Talk” about the following items….

  • Jobs Credit. The so called nearly-silver bullet, not to solve the coming retrenchment after Chinese New Year, but to reduce it.
  • 90% Course fee subsidy with the SPUR project meant for PMET (Professional, Manager, Executive and Technician).
  • Property rebate of 40% for Businesses.
  • Expansion of public construction projects.
  • Lowering of Corporate Tax.
  • 30% Road tax reduction for the so called “Public Transportation”, namely taxi and bus.

Jobs Credit

This is supposed to be the “Ace in the pack”.
It seems quite original. I have not heard of anything like it. But of cos some other countries may have used similar method and I may be ignorant.
Anyway it seem pretty novel to most Singaporean.

The good thing about this is that it bring down the cost difference between hiring a foreigner and local Singaporean.
But looking at another angle, this difference has been around for some time, making local Singaporean uncompetitive. Right now, they are just trying to make the playing field more equal.
Still it may still be more cost effective to hire foreigners than local.
Bear in mind that employers do not need to pay CPF for foreign workers  (See Attachment #11 Tag #1).
Furthermore, the foreign workers will probably be willing to take more pay cut if it mean keeping their jobs in Singapore.

With the Jobs Credits in place, it is likely that employers will cap most of their workers income at $2500 to take full advantage of the system
In the long term, we may be seeing a ceiling caps for our workers income (Attachment #9 Tag #1).

SPUR Project

This project is meant to target the so called PMET.
90% of the course fee will be subsidized, but only for courses in UniSim and the 3 Public Universities.
It remain to be seen on what are the courses involved and how useful these courses will be in the new economy.

As the going said “The Devil is in the detail”, who exactly will be qualified for these subsidies still remain a question.
An executive working in a company may apply for the 90% subsidies course, but how about an executive that has been retrenched.
Will a solo retrenched person be able to get the subsidies without the backing of a company behind him/her ?
From its website, it seem that SPUR will offer 90% subsidies courses to unemployed person and assist in job placement after training.
But what if the person still cannot find job after the training, does it mean that the person need to pay back the subsidies ?

Furthermore, as more company cut jobs, it would mean that one person could be shouldering the task of multiple people.
With this added workload, can the executive afford the time to go on course ?
Will the company likely to retrenched the fellow who goes on course ?
And if you are talking about local male Singaporean, he will still have to cope with his national duties like Reservist, IPPT and RT.

Let’s be realistic.

Property rebate of 40%

This rebate will be given to property owners in the hope that they pass down the saving to their tenants.

But let’s face it, property owners has already been spooked by the property crash in America and many other countries.
So for tenants, they should not rely too much about the so called saving being pass down to them (Attachment #8 Tag #1).

JTC was the first to come out and declared that they will be cutting rents.
Was there an article that mentioned JTC increasing their rental by more than 50% within 2 years despite bad economy condition (Attachment #12 Tag #1) ?
Public Construction Project

It all make sense to expand the public construction project to inject money into economy.
It is during a recession that the cost of construction is significant lower.
So making use of this recession (Or Depression 2.0 as some people called it) for public construction project is economically logical.

But we have to be fearful if it mean HDB lift upgrading project (Attachment #7 Tag #1).
Cos they may say that it will be heavily subsidies, residents may still need to take cash out of their pocket.

Lowering of Corporate Tax

Corporate Tax has been lowered to 17%.
While this may still be higher than Hong Kong, it may attract investors to Singapore.
Our direct competitors Hong Kong may be more pro-business in this aspect, but they are losing out in other aspect like lousy air qualities.

Nobody like to work in a place with Hong Kong bad air quality unless there is no choice.
It’s a question of “Money or Health”. As the saying goes “Your most valuable asset is your health”.

Lowering of Corporate Tax will mean a reduction in Government revenue.
Being Singapore, Government will make up for the losses at a later time whenever possible.
The only logical answer is to increase GST (Goods and Service Tax).
So be prepared.

30% Road Tax Reduction

While this seem like a pretty good action to bring down transportation cost, how much reduction can we expect from our bus fare is still unknown.

Let take a logical analysis of the situation.

Global crisis lead to people more prudent on their spend. This mean more people taking public transport like bus and MRT.
Revenue and profit for Bus and MRT companies goes up. Coupled by the effect of Road Tax reduction mean more profit for our “Public Transport” Companies.
Furthermore, they are hiring more foreigners driver that drive cost down some more. Not to mention, there’s the global oil price reduction.

So while the Bus and MRT companies seem to be earning the big buck during bad times, they may lower the ticket cost while making much more money than before.

It seem that nobody is really looking to see if the coming public transport ticket reduction is reasonably enough.

Who will be the real beneficial ?

From every news report, it seem that this budget is mainly targeting the Singaporean Middle incomers and below.

There still remain a question, Who are the Singaporean ?
Does Singaporean mean Singapore Citizen plus Permanant Residents ?
I don’t seem to see this mentioned in the paper, so I will assume that PR will also enjoy the jobs credit and most of the benefits.
If this is the case, it will be unfair to local citizens.

Cos, PR as the name implies will have no loyalties to Singapore.
If Singapore goes under, they will probably leave and go back to their native countries (With some other budget to help them).
Only the local citizens will stay to backup Singapore. So the priority should be on them.

Why not take this crisis as an opportunity to offer some of the more valuable PR to take up citizenship and forgo their native one in order to enjoy the benefits?
That way, they will have to stay back to support Singapore no matter what.

When questioned if more can be done to help PMET, the answer was that “the changes to the SPUR project is more than good enough” (Attachment #3 Tag #3).
They fail to see that when PMET are retrenched, they still need to pay for the home mortgage loan (Attachment #4 Tag #1). What good is SPUR if they got no place to live ?

What more can be done ?

  • GST can be cut.This is highly unlikely, cos it is an effective tool to get Government revenue.Nobody can escape, not even the poor families whose income is so low that they are basically paying zero income tax.They keep saying our GST is meant to help the poor. This concept of thinking defies logical thinking since poorer families spend more of their money on food.Unless they cut or reduce the GST for essential goods like rice.
  • CPF withdraw.This is again unlikely cos they keep saying that CPF is meant for retirement only.But in time of urgent need, why not let the poor withdraw their CPF monthly in the form of essential food voucher that they can exchange for food to tight over the crisis ?No money mean no food, no food mean deterioting health, no health mean not staying alive long enough to make use of CPF money.
  • In time like this where fund are being miss-managed by many big banks and financial institute, people are getting pretty worry about how Singapore funds are being managed.Just look at how some of our town council lose money on risky investment. Not to mention there’s also our Temasak Holding and GIC.Government should set up a website where they show people how money are being used and allow all Singaporean to go in and comment.The purpose is to alleviate the people fear of fund miss-management.

Do we really need to touch our reserve ?

Singapore only resources is its people and money.
In this case, we talk about Singapore National Reserve as our money resources.

But let’s not forgot that we still have our fund in Temasak Holding, GIC and Town Councils.
Although, these fund sound different from Singapore Reserve, it is never-the-less still Singapore money resources.

While it seem good that our Government is dipping into our reserve to help our people, the question is that can we not take money from other places like Temasak Holding, GIC and Town Councils ?
Furthermore, they mentioned that government is dipping into the reserve, despite having sufficient saving amassed during the current term of government.

Or is it that these other pockets of money (Temasak Holding, GIC and Town Council Funds) are tied down in the America and Europe investment (which look pretty high risk at this moment).
If this is the case, there may be little usable fund in these pockets such that we have to dip into our national reserve ?

It is good that Government realize the urgency of the situation and come up with plans to help Singaporeans.
But we should not be complacent and assumed that these policies are the best.
I believed there are still faults in the policies and further improvement is needed.


Attachment #1: Today, 23 Jan 2009, Page 1

Attachment #2: Today, 23 Jan 2009, Page 2


Attachment #3: Toady, 23 Jan 2009, Page 2


Attachment  #4: Today, 23 Jan 2009, Page 3


Attachment #5: Today, 23 Jan 2009, Page 4


Attachment #6: Today, 23 Jan 2009, Page 6


Attachment #7: Today, 23 Jan 2009, Page 820090123a07_singaporebudget2009_todaypg8

Attachment #8:  Today, 24 Jan 2009, Page 2


Attachment #9:  Today, 24 Jan 2009, Page 2


Attachment #10:  Today, 24 Jan 2009, Page 2


Attachment #11: Today, 30 Jan 2009, Page 1


Attachment #12: Today, 19 Jan 2009, Page B3




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