Comments on Singapore’s fourth support package, Fortitude Budget, for COVID-19

SINGAPORE, 26 MAY 2020 --

Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International:

The Singapore government has announced a fourth round of support measures in Parliament on May 26, 2020 to help businesses, workers and households mitigate the coronavirus (COVID-19) impact.

The new "Fortitude Budget" follows the Unity Budget announced on February 18, the Resilience Budget of March 26 and the Solidarity Budget of 6 April, and comes as Singapore is about to ease out of the two-month circuit breaker which lasted from 7 April to 1 June. Schools will reopen but most workplaces will still remain largely shut after 1 June, at least for four weeks during Phase 1.

Known as the Fortitude Budget, this fourth stimulus package will cost a further S$33 billion. The extra stimulus will take the government’s COVID-19 related relief measures to S$93 billion, representing 19.2% of gross domestic product (GDP).

We note that the central focus for the Fortitude Budget is jobs, with more measures to support workers and businesses who remain affected by border closures and safe distancing measures. Besides enhancing the Job Support Scheme (JSS), more than 40,000 jobs are to be created in public and private sectors, and about 25,000 traineeships will be created this year to help job seekers gain industry-relevant experience. To support digital transformation, the government will pay a Digital Resilience Bonus of up to S$5,000 for F&B, retail businesses that go digital e.g. adopt PayNow Corporate and e-invoicing, as well as business processes or e-commerce solutions.

New support measures related to the property sector

  • New cash grants to offset rental costs for SMEs

The Singapore government will provide a new cash grant to offset more of the rental costs of small and medium-sized enterprises (SMEs), to be disbursed through property owners. For qualifying tenants of commercial properties, such as shops, the grant will amount to about 0.8 month's worth of rent. Those in industrial and office properties will get a grant amounting to 0.64 month's of rent.

Taken together with the earlier property tax rebates earlier (100% for retail properties equivalent to 1.2 months’ rent, and 30% for office and industrial properties equivalent to 0.36 month’s month), the government will, in effect, offset about two months' of rents for qualifying SME tenants of commercial properties, and about one month for qualifying SME tenants of industrial and office properties.

  • New law to mandate landlords grant temporary rental waiver to SME tenants

The Singapore government will introduce a new bill to mandate landlords grant a rental waiver to small- and medium-sized enterprise (SME) tenants that have suffered a significant revenue drop in the past few months.

The new bill will also cover provisions on temporary relief from onerous contractual terms such as excessive late payment interest or charges. It will also allow tenants to repay their arrears through installments. If the bill is passed by Parliament, SME tenants in commercial properties who have suffered a significant revenue drop will benefit from a total of four months' of rental relief - shared equally between the government and landlords.

Meanwhile, other SME tenants in industrial and office properties will also be given some relief. They also already benefit from temporary relief from rental payment obligations until October.

 

Colliers' comments: 

We expect these two new measures, taken together, should provide further clarity in helping SMEs to survive COVID-19 and its effects.

The earlier Temporary Measures bill provided a moratorium in rental payments for affected businesses, but uncertainty of the tenants’ ability to pay after six months still exists, which create a lot of risk to the landlords and entire eco-system. A full four months’ rental relief for SME retail tenants, with landlords sharing half of it, should ensure a better collective outcome for both tenants and landlords.

Selected measures

Measures

4th support Budget on 26 May

3rd support Budget on 6 April

Supplementary Budget on 26 March

Budget on 18 Feb

 

Beneficiaries

Property tax rebates for qualifying commercial properties including shops and restaurants

 

 

100% (equivalent to 10% of annual rent or 1.2 month rent)

15%

Retail landlords to pass through to tenants

Property tax rebate for hotels, serviced apartments, tourist attractions, MICE venues

 

 

100%

30%

Hospitality

Property tax rebate for Integrated Resorts

 

 

60%

10%

Integrated Resorts operators

Property tax rebate for non-residential properties

 

 

30% (equivalent to 3% of annual rent or 0.36 month rent)

None

Industrial, warehouse, office landlords to pass through to tenants

*NEW*Cash grant for qualifying SMEs for property rental

0.8 month rent for SME commercial tenants and 0.64 month for SME industrial and office tenants

 

 

 

SME tenants in private retail, office and industrial properties

Rental waivers for non-residential tenants of state properties

Such as hawker centres, JTC, SLA, HDB, URA, BCA, NParks, and PA

+2 months for hawkers and commercial tenants; +1 month for industrial, office and agricultural; bringing total 5 months for hawkers, 4 months for commercial; 2 months for industrial, office and agricultural tenants

+0.5 month for industrial, office and agricultural tenants; rest remained same

0.5 to 3 months

0 to 1 month

Non-residential tenants of government agencies

Deferment of income tax payments for companies and self-employed persons

 

 

3 months

None

Industry-wide

Jobs Support Scheme

1 additional month of support til November 2020, will be at the same levels as those provided during the non-"circuit breaker" months.

75% of monthly wages for every local worker in employment, capped at S$4,600, for the “circuit breaker” month of April and May

25% of monthly wages for every local worker in employment, capped at S$4,600, for 9 months til October 2020

None

Industry-wide

Enhanced Jobs Support Scheme for Aviation, Tourism, Food Services, Land Transport, Arts & Culture sector; Aerospace, marine, offshore, retail sectors

75% wage offset for those businesses which cannot resume operations post circuit breaker until August, eg. retail outlets, gym and fitness studios, and cinemas.

 

50- 75% wage offset, capped at monthly wage of S$4,600, for 9 months til end-2020

None

Industry-wide

Foreign worker levy waiver/ rebate

Foreign Worker Levy waiver and rebate extended by up to 2 months for businesses that are not allowed to resume operations on-site after circuit breaker, and will include all firms in the construction, marine and offshore, and process sectors.

The monthly foreign worker levy due in April will be waived.

 

 

 

As early as Apr 21, employers will also receive a foreign worker levy rebate of S$750 for each work permit or S pass holder.

None

None

Industry-wide

Cash payout and grocery vouchers to households, utility bill credit

Households with at least one Singapore citizen will get a one-off S$100 credit in their utilities bill.

Additional S$300 cash payout for every Singaporean adult, and one-off payment of S$600 by 30 April

S$300 - 900

S$100 - 300

Industry-wide

Source: Colliers International, Ministry of Finance

 

 

---

Media Contact:

Annabelle Taylor