No Match Found
This article was contributed to and first published in The Business Times on 17 February 2021.
COVID-19 has clearly rattled Singapore's economy. But Budget 2021 shows that the government is determined to focus on the positive with a strong emphasis placed on sustainability.
Despite the country incurring a record budget deficit of S$64.9 billion - close to 14 per cent of the country's gross domestic product - this year, choosing this rather difficult time to push ahead and strengthen Singapore's economic, climate and resource resilience is a valiant move.
Like many governments globally, Singapore did not hold back on spending big.
This year, the government will set aside S$11 billion to provide continued support to businesses and individuals still reeling from the effects of the pandemic. This is on top of the close to S$100 billion already spent over the 5 budgets last year. Out of this, the total expected draw down from reserves for 2021 and 2022 would be up to S$53.7 billion.
For the whole of 2020, the economy contracted 5.4 per cent according to the Ministry of Trade and Industry. While this is significantly less than the 12.4 per cent contraction had there been no policy support, it is important to remember that we are not out of the woods yet. Which is why it is particularly heartening that even in these uncertain times the government is setting out an ambitious plan to transform Singapore and build a sustainable future.
By taking this opportunity amid a crisis, the government is demonstrating that they are totally committed to the sustainability agenda. But more than just going green, it is also about making sure that Singapore's economy and its businesses builds resilience in a sustainable manner. This transformation can also lead to as yet undiscovered opportunities with new skills, new industries and new intangible properties anchored around sustainability.
At a fundamental level, the government needs to continue to sustain and grow the economy while transforming it. Creating new jobs amid such changes remains paramount. For companies in Singapore, this calls for a re-look at how to transform businesses in a way that creates the most value and opportunity. Prioritising transformation through upskilling and digital transformation is key, perhaps even going abroad to discover new markets.
From a fiscal perspective, we still need to fund inclusive growth - for example caring for the aging population and addressing increasing healthcare costs. It should not come as a surprise that increasing the GST will still be on the horizon.
In many ways, the sustainability efforts mentioned during Budget 2021 play strongly across Singapore's strengths. As a vibrant financial centre, news that the government will issue green bonds on select infrastructure projects is welcome, identifying up to S$19 billion of green public-sector projects. This amount is sizable - more than 1.5 times the collective Asean green issuances between 2016 to 2019 - and will make a name for Singapore as a global centre for green finance.
The government is proving to be an early adopter within the South-east Asia region of electric vehicles (EVs).
Policies such as significantly increasing the number of charging pods by 2030 and narrowing the price differential between EVs and internal combustion engine cars, showcase this resolve. This transition to EVs will reduce emissions materially in a high adoption scenario and emissions can reduce even more as grids become greener.
While Singapore emits only 0.11 per cent of greenhouse gases in the world, the government is clearly taking a stewardship position. The Budget sets Singapore on the path to be a global economy built on businesses grounded in green finance, sustainability consultancy, verification, credits trading and risk management.
Under the Singapore Green Plan 2030, the city also plans to be the location for both global and local companies to develop innovation capabilities around sustainability for Asia through research and development.
Singapore can be the defining city state that embodies what green living is and should be. And we should take this opportunity to transform our people and our economy to serve such a purpose.
They say that it is during times of deep crisis that new norms can emerge. In many ways, there is no better time to rethink, reimagine and transform.
Chris Woo is tax leader, Abhijit Ghosh is tax markets leader, and Fang Eu-Lin is sustainability leader at PwC Singapore