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Ethos Issue 6, Jul 2009
Extraordinary Times,
Fundamental Principles:
The 2009 Budget and the Ministry of Finance’s
Approach to Countercyclical Economic Strategy
Jonathan Pflug
| NOTES |
| 01. |
Budget 2009 speech. For more details, see http://www.
singaporebudget.gov.sg/ |
| 02. |
Prior to 2009, the largest deficit on record was 3% of
GDP in 2003, in response to the recession that followed the
outbreak of the Severe Acute Respiratory Syndrome. |
| 03. |
Based on internal MOF data |
| 04. |
With the employer’s CPF contribution standing at 14.5%
of employee wages, a 9-percentage point CPF cut would
lower employer contribution rates to 5.5%. This is a 62%
reduction. The scale of this reduction is in line with those
undertaken in response to the 1985 recession, when the
employer’s CPF contribution was lowered from 25% to 10%
in the following year. |
| 05. |
In a February 2009 post-Budget survey, the Singapore
Chinese Chamber of Commerce and Industry (SCCCI)
asked its 131 member associations which measures they
considered to be most helpful. 78% of respondents cited
the Jobs Credit scheme. See Teh Shi Ning, "Jobs Credit
scheme most helpful: survey", Business Times, 19 March
2009. |
| 06. |
Under Budget 2009, the new Bridging Loan Programme
supplants an initiative of the same name, originally
launched in November 2008, which provided a 50% risk-share
on unsecured working capital loans of up to $500,000.
The Budget 2009 version of the programme surpasses the
November initiative on every scale. |
| 07. |
In terms of retaining jobs, multi-national corporations, like
German chipmaker Infineon Technologies Asia-Pacific, have
applauded the Jobs Credit scheme for easing the pressure
off their labour costs. Meanwhile, Deloitte and Touche
has cited the scheme as affirmation for its decision to hire
150 new graduates. Some other companies have also said
that they would use the funds in different ways, such as
investing in training and new equipment. See Alvin Foo and
Robin Chan, "Cash grant helps wage bill", The Straits Times,
24 January 2009. |
| 08. |
At a March 2009 tripartite dialogue with unionists,
Mr Tan Peng Heng, President of the Singapore Industrial
and Services Employees’ Union, raised the example of
an aerospace company that intends to use the wage bill
savings to subsidise training. See Jeremy Au Yong, "How
the Budget helped one company", The Straits Times, 25
February 2009. |
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