Little Evidence the Singapore Budget can Help Address Future Challenges

Presumably, Singapore’s Golden Jubilee Budget is aimed at preparing the country for challenges it expects to face in the future. I do not find any convincing evidence for it in the Budget that was presented by Finance Minister Tharman Shanmugaratnam this evening.

Channel8News pictureAll he has done is to launch a SkillsFuture scheme to encourage life-long learning. This is akin to the Skills Development Fund we already have – something that is designed for both Singapore PRs and Singaporeans.

Then the Budget offers some fee concessions for pre-school, primary and secondary school education.

All that are welcome measures, but how is that going to address the country’s long-term requirements? What the Minister has announced starts when people are on the job or when they see a need to upgrade their skills. An immediate requirement is to get more Singaporeans into critical STEM-related courses in the universities here? That is the only way Singapore can be ready for the future with minimal reliance on foreigners.

University Admissions: An immediate requirement is to get more Singaporeans into critical STEM-related courses in the universities here? That is the only way Singapore can be ready for the future with minimal reliance on foreigners.

An immediate requirement, though, is to get more Singaporeans into critical STEM-related courses in the universities here. That is the only way Singapore can be ready for the future with minimal reliance on foreigners.

Money Spinners: The fees for university education will remain high, with insignificant distinction between Singaporean and foreigner admissions. As universities are designed to be money spinners it is easier for the government to focus on primary schools where the fees are already low.

Singapore has long come past the stage of basic education. What is vital now is getting as many Singaporeans as possible into the world-class universities we have here, and in prime STEM courses such as engineering. Having the best universities here may offer us pride but without easy access to them for Singaporeans they will not be very meaningful.

The universities here have great courses geared for the future, such as data analytics.

For a self-reliant future, Singaporeans must have no impediments for entry into the universities and into such courses..

Then there are no lower personal income taxes for the average Singaporean even as the country is ranked as the world’s most expensive to live in.

Predictable Reactions: Predictably, business-driven companies such as PwC, Deloitte and KPMG are upbeat about the budget presented by Singapore Finance Minister this evening. I will not be swayed by their reactions as I have little reason to believe they are objective.

I would not get carried away by the opinion of analysts as well given that they always have motives in what they say – they are the ones who manipulate the markets the way they want them to move. So what they say is typically self-serving and not necessarily credible.

The reactions of people that the budget touches are what that will need to be weighed.

Detailed information on the Budget can be found in the government site at http://www.singaporebudget.gov.sg/budget_2015/home.aspx

More of my thoughts on the Budget are tabulated below.

What’s in the Budget? Relevance / Impact
CPF The CPF salary ceiling will go up to S$6,000, from S$5,000 But why only from January 1, 2016? Why not right away as companies have already been anticipating this for the last six or so months?
CPF rates for older employees to be raised This is good for the older workers who manage to escape the axe.But, what is the motivation for employers to retain older workers earning higher than the lesser experienced ones? In an environment where cost-cutting and boosting EBIT is the corporate mantra, businesses just want the work done, throwing quality out the door!Is this a conspiracy to further encourage age discrimination?
Special Employment Credit Scheme to encourage re-employment beyond the age of 65 This is misplaced optimism as these are times when people in their 40s are at risk of losing jobs for one simple reason – they get handsome salaries.If anything, companies will use the credit through some manipulation.
Learning / Education New SkillsFuture scheme giving learning grants to all Singaporeans This misses the real issue – to be ready for the future and be self-reliant, Singapore will need to get Singaporeans in large numbers into universities, particularly in STEM-related courses.
Income Tax Top income earners (those with a chargeable income of over S$320,000) will have to pay higher income tax – up from 20% to 22%. This affects the top 5% of income earners here, as the Finance Minister pointed out. They should be least worried about this increase.For those earning lesser, there is a rebate of 50 per cent capped at $1,000. At best, the saving is S$1000 a year or around $85 a month.
Productivity The Government will “sharpen support” to businesses making “significant effort to raise productivity.” Boosting production can prop up the economy as long as it does not get stuck in the inventory with lower demand when the circumstances are tough. But a move that will be welcomed by businesses.
Singapore Business More incentives for Singapore companies focused on innovation Fostering innovation necessary for a next-generation environment is a move in the right direction.

Please also refer to my earlier post on the Budget today.

G Joslin Vethakumar

Advertisements

Leave a comment

Filed under Singapore Budget 2015

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s