Speech for 2020 Budget Debate by Henry Kwek, MP for Kebun Baru, Nee Soon GRC.
Mr. Speaker Sir,
Our Response to the Coronavirus Crisis
1. I would start with our response to the Coronavirus crisis. First, most Singaporeans are heartened by the speed and scale of our initial economic response. The pressing issue is now is effective implementation of the short-term economic package, and a dynamic response as the crisis unfolds.
a. Effective implementation requires all parties to partner with one another, in the spirit of SG Together.
b. We must also respond dynamically as events unfold. A prolong U-Shape economic situation is becoming more likely. Why?
i. When major societies manage the pandemic in a decisive, clear, and transparent way, the economic impact is limited to a short-term supply shock and deferred demand, all leading to a V-shape rebound.
c. On the other hand, if major economies fail to implement containment and mitigation efforts, widespread fear and uncertainty will triggers a second level economic impact leading to a U-shape scenario. Governments will need to coordinate economic responses within and beyond their borders.
d. And if a coordinated economic response fails, in an extreme scenario, global economic contagion could happen.
2. The global financial market has starting to price in a U-shape scenario. Investors are beginning to wonder:
a. In the US, with the upcoming Presidential elections, can the Democrat-held House of Representative, and the Trump administration, partner effectively on healthcare and fiscal responses?
b. Also, if Northern Europe can mitigate a pandemic much more effectively than Southern Europe, will the former want to bear the burden of a large EU fiscal response?
3. It is still too early for us to tell. Nevertheless, business leaders, including many from my constituency, would like to contribute ideas on how we can implement effectively, and respond dynamically.
4. One. For the next twelve months, MOF, MTI and MOM can have monthly meetings with key TACs and unions. Key areas to track include: bank-lending levels by sector and company size; short-term grant utilization; and efforts to help affected workers. This allows for dynamic response.
a. For example, if companies withhold wage across the board, there could be less take-up on the Enhanced Wage Credit scheme.
b. Could we then, perhaps, re-deploy funds to other short-term measures, so as to achieve the intended positive fiscal impulse.
5. Two. Some companies in badly affected sectors hope for more assistance in a prolong downturn: Some ideas.
a. IRAS can also consider implementing the Jobs Support Program for them immediately.
b. Some deeply impacted companies are asking for a short-term waiver of the Foreign Worker Levy. If we do so, our objective must be to protect the jobs of the Singaporeans in these companies.
c. Also, during SARS, STB prepared an excellent marketing campaign, so that we were one of the first to pitch for tourism when travel resumed. Even as things look bleak for the tourism today, we can do similar preparations.
6. Three. Our banks must live up to the social and moral responsibility to lend to viable companies, especially now that the government has done its part to take on more default risk.
a. Many banks are digitization their relationship and risk management approach.
b. In fact, many smaller SMEs with me that they no longer know who are their champions within their banks, which is critical during tough times.
c. Our Singapore banks have a strong reputation of being responsible in supporting viable companies during tough times. Now is the time for them to earn that reputation for many more years to come.
7. Four. MAS can consider accelerating the banking licensing process for new entrants, if they bring different perspectives on credit-worthiness (for example through supply chain data analytics), so that more viable firms benefit.
8. Five. Some foreign workers are thinking of returning home.
a. After the Little Indian Riot, I saw first hand how our frontbench went systematically to major dormitories to calm the ground.
b. Our TACs, businesses, the government, and unions can consider doing something similar.
c. Also, if there is an exodus of foreign workers from any particular country, perhaps MOM can consider temporarily expanding the countries our firms hire from.
9. And lastly, some Singaporeans are wondering if there will be a second economic package.
a. Could MOF share the likely criterion to determine if a second package is needed? And the considerations that determine the scale and scope of further actions?
10. I also hope the TACs leaders, who are usually respected elders in their industry, play the difficult role to counsel owners, when their business are no longer viable, and on how to move forward.
a. So that they can seek social assistance early, and move quickly to new opportunities, before their finances deteriorate beyond the point of no return.
MOH’s exceptional response; Reviewing our Strategic Healthcare Stockpile
11. Next, Let me next speak on MOH exceptional response to the coronavirus. I recently ran into my family GP of many years.
a. Like many Singaporeans, he commended MOH for the excellent response so far. He shared that during SARS, we had limited medical resources – CDC 1 was a pre-war building, and CDC 2 was a converted ward.
b. Today, we have an excellent system, with the state-of-the-art NCID at the heart of it.
12. Well-informed foreign investors also shared with me that should a global pandemic happen, Singapore is best placed regionally to weather the storm.
13. I am also heartened to see MOH’s additional 800 million budget, on top of the large post-SARS investments. As a comparison, US is seeking additional funding of 1.2 billion USD for their CDC, for a population of 300 million. Clearly, our government spares no expenses when it comes to protecting the lives of Singaporeans!
14. With globalization and climate change, we must expect more pandemics, not less. Yet over the years, the global healthcare supply chain has become overly lean for even crucial healthcare essentials.
15. According to WHO, the widespread inappropriate use of facemask and protective suits globally by those not on the frontline caring for patients, further contribute to the unexpected shortage and price surge.
16. Therefore, changing global circumstances require us to do an immediate review of our medical stockpile and resilience policy, both for basic drugs and medical disposables commonly used in pandemics.
17. If necessary, we should anchor relevant manufacturers in Singapore on strategic, and not purely economic considerations. And if that is not possible, we could explore pre-position materials and manufacturing capabilities within Singapore.
Up-Skilling and Re-Skilling Singaporeans
18. Next, developing our Singaporeans. We are also making wonderful progress for our senior workers to age. Our urgent task now is to strengthen the employability our mid-career Singaporeans, especially in a prolong downturn. Here are some suggestions.
19. First, I hope mid-career Singaporeans will fully embrace the SkillsFuture NextCareer Package, now they have an additional 1,000 dollars credit. I also hope to see strong publicity by all for SkillsFuture.
20. Second, I hope some industries and TACs can step up. A sector is more viable if the companies actively steer industry development.
a. Some industries have yet to come up with compelling visions, despite the additional help that the government has provided to TACs.
b. Without a compelling vision, Singaporeans will struggle to identify meaningful paths for up-skilling within those sectors.
c. If things do not move in some of these sectors, I hope the existing companies and government can partner to create alternative TACs to drive industry development.
i. Too many jobs, especially those from mid-career Singaporeans, are at risk if we do not get the transformation right.
21. Last, should we face a long downturn, I hope the government can actively work with certain established industries to absorb more mid-career Singaporeans.
a. These include the construction, engineering services, healthcare, social work sectors, which usually have difficult recruiting Singaporeans, even for supervisory jobs. Companies can tap on MOM’s many excellent initiatives to attract Singaporeans.
b. I also hope that affected Singaporeans will also keep an open mind to these jobs. Career transitions are very hard. But I am confident that Singaporeans will rise to the occasion.
c. And if things do not improve, I hope the government can consider further DRC reduction for these specific sectors, and implement the Fair Consideration Framework vigorously.
d. Tough actions could become necessary. Because our sectors that usually absorbs on mid-career Singaporeans – heartland enterprises, the IR, airport, hospitality, and private hire transportation – may not be able to do as much now. We must give our mid-career Singaporeans the best fighting chance to stay employed.
The Impact of BEPS
22. Beyond current concerns, we must keep a lookout to longer-term trends. I hope that our house can start tracking developments on the Base Erosion and Profit Sharing (BEPS).
23. Our tax incentives for income within and beyond Singapore are important tools to anchor major investments in Singapore.
24. The G-20 has turned on the pressure on hub economies such as Singapore, Switzerland and Hong Kong. Singapore has weather Phase One of BEPS well through quick adjustments.
25. But there is a Phase Two coming, along two fronts:
a. One, EU and the UK wants a cut of their own citizen’s e-commerce revenue, even though existing rules dictates that tax revenue should largely reside in locations generating economic activities.
i. The US currently stands in the way of this proposal, as they benefit from e-commerce.
ii. But one cannot rule out a future compromise, to the detriment to hub economies.
b. Two. Some major developed economies are pushing for a minimal global tax.
i. So that they can tax their companies more, even if their companies get a preferential tax rate elsewhere, regardless of the justification.
26. If these developments take place, the impact on our revenue base could be swift and sizable. Billions of dollars of lost corporate income tax; additional spending to keep and attract current and future investments; loss tax revenue and spending by a reduced international workforce; and less job opportunities for our people.
27. I hope that within this chamber, as we discuss about meeting current and future needs, we can keep in mind the possibility of a sudden revenue.
28. Let me conclude. In trouble times like this, we can see the mettle of a country’s governance system.
29. Yes, Singapore is undoubtedly the canary bird for globalisation.
a. Pandemics, trade wars, terrorism, identity politics, climate change, and fake news can hit Singapore hard and fast.
30. Nevertheless, the world can expect Singaporeans, in the spirit of SG Together, to emerge stronger from every crisis.
a. Because they know the hallmark of Singapore, is our ability
i. To implement effective,
ii. And respond dynamically,
iii. To short-term, medium-term, and long-term challenges,
iv. All at the same time,
31. I stand in support of the budget. Thank you.
Watch the speech here