What business executives say about Singapore Budget 2022

SINGAPORE— Finance Minister Lawrence Wong on 18 February delivered the "Charting Our New Way Forward Together" Budget for financial year 2022, which laid out the blueprint for Singapore to prepare for a post-pandemic future.

The measures include raising the Goods and Services TAX (GST) in two stages from 7 per cent to 8 per cent on 1 January 2023, and from 8 per cent to 9 per cent on 1 January 2024. The increase in GST will be cushioned by the additional S$640 million top-up to the S$6 billion Assurance Package.

The minister also announced "significant enhancements" to the tax system aimed at helping to raise additional revenue and also contribute to a fairer revenue structure. The changes include raising the personal income tax rate for top-tier earners, adjustments to property taxes and an additional levy on luxury cars.

Here is a look at what some business executives have to say about the Singapore Budget 2022.

Benjamin Choy, Group Chief Operating Officer, Natural Cool Holdings Limited

The increases in taxes on luxury cars, high income earners, and investment and high end residential properties is understandable. More importantly, the decision to roll out GST increases in an incremental and graduated manner with a longer than anticipated implementation runway is a relief. This will give businesses time to react and readjust to the changes, and gives industries and markets time to properly adjust their cost and pricing structures to reduce undue burden on the consumer.

However in the longer run, we cannot keep increasing GST to fund expenditure, and our tax base must increase – this means we must register strong and sustained economic growth.

I am really concerned about the changes to the foreign workforce policies and its impact on the Built Environment sector as this industry is still currently facing a trifecta of labour, raw material and supply chain stresses. Given that many large projects have multi year timelines, I am anticipating continued cost uncertainty in this sector. I hope the government will reconsider the timeline for implementing changes to some of these policies to cushion their impact on this sector.

Tan Tee Khoon, Country Manager, PropertyGuru Singapore

Those who own luxury homes and/or multiple properties will feel the biggest pinch as the rates will be significantly greater for properties at the higher end. An average Singaporean homeowner who owns just the single property will not be affected by this change.

Private property prices and rentals, which affect annual values, have risen substantially in the past year. Taxes on non-owner occupied residential properties will clearly be hefty. This measure is another large blow to property investors, especially when it is announced just two months after the introduction of the Additional Buyer's Stamp Duty (ABSD) hike, announced last December.

The rate hike may increase the price of rents if property owners choose to direct the additional costs to their tenants. However, this will only affect a niche group of landlords owning properties with rents above S$10,000 per month. The sales of luxury properties are unlikely to be affected as these tend to be purchased as trophy assets, whereas buyers are more focused on capital appreciation than just rental yield.”

Benjamin Soh, Co-Founder and Managing Director at STACS

The tracking of ESG goals for companies across all sectors (e.g. transport, building and construction, manufacturing, food and agriculture, renewable energy, etc.) is vital for Singapore’s international competitiveness.

Increasing the carbon tax not only puts pressure on these industries to become greener across their supply chains and operations, but it also indirectly supports technology innovators who are building the ESG tracking platforms. Without increasing the carbon tax, investment in new technologies in many traditional sectors would be too slow as the economics would favour the status quo.

As an ESG fintech platform provider, we believe that the Singapore government’s decision to raise the carbon tax as well as to signal a policy regime of gradually increasing the cost of carbon over the coming decades, are necessary regulatory push to accelerate the nation’s adoption of green and sustainable finance.

Warren Hayashi, President, Asia-Pacific, Adyen

The government’s S$25 billion R&D commitment and S$200 million digital capability support will build on the momentum we’ve seen in the past two years, as the pandemic fast-tracked digitalisation. Businesses still operating with legacy systems now need to look beyond survival and embrace innovation to address the structural shifts in the way businesses and consumers interact.

Flexibility and scalability should now be the focus for businesses – systems that aren’t automated and integrated won’t have the agility to face the next cyclical dip or capitalise on new avenues of growth.

Arne Jeroschewski, Co-Founder and CEO, Parcel Perform

The government is enhancing the Grow Digital scheme, which helps local SMEs sell overseas via e-commerce platforms to help them expand to more countries. This is a fantastic initiative with great opportunities for the sector. We have seen e-commerce developing to become a part of everyday life for consumers. Given the relatively small size of our domestic market, building inroads to overseas markets are essential for the growth of these Singaporean SMEs.

In addition, delivery speed and visibility are essential components to any great online shopping experience. Government stakeholders will need to ensure that efficient supply chains and customs processes are in place. This is an additional critical enabler for our local SMEs to succeed at cross-border e-commerce.

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