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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published February 24, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Building muscle for the days to come
Budget a generous one in terms of attaining long-term growth: economists
By MICHELLE QUAH
(SINGAPORE) Economists and accountants are unanimous in their verdict that this year's Budget has been a generous one in terms of helping Singapore attain long-term growth, through a concentrated focus on boosting productivity.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>In transit: With this year's Budget, the focus has clearly shifted to securing future growth from weathering the economic storm </TD></TR></TBODY></TABLE>But, with fewer measures than expected - especially in the area of tax cuts - they're also of the view that this is not a pre-election Budget, suggesting the polls will only take place in 2011.
The experts noted that, with this year's Budget, the focus has clearly shifted to securing future growth from weathering the economic storm.
PricewaterhouseCoopers (PwC), in its Budget Review, said: 'The general outlook, judging by the tenor of this year's Budget speech, was that the storm had indeed passed, and that what was needed now was to take a compass bearing and get on with the original plan for the sustainable growth of the Singapore economy and its people.'
KPMG said, in its Budget Tax Special, that the goal of this year's Budget is clear: 'It seeks to create a powerful growth engine that will transform the Singapore economy into a more sophisticated and advanced one.'
Morgan Stanley Research's Asia-Pacific team, in their research note on the Budget, said: 'With the macro trough now behind us, the FY2010 Budget moves beyond the short term to focus on longer-term growth sustainability. Specifically, the Budget places emphasis in the three areas of productivity, competitiveness and growth inclusiveness.'
The government had on Monday unveiled $5.5 billion worth of measures to boost productivity here, as well has incentives to boost research and development and innovation among local enterprises and ways to cut acquisition costs for companies. And, for greater growth inclusiveness, the government introduced a progressive property tax system, as well as various tax reliefs.
PwC noted: 'The clear approach he (the finance minister) took was from the bottom up. The thrust of the initiatives announced were aimed at the lower-paid, the consolidation and growth of small and medium enterprises, and a general upgrading of quality and productivity from the lowest levels up, through training and innovation.'
Morgan Stanley said: 'In our view, the thrust on productivity and growth inclusiveness address the macro issues emanating from within. The 8.4 per cent average GDP growth seen in 2004-2007 had been predicated on the global liquidity supercycle and to a certain extent on factor input from strong foreign labour growth. Additionally, until late in the last upcycle, growth recovery had also been uneven in distributing income amongst the different income groups. Focusing on productivity is definitely key to future growth sustainability and income growth.'
'On the other hand, the focus on competitiveness addresses the issue from without, ie. growth extraction could be more difficult to come by if (the) developed world, such as Europe, were to continue to see subdued growth. We think the growth strategy will remain one of export-orientation,' it added.
Still, there was disappointment that highly anticipated measures were missing from the actual Budget - namely, a cut in the corporate and personal income tax rates here.
Accounting firm BDO also expressed disappointment in the government's decision not to extend the Foreign Sourced Income Exemption introduced last year. 'The objective of introducing the Exemption in the Budget 2009 was to facilitate remittances into Singapore during a period of recession. Singapore is just about to emerge from the recession and therefore it would have been good to see the exemption extended for another year,' noted its head of tax, Rohan Solapurkar.
Citi economist Kit Wei Zheng says the absence of certain measures in this year's Budget suggests that general elections in Singapore may be held next year instead of this year.
'The FY09 deficit undershoots initial Budget assumptions significantly (actual: $2.9 billion or 1.1 per cent of GDP; budgeted: $8.7 billion or 3.4 per cent of GDP), while the FY2010 deficit is expected at $3.0 billion, the largest deficit since 2001. Assuming the $4.9 billion of fiscal reserves unlocked last year were fully spent, we estimate this government has accumulated fiscal savings of $6.9 billion that can, in theory, be utilised to finance a similarly-sized deficit in FY11. The government may thus be saving fiscal bullets for a pre-election Budget in 2011,' he said.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Building muscle for the days to come
Budget a generous one in terms of attaining long-term growth: economists
By MICHELLE QUAH
(SINGAPORE) Economists and accountants are unanimous in their verdict that this year's Budget has been a generous one in terms of helping Singapore attain long-term growth, through a concentrated focus on boosting productivity.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>In transit: With this year's Budget, the focus has clearly shifted to securing future growth from weathering the economic storm </TD></TR></TBODY></TABLE>But, with fewer measures than expected - especially in the area of tax cuts - they're also of the view that this is not a pre-election Budget, suggesting the polls will only take place in 2011.The experts noted that, with this year's Budget, the focus has clearly shifted to securing future growth from weathering the economic storm.
PricewaterhouseCoopers (PwC), in its Budget Review, said: 'The general outlook, judging by the tenor of this year's Budget speech, was that the storm had indeed passed, and that what was needed now was to take a compass bearing and get on with the original plan for the sustainable growth of the Singapore economy and its people.'
KPMG said, in its Budget Tax Special, that the goal of this year's Budget is clear: 'It seeks to create a powerful growth engine that will transform the Singapore economy into a more sophisticated and advanced one.'
Morgan Stanley Research's Asia-Pacific team, in their research note on the Budget, said: 'With the macro trough now behind us, the FY2010 Budget moves beyond the short term to focus on longer-term growth sustainability. Specifically, the Budget places emphasis in the three areas of productivity, competitiveness and growth inclusiveness.'
The government had on Monday unveiled $5.5 billion worth of measures to boost productivity here, as well has incentives to boost research and development and innovation among local enterprises and ways to cut acquisition costs for companies. And, for greater growth inclusiveness, the government introduced a progressive property tax system, as well as various tax reliefs.
PwC noted: 'The clear approach he (the finance minister) took was from the bottom up. The thrust of the initiatives announced were aimed at the lower-paid, the consolidation and growth of small and medium enterprises, and a general upgrading of quality and productivity from the lowest levels up, through training and innovation.'
Morgan Stanley said: 'In our view, the thrust on productivity and growth inclusiveness address the macro issues emanating from within. The 8.4 per cent average GDP growth seen in 2004-2007 had been predicated on the global liquidity supercycle and to a certain extent on factor input from strong foreign labour growth. Additionally, until late in the last upcycle, growth recovery had also been uneven in distributing income amongst the different income groups. Focusing on productivity is definitely key to future growth sustainability and income growth.'
'On the other hand, the focus on competitiveness addresses the issue from without, ie. growth extraction could be more difficult to come by if (the) developed world, such as Europe, were to continue to see subdued growth. We think the growth strategy will remain one of export-orientation,' it added.
Still, there was disappointment that highly anticipated measures were missing from the actual Budget - namely, a cut in the corporate and personal income tax rates here.
Accounting firm BDO also expressed disappointment in the government's decision not to extend the Foreign Sourced Income Exemption introduced last year. 'The objective of introducing the Exemption in the Budget 2009 was to facilitate remittances into Singapore during a period of recession. Singapore is just about to emerge from the recession and therefore it would have been good to see the exemption extended for another year,' noted its head of tax, Rohan Solapurkar.
Citi economist Kit Wei Zheng says the absence of certain measures in this year's Budget suggests that general elections in Singapore may be held next year instead of this year.
'The FY09 deficit undershoots initial Budget assumptions significantly (actual: $2.9 billion or 1.1 per cent of GDP; budgeted: $8.7 billion or 3.4 per cent of GDP), while the FY2010 deficit is expected at $3.0 billion, the largest deficit since 2001. Assuming the $4.9 billion of fiscal reserves unlocked last year were fully spent, we estimate this government has accumulated fiscal savings of $6.9 billion that can, in theory, be utilised to finance a similarly-sized deficit in FY11. The government may thus be saving fiscal bullets for a pre-election Budget in 2011,' he said.
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