http://www.channelnewsasia.com/stories/singaporelocalnews/view/407036/1/.html
Saving jobs will have bigger impact in boosting Singapore economy
By Ng Baoying, Channel NewsAsia | Posted: 05 February 2009 1908 hrs
Photos 1 of 1
Special Report
• Singapore Budget 2009
SINGAPORE: Putting cash directly into the hands of consumers to stimulate spending is not the best way to help Singapore's economy during the downturn.
Instead, the government believes keeping Singaporeans employed and helping businesses stay afloat makes more sense.
It says this will eventually filter down to boost consumer spending, and will have other far-reaching effects.
Speaking in Parliament on Thursday, Finance Minister Tharman Shanmugaratnam said this is why businesses and jobs were a key focus in this year's Budget.
Members of Parliament have called for direct measures to deal with falling demand for goods and services during the Budget debate. These include cutting the Goods and Services Tax (GST) to encourage consumers to spend more.
But Mr Tharman said the government opted for a solution it believed will have the most effective and far-reaching benefits for the economy.
"Our main approach has been to help the economy through the supply side by helping businesses so they can preserve jobs. What this does is to support both business demand - the demand that businesses create from each other - one supplier to another, as well as to support consumer confidence, the confidence that workers get when their jobs and incomes are secure," he said.
The minister said a GST cut is unlikely to help Singaporeans or businesses as powerfully.
"Many economists question whether consumers would at all be concerned about the real value of bank balances at a time of recession when real concerns are over the possibility of losing their jobs or earning low incomes," said Mr Tharman.
He said a GST cut is unlikely to be as effective.
Mr Tharman also said that the government has received positive feedback on measures such as the Special Risk-sharing Initiative (SRI) announced in this year's Budget.
Under the SRI, the government takes 80 per cent of loan risk. Responding to MPs who said this will not directly encourage banks to lend, the minister said top market players, who account for more than 60 per cent of lending market, have provided positive feedback on the scheme.
He said: "The move to raise the government's share of credit from 50% to 80% through the SRI was what banks felt would allow them to keep lending. The banks felt the SRI would be especially important for the significant group of companies that are essentially viable and have business models to allow them to succeed in years to come but face uncertainty in their short-term revenues."
Mr Tharman added that the amount of loans approved under SPRING's financing schemes went up more than 50 per cent in January compared to the average over the previous two months.
"But this does not mean that we will leave the banks and customers entirely on their own to work things out. The government is engaged with both the banks and the companies. SPRING is closely monitoring the flow of loan applications and is active in referring businesses to the participating financial institutions," said the finance minister.
The Singapore Business Federation and five enterprise development centres run by other business groupings are also actively helping companies with loan applications. Experienced ex-bankers have also been hired and roped in to help.
- CNA/ir
Saving jobs will have bigger impact in boosting Singapore economy
By Ng Baoying, Channel NewsAsia | Posted: 05 February 2009 1908 hrs
Photos 1 of 1
Special Report
• Singapore Budget 2009
SINGAPORE: Putting cash directly into the hands of consumers to stimulate spending is not the best way to help Singapore's economy during the downturn.
Instead, the government believes keeping Singaporeans employed and helping businesses stay afloat makes more sense.
It says this will eventually filter down to boost consumer spending, and will have other far-reaching effects.
Speaking in Parliament on Thursday, Finance Minister Tharman Shanmugaratnam said this is why businesses and jobs were a key focus in this year's Budget.
Members of Parliament have called for direct measures to deal with falling demand for goods and services during the Budget debate. These include cutting the Goods and Services Tax (GST) to encourage consumers to spend more.
But Mr Tharman said the government opted for a solution it believed will have the most effective and far-reaching benefits for the economy.
"Our main approach has been to help the economy through the supply side by helping businesses so they can preserve jobs. What this does is to support both business demand - the demand that businesses create from each other - one supplier to another, as well as to support consumer confidence, the confidence that workers get when their jobs and incomes are secure," he said.
The minister said a GST cut is unlikely to help Singaporeans or businesses as powerfully.
"Many economists question whether consumers would at all be concerned about the real value of bank balances at a time of recession when real concerns are over the possibility of losing their jobs or earning low incomes," said Mr Tharman.
He said a GST cut is unlikely to be as effective.
Mr Tharman also said that the government has received positive feedback on measures such as the Special Risk-sharing Initiative (SRI) announced in this year's Budget.
Under the SRI, the government takes 80 per cent of loan risk. Responding to MPs who said this will not directly encourage banks to lend, the minister said top market players, who account for more than 60 per cent of lending market, have provided positive feedback on the scheme.
He said: "The move to raise the government's share of credit from 50% to 80% through the SRI was what banks felt would allow them to keep lending. The banks felt the SRI would be especially important for the significant group of companies that are essentially viable and have business models to allow them to succeed in years to come but face uncertainty in their short-term revenues."
Mr Tharman added that the amount of loans approved under SPRING's financing schemes went up more than 50 per cent in January compared to the average over the previous two months.
"But this does not mean that we will leave the banks and customers entirely on their own to work things out. The government is engaged with both the banks and the companies. SPRING is closely monitoring the flow of loan applications and is active in referring businesses to the participating financial institutions," said the finance minister.
The Singapore Business Federation and five enterprise development centres run by other business groupings are also actively helping companies with loan applications. Experienced ex-bankers have also been hired and roped in to help.
- CNA/ir
