Feb 25, 2013

Singapore - Govt likely to post much larger fiscal surplus for FY 2012: economists

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SINGAPORE: The Singapore Budget is due to be announced on Monday afternoon and it's expected to continue to focus on raising productivity and fostering inclusive growth.

But economists said with the government likely to post a much larger fiscal surplus for the financial year 2012, some funds could be channelled to help households and businesses.

The restructuring of the Singapore economy is in full swing - moving away from its reliance on foreign workers to spur growth, to one that is driven by higher productivity.

Tighter controls on the hiring of foreign workers have crimped growth for some firms. And many companies are also reeling from rising business costs.

Economist at UOB, Francis Tan, said: "With the recent rise in industrial prices we see that that will probably push industrial rents up north this year, that will significantly increase the business cost for businesses, together with the expected in labour cost, that is going to be very tough on businesses this year."

Some economists expect this year's Budget to be an expansionary one, but they said the incentives offered will not be broad-based but more targeted, to help low income families and businesses cope with higher costs.

Economists also added that the Budget is likely to feature more incentives to encourage companies to boost productivity and innovation.

There may also be tax rebates linked to incremental reduction in foreign worker headcount.

Another possible measure is tweaking the foreign worker levies and dependency ratio so that they are more industry-specific.

Senior economist at DBS Bank, Irvin Seah said: "For households we do not expect another generous special transfer package this year but some degree of wealth distribution would be visible in the budget. However, for households, the key things we need to focus this year, that will be more initiatives in terms of upgrading skills set which will help mitigate the negative side effects of the restructuring."

Economists also expect the Budget to outline more public infrastructure expansion plans.

- CNA/ck

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