SINGAPORE – Past crises are no longer good indicators of how the ongoing coronavirus outbreak will impact the global economy, and Singapore needs to be prepared for anything to happen, said Minister in the Prime Minister’s Office Indranee Rajah on Wednesday (April 8).
“What happened in the past, whether it’s the global financial crisis or Asian financial crisis, are no longer reliable predictors of what could happen because we’ve never had a situation where virtually the whole world’s economy is shut down,” she said.
“It would be a mistake for us to assume any particular scenario, and what we have to do is to make sure we are prepared for whatever comes along, which we are.”
Ms Indranee, who is also Second Minister for Finance and Education, was speaking with Money FM 89.3 presenters Elliott Danker and Ryan Huang on Singapore’s Budget and the supplementary budget, as well as the Covid-19 (Temporary Measures) Act which was passed on Tuesday.
Among other aspects, the new temporary law seeks to prevent landlords from terminating commercial leases because of non-payment of rent, and to protect business assets from repossession if small- and medium-sized enterprises are unable to repay their instalments, if these are due to the pandemic.
Commercial properties that qualified for Budget 2020’s property tax rebates of 15 per cent to 30 per cent will, with enhancements introduced in the Resilience Budget, pay zero property tax for this year.
Commenting on the need for a law to ensure landlords pass on the rebates to tenants, Ms Indranee said some landlords had been dragging their feet in this regard, despite efforts to persuade them otherwise.
Their continued inaction made it necessary for the Government to intervene and send out a very clear signal, she noted.
“When you need to help a certain group, everyone needs to pitch in,” Ms Indranee said.
This broader thinking applies to the assistance given to businesses, to prevent a domino effect where businesses topple one after another because of cash flow problems and an inability to pay creditors.
“You really don’t want to have that because this is not a situation where it’s any particular company’s fault.
“This is a situation where globally, the whole world economy has been hit, everybody has been hit equally, and it does not help if people start taking each other down,” she said.
The thinking behind the new temporary law is to “call a timeout” and give all stakeholders, be it businesses or individuals, some breathing space to work out how they can repay their creditors, Ms Indranee said.
Responding to a question on a possible government bailout for firms in the event that things do not get better, especially for companies of strategic importance, she said the Government has not experienced that scenario thus far.
She noted that Singapore Airlines, for one, is looking at private capital injection led by its majority shareholder – Singapore’s investment company Temasek Holdings.
“It’s too soon to say if you need further measures but so far, the measures we’ve done are in line with market practice and don’t overstrain our resources,” Ms Indranee added.
She also spoke on the use of Singapore’s reserves for the supplementary budget and returning the funds, as the Government did in 2011 after drawing on the reserves for schemes to save jobs hit by the global financial crisis in 2009.
Deputy Prime Minister Heng Swee Keat had sought and obtained in-principle support from President Halimah Yacob to draw on up to $21 billion from past reserves to fund Covid-19 support packages.
On whether the drawdown can be returned, Ms Indranee said: “It depends on what happens to the economy going forward.
“At the moment, we’re in the situation of having to draw on reserves, but from a prudent fiscal management viewpoint, if we come out stronger and we do get additional revenues, I think we will want to put (the funds) back as far as possible, so long as we have enough to meet our needs.”
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