OCBC says the 2021 Budget will position Singapore to be more economically resilient.
Singapore’s Budget 2021 should focus on pushing to ingrain green practices as these will ensure a sustainable recovery in a post-pandemic world, the OCBC noted in its SG 2021 Budget Preview.
OCBC explained that green practices—such as reducing unnecessary consumption, food and waste management, cutting carbon emissions, paper and plastic usage as well as encouraging the adoption of efficient technologies and use of renewable energy sources and reusable bags, and recycling—are essential to ensure sustainable recovery.
“On the funding side, green financing incentives could be further enhanced as investments mandates are increasingly incorporating ESG as a criteria, and there has been a surge in green-related financing deals coming to the market recently,” OCBC said.
“Singapore as a small island and city-state is under direct threat from rising sea levels, and the COVID pandemic has been a timely reminder that our lifestyles and business operations can impact the environment,” it added.
Infrastructure upgrade to help 5G rollout
OCBC also said that the budget would reposition and reinforce Singapore’s competitive advantages, especially with Singapore’s Smart Nation initiative and 5G rollout.
Infrastructure upgrades and investments would continue, particularly with increasing digitalisation, automation, and innovation.
In this regard, grants to fund qualifying projects, especially by SMEs, would continue to reap economic benefits as they transform to adapt in the new age.
However, OCBC warned that there would be a need to guard against cybersecurity risks when more local firms are adopting e-commerce models in the new borderless business world.
Goods and services tax hike unlikely
On the other hand, OCBC predicts that a hike in goods and services tax is improbable at the moment, but may be a story for the future, likely in 2023 or 2024.
“The general principle that healthcare, infrastructure and security expenditure will continue to increase further in coming years remains valid and the 2% point GST hike is expected to contribute up to 0.7% of GDP per year. For 2021, NIRC, followed by personal and corporate income tax receipts remain the top three contributors to the revenue base, with GST revenue remaining in fourth place,” OCBC said.