Singapore business support guidance

In a bid to contain the spread of the COVID-19 pandemic, the Singapore government implemented what it describes as a “circuit breaker” from 7 April 2020 to 4 May 2020. On 21 April 2020, the Singapore government extended the “circuit breaker” to 1 June 2020. During this period, all businesses were closed except for businesses that provided essential services. Schools were also closed during the same period and social gatherings of any size were prohibited.

On 19 May 2020, the Singapore Government announced Singapore will exit the “circuit breaker” through a three-phase approach. Phase One (named “Safe-Reopening”) commenced from 2 June 2020 to 19 June 2020. During Phase One, limited businesses were allowed to reopen. Phase Two (named “Safe Transition”) commenced from 19 June 2020 and is still in force. During Phase Two, more businesses are allowed to resume, including retail, F&B, dine-in and home-based services.

In order to save jobs and support businesses as Singapore emerges from the “circuit breaker”, Deputy Prime Minister Heng Swee Keat announced the Fortitude Budget on 26 May 2020. The Fortitude Budget builds upon the measures announced in the Solidarity Budget on 6 April 2020, the Resilience Budget of 26 March 2020, the Unity Budget of 28 February 2020 and other sector-specific initiatives to support people and businesses in Singapore given the disruption caused by the COVID-19 pandemic.

Businesses will receive support through the following measures:

• Jobs Support Scheme
• Wage Credit Scheme
• SGUnited Jobs and Skills Package
• Deferment of Higher CPF Contribution Rates
• Enterprise Financing Scheme
• Loan Insurance Scheme
• Temporary Bridging Loan Programme
• Deferment of Corporate Income Tax Payments
• Property Tax Rebate
• Freeze on all government Fees and Charges
• Rental Waivers
• Foreign Worker Levy Support
• Man-Year Entitlement Refund for Construction Firms
• Temporary Relief from Legal Action
• Temporary Measures relating to Insolvency and Directors’ Duties
• Temporary Measures relating to the conduct of meetings
• Digital Transformation and Innovation Initiatives
• New grants for Financial Institutions and FinTech firms
• Startup SG Equity Scheme

The purpose of this note is to provide a brief oversight of the measures introduced by the Singapore government to support businesses through the “circuit breaker” period and beyond.

The latest information on the Unity Budget is available here.

The latest information on the Resilience Budget is available here.

The latest information on the Solidarity Budget is available here.

The latest information on the Fortitude Budget is available here.

Jobs Support Scheme

Through the Fortitude Budget, the Singapore Government is enhancing and extending the Jobs Support Scheme (JSS), which was previously announced in the Solidarity Budget, Resilience Budget and Unity Budget.

Under the Enhanced JSS, the Singapore Government will help businesses by paying 75% of the first $4,600 of monthly salaries for local employees for April 2020 and May 2020 (applicable to Singapore Citizens and Permanent Residents only). This is an 8% increase from the previous qualifying monthly wage ceiling of $3,600.

From June 2020 onwards, wage support levels will revert to their original levels in the Resilience Budget, which will be 75% of the first $4,600 of monthly salaries for the aviation and tourism sectors, 50% for the food services sector, and 25% for all other sectors. Additionally, as announced in the Fortitude Budget, there will be increased support for some affected sectors (e.g. aerospace, retail, marine and offshore) from 25% to 50% or 75%.

The JSS will be extended to include wages paid in August 2020, bringing the total wage support under the JSS to 10 months.

The JSS will also be extended to cover wages of employees of a company who are also shareholders and directors. This support will only apply to companies that were registered on or before 20 April 2020, and for the wages of shareholder-directors with Assessable Income of $100,000 or less for Year of Assessment 2019.

Employers do not need to apply for the JSS as this will be computed based on CPF contribution data.

Wage Credit Scheme

The Singapore Government is enhancing the Wage Credit Scheme (WCS). Currently, the WCS supports wage increases for local workers and co-funds wage increases for Singaporean employees earning a gross monthly wage of up to $5,000.

An additional $500 million will be set aside for employees’ wage increases, on top of the $600 million disbursed in March 2020.

Employers do not need to apply for WCS and will receive payouts automatically. Letters will be sent to all qualifying employers to inform them of the supplementary payout.

SGUnited Jobs and Skills Package

The Singapore Government announced new job support measures to help Singaporeans through the COVID-19 disruptions.

Employers who hire local workers who have completed eligible traineeship and training programmes will be given hiring incentives. For workers aged under 40, employers will receive a 20% rebate on the employee’s monthly salary for 6 months, capped at $6,000. For workers aged 40 and above, employers will receive a 40% rebate of the employee’s monthly salary for 6 months, capped at $12,000.

Deferment of Higher CPF Contribution Rates

In order to ease cashflow, the increase in CPF contribution rates for senior workers will be deferred by 1 year, from 1 January 2021 to 1 January 2022.

Enterprise Financing Scheme

In order to ensure that businesses will continue to have access to credit, the Singapore Government has enhanced the Enterprise Financing Scheme.

The maximum quantum for a loan under the enhanced Enterprise Financing Scheme-Trade Loan will be increased from $5 million to $10 million.

The maximum quantum for a loan under the Enterprise Financing Scheme-SME Working Capital Loan will be increased from $0.6 million to $1 million.

The Singapore’s Government’s risk-share will also be increased from 80 per cent to 90 per cent for the Enterprise Financing Scheme-Trade Loan and the Enterprise Financing Scheme-SME Working Capital Loan. This will apply to loans initiated from 8 April 2020 till 31 March 2021.

Loan Insurance Scheme

The Singapore Government announced an increase in subsidies to businesses for loan insurance premiums under the Loan Insurance Scheme (LIS).

Businesses can secure short-term trade financing loans via the LIS from participating Financing Institutions. The Singapore Government will increase its support of the portion of the insurance premium from 50 per cent to 80 per cent until 31 March 2021.

Temporary Bridging Loan Programme

The Singapore Government announced enhancements to the Temporary Bridging Loan Programme (TBLP). The TBLP provides access to working capital for business needs.

The TBLP will be expanded to cover all sectors. Additionally, the maximum supported loan will be raised from $1 million to $5 million. The Singapore Government will provide 90% risk-share on these loans.

The TBLP is available until 31 March 2021.

Deferment of Corporate Income Tax Payments

In order to ease cashflow, all companies will be granted an automatic deferment of income tax payments for 3 months for payments due in April, May and June 2020.

Property Tax Rebate

The Singapore Government announced that qualifying commercial properties that have been badly affected by the COVID-19 outbreak will pay no Property Tax. The list of qualifying properties includes hotels, serviced apartments, tourist attractions, shops and restaurants.

Additionally, businesses in other non-residential properties such as offices and industrial properties will be granted a Property Tax Rebate of 30% for the year 2020.

The COVID-19 (Temporary Measures) Act (the COVID-19 Act) was also passed on 7 April 2020 to make it mandatory for property owners to pass on the rebate to tenants. Property owners will also be prohibited from imposing conditions when passing on rebates. The COVID-19 Act will be valid for 6 months, with an option to be extended up to a year.

Freeze on all government Fees and Charges

All government fees and charges will be frozen for one year, from 1 April 2020 to 31 March 2021.

Rental Waivers

The Singapore Government has announced enhanced rental waivers for various tenants. Eligible tenants under government agencies will be given rental waivers of 4 months and all other non-residential tenants will be given a rental waiver of 2 months.

Small and Medium-sized Enterprises (“SME”) Tenants will also be given government-funded rent relief through a cash grant to offset their rental costs. To qualify as an SME, a business must not have more than $100 million in annual turnover. Including the Property Tax Rebate for 2020 and the Fortitude Budget, the Government will offset 2 months’ rental for qualifying SME tenants of commercial properties and 1 month’s rental for qualifying SME tenants of industrial and office properties. This rental waiver will apply to April and May 2020 for SME tenants of commercial properties, and April 2020 for SME tenants of industrial and office properties.

On 5 June 2020, the COVID-19 Act was amended to provide additional landlord-funded rental relief for SMEs. Under the amended framework, SMEs who have seen a significant drop in their average monthly revenue due to COVID-19 will receive an additional 2 months’ waiver for qualifying commercial properties and an additional 1 month’s waiver for industrial and office properties. These waivers will apply for June 2020 onwards. In total, SME tenants in commercial properties will benefit from a total of four months of rental relief, which will be shared equally between the Government and landlords.

SMEs that qualify for landlord relief may also elect to serve notice on their landlords to take up a prescribed statutory repayment scheme for specified portions of rental arrears accumulated from 1 February 2020 to 19 October 2020. Under the repayment scheme, tenants can pay for a specified portion of their arrears over an extended period of time (up to 9 months, or the remaining term of the tenancy, whichever is shorter) in equal instalments, with the interest payable on such arrears capped at 3% per annum.

Additionally, tenants who are unable to vacate their business premises due to COVID-19 after the end of their lease or licence and before 19 October 2020 will not be liable for the failure to vacate. However, such a tenant must serve a notification for relief on the landlord and meet other conditions prescribed in the COVID-19 Act.

Foreign Worker Levy Support

The Singapore Government announced a waiver of the monthly Foreign Worker Levy (FWL) due in April and May 2020 to help firms with cashflow.

There will also be a FWL rebate of $750 in April and May 2020 from levies paid this year, for each Work Permit or S Pass Holder.

For businesses that are not allowed to resume operations after the “circuit breaker”, there will be a 100% waiver of the FWL and a $750 rebate in June 2020, and a 50% waiver and $375 rebate in July 2020.

Additionally, given the various travel restrictions in place, the Singapore Government will extend the levy waiver period to up to 90 days for foreign workers who are currently on overseas leave. This extended period of waiver will also apply to employers who send their foreign workers back home from now till the end of 2020.

SMEs will be given an additional 3 months to make foreign worker levy payments. In total, SMEs will have 5 months to make payment from the month the levy is incurred. This relief will apply to all levies incurred in 2020. Businesses who make use of the extension are encouraged to retain existing workers instead of employing new foreign workers.

Man-Year Entitlement Refund for Construction Firms

The Man-Year Entitlement (“MYE”) is a Work Permit allocation system for construction and process sector workers from non-traditional source countries and the People’s Republic of China.

The Singapore Government has announced a temporary scheme to refund unutilised MYE due to work disruptions from COVID-19. Work disruptions can either be due to a lack of necessary materials to commence work as a result of supply chain disruptions or MYE workers being unable to return to Singapore as a result of travel restrictions. Construction businesses will have the flexibility to use the refunded MYE within 1 year to hire new workers or renew the work passes of existing workers.

This temporary scheme will be available for a period of six months starting from 1 April 2020. Interested applicants can apply to the Building and Construction Authority with the relevant documentary proof.

Temporary Relief from Legal Action

The COVID-19 Act provides temporary relief to some businesses who are unable to fulfil their contractual obligations because of the COVID-19 pandemic. The COVID-19 Act will apply retrospectively to contractual obligations that are to be performed on or after 1 February 2020 in certain scheduled contracts that were entered into or renewed before 25 March 2020. These temporary relief measures will apply from 20 April 2020 to 19 October 2020. However, the Minister has the power to extend the period of relief up to a year.

The scheduled contracts include event and tourism contracts, construction and supply contracts and related performance bonds, non-residential property leases or licences, some hire purchase and conditional sale contracts, leases or rental agreements for commercial equipment or commercial vehicles, secured loans to SMEs, options to purchase real estate, and sales and purchase agreements for real estate. Commercial equipment include plants, machinery or fixed assets used for manufacturing, production or other business purposes and commercial vehicles include goods vehicles and forklifts, but excludes taxis and private hire cars.

To qualify for the temporary relief, a business must be unable to perform obligations arising from a scheduled contract, and this inability to perform must be materially caused by a COVID-19 event. If this is made out, certain legal actions for non-performance will be prohibited, including the commencement of court and insolvency proceedings and the termination of certain leases. The affected business claiming relief will have to serve a notification for relief to the other contracting party. Upon serving of such notification, the other contracting party is prohibited from certain actions such as the imposition of new charges under the contract without the further agreement of the affected business, or requiring any part of a security deposit given pursuant to the contract to be replaced without the further agreement of the affected business.

Additionally, for construction and supply contracts, contracting parties will be relieved from the liability to pay liquidated damages in the event of a failure to perform or delay that was caused to a material extent by COVID-19.

Moreover, the COVID-19 Act imposes a limit on the liability of a debtor with regard to late interest or charges accrued under a scheduled contract due to his inability to pay monies under the contract. Different limits of interest are prescribed for different circumstances. Further, if the debtor serves a notification of relief to the other contracting party, the counter party would not permitted to terminate the contract on the basis of an inability to pay until the end of the prescribed period.

Finally, relief will be provided for the forfeiture of deposits for event and tourism-related contracts. For example, a forfeiture of the deposit for an event venue will only be allowed if an assessor determines that it is just and equitable to do so.

The Ministry of Law will also appoint a body of assessors to resolve disputes arising from the application of the COVID-19 Act. Decisions by the assessors are non-appealable, binding and no costs will be awarded for these proceedings. Assessors will be able to make subsequent determinations after an initial determination is made and a party to a proceeding before an assessor may be represented by a lawyer if permitted by the assessor. Any documents or information disclosed during the proceedings before an assessor will be confidential.

Temporary Measures relating to Insolvency and Directors’ Duties

The COVID-19 Act temporarily amends the bankruptcy and insolvency laws in Singapore for an initial 6-month period.

Under the COVID-19 Act, the monetary threshold for insolvency will be increased from $10,000 to $100,000 for companies and limited liability partnerships. The statutory period to respond to creditor demands will also be temporarily extended from 21 days to 6 months.

Directors are also temporarily relieved from their obligations to prevent their companies from trading while insolvent if the debts are incurred in the company's ordinary course of business. However, directors remain criminally liable for debts that are incurred fraudulently.

Temporary Measures relating to the conduct of meetings

The COVID-19 Act allows the Minister of Law to prescribe alternative arrangements for the conduct of meetings where it is inexpedient or impracticable for the meeting to be convened, held or conducted in the manner provided for in any written law or legal instrument.

Examples of alternative arrangements include the provision for a meeting to be conducted through electronic means or for the quorum for a meeting to be reduced to a specified number.

Digital Transformation and Innovation Initiatives

The Singapore Government announced several digital transformation and innovation initiatives. First, a bonus of $300 per month will be given over 5 months to encourage the adoption of e-payments by stallholders in hawker centres, wet markets, coffee shops and industrial canteens.

Additionally, a Digital Resilience Bonus will be introduced (“Bonus”), which provides additional support to enterprises seeking to uplift their digital capabilities to adapt to safe management practices after the “circuit breaker” period. As a pilot, the Bonus will be targeted at the food services and retail sectors.

Enterprises that adopt qualifying solutions (e.g. PayNow Corporate, e-invoicing, business process or e-commerce solutions) can receive bonus payments up to $5,000. An additional bonus of $5,000 will also be given to businesses that use advanced solutions. More details on qualifying conditions will be announced at a later date.

New grants for Financial Institutions and FinTech firms

The Monetary Authority of Singapore (MAS) has launched four new grants: the Training Allowance Grant (TAG), Digital Acceleration Grant (DAG), the Business Sustenance Grant (BSG), and the Business Growth Grant (BGG).

The TAG is meant to encourage Financial Institutions and FinTech Firms to train and deepen the capabilities of their employees during the downtime in business activity.

The TAG will provide training allowances for completing training in courses accredited by the Institute of Banking and Finance (IBF) at $15 per training hour for employees sponsored by Financial Institutions and FinTech firms.

The MAS and the IBF will also increase course fee subsidies for Singapore Citizens and Permanent residents attending relevant IBF courses from the current range of 50%-70% to 90%.

The MAS has also set up the DAG to support digitalisation in smaller Financial Institutions and FinTech firms. The DAG will help these firms adopt digital solutions to strengthen operational resilience, process efficiency, risk management and customer service.

The DAG will have two tracks: (1) the Institution Project track, which supports 80% of qualifying expenses for the adoption of digital solutions by smaller Financial Institutions and FinTech firms, up to a cap of S$120,000 per entity, over the duration of the scheme; and (2) the Industry Pilot track, which supports collaborations among at least 3 smaller Financial Institutions to customise digital solutions for implementation within their institutions, by co-funding 80% of qualifying expenses, capped at S$100,000 per participating Financial Institution per project.

The BSG will allow eligible Singapore-based FinTech firms to receive a one-time grant for up to S$20,000 to cover day-to-day working capital expenditures, such as salaries and rental costs. The short-term assistance will help FinTech firms sustain their operations and retain their employees.

The BGG will allow eligible Singapore-based FinTech firms to receive up to S$40,000 for their first Proof of Concept (POC) with financial institutions on the API Exchange (APIX) platform, and S$10,000 for each subsequent POC, subject to a total cap of $80,000 per firm for the entire duration of the grant. The BGG will also provide funding for the salaries of undergraduate interns, capped at S$1,000/month per intern.

It is our understanding that some of the above measures are more likely to be relevant to your business needs than others. For example, some are targeted at small- and medium-sized businesses only. However, if there are any particular support mechanisms that you would like further information on or would like to discuss then we would be happy to do so. We will also continue to update this note with further guidance as and when it becomes available.

Startup SG Equity Scheme

The Singapore Government announced that it will dedicate an additional $285 million to the Startup SG Equity scheme. This is on top of the $300 million that was previously announced.

Under the Startup SG Equity Scheme, the Singapore Government will co-invests with independent, third-party investors into eligible start-ups. The aim is to catalyse more private sector investments into Singapore-based deep-tech start-ups in key emerging sectors, including Advanced Manufacturing, Pharmbio/Medtech, and Agri-food tech.