In his new year message for 2022, Singapore’s Prime Minister Lee Hsien Loong estimated that the country’s gross domestic product (GDP) will grow between 3% to 5% in 2022.
“The year ahead will be a time of transition. Our economy is recovering steadily. Barring fresh disruptions, it should grow in step with global economic recovery,” says Lee.
The government will also progressively phase out emergency support measures as businesses revive, he announced. However, a few sectors may take a longer time to see recovery, he adds.
In addition, Singapore is looking at expanding cross-border travel in 2022, depending on the current Covid-19 situation, he adds. On Nov 26, the World Health Organisation (WHO) announced that the latest discovered variant would be given a name: Omicron.
The Omicron variant has put a spanner in the works of reopening plans; Singapore announced that it would be freezing new ticket sales for flights and buses under the Vaccinated Travel Lane (VTL) programme from Dec 23 to Jan 20, 2022, amid a rising number of Omicron cases.
On the Covid-19 pandemic, Lee adds that the country can be “quietly confident that we will cope with whatever lies ahead” as Singapore learned to better manage the challenges on public health while minimising the hit to its economy.
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Post-Covid-19, Lee says the country “must continue to generate new growth, new jobs, and prosperity in a post-pandemic economy”.
“Much will depend on a stable global and regional environment, central to which is relations between the US and China. The differences between the two powers remain many and deep, but their recent high-level engagements and practical cooperation on climate change are encouraging,” he continues.
“For our part, Singapore will continue engaging partners near and far. We will continue to pursue trade liberalisation and regional integration for the benefit of our people, including through the Regional Comprehensive Economic Partnership, which comes into force on the first day of 2022,” he adds.
Increasing GST
In his speech, Lee also announced that the government will proceed with the increase in the country’s goods and services tax (GST) as planned.
“The GST forms one important component of our system of taxes and transfers that also includes income and wealth taxes. Overall, our system will remain progressive and fair,” he says.
“We have seen this need coming for some years. Now that our economy is emerging from Covid-19, we have to start moving on this. Budget 2022 will therefore lay the basis for sound and sustainable government finances for the next stage of Singapore’s development,” he adds.
The government has announced that Budget 2022 will be unveiled in Parliament on Feb 18, 2022.
On the rationale of increasing Singapore’s GST, Lee said that the country needs a “vibrant economy to generate the resources to realise these cherished goals”.
“And the government must have reliable and adequate revenues to carry out its social programmes. It needs to raise additional revenues to fund the expansion of our healthcare system and support schemes for older Singaporeans. Those who are better off should contribute a larger share, but everyone needs to shoulder at least a small part of the burden,” he adds.
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In his speech, Lee added that Singapore will “press on” to bring in “much needed” migrant workers. The government will also “ensure international talents feel welcome and are able to complement Singaporeans”, he continued.
Improving industry transformation efforts
In the longer term, Singapore will improve its industry transformation efforts to “enhance existing strengths, and help companies restructure and workers upgrade their skills”.
“Together with businesses and the labour movement, we will keep investing in our workers to keep them productive and employable throughout their careers. We will seek out new growth areas, including in the digital and green economies, building on our Smart Nation efforts and the Singapore Green Plan 2030,” he adds.
