Singapore rolls out S$1 billion support package as energy costs rise, expands corporate tax rebates and payouts

Singapore will roll out a support package worth close to S$1 billion to cushion the impact of rising energy costs from the Iran war, with a raft of measures aimed at helping businesses, workers and households manage the fallout.

The measures are over and above the S$155 billion announced during this year’s Budget statement in February, said Senior Minister of State for Finance Jeffrey Siow during a ministerial statement in Parliament on Tuesday (Apr 7) on the impact of the Middle East situation.

Siow, who is also acting minister for transport, said higher energy and logistics costs are likely to persist across the economy as a result of the conflict.

“Small and medium-sized enterprises, in particular, are more vulnerable to sudden cost increases,” he said.

To help businesses manage cash flow, Siow said that the corporate income tax rebate announced at this year’s Budget will be increased from 40 per cent to 50 per cent for the Year of Assessment 2026.

Furthermore, the cash grant component for eligible companies will be raised from S$1,500 to S$2,000, and the total benefits cap for each company will be raised from S$30,000 to S$40,000. 

Eligible companies will receive the enhanced support quickly, with disbursements expected as early as the end of this month, he added.

Even as immediate relief is rolled out, the government will support businesses in building longer-term resilience against sustained energy price pressures, Siow said.

To support more companies in adopting energy-efficient equipment, the base tier of the Energy Efficiency Grant will be expanded from the current six sectors – food services, retail, manufacturing, construction, maritime, and data centres – to cover all areas.

Under the existing framework, the base tier provides up to S$30,000 in funding support and was originally set to run until Mar 31, 2027. Siow said the scheme will be extended by a further year to Mar 31, 2028, so more companies can benefit.
 

“Responsible buyer”

Siow said the government, as a “responsible buyer”, will share fuel-related cost increases for critical public sector projects where delays would significantly affect the public interest.

These include major infrastructure works such as the Cross Island MRT line and public housing projects, with details to be provided by the Building and Construction Authority.
 

Support for transport sector

Aside from businesses, the government will also provide targeted support for workers affected by rising fuel costs, as the sharp increase has had an immediate impact on the earnings of platform workers, private-hire and taxi drivers.

To provide relief, the government will disburse S$200 in cash to these groups from the end of April, said Siow.

The payout builds on efforts by the National Trades Union Congress, which has worked with platform and taxi operators on fuel vouchers and fare adjustments to help cushion the impact.

As for certain essential bus services – such as those for school students, seniors and persons with disabilities – Siow said the government will provide temporary assistance to co-fund cost increases, to enable these services to continue operating without disruption.

Details of the co-funding will be provided by the respective agencies, he added.
 

Not reducing fuel or diesel duties

In response to earlier queries from Members of Parliament on whether the government will consider reducing fuel or diesel duties across the board, Siow said it would not be the right move.

“It is too blunt an approach, and it could also be regressive. At the same time, we want to preserve the price signals for consumers to use energy more efficiently,” he said. 

More fundamentally, he added that as an open economy, Singapore must allow fuel prices to reflect market realities. 

“If prices are artificially suppressed, importers may choose to divert fuel where prices are higher, and over time, this can tighten supply and leave us worse off,” Siow explained.

Instead, he said that Singapore’s approach provides support to those who are directly affected, which allows the government to channel more help to those who need it most.

Separately, Senior Minister of State for Transport and Law Murali Pillai told Parliament there are currently “no significant supply shortages” of jet fuel, with Singapore drawing on diversified sources.

However, he warned that sustained higher fuel prices could raise costs for airlines and, in turn, passengers and other sectors.

“Some airlines have made commercial decisions to raise ticket prices in response to the soaring cost of fuel. These remain commercial decisions which we do not intervene in,” he said.

Murali added that the government will continue to monitor the situation closely and assess if further measures are needed.
 

Support for households

As for households, Siow said Singapore will also bring forward the next tranche of S$500 in CDC Vouchers to June this year, from the original target of January 2027, and increase payouts under the Cost-of-Living Special Payment to ease cost pressures amid uncertainty from the Iran war.

Siow said the Cost-of-Living Special Payment will be increased by S$200 for all eligible Singaporeans, bringing the total payout to between S$400 and S$600 per person.

About 2.4 million Singaporeans will receive the additional support, which will be disbursed in September.

While broader price increases have yet to materialise, Siow said the government is closely monitoring the situation, noting that uncertainty has already heightened cost-of-living concerns.
 

Not waiting to act

Siow said that when the Budget – Singapore’s largest on record – was announced by Finance Minister and Prime Minister Lawrence Wong, “we could not know about the conflict that would break out in Iran”. 

However, he added that Singapore could “see many uncertainties ahead” and the need to provide greater reassurance and support in this Budget. Sixteen days later, the US and Israel launched coordinated airstrikes on Iran.

“The situation in the Middle East remains highly uncertain. We cannot predict how exactly events will unfold, or when the conflict will end,” he said. 

“What we do know is that Singaporeans are already feeling some of the effects on the ground,” said Siow, who cited how petrol and diesel prices have risen in tandem with global oil prices and are likely to remain elevated for some time.

“While the impact has not yet fully filtered through for items like electricity or imported food, we have to brace ourselves… that this will come,” he said. “The government is not waiting to act.”
 

Source: The Business Times ©️ SPH Media Limited. Permission required for reproduction.