The government of Singapore presented the Budget 2022 on 18 February, where one of the main themes was sustainability and a green economic transition, as Singapore announced the ambition to achieve net zero emissions ‘by or around mid-century’. The developments and innovations in green technologies and alternative low-carbon solutions made the change in Singapore’s long-term climate goals possible. To this, Minister for Finance of Singapore, Lawrence Wong, said: “We will therefore raise our ambition to achieve net zero emissions by or around mid-century. We will consult closely with industry and citizen stakeholder groups to firm up and finalise our plans before making a formal revision of our LEDS (Long-Term Low-Emissions Development Strategy) later this year.”
Reaching the objective of zero emissions will partly be done by a gradual increase in carbon taxes and by issuing public sector green bonds. Combined, the two measures place Singapore as a pace-setter in Asia and reinforce Singapore’s aim to become a regional hub for carbon trading and green finance.
The taxes on carbon emissions will be raised from SGD five per tonne to SGD 25 in 2024 and 2025 and SGD 45 in 2026 and 2027. The goal is to reach SGD 50 to SGD 80 by 2030. The tax applies to facilities producing 25,000 tonnes or more of GHG per year. In addition, the government will allow use of ‘high quality, international carbon credits’ for up to 5% of taxable emissions by 2024 for large emitters of GHG.
The public sector will support the green transitions by issuing up to SGD 35 billion of green bonds by 2030 to fund public sector green infrastructure projects. ‘Singapore Green Bond framework’ will be published later this year and the government will issue the first green bond of the plan in 2022. Green finance as a sector is experiencing a rapid growth and Singapore now accounts for almost half of ASEAN green bond and loan market.
The Government will publish a Singapore Green Bond framework, and issue its inaugural green bond later this year, said Finance Minister Lawrence Wong in his Budget statement on February 18.
Singapore’s new sustainability goals partly match Denmark’s ambitious goals, which paves the way for the two nations to inspire and learn from each other.
Read more about carbon emission tax and green bonds here
Other relevant announcements from the Budget 2022 for Danish companies operating in Singapore
GST increases from 7% to 9% in 2024 and property tax increases
The GST hike will happen in two stages in 2023 and 2024, where the GST will increase by one percentage point by 1 January 2023 and again on 1 January 2024. The government has proposed different packages and schemes to help cushion the hike’s impact for Singaporeans.
Property tax rates will increase for non-owner-occupied residential properties – which includes investment properties – from a range of 10% to 20% to a range of 12% to 36%.
Read more about the GST and property tax hikes here
Foreign worker policy revisions
The minimum qualifying salary for Employment Pass (EP) will be raised from SGD 4,500 to SGD 5,000. The minimum qualifying salary for foreign workers on S Passes will be raised to SGD 3,000. The Dependency Ratio Ceiling for the construction and process sector will be lowered from 1.7 to 1.5 from 2024. The Dependency Ratio Ceiling (DRC) refers to the maximum permitted ratio of foreign workers to the total workforce that a company in the stipulated sector is allowed to hire.
Read more about foreign worker policy revisions here
Robotics and automation support continues
Singapore continues to finance the Productivity Support Grant (PSG) with SGD 600 million and SGD 200 million for building digital capabilities with up to 70% funding to help local companies increase productivity using digital technology and automation. PSG is a grant that supports companies keen on adopting IT solutions and equipment to enhance business processes.
It was also announced that 2,000 innovation projects across five pilot sectors (agri-tech, construction, food manufacturing, precision engineering, and retail) will be carried out to enhance research and innovation support for SMEs.
Read more about support for digital and automation here
Contact the Royal Danish Embassy in Singapore for more information about business opportunities and how Denmark seeks to inspire green transition in Southeast Asia:
Mark Edward Perry
Head of Trade at the Royal Danish Embassy in Singapore
Phone: +65 9088 5567
Email: markpe@um.dk