According to the Singapore’s Minister of State for Trade and Industry S. Iswaran, the country’s GDP for 2008 is now anticipated to come in lower than what is expected.
The country’s economy had contracted by 5.3 percent in Q2 and 6.8 percent in Q3 due to technical recessions. On 21 November 2008, the official 2008 growth estimate was cut from three percent to 2.5 percent.
Iswaran attended a dialogue session with representatives of Enterprise Development Centres and the Singapore Business Federation on 30 December 2008.
Challenges facing businesses, such as the cost of doing business was also discussed in the said dialogue session.
Iswaran stated, “In general, the point has been made that the government will continue to look at what is necessary to work with businesses in this challenging environment, and the Budget will reflect this consideration,” when asked if a reduction in the contribution rate to Central Provident Fund savings of employers will be possible.
Association of Small and Medium Enterprises (ASME) President Lawrence Leow, who was also present in the dialogue session, commented that the biggest concern is the cash flow.
Leow also said that rebates and commercial property rent-reductions are the things that ASME is hoping for. Although he did not mention that ASME is backing CPF cut, ASME has suggested measures in areas that include corporate and property tax.
Selena Ling, OCBC Bank treasury economist, reports that the bank predicts a GDP increase of 1.7 percent for 2008, and less than 0.8 percent for fiscal year 2009. Citigroup Analyst Kit Wei Zheng also anticipates that there is almost the same GDP rise for 2008, and notes, “In terms of pro-business measures, we think there is a good case for aggressive corporate tax cuts, which could help Singapore retain some investments, and improve its competitive position vis-a-vis Hong Kong.”