The Ministry of Finance (MOF)’s mission is to create a better Singapore through Finance. We will do so by achieving the following three Strategic Outcomes:
Sound Public Finances
Growth with Opportunity for All
High Performance Government
A total budget of $606.86 million (excluding Expenses on Investments) has been allocated to MOF in FY2008 to achieve this mission.
Sound Public Finances
MOF ensures that the government’s fiscal position is sustainable over the medium and long term. We also ensure that Singapore’s reserves are optimally managed to balance the present and future financial needs of Singapore.
Review of the Spending Rule on Net Investment Income
In the coming year, MOF intends to revise the spending rule for the Net Investment Income (NII) from past reserves. The new formula will enable the Government to draw more from the investment returns of past reserves, while continuing to preserve and enhance the value of our reserves. The plan is to effect the change from FY09, after seeking Parliament’s approval for the changes to the Constitution.
Manpower Management Framework (MMF)
The Government is committed to keeping the public sector lean and trim. Towards this end, the Manpower Management Framework was introduced in FY2004 to instil discipline in the use of manpower resources. As at 31 Mar 2007, the public sector achieved an overall manpower reduction of 5%1 through measures such as job redesign, streamlining of processes and best sourcing of non-strategic functions. While the Government announced in 2006 a headcount freeze for the public sector from FY2007 to FY2009, this would affect the public sector’s ability to build capacity to meet the growing needs of the economy and the population. MOF has thus reviewed the MMF to allow the public sector headcount to grow in line with the smoothened resident labour force growth2 going forward. This is to ensure that the Government does not consume excessive manpower resources while providing sufficient flexibility for the public sector to handle increased and more complex demands.
1Excluding corporatisation of CISCO and the Universities.
2The manpower growth factor is smoothened over 7 years to reduce volatility in manpower growth.
The Value-For-Money (VFM) Review Office
The Value-For-Money (VFM) Review Office in the Accountant-General’s Department will continue to conduct VFM reviews for the whole of government. It will track the outcomes of government expenditure, and ascertain whether the various programmes are achieving their objectives in the most cost-efficient manner. The findings from these reviews are shared across the public sector to promote a culture of "value-for-money" within the Government.
Growth with Opportunity for All
MOF aims to promote economic growth through the use of financial levers. We will create a pro-enterprise environment by keeping taxes competitive, facilitating trade and business creation, and encouraging innovation. We will also create opportunities for a better life for all, and build a strong community.
Tote Board Donations
The Singapore Totalisator Board will continue to channel the surpluses from its gambling operations towards projects that benefit all Singaporeans. These include significant projects that enhance the quality of life such as the Sungei Buloh Wetland Reserve and Marina Gardens by the Bay; sports excellence; as well as community projects like crime prevention programmes, health promotion initiatives, and grants to social service programmes run by VWOs.
Incentives to Encourage Innovation
The Government is introducing new measures to make innovation more pervasive in the economy, and to enhance incentives for enterprises to do R&D. Firstly, the tax deductions allowed for R&D done in Singapore will be increased from 100% to 150%. This enhanced deduction means that for every $100,000 of local R&D spending, a company will be able to deduct $150,000 from its taxable income. In addition, the R&D done in Singapore need not be related to a company’s existing business. Secondly, a new incentive will be introduced whereby companies with chargeable income will earn a R&D Tax Allowance up to an amount equal to 50% of the first $300,000 of chargeable income for each year of assessment. This allowance can be utilised against incremental expenditure on ongoing R&D that the company does in Singapore. Thirdly, a new incentive to incentivise high-tech start-ups, called the R&D Incentive for Start-Up Enterprises (RISE), will allow companies to convert immediately losses into a cash grant of up to about $20,000. To qualify for this new incentive, the start-up company needs to incur at least $150,000 of expenditure on ongoing R&D done in Singapore in each year of claim. This scheme will be available for enterprises in their first three years of assessment. The 3 incentive schemes will cost the Government $250 million.
Removal of Estate Duty
We have removed Estate Duty from our tax regime, effective from 15 Feb 2008. This will make Singapore an attractive place for wealth to be invested and built up, whether by Singaporeans or foreigners who bring their assets here. This will cost the Government on average, $75 million each year.
Tax Incentive for Fixtures and Fittings
A new special allowance will be introduced for expenditure on all fixtures, fittings, and installations (“attached fixtures”), except those expenses relating to structural works and expansion of space. The special allowance is to be written off over three years, and is subject to a cap of $150,000 every three years per business entity. This will be applicable to qualifying expenditure on attached fixtures incurred during the period from 16 Feb 2008 to 15 Feb 2013.
This special allowance will provide relief to businesses which have to incur costs of attached fixtures as part of their renovation expenses, in particular the smaller businesses in the services sector. This change will cost the Government $130 million each year.
High Performance Government
Through various policies and systems, MOF ensures that resources are utilised in an efficient and effective manner to achieve the Whole-of-Government (WOG) outcomes, and actively promotes inter-ministry collaboration and integration. MOF also supports innovation in the Government to enhance public policy and service delivery.
The Public Service Innovation Framework
The Government will set aside $90 million over the next 3 years as a seed fund for experimentation, test-bedding and building capabilities for innovation in public services. Each ministry will have a Chief Innovation Officer responsible for supporting idea generation, selection and external sourcing. The Government will involve the private sector, and bring them early in the process to address longer-term requirements where there are no off-the-shelf solutions. This will create synergies and catalyse breakthrough in public service delivery, with potential for commercial spin-offs.
The iGov2010 masterplan, launched in May 2006, is a five-year masterplan to enable the Singapore Government to realise the vision of an Integrated Government (iGov) that delights customers and connects citizens through the use of infocomm technology. The major FY2008 initiatives and projects include:
Unique Entity Number (UEN)
The Unique Entity Number (UEN) is conceived to work for entities such as businesses and societies in the same way that the NRIC works for individuals in Singapore. Having a UEN, entities only need to remember and use a common number to identify themselves when interacting with the Government. This will make their interactions with the Government simpler and easier. UEN also brings about greater efficiency in the Government.
Come Jan 2009, more than 350,000 entities in Singapore will be able to use UEN to interact with government agencies. For businesses and companies, they will continue to use their existing identifiers issued by ACRA as their UENs while other entities such as societies, embassies, representative offices and trade unions will each be issued with a new UEN.
Standard ICT Operating Environment – ‘SOE’ easy to work together as one government
The Government will implement the Standard Operating Information Communications Technology (ICT) Environment, or SOE, over the next 3 years (2008 to 2010) across 74 ministries, departments, organs of state and statutory boards. With the implementation of SOE, the desktop, messaging and network environment of public sector agencies will be standardised. This will reduce the time and costs required to implement and deploy new service-wide ICT services and systems. The Government will expect 30% net savings per year when SOE is fully deployed.
Public Private Partnerships (PPPs) and Civil-Service Wide Economy Drive (ED)
In evaluating major public sector projects, MOF will also continue to assess project-worth based on the total costs of the projects over its life-cycle. This would enable more meaningful comparison of alternative methods to undertake a project since it takes into account both the downstream maintenance and economic costs in addition to the upfront developmental outlays. Public Private Partnerships would continue to be undertaken if the economic costs associated with implementing the project prove much lower.
We will continue to work with agencies to identify areas for creating economic value in the public sector under the Economy Drive. The Cut Waste Panel, an initiative in the Economy Drive will also continue to take in public feedback and suggestions to adopt more efficient practices and/or methods in delivering public services.
Rewriting of Companies Act
A Companies Act Re-write Committee has been formed to update the Companies Act to provide a conducive, effective and efficient regulatory framework for setting up and doing business in Singapore. It is chaired by the Solicitor General with members comprising highly qualified and experienced professionals from the accounting, legal, business and public sector.
Singapore Customs: Apex Licence Scheme
Singapore Customs (SC) will continue to make its rules and regulations more business-friendly. With changing business models, companies are increasingly engaged in various types of business activities (e.g. storage, manufacturing or retail) over a variety of dutiable and non-dutiable products. To reduce the number of licences that traders need for various activities and products under duty or GST suspension, SC would be implementing an apex licence in FY2008. Under the scheme, licensees with good compliance record would be able to use one licence for multiple activities conducted at different locations. This will help reduce business costs.
IRAS will implement a No-Filing Service initiative in the Year of Assessment 2008. This initiative is made possible by the numerous simplifications made to the individual income taxation structure over the years and with more employers submitting pay information directly to IRAS through the Auto-Inclusion Scheme. Under this new No-Filing Service, about 330,000 individual taxpayers who have only auto-included income with pre-filled reliefs would not need to file a tax return if there are no changes in their income or reliefs. Instead, they will receive their Notice of Assessment from IRAS directly. IRAS will continue to improve service delivery and reduce the compliance cost of taxpayers by simplifying the tax obligation of taxpayers.