Barings harmless to Singapore's budget<\/p>\n
By Chen May Yee<\/p>\n
SINGAPORE (AFP): Singapore was set Tuesday to present what is
\ntouted as a pre-election national budget, which financial
\nanalysts say is unlikely to be overshadowed by a billion-dollar
\nfutures scandal here.<\/p>\n
\"The budget and the Barings incident are two separate issues,\"
\nsaid Chan Tuck Sing, senior dealing director at Overseas Union
\nBank Securities.<\/p>\n
Other analysts called the Barings debacle an isolated incident
\nthat was unlikely to affect any \"goodies\" the government could
\noffer in its budget set for presentation to parliament Wednesday
\nfor the financial year to next March.<\/p>\n
Chan said the scandal involving Baring Futures (Singapore)
\nPte. Ltd., the massive losses of which led to the collapse of its
\nparent bank, had already taken its toll on the stock market,
\nwhich rebounded Monday after steep losses in early trading.<\/p>\n
Prime Minister Goh Chok Tong is widely expected to call for
\nelections later this year although the government's five-year
\nmandate does not end until August 1996.<\/p>\n
Analysts said Singapore, running a healthy surplus, could
\nafford to be generous with tax cuts and incentives.<\/p>\n
The government collected more than one billion dollars
\n(US$666.67 million) in a goods and services tax (GST) last year
\nsince its introduction in April.<\/p>\n
\"There is the expectation of a cut in corporate tax rates
\ngiven the substantial fiscal surpluses,\" said Low Siew Kheng,
\nhead of research at Union Bank of Switzerland (UBS) Securities.<\/p>\n
Industry leaders and analysts have stressed the need for
\nSingapore, with its spiraling operating costs, to stay
\ncompetitive by reducing corporate taxes.<\/p>\n
\"Our corporate taxes are still higher than our major
\ncompetitors like Hong Kong,\" said Lee Ju Song, deputy executive
\ndirector of the Singapore International Chamber of Commerce.<\/p>\n
Singapore's corporate tax rate, at 27 percent, is 10
\npercentage points higher than Hong Kong's 17 percent but lower
\nthan neighboring Malaysia's 30 percent.<\/p>\n
Lee said her wishlist included a reduction in corporate tax
\nfrom 27 percent to 25 percent this year.<\/p>\n
But some analysts said the government could reduce personal
\ntaxes instead, arguing that a corporate tax cut was unnecessary
\nfor an economy that grew by a hefty 10.1 percent last year.<\/p>\n
Singapore's top personal income tax rate of 30 percent could
\nbe trimmed and taxpayers may be treated to a one-time tax rebate,
\nwhich will also boost sluggish consumer spending, they said.<\/p>\n
\"The three percent disparity between corporate and individual
\ntaxes is quite glaring already. Maybe there will be a one-to-two
\npercent income tax cut and a couple of percent on a one-time
\nrebate on personal income tax,\" said Chan.<\/p>\n
Analysts also said they expected the government to announce
\nother rebates and incentives aimed at grooming Singapore as a
\nmajor financial hub after Senior Minister Lee Kuan Yew in
\nSeptember announced plans to turn the island state into a center
\nfor portfolio management.<\/p>\n
\"The government needs to encourage (foreign) talent to come in
\nand also bring foreign funds in,\" said Alex Chung, assistant
\ngeneral manager of Alliance Securities.<\/p>\n
Analysts said they expected concrete incentives to draw these
\nforeign fund managers to Singapore.<\/p>",
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"sponsor": "Okusi Associates",
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