The outbreak of the severe acute respiratory syndrome (SARS) has created public anxiety and taken a toll on businesses. The hardest and most directly hit are tourism and transport-related industries like airline, cruise, hotel, restaurant, travel agent, retail and taxi services. Other sectors like manufacturing are less affected.

Visitor arrivals have dropped by 15% in March and 61% in the first 13 days in April. This sharp fall in inbound travellers has caused average hotel occupancy rates to fall to 20-30%, compared to normal levels of 70% or above. Sales at retail outlets have declined by between 10% to 50%. Revenues at some restaurants have halved. Taxi drivers are carrying fewer passengers, and earning less.

SARS will significantly impact our economy. Our previous estimate of 2 to 5 per cent GDP growth for 2003 is no longer realistic. Exactly how severe the impact of SARS will be is not yet clear. It will depend on how quickly we can control the disease in Singapore, as well as the course of the SARS outbreak in the region and beyond. The Government is making maximum efforts to break the transmission of SARS in Singapore.

MTI has revised its forecast for GDP growth this year to 0.5 to 2.5 per cent. This forecast assumes that we succeed in our national effort, and that the outbreak does not grow into a global pandemic, which would bring world economic growth to a halt.

It is not possible for the Government to fully offset the impact of SARS on the economy. However, the Government can and will render assistance to the tourism and transport-related sectors, to help them tide over this difficult period and also to save jobs wherever possible.

Government agencies such as the Singapore Tourism Board (STB), SPRING, Civil Aviation Authority of Singapore (CAAS), and Land Transport Authority have been meeting industry players to understand their problems. Arising from the consultations, the Government has decided to implement a package of relief measures.

This relief package will cost the Government $230 million. It is a focussed effort to provide immediate relief for the most directly and adversely hit sectors, namely, the tourism and transport-related sectors. It is not intended as a general stimulus package for the whole economy. The Government will continue to monitor the situation closely, and will consider further appropriate measures later should these become necessary.

The following measures are targeted at the tourism-related industries:

1. Additional property tax rebates for commercial properties. The existing property tax rebates for commercial properties will be enhanced by an additional rebate of $2,000 plus 10% of the balance property tax payable in 2003. The additional tax savings for owners of commercial properties is about $56 million. Shops, restaurants and hotels make up the majority of these commercial properties. The Government strongly encourages landlords to pass these savings to their tenants. HDB will do so with its commercial tenants.

2. Higher property tax rebates for gazetted tourist hotels. Gazetted tourist hotels are premises declared under the Singapore Tourism (Cess Collection) Act. As they are especially hard hit, gazetted tourist hotels will be given a higher additional rebate of $2,000 plus 30% of the balance property tax payable in 2003. However, this will not apply to the F&B outlets and retail shops in hotels. This will cost the Government $8 million.

3. 50% reduction in Foreign Worker Levy for unskilled workers employed by gazetted tourist hotels. The foreign worker levy for unskilled workers in hotels is currently at $240 per worker per month. With effect from 1 May 03, this will be reduced by 50% to $120 for all gazetted hotels. This levy reduction will be for a period of 8 months from 1 May to 31 Dec 03. Hotels will save more than $2 million in levy payment. The current levy rate for skilled workers will remain at $30.

4. 100% rebate of TV licence fees for gazetted tourist hotels. In view of low occupancy rates, a 100% rebate of TV licence fees payable for gazetted tourist hotels will be granted for the year 2003. This will cost $2 million.

5. Cess rebate and waiver of cess security deposit. Cess-collecting establishments will continue to collect 1% cess, but will retain the receipts instead of forwarding them to the STB. This will add $20 million to the revenues of cess-collecting establishments. The cess security deposit, equivalent to 5 months’ worth of cess collection, will also be waived to improve cash flows of businesses. Both measures will be valid for the period from 1 May to 31 Dec 2003.

6. Bridging loan programme for tourism-related small and medium-sized enterprises (SMEs). To alleviate the short-term cash-flow problems of SMEs in the tourism-related sectors, a new Bridging Loan Programme will be introduced under the Local Enterprise Financing Scheme (LEFS) from 1 May to 31 Dec 03. This working capital loan facility will allow SMEs in the tourism-related sectors to take working capital term loans similar to an overdraft facility of up to $100,000 per company. The loans will be administered by SPRING, in consultation with STB and offered through participating financial institutions. The interest rate will be 5% and repayment period is up to 4 years. The interest rate subsidy will cost the Government $10 million.

7. Enhanced training grant for the Ministry of Manpower (MOM) and STB-approved tourism-related courses. This will make it more attractive for employers in the tourism sector to hold on and train their critical staff during this period, so that they are still available when the tourists return. Specifically, the Government will enhance current training grants from 1 May to 31 Dec 03 by:

   1. Raising course-fee support, from a cap of $10 to $15 per training hour for relevant tourism-related courses approved by MOM and STB. The support level will be 90% of course fees, subject to the caps. The enhancement will significantly reduce employers’ burden in sending workers for training; and

   2. Raising absentee payroll, from $6.10 to $6.50 per training hour. The enhanced payroll translates to $1,040 per month per worker, or equivalent to half pay for the 3rd quartile group of service workers.

   These enhancements will generate training places for 22000 Singaporeans and PRs in the affected industries, and will cost $57 million.

   Transport Sector

   The measures targeted at the transport sector are:

1. Diesel tax rebates for taxis. Diesel tax for taxis will be reduced by a further $2,000 per year, from $4,700 to $2,700, from 1 May to 31 Dec 03. This will lower their operating costs by about 5%, and will cost $25 million.

2. Waiver of taxi operator licence fees. The $25 taxi operator licence fee due to be introduced on 1 June will also be waived till 31 Dec 03. This will cost another $3 million.

3. Road tax rebates and flexible laying-up procedures for buses. A 20% road tax rebate will be extended to all excursion buses from 1 May to 31 Dec 03. This will cost $0.3 million. To help fleet owners rationalise the usage of their fleet during this period, the Land Transport Authority will allow the excursion buses which are laid up for less than three months, to be re-licensed without vehicle inspection.

4. Relief measures for the aviation industry. A set of measures will be in place to help the aviation industry from 1 May to 31 Dec 03, mainly an additional 30% rebate on aircraft landing fees and an additional 10% rental rebates for all CAAS tenants at Changi and Seletar airports, including the Changi airfreight centre. These will cost $45 million.

5. 50% Reduction in port dues for cruise ships. This will apply from 1 May to 31 Dec 03, and will cost $0.2 million.

The relief package will not fully offset the hardships brought about by the outbreak of SARS, but it will help businesses tide over this difficult period. What is more important is our collective response to this challenge. Singaporeans must cooperate to minimise the risk of catching and more important of spreading the SARS virus, so that our "isolate and contain" strategy can succeed. Then we can stifle the spread of the disease in Singapore. All of us, everyone, must follow the precautions in our daily lives recommended by the Ministry of Health, and follow the rules and observe the restrictions meant to keep our hospitals and healthcare workers free of SARS. This calls for a keen awareness of our responsibility as Singaporeans to one another’s health. With this strong group spirit of social responsibility, we can prevent the SARS virus from spreading in Singapore. Then our economy can pick up again.

Our healthcare workers are at the frontline of this battle. The Courage Fund was launched on 11 Apr 03 through a collaborative effort by the National Healthcare Group, Singapore Health Services, Singapore Medical Association, Singapore Nurses’ Association and Singapore Press Holdings. It provides a rallying point for Singaporeans to make a tangible gesture to help the victims of SARS, and to show their appreciation, respect and support for the dedication and sacrifices of our healthcare workers.

The Government shares the sentiments that led to the spontaneous and open hearted response to this appeal. It will make an upfront $1 million contribution to the Courage Fund, plus dollar-for-dollar matching for all donations to the Fund. The Fund will also be given "Institution of Public Character" status, so that donors will enjoy double tax deduction. The Government hopes Singaporeans will donate generously to the Fund.

To qualify for the programme, tourism-related companies must satisfy the following criteria:

1. It must be a SME, viz.:

1. At least 30% local equity

2. Fixed assets (defined as net book value of building, machinery and equipment) not exceeding $15 million
3. Employment size not exceeding 200 workers for service companies

1. Cruise operator or cruise related shipping agent
2. Attraction operator
3. Meetings, Incentives, Conventions and Exhibition (MICE) organiser
4. Event organiser
5. Surface Transport Operator
6. Hotel (gazetted and non gazetted)
7. Travel Agency (licensed)
8. Spa Operators (members of the Spa Association of Singapore)
9. Food and Beverage Establishment (cessable establishments)
10. Tourism Retail *

• airports and cruise terminals;
• convention facilities;
• approved attractions
• hotels (gazetted and non-gazetted)
• tourist zones of Orchard Road, Singapore River, Chinatown, Little India, Bugis, Kampong Glam & Civic District

Or those that have more than 20% of turnover from sale to tourists

 Annex 2

Note: All measures will end by 31 Dec 03, except the matching grant to the courage fund which is on-going.