1998: $4.9b surplus

PRUDENCE took precedence when the Asian financial crisis hit in 1998. Then finance minister Richard Hu refused to include a big boost for the economy in February, instead turning in a surplus and promising off-Budget measures if necessary.

Apart from freezing rentals for land and factories owned by Jurong Town Corporation and HDB, and giving a 15 per cent tax rebate on commercial and industrial properties, most companies got little help in cost-cutting.

Individual Singaporeans received a bit more: an income tax rebate, and rebates on rents, utilities and HDB service and conservancy charges.

Explaining the conservative Budget then, Dr Hu said the economy was still expected to grow in 1998. In the months following, however, the economy worsened rapidly.

In June, the Government slashed its growth forecast and rolled out a $2 billion stimulus, pushing the Budget into a deficit of $800 million.

Companies were given bigger rebates on property taxes and rentals. The weak property sector also got a boost: Land sales were suspended, stamp duty for uncompleted properties was deferred, and developers were allowed to delay developing state land. But corporate tax cuts and rebates were absent, and consumers received practically nothing.

It turned out that the Government was saving the best for last. In November, then deputy prime minister Lee Hsien Loong announced a $10.5 billion package to help businesses further cut costs.

Employers' contributions to Central Provident Fund were halved to 10 per cent. Firms also received corporate and property tax rebates, and further cuts in business rents and charges. Living cost rebates were also extended for households in most HDB flats.

This article was first published in The Straits Times on January 17, 2009.