How the 2022 budget, like the 1986 budget, prepares Singapore for the future

Delivered by Finance Minister Lawrence Wong on February 18, the Budget 2022 statement is titled: Charting Our New Course Together.

Elaborating in a Facebook post, Mr Wong shared that the title of the statement emphasizes the government’s focus on preparing Singapore for a post-pandemic future and including Singaporeans in this. forward journey.

Budget 2022 is a watershed moment for Singapore’s economy and society for years to come. This is certainly not the first time that Singapore has sought to shape its future development trajectory through policy and fiscal tools.

A similar process can be detected in the 1986 budget.

So, in order to understand the impacts of Budget 2022 on our future, we need to take a step back into our past.

In 1985, Singapore faced a similar inflection point. Freshly hit by a major economic crisis and in need of new economic directions, the government decided to set up an economic review board to identify future growth sectors that Singapore could develop.

The committee and subsequent 1986 Singapore Budget were intended to facilitate Singapore’s recovery from its first major economic crisis.

A significant outcome of the committee’s work was the identification of wealth management as a potential growth sector and the government’s subsequent decision to lay the foundations for a then non-existent wealth management sector.

In order to develop this sector, agencies such as the Monetary Authority of Singapore and the Central Provident Fund (CPF) Board have decided to invest part of their financial resources in the bond market.

As Singapore’s bond and fund markets were then relatively less developed, these measures provided a much-needed injection of funds into the sector and helped establish benchmark rates that would be useful to future fund managers.

These measures would ultimately lead to the liberalization of Singapore’s banking and financial sector, with the government subsequently taking the unpopular decision to merge several of Singapore’s major local banks to make them more globally competitive.

Taken together, these would ultimately lay the foundation for the development of Singapore’s financial sector.


Fast forward to 2022. In this year’s budget, tax changes aim to ensure greater inclusiveness and collective risk-sharing in the face of pressing health and social needs, while measures to ensure net zero carbon dioxide emissions by 2050 represents a more fundamental change. towards a green and low-carbon economy.

This marks a decisive shift in Singapore’s strategic direction.

The contours of the low- or no-carbon economy are unclear at this time, but the budget provides some clues.

Carbon taxes have now increased at a much faster pace and to higher levels, with the lower limit of S$50 per tonne by 2030 representing a 10-fold increase from 2019 rates.

The budget also mentions the use of “high quality international carbon credits”, potentially creating a market for the trading of these carbon credits.

As these changes are staggered over a long period of time, this should give businesses and consumers plenty of time to prepare.

At the same time, the finance minister had said that the revenue from the carbon tax would be used to cushion the costs of transitioning to a low-carbon economy, possibly alongside the insurance package launched alongside the amendments goods and services tax. .

All of these factors together provide reasons why businesses and consumers should not worry too much about the carbon tax.

Another initiative that has been announced is the government’s decision to issue up to S$35 million in green bonds by public bodies, through the National Environment Agency.

The proceeds of the issue will be used to finance public sector green infrastructure projects.

For investors, green bonds are an investment asset that not only earns a monetary return, but also contributes to Singapore’s sustainable development efforts.

Just as the government sought to grow Singapore’s wealth management industry in the 1980s by investing directly in the sector, these more recent initiatives represent an effort to grow Singapore’s nascent green finance industry.

By issuing green bonds, the government will provide a much-needed boost to the green finance sector.

It is important to note that these movements extend well beyond the financial services sector. For example, increased public and institutional support for green finance can provide sustainable solutions companies and green start-ups with better access to much-needed capital and financing.

This availability of funding for sustainable solutions will in turn help stimulate the development of greener technologies and climate change mitigation solutions.

But to achieve this outcome, we must first develop the green finance industry and establish the necessary pricing benchmarks that green financiers and technology providers can work with.

The 2022 budget and the 1986 budget are therefore similar in many ways – both are forward-looking and focused on getting out of the crisis.

When viewed in isolation, individual policy measures may not make immediate intuitive sense to the public. Taken together, however, each policy decision lays the foundation for further policy reforms that would ultimately ensure Singapore’s future economic development.

Many of us will recall that bank mergers two decades ago received mixed reactions from industry players and the public.

Now consider the fact that our three local banks – DBS, UOB and OCBC – are among the largest and most competitive banks in Southeast Asia.

Likewise, recent tax changes may not be welcomed while efforts to boost Singapore’s green economy may not resonate deeply with most; these are after all the early days of green industries.

However, these steps should be seen as early levers that will hopefully help Singapore change course and embark on a more sustainable and inclusive path for the future.


The 2022 budget therefore represents an important fork in the road to Singapore’s future economic and social development. Through these new initiatives, Singapore has chosen to chart a new course for its social and economic development.

It is a path that involves emphasizing greater social inclusion and making a decisive shift towards a green economy.

In the 1980s, Singapore found itself at an inflection point and chose to chart a new course that was not immediately intuitive.

In 2022, we are doing the same. The fruits of the 1980s moves are evident, with Singapore’s wealth management industry ranked among the best in the world, creating jobs and income for many in the industry.

As Singapore faces new challenges and headwinds, we will need to muster the same courage as our predecessors to similarly chart a new course for the future.


Eddie Choo is a research associate at the Institute of Policy Studies, National University of Singapore. Dr. Woo Jun Jie is a senior researcher at the same institute.

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