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08 Apr 2020  (640 Views) 
Economic downturn

Stimulus packages face problems
I read about the problems in administering the three stimulus packages introduced by the government to deal with the covid-19 crisis/

Here are some examples:

a) The temporary relief fund are being abused by applicants who are not in financial distress
b) There are uncertainly about the impact of no-pay leave on the payout of the job support scheme
c) There are self employed people who need financial assistance, but fall outside of the relief scheme.

I am sure that the relevant ministers will come out with complicated rules to deal with these situations. These rules will still leave some people cut off, and they will feel being unfairly treated. 

Is there an alternative approach?

My preference is to grant loans, rather than give grants, to the affected workers or the self employed. They need financial assistance to cover their loss of income. 

As this is a loan, which needs to be repaid with a modest rate of interest, it is likely to attract the people who needs it. Those who can get by will probably not apply for it. The interest rate can be the rate paid by CPF on ordinary account.

Here are the rules that I would apply:

a) If a worker is put on partial or full no-pay leave or is being retrenched, the employer can certify the amount of reduction in pay. This allows the worker to apply for a loan to be given out by a relevant agency, e.g. Central Provident Fund

b) Self employed workers can also apply for a loan based on the their declaration of the estimated loss of income. Caps can be set for each type of industry, e.g. taxi driver, stall holder, professionals, etc.

These loans have to be repaid in the future. If not repaid, it could be setoff against CPF savings or on the sale of a CPF funded property. Some of the loans will remain unpaid. They can be written off.

At a future date, the government can decide on the proportion of the relief loans that can be forgiven, e.g. 30% or 50%. this can be decided based on submission of relevant documents and an evaluation process.

The approach that I have suggested will relieve the pressure on the front line processing of the applications. It ensures that the required money goes out first, and the evaluation can be done later.

Tan Kin Lian

Vote - do you agree with my approach?

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