The document provides an overview of the global environment and Singapore's Budget 2016. It summarizes key points from Budget 2016, including that it allocates 66% of spending to the long-term goal of transforming the economy compared to 34% for short-term concerns. The budget focuses on building a caring and resilient society, transforming the economy through enterprise and innovation, and partnering for the future. It also outlines various economic initiatives, support for businesses, and support for people announced in the budget.

1. 1
April 2016
The Singapore
Budget 2016
UOB Global Economics & Markets Research
After-thoughts

2.  A Survey Of The Global Environment
 The Singapore Budget 2016
2

3. UOB Global Economics & Markets Research
0
50
100
150
200
250
2000 2002 2004 2006 2008 2010 2012 2014 2016
Bloomberg Commodity Index
BCOM Index
0
20
40
60
80
100
120
140
160
2000 2002 2004 2006 2008 2010 2012 2014 2016
West Texas Intermediate Crude
USCRWTIC Index
0
500
1000
1500
2000
2500
3000
3500
2000 2002 2004 2006 2008 2010 2012 2014 2016
Aluminium
LMAHDS03 Comdty
0
2000
4000
6000
8000
10000
12000
2000 2002 2004 2006 2008 2010 2012 2014 2016
Copper
LMCADS03 Comdty
World Commodities Prices Remain Depressed
3
-68%
-79%
-54%
-55%
Source: Bloomberg (Daily Data)

4. UOB Global Economics & Markets Research
0
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012 2013 2014 2015
Index (2007 Jan = 100)
Singapore
China
India
Indonesia
Japan
Korea
Malaysia
Philippines
Taiwan
Thailand
EU
United Kingdom
United States
New Zealand
Australia
4
Deflationary Trends Prompted Global Central Banks To Ease Policies
Central Bank Policy Rates (Jan 2007 = 100)
Source: CEIC (Monthly Data)

5. UOB Global Economics & Markets Research 5
Recent Crude Oil Prices Showed Weaker Trend Versus Last Two Crises – May
Trade Lower To US$20-30 In 2016 (From Base Case US$30-35)
Comparing The 1985, 2008 & 2014 Oil Busts
Source: US EIA (Daily Data)
-80
-60
-40
-20
0
20
40
0 100 200 300 400 500 600 700 800
May 1985 - Sep 1988 May 2008 - Dec 2010 From Dec 2013 - Mar 2016
Oil Price Indexed To Zero
Number of Days
The long-awaited rebound?

6. UOB Global Economics & Markets Research
Source: US EIA, CEIC
0
40
80
120
160
Apr-83 Apr-87 Apr-91 Apr-95 Apr-99 Apr-03 Apr-07 Apr-11 Apr-15
WTI Brent Crude
1990 Gulf War
followed by US
recession
1997/98 Asian
Financial Crisis
2008/09 Global
Financial Crisis
2001 US recession
2014 Oil
Slump
US$/bbl
1985/86 Oil Crisis:
Increase in the supply
of oil and change in
OPEC policy
6
Recent Periods Of Sharp Oil Price Declines
Episodes Of Oil Price Declines >30% In 6-month Period

7. Quarterly Chart of US Dollar Index (DXY) until end Mar 2016
The U.S Dollar has been weak since the December rate hike
Source: Bloomberg, UOB Global Economics & Markets Research

8. Divergence between U.S Data (Red) and USD Positioning (Blue)
Divergence between U.S data and the USD
Source: Bloomberg, UOB Global Economics & Markets Research

9. Daily Chart of Bloomberg JPM Dollar Index (Green) & CFTC USD Positioning (Yellow)
Unless USD positioning improves, DXY is still susceptible to further
downside
Source: Bloomberg, UOB Global Economics & Markets Research

10. Monthly Chart of Bloomberg JPM Asia Dollar Index (ADXY) & Fed Funds Rate (FDTR)
We showed this in Q1 - Asian Currencies (ADXY) Were Resilient In
Previous Fed Hike Cycles
Source: Bloomberg, UOB Global Economics & Markets Research

11. Monthly Chart of Bloomberg JPM Asia Dollar Index (ADXY) & Fed Funds Rate (FDTR)
Strong Bounce in Asian Currencies (ADXY)
Source: Bloomberg, UOB Global Economics & Markets Research

12. Monthly Chart of USD/SGD – 1.3515
High Conviction Trades
Source: Reuters, UOB Global Economics & Markets Research

13. Monthly Chart of EUR/USD – 1.1375
High Conviction Trades
Source: Reuters, UOB Global Economics & Markets Research

14. Monthly Chart of AUD/USD – 0.7665
High Conviction Trades
Source: Reuters, UOB Global Economics & Markets Research

15. UOB Global Economics & Markets Research 15
China “New Normal”: Manufacturing
China Industrial Value Added YTD
Source: CEIC, UOB Global Economics & Markets Research

16. UOB Global Economics & Markets Research
… serious excess capacity in China since 2008
Source: IMF Staff Calculations, IMF Article IV Report, 2012 http://www.imf.org/external/pubs/ft/scr/2012/cr12195.pdf
16
China “New Normal”: Excess Capacity
Average Capacity Utilization (%)

17. UOB Global Economics & Markets Research
1% growth: in 2014 = +RMB554bn vs. in 2004
= +RMB214bn, or 2.6x larger…
… i.e. 7.3% growth in 2014 is equivalent to
18% growth in 2004 …
17
China “New Normal”: Quality Versus Quantity
China Real GDP & Growth Rate
Source: IMF, UOB Global Economics & Markets Research

18. UOB Global Economics & Markets Research 18
Watch For FX/Interest Rate Risks: Volatility
USD/CNY Trend
Source: Bloomberg, UOB Global Economics & Markets Research

19. UOB Global Economics & Markets Research 19
ASEAN Will Take The 4th Spot In GDP Ranking By 2025
Nominal GDP By Economies (2001-2030)
US
China
Eurozone
Japan
UK
ASEAN
0
5
10
15
20
25
30
2001 2005 2009 2013 2017 2021 2025 2029
US$ Trillions
2018
2025
Source: IMF, World Bank, UOB Global Economics & Markets Research

20. Since 2000, China & ASEAN Saw Rapid & Stable Growth
Source: IHS; World Economic Outlook (IMF), McKinsey Global Institute
Selected Key Economic Indicators Comparing ASEAN & ROW

21. 0
1,000
2,000
3,000
4,000
5,000
2009 2020 2030
Asia Pacific LatAm MENA
South Africa Europe North America
Growing Population and Consumer Affluence
340mn
-50 0 50 100 150 200 250 300 350
Japan
CIS
EU-27
ROW
US
LatAm
MENA
South Africa
Asia ex-Japan
Population Change by Region, 2010-2020 Growing Middle Class
525mn 3,228mn
Source: UN, OECD, The Brookings Institution, UOB Global Economics & Markets Research
1,740mn

22. 22

23.  A Survey Of The Global Environment
 The Singapore Budget 2016
23

24. UOB Global Economics & Markets Research
Budget 2015
24
Budget 2015 Pages Number
Building our Future, Strengthening
Social Security
6 to 19 14
Assurance in Retirement 46 to 56 11
Supporting Families, Strengthening
Community
59 to 70 12
Investing in Innovation &
Internationalisation
32 to 43 12
Developing our People 21 to 30 10
37
SocialEconomy
(63%)
(37%)
22
Building Our Future,
Strengthening Social Security

25. UOB Global Economics & Markets Research
Budget 2016
25
Budget 2016 Pages Number
Building a Caring & Resilient Society 47 to 65
19
Transforming our Economy through Enterprise & Innovation
Growing Singapore Together 11 to 16 6
Addressing Near-Term Concerns 17 to 21 5
Industry Transformation Programme 22 to 25 4
- Enterprise 25 to 29 5
- Industries 29 to 32 4
- Innovation 33 to 39 7
Supporting Our People 39 to 44 6
SocialEconomy
37
(34%)
(66%)
Partnering for the Future

26. UOB Global Economics & Markets Research
Budget 2016
26
Budget 2016 Pages Number
Building a Caring & Resilient Society 47 to 65
19
Transforming our Economy through Enterprise & Innovation
Growing Singapore Together 11 to 16 6
Addressing Near-Term Concerns 17 to 21 5
Industry Transformation Programme 22 to 25 4
- Enterprise 25 to 29 5
- Industries 29 to 32 4
- Innovation 33 to 39 7
Supporting Our People 39 to 44 6
SocialEconomy
21
(34%)
(84%)
(16%)Short-Term
Long-Term
Partnering for the Future

27. UOB Global Economics & Markets Research 27
Economic
Initiatives
Supporting
Businesses
Short Term
Measures
Transition Support
Package
Public Infrastructure
Projects
Enhance Corporate
Income tax Rebate
Extend Special
Employment Credit
SME Loan Assistance
Enhance
Revitalisation of
Shops Package
Longer
Term
Measures
Industry
Transformation
Programme
Transforming
Enterprises
Business
Grants Portal
Automation
Support
Package
Financing &
Tax
Incentives
Support For
Internationali
sation
Transforming
Industries
National
Trade
Platform
National
Robotics
Programme
Increasing
Outreach
Through
TACs
Transforming
Through
Innovation
Deepen
Innovation
Capabilities
Strengthen
Innovation &
Enterprise
Networks
Jurong
Innovation
District
Shifting From Broad-
Based Support
Supporting
People
Investing in
SkillsFuture
Adapt and
Grow
Initiative
Increase
Jobs
Matching
TechSkills
Accelerator

28. UOB Global Economics & Markets Research
Even As Firms Were Struggling With Revenue, Business Costs Continued
To Rise In 2015
28
Source: MTI

29. UOB Global Economics & Markets Research
A Large Part Was Due To Higher Labour Cost
29
Source: MTI

30. UOB Global Economics & Markets Research
Productivity & Resident Real Average Wage Growth (2005-15)
30
Size of the bubbles represents the sector’s employment size in 2015.
Source: MTI Staff estimates based on administrative and survey records
Improve Productivity

31. Thank you