12-10-2011, 07:24 AM
The Straits Times
Oct 12, 2011
Headwinds will slow S'pore's growth: Govt
Economy needs steadying hand; aim is for inclusive growth
By Aaron Low
SINGAPORE'S key economic ministries warned that the deteriorating global economy could create headwinds for the country in the next five years.
But they pledged to continue to cushion companies and workers against the ups and downs that are increasingly becoming the normal order of business, and put the economy on a steady and sustainable growth path.
The ministries of Trade and Industry (MTI), Finance (MOF) and Manpower (MOM) also emphasised that this growth must be inclusive and felt by all sectors of society, especially older workers and the low-income.
Setting the tone in the MOF's submission to Parliament, Deputy Prime Minister Tharman Shanmugaratnam said the environment has shifted in the last five years, noting that 'slow growth in the developed economies, with periodic debt shocks and economic setbacks, may be the norm for several years to come'.
The Monetary Authority of Singapore (MAS), Singapore's central bank, echoed this, warning that the 'headwinds from slower global growth will mean slower growth in Singapore in the next few years'.
At the same time, Singapore's land and manpower are limited, added Mr Tharman.
In the past, Singapore has been able to overcome the handicap of its limited labour pool by bringing in foreign workers.
But the MOM said in its addendum to the President's Address that while Singapore must remain open to foreign talent, it must seek to keep the overall share of foreigners in the workforce at 'no higher than one-third' over the long term.
And this will mean the Government must help businesses to adjust to the reality of a tight labour market.
These warnings are in stark contrast to the upbeat mood less than five years ago struck in the ministries' addenda to the President's Address at the opening of Singapore's 11th Parliament in 2006.
In the midst of an economic boom, Trade and Industry Minister Lim Hng Kiang had said then that the objective for Singapore was 'maximising growth while external conditions are conducive'.
Prime Minister Lee Hsien Loong had also added: 'When the sun is shining, we should go for it - as fast as we can, as much as we can'.
Yesterday, Mr Tharman advocated a more careful approach, saying: 'We must steer a path that enables the country to respond to these challenges, transform the nation's capabilities and help our citizens achieve higher standards of living.'
Key to this transformation will be a rise in productivity.
'Our resident workforce will grow more slowly, and the proportion of younger workers too will decline,' said Mr Tharman, who is also the Manpower Minister.
'We therefore have to focus our efforts on improving quality, in every job and for every age, as the basis for Singapore's economic dynamism and for sustained increases in Singaporeans' incomes.'
At the same time, the Government will make sure no one is left behind as the economy grows. That will involve spending more to enhance the social safety net and improve the quality of education, health and housing, said the ministries.
The Workfare Income Supplement scheme, which helps people stay employed and earn a higher wage, will also be reviewed.
But the initiatives will come at a significant cost, resulting in higher government spending. 'We have put in place a resilient revenue structure to enable us to meet these higher spending needs,' said the minister.
Likewise, Mr Lim said the MTI will work to help small local firms grow into big multinational companies.
Outlining his ministry's five-year plan, Mr Lim noted that it is not all doom and gloom for Singapore despite the challenges that abound.
For one, Singapore is situated in the heart of Asia, which will be the world's major driver of growth. The country also has strong economic strengths and networks that will help it ride on this wave of Asian growth, said Mr Lim.
'The MTI will promote sustained and inclusive economic growth, to create good quality jobs and support higher standards of living for Singaporeans,' he added.
Analysts and MPs said the message of inclusive growth marks a distinct shift towards a different growth paradigm.
Private sector economists such as Bank of America Merrill Lynch's Chua Hak Bin forecast a rocky period ahead.
'Singapore's land and manpower are limited while external demand is slowing. We are unlikely to see the economy hit the 8 per cent or so seen in the past five years again,' he said.
Marine Parade GRC MP Seah Kian Peng said it is quite clear that 'we are no longer embarking on a growth at all costs policy'. 'The Government wants to pursue growth at a pace that people are comfortable with... one that keeps pace with the growth of infrastructure.'
Associate Professor Tan Khee Giap of the Lee Kuan Yew School of Public Policy said it was 'high time' inclusive growth became the focus of the Government's economic policy.
'Income inequality has been rising steadily and it is clear that many less educated workers have been left behind in the race to get ahead. The policy is long overdue,' he said.
aaronl@sph.com.sg
Oct 12, 2011
Headwinds will slow S'pore's growth: Govt
Economy needs steadying hand; aim is for inclusive growth
By Aaron Low
SINGAPORE'S key economic ministries warned that the deteriorating global economy could create headwinds for the country in the next five years.
But they pledged to continue to cushion companies and workers against the ups and downs that are increasingly becoming the normal order of business, and put the economy on a steady and sustainable growth path.
The ministries of Trade and Industry (MTI), Finance (MOF) and Manpower (MOM) also emphasised that this growth must be inclusive and felt by all sectors of society, especially older workers and the low-income.
Setting the tone in the MOF's submission to Parliament, Deputy Prime Minister Tharman Shanmugaratnam said the environment has shifted in the last five years, noting that 'slow growth in the developed economies, with periodic debt shocks and economic setbacks, may be the norm for several years to come'.
The Monetary Authority of Singapore (MAS), Singapore's central bank, echoed this, warning that the 'headwinds from slower global growth will mean slower growth in Singapore in the next few years'.
At the same time, Singapore's land and manpower are limited, added Mr Tharman.
In the past, Singapore has been able to overcome the handicap of its limited labour pool by bringing in foreign workers.
But the MOM said in its addendum to the President's Address that while Singapore must remain open to foreign talent, it must seek to keep the overall share of foreigners in the workforce at 'no higher than one-third' over the long term.
And this will mean the Government must help businesses to adjust to the reality of a tight labour market.
These warnings are in stark contrast to the upbeat mood less than five years ago struck in the ministries' addenda to the President's Address at the opening of Singapore's 11th Parliament in 2006.
In the midst of an economic boom, Trade and Industry Minister Lim Hng Kiang had said then that the objective for Singapore was 'maximising growth while external conditions are conducive'.
Prime Minister Lee Hsien Loong had also added: 'When the sun is shining, we should go for it - as fast as we can, as much as we can'.
Yesterday, Mr Tharman advocated a more careful approach, saying: 'We must steer a path that enables the country to respond to these challenges, transform the nation's capabilities and help our citizens achieve higher standards of living.'
Key to this transformation will be a rise in productivity.
'Our resident workforce will grow more slowly, and the proportion of younger workers too will decline,' said Mr Tharman, who is also the Manpower Minister.
'We therefore have to focus our efforts on improving quality, in every job and for every age, as the basis for Singapore's economic dynamism and for sustained increases in Singaporeans' incomes.'
At the same time, the Government will make sure no one is left behind as the economy grows. That will involve spending more to enhance the social safety net and improve the quality of education, health and housing, said the ministries.
The Workfare Income Supplement scheme, which helps people stay employed and earn a higher wage, will also be reviewed.
But the initiatives will come at a significant cost, resulting in higher government spending. 'We have put in place a resilient revenue structure to enable us to meet these higher spending needs,' said the minister.
Likewise, Mr Lim said the MTI will work to help small local firms grow into big multinational companies.
Outlining his ministry's five-year plan, Mr Lim noted that it is not all doom and gloom for Singapore despite the challenges that abound.
For one, Singapore is situated in the heart of Asia, which will be the world's major driver of growth. The country also has strong economic strengths and networks that will help it ride on this wave of Asian growth, said Mr Lim.
'The MTI will promote sustained and inclusive economic growth, to create good quality jobs and support higher standards of living for Singaporeans,' he added.
Analysts and MPs said the message of inclusive growth marks a distinct shift towards a different growth paradigm.
Private sector economists such as Bank of America Merrill Lynch's Chua Hak Bin forecast a rocky period ahead.
'Singapore's land and manpower are limited while external demand is slowing. We are unlikely to see the economy hit the 8 per cent or so seen in the past five years again,' he said.
Marine Parade GRC MP Seah Kian Peng said it is quite clear that 'we are no longer embarking on a growth at all costs policy'. 'The Government wants to pursue growth at a pace that people are comfortable with... one that keeps pace with the growth of infrastructure.'
Associate Professor Tan Khee Giap of the Lee Kuan Yew School of Public Policy said it was 'high time' inclusive growth became the focus of the Government's economic policy.
'Income inequality has been rising steadily and it is clear that many less educated workers have been left behind in the race to get ahead. The policy is long overdue,' he said.
aaronl@sph.com.sg