ANOTHER GOOD YEAR
1. This year, the world economy faced a number of challenges. Oil prices continued to rise, and are now close to US$100 a barrel. The US sub-prime loans crisis has uncovered deeper problems in the banking and financial system, not only in the US but also Europe. But so far Asia`s growth continues to be strong, and this has benefited us.
2. Singapore has enjoyed another year of robust expansion, although the fourth quarter saw slower growth. The economy grew by 7.5% for the year. Manufacturing and services are doing well. The construction sector is especially strong. Many major projects are underway, which when completed will upgrade our infrastructure and economy. Financial services also grew vigorously, as financial institutions shifted more regional activities to Singapore.
3. High growth has benefited all Singaporeans. A record 172,000 jobs were created in the first three quarters of the year. Unemployment is down to 1.7%, the lowest in almost a decade. Companies are reporting bigger profits, and workers are enjoying higher bonuses and wages. Low-income workers too are earning more, unlike in some previous years.
4. In 2007, the Economic Development Board (EDB) drew in a record $16 billion of fixed asset investments (FAI) in manufacturing, and projects generating $3 billion of total business spending in services. Existing investors continued to expand their operations in Singapore, like ExxonMobil which is building a second world-scale chemical complex here. We are also getting high-quality, `first-of-its-kind` investments. One is by a Norwegian firm, REC, which chose Singapore against stiff competition to build the world`s largest integrated solar plant. These projects are a strong vote of confidence in Singapore and will generate many new jobs.
5. On the international front, we successfully hosted the 13th ASEAN Summit. This was a significant milestone in regional cooperation. The countries signed the ASEAN Charter to make ASEAN a more effective and cohesive organisation, and adopted a Blueprint to create the ASEAN Economic Community by 2015.
6. In this globalised world, more and more Singaporeans study and work abroad. We need to keep in touch with them, and help them to stay engaged with home both in heart and in mind. The Overseas Singaporean Unit has been reaching out to the Singaporean diaspora around the world. Ministers, senior officials and business leaders meet up with overseas Singaporeans when they travel. In April we held the first “Singapore Day” in New York City, which attracted 6,000 Singaporeans. These efforts help to strengthen our sense of belonging and national identity.
OUTLOOK FOR 2008
7. I am cautiously optimistic on the outlook for 2008. The US may go into a recession because of the financial market problems. A US downturn would affect Asia too, but the impact on us would be offset somewhat by the strong momentum in the dynamic Asian economies.
8. At home, 2008 will see the realisation of several major projects. The Singapore Flyer will be up in March, and the inaugural F1 Singapore Grand Prix – the first F1 night race ever – will flag off in September. The Marina Barrage will create a freshwater lake, buzzing with activity in the heart of the city. Work on the two Integrated Resorts is in full swing, and should be completed by 2010. As these plans progressively fall into place, we can look forward to a more exciting and vibrant city landscape.
9. Internationally we will continue to expand our economic space, seize opportunities all over Asia and tap new areas of growth. A more diversified economy will weather external shocks better. All things considered, we expect to grow by 4.5-6.5% in 2008.
PROBLEMS OF SUCCESS
10. The last four years of sustained strong growth have created some problems of success. First, there is a shortage of prime office space. The Government is releasing enough land to meet the demand for more office space over the next few years. In the interim, we are making available more transitional office sites.
11. Second, the construction industry faces resource constraints. To ease the pressure, the Government has deferred some of its less urgent projects. This will help to spread out the workload and moderate construction costs.
12. Third, the labour market is tight. We need more workers at all levels, especially those with professional skills. This is why we are upgrading and re-skilling our workers, and bringing in foreign workers to top-up the numbers. We must seize the moment and ride this wave of growth, while the winds and tides are with us.
COST OF LIVING
13. In recent months, inflation has picked up. This has caused concern to Singaporeans, as REACH has reported.
14. There are several reasons for this. First, the GST rate went up to 7% in July. However, the GST Offset Package has buffered that fully for lower-income citizens, who are receiving much more in offsets than the extra GST they have to pay.
15. Second, IRAS has revised up the Annual Values of HDB flats. This will push up the Consumer Price Index, but in reality does not affect the 95% of HDB households who own their homes, and so do not pay any rents.
16. Third, prices of food and energy have increased worldwide. This affects us directly, because we are a small and open economy which imports all our food and fuel. But we are doing what we can to lessen the burden on Singaporeans, for example by encouraging NTUC Fairprice and other supermarkets to find new sources of supply and offer house brands of basic essential items, and helping low-income families through U-Save and other rebates.
17. But remember that while prices have gone up, so have earnings, and generally by more than inflation. That is why shopping malls were thronged with Christmas shoppers, and tourist agencies have had a record year arranging overseas holidays for Singaporeans. So although nobody likes to see prices go up, most working Singaporeans should be able to cope, and in reality are better off despite the inflation.
18. Understandably, retired Singaporeans living off their savings worry the most about rising prices. The Government has not forgotten them. Whenever we have had a Progress Package, GST Offset Package, or CPF top-ups, we have given significantly more to older and lower-income Singaporeans. With the strong economy this year, Government revenues have been buoyant. Our finances permitting, we should have something more in the FY2008 Budget to help needy and older Singaporeans.
19. But every citizen should also do his own part to upgrade himself. Low-income workers should make full use of reskilling and retraining programmes offered by WDA and NTUC. Unemployment and retrenchments may be down, but your efforts will help you to earn more in a better and more productive job, and stand you in good stead as economic conditions continue to change.
ANTICIPATING AND TACKLING NEW CHALLENGES
20. While we tackle immediate cost issues, we must continue to focus on longer-term strategies. Over the years, we have made many difficult but necessary adjustments, which have contributed to the prosperity that we are enjoying. In 2007 alone, there were three major policy packages.
21. In the Budget, we raised the CPF contribution rates, introduced the Workfare Income Supplement (WIS) scheme for older, low-income workers, and restructured taxes to make our economy more competitive.
22. In April, we revised public sector salaries to narrow the gap with the private sector, and are now following through with the second instalment. This is absolutely necessary to maintain the quality of our public service, and a good, clean and competent government for Singapore.
23. In August, we embarked on further CPF reforms to ensure financial adequacy for CPF members in old age. Professor Lim Pin`s committee is now studying the best way to provide affordable and flexible longevity protection for all CPF members, and should complete its work by early next year.
24. These major changes will strengthen our economic vibrancy, our public service and our social cohesion. We must continue to rethink our problems and respond creatively to them, to maintain high growth and continue transforming Singapore. In 2008, we face several significant policy decisions.
25. The first is healthcare, a major concern of Singaporeans. To meet the growing needs and rising expectations of our ageing population, MOH will expand public sector healthcare capacity. We will set up new hospitals and specialty centres, and improve staff to patient ratios with more doctors, nurses and allied health workers. Patients will enjoy higher quality care, less crowding and shorter waiting times.
26. The Government will spend more on healthcare to expand and upgrade services, and keep healthcare affordable for all. We need to deploy our resources wisely, and target subsidies at those who most need help. Higher-income patients should co-pay a larger share than poorer patients. This calls for means-testing. We already have means-testing in nursing homes, and should now implement it for hospitals too. MOH will discuss and finalise the scheme with patients, unionists and the public over the next few months.
27. Another issue is land transport. MOT is doing a Land Transport Review to make sure that our road and rail network can meet our growing needs. A key focus is to improve our public transport, so that more Singaporeans will take buses and trains instead of driving cars. We can do more to make public transport a choice mode of travel. Some measures are long-term, like building more rail lines. But changes like improving bus services, making transfers more seamless and convenient, as well as running more trains at peak hours can and should be made more quickly.
28. In parallel, we need to update our policies on car ownership and usage. Our roads are getting more crowded and traffic jams are worsening. We have to lower the vehicle growth rate and step up measures to manage the demand for road space. We need to enhance the ERP and extend its coverage so that driving costs significantly more, but we will balance that with lower vehicle ownership taxes. Free flowing traffic is an important factor in the quality of urban life in Singapore.
29. The third issue is education. We are investing heavily in our young and opening up new paths for them to make the most of their talents. Every student should receive a post-secondary education and more should receive a subsidised university education. Hence we are increasing publicly-funded university places to take in 30% of every cohort by 2015.
30. Minister of State Lui Tuck Yew`s committee is studying how to expand the university sector. It has looked at the experiences of other countries, and consulted widely with employers, working adults and students from junior colleges and polytechnics. While the form is still being studied, the case for a fourth publicly-funded university is already clear. The new institution must maintain high and rigorous standards, emphasise innovation and produce graduates who are eager to create and seize new opportunities.
CONCLUSION
31. We will be tackling these three issues in 2008. But we must see the challenges ahead in perspective. Singapore is in a strong position. If a US slowdown affects Asia, I am confident that we will weather it well, and our people and companies will continue to find opportunities amidst the challenges.
32. We have good reasons to rejoice:
a. Our students have excelled at all kinds of international events and competitions, from Olympiads in Mathematics and the Sciences, to choir festivals and debates. Our education system is admired by others and recognised internationally; that is why our mathematics textbooks have been approved for use in California.
b. Our creative talents are making their mark internationally. Singapore Idol Hady Mirza was voted the first Asian Idol. Movies like “Singapore Dreaming” and “881” have been well received at film festivals. At the Singapore Season in China, our team of artistic talents showcased Singapore`s cultural diversity and distinctiveness, and won the hearts of a wider audience.
c. Our athletes are well-motivated and show keen fighting spirit. This year we sent our youngest-ever team to the Southeast Asian Games. They gave their best. Team Singapore returned from Korat with 43 gold, 43 silver and 41 bronze medals, a record for a SEA Games held outside Singapore.
33. As long as we continue to work together and support each other, we can all look forward to a brighter future for our nation and for ourselves.
34. I wish all Singaporeans a happy and fulfilling 2008.
Source: www.egovmonitor.com (3 Januari 2008)
