S’pore in vital year of restructuring: DBS CEO

SINGAPORE — The Republic has its work cut out for it this year as it enters an important phase in its crusade to restructure and transition the economy, with the manufacturing industry and a further slowdown in the property sector set to remain among the main drivers of change, said the head of South-east Asia’s largest bank yesterday.

“2015 is a very, very important year for our country in restructuring and transition,” Mr Piyush Gupta, chief executive officer of DBS Group Holdings, said at a market-outlook event yesterday.

“(The Government is) trying to do two things at the same time — restructure the manufacturing sector to be more productivity driven and technologically efficient and, at the same time, slow down asset prices in the property market.”

Among one of Singapore’s most closely watched industries, the property market is expected to face a continuous roll down from last year’s decline, with a greater downward revision in prices expected.

Flash estimates by the Urban Redevelopment Authority showed private home prices in Singapore fell 4 per cent last year, posting its first annual decline since 2008.

In the public housing market, resale prices for Housing and Development Board flats fell 6.1 per cent — the steepest decline since 2001 — flash estimates showed.

“I expected property prices in Singapore to go down 10 to 15 per cent (last year). The fundamentals that supported that are still true. We are about halfway there — there is still some more way to go on that front,” Mr Gupta said.

Now in its sixth year, Singapore’s restructuring efforts have led to significant challenges across several areas, including labour shortage, higher employment costs and slower economic growth.

Singapore’s economy grew 2.8 per cent last year, down from 3.9 per cent in 2013 and a tad short of the official 3 per cent forecast, advance estimates from the Ministry of Trade and Industry (MTI) showed last week.

The slower growth was attributed to a contraction in manufacturing in the fourth quarter.

“I thought Singapore would perform relatively strong with 3.5 to 4 per cent growth (last year). So we obviously got that wrong. Singapore has been performing slower than we anticipated,” Mr Gupta said.

For the year ahead, Singapore’s performance will be pegged to that in the United States, he added. “If the US does well, I think Singapore has the flexibility to align to US demand and that may create some wind in our sails in the course of the year … but it is not going to be an easy ride.”