The carrot, the stick and the sting: Restructuring for quality growth

The proverbial writing, as they say, is on the wall. With a continued focus on driving productivity growth, Budget 2013 continued the Government’s approach of using both the carrot and stick to transfer the economy to be on a par with developed countries.

As foreign worker levies are poised to increase and the influx of foreign workers is tightened for all sectors of businesses (with those in construction, marine, processes and services industries being the hardest hit), the new three-year Transition Support Package – comprising wage subsidies, tax rebate and the PIC bonus to encourage investments – should take some of the sting out for our businesses, in particular the SMEs.

It is imperative that our SMEs take these measures into their business planning. While the 3-year transition package is a welcome relief, it may not be permanent.

The Government is sending a very strong signal to all businesses to restructure, innovate and achieve greater efficiencies or risk being sidelined, as has happened to some of the world’s best known companies (e.g. Eastman Kodak).

The years of heady growth rates of the 1980s and 1990s are long past. As we attain developed economy status, the only avenue for Singapore to continue to shine on the global stage and remain relevant is to be focussed on ingraining productivity concepts, adopt better work practices and look for innovation in all that we do in our daily work.

Tan Tay Lek is a Partner at PricewaterhouseCoopers Services LLP.