No economic crisis, long-term plan to fix S’pore economy set in motion: PM Lee

SINGAPORE — Soothing anxieties over the slowing economy and job market, Prime Minister Lee Hsien Loong said Singapore is not in a crisis. Instead, the structural problem that the country has to overcome has no quick fix but requires a long-term strategy that has been set in motion.

Mr Lee was speaking to over 200 unionists, small and medium enterprise bosses, professional association representatives and freelancers in a dialogue arranged by the National Trades Union Congress (NTUC) on Tuesday (Nov 1), where he gave reassurances about Singapore’s economic situation and outlook — the second time in just over a week that he has done so.

While the economy is expected to register growth of 1 per cent to 2 per cent this year, this is due to weak external demand, he said. And when the situation reverses, Singapore can aim for 2 per cent to 3 per cent growth on average, he added, noting that substantial investments are still being drawn in and creating new jobs. But he stressed that upgrading workers’ skills and restructuring the economy was critical.

"Growth has slowed, yes. In a way this is a new normal. We can’t go back to 5, 6, 7 per cent growth. Two, 3 (per cent), I think should be the normal," he said. "It’s not a crisis, there are still bright spots in the economy and what we need to do is we need to work hard in order to grow ... The prescription is upgrading and restructuring."

Using a medical analogy to talk about the effects of the Global Financial Crisis of 2008 and 2009, he said the Government had to act quickly then to administer "antibiotics", in the form of reducing business costs and protecting jobs. This "medicine" worked, and Singapore recovered from the crisis quickly, he added.

But Singapore is not in need of an emergency package now.

"In 2008, 2009, it was a crisis, we were sick, we needed medicine, we took antibiotics. One course of powerful medicine, we recovered. Luckily the germs also stopped coming and we were okay. But this is not that kind of infection that we can take a quick medicine to cure," he said before a closed-door dialogue with participants. "This one you see the doctor, the doctor says, ‘No you don’t need me. You need to see a physical trainer. You need to build up your muscles, you need to build up your skills you need to strengthen yourself. You need to keep at it. Several months, you’ll see a difference. A few years, you’ll be a different person.’"

Programmes in place to help businesses and workers will be scaled up, with funding bumped up by as much as 50 per cent in the next two years, said Mr Lee. On the Labour Movement’s part, a new unit led by NTUC assistant secretary-general Patrick Tay will be set up from January to work with businesses, institutes of higher learning and the Government help workers of tomorrow in jobs, skills and training.

Mr Lee noted that other countries are facing similar structural changes as Singapore amid slowing trade. But unlike others, unemployment has remained low and stable here, and there are still jobs available.

Nevertheless, Singapore needs to drive its economic growth through improving productivity now, rather than increasing the labour force, he added, given that the local workforce is heading for negligible or even stagnant growth in the next decade.

And the broad strategy to restructure the economy and upgrade workers is already in place, said Mr Lee.

The Government is helping businesses by helping them transform, he said, citing the Industry Transformation Programme announced in this year’s Budget. Three such programmes have been rolled out — for the precision engineering, food services and retail sectors — and 20 more are still in the works.

It is also helping companies find opportunities overseas to overcome the challenge of a small domestic market. For example, barbecue sliced pork seller Bee Cheng Hiang recently opened a shop in Ginza in Tokyo, an effort that took years to realise because of Japan’s strict regulations on importing food.

The Government is supporting current workers, displaced workers and future workers, said Mr Lee, outlining measures that have been introduced.

New investments continue to be brought in to Singapore, he added, with the Economic Development Board attracting S$11.5 billion of total foreign direct investment last year.

Mr Lee also noted that the Committee on the Future Economy is planning ahead for the next 10 to 15 years by developing strategies to take advantage of Singapore’s strengths and grow its economy. It is also making sure that when workers come into the workplace in the future, there will be opportunities for them.

"We’ve got the resources, we’ve allocated the money, what we need to do is get the programmes working, which we will," he said. Sounding a final note of assurance, he expressed confidence that the strategies would work.

"We’re doing the right things. These are the things which, if you consult the economists internationally, they’ll say, ‘Actually all the developed economies all do this — retrain, invest in people, help the restructuring to happen, get into new skills. Follow where the new jobs are being created’," said Mr Lee, who was accompanied by Minister of Trade and Industry (Industry) S Iswaran. "Not everybody can do it but we have been able to do it in Singapore. It is not something which is a magic pill, it will not solve our problem overnight, but it is something which will work given time."