SINGAPORE — Against the backdrop of a shift in global economic weight towards Asia, the emergence of new technologies and an ageing domestic population, this year’s Budget seeks to position the Republic for the future through what Finance Minister Heng Swee Keat called a “strategic and integrated plan”.

The Budget will build on Singapore’s strong position and develop a more vibrant and innovative economy, improve liveability and strengthen the social safety nets.

To prepare the Republic for longer term shifts amid greater geo-political uncertainty and tax competition, the country must also continue to plan ahead for a “fiscally sustainable and secure future”, Mr Heng told the House on Monday as he delivered Budget 2018.

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Mr Heng sketched out three major shifts in the coming decade, which he said will provide opportunities but also bring new challenges.

Firstly, the shift in global economic weight towards Asia has seen China setting up a regional infrastructure bank and laying out bold plans under its Belt and Road initiative, while India is reforming its economy by easing restrictions on foreign investments.

Closer to home, countries in the Association of Southeast Asian Nations are also moving up the value chain as their middle-class populations grow rapidly.

These developments represent “significant opportunities” for Singapore’s firms and people, and its economy must be “geared to ride on and contribute to Asia’s growth”, said Mr Heng. However, threats such as terrorism, as well as tensions on the Korean peninsula and South China Sea, may dampen investor confidence and adversely impact regional growth and stability.

Secondly, new technologies are reshaping the economy and jobs. For instance, Mr Heng noted how the rise of e-commerce and a sharing economy have complemented some traditional businesses but also made the environment more competitive for others.

Going forward, firms will compete increasingly on intangible assets such as intellectual property, data and user networks. “First-mover advantage and time to market will be key,” said Mr Heng.

Securing better jobs and wages will also not just depend on “how well we did in school”, he said, but how individuals can learn, adapt and grow throughout their lives.

The ageing population, which Mr Heng identified as the third “major shift”, will result in a significant increase in the Government’s healthcare and social expenditure. A shrinking resident workforce could also tighten Singapore’s labour market and slow economic growth, he cautioned.

“(These could happen) unless we remain dynamic in our outlook, are increasingly productive in the way we work, and supplement our workforce with a calibrated inflow of workers from abroad,” he said.

The rapid pace of technological change may also cause older workers to feel marginalised, said Mr Heng, as he noted a “rising discontent” over globalisation and technological disruptions in some advanced economies.

The Republic must also “keep a close watch” on income inequality and social mobility. “We want growth to uplift all Singaporeans and deepen our social compact. This is why we will continue to invest in education and skills upgrading, to give every Singaporean the best chance to realise his or her potential,” he said.

Singapore is in a good state to seize opportunities and guard against challenges presented by these shifts, said Mr Heng, noting the Republic’s good geographic and digital connectivity, as well as its strong trade links with many foreign economies.

On the economic front, this year’s Budget will focus on making innovation pervasive in the economy, deepening capabilities in firms and workers, as well as establishing strong foreign and local partnerships. To improve liveability, it will also drive initiatives to help the economy be more carbon-efficient.

Meanwhile, the Government will continue to strengthen social safety nets as the population ages. Nevertheless, a collective effort is required to foster a caring and cohesive society, Mr Heng stressed.

“We must also remain a society where all of us, as individuals, members of families , and citizens, take pride in caring for ourselves, our children and seniors, and one another,” said Mr Heng, adding that the Budget should pull together resources and integrate efforts across all sections of society to “build a better Singapore for everyone”.

Concluding the Budget statement which was delivered in about two hours, Mr Heng reiterated that this year’s Budget is about “laying the foundation for our nation’s development in the next decade”.

It seeks to support the country’s transformation into a vibrant and innovative economy, “by fostering pervasive innovation, building deep capabilities, and forging strong partnerships”, he noted. The Budget also aims to build a smart, green and liveable city, so that Singaporeans can enjoy a high quality living environment.

He added that apart from furthering Singaporeans’ collective efforts to foster a caring and cohesive, the Budget also lays out plans for the Government’s expenditures and revenues in the next decade, to “ensure a fiscally sustainable and secure future for the country”.

“At its heart, the Budget is a strategic and integrated financial plan to position Singapore for the future… We are now in a much stronger position than we have been in the past. We have a diversified and well-connected economy, a highly motivated and educated workforce, a cohesive and resilient society,” Mr Heng said.

“Together, we will marshal our resources and chart our course – to come together, to work together, to make our aspirations today, the reality tomorrow.”