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‘Political stability, competent leadership’ among factors that enable Singapore to stay ahead amid weak global outlook

SINGAPORE — With the downbeat global economic outlook, Singapore has stood out from the competition because of strengths such as its “stable political environment with a competent and united leadership”, Trade and Industry Minister Chan Chun Sing said in Parliament on Monday (July 8).

Trade and Industry Minister Chan Chun Sing answering questions in Parliament on how the global economic headwinds will impact Singapore, as well as the country’s response to these risks as the world’s economic outlook worsens.

Trade and Industry Minister Chan Chun Sing answering questions in Parliament on how the global economic headwinds will impact Singapore, as well as the country’s response to these risks as the world’s economic outlook worsens.

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SINGAPORE — In spite of the downbeat global economic outlook, Singapore has stood out from the competition because of strengths such as its “stable political environment with a competent and united leadership”, Trade and Industry Minister Chan Chun Sing said in Parliament on Monday (July 8).

Other factors which enable the Republic to stand apart from the rest: Singapore’s pro-business environment, such as the rule of law and pro-innovation regulatory environment, its superior connectivity, its skilled and continually upgrading workforce and “a progressive tripartite partnership that enables the Government, businesses and labour to overcome challenges together”.

“Each attribute enhances our competitiveness. Collectively, they enable Singapore to be much more than the sum of our parts. We must, however, not rest on our laurels. We must extend our lead, by continuing to build on these fundamentals and seizing new opportunities," said Mr Chan, who noted that Singapore had topped the IMD World Competitiveness Rankings in May. 

He was responding to six Members of Parliament (MPs), who had filed questions on how the global economic headwinds will impact Singapore, as well as the country’s response to these risks as the world’s economic outlook worsens.

Mr Seah Kian Peng, MP for Marine Parade Group Representation Constituency (GRC), asked Mr Chan to name the “top three things the man-on-the-street should be prepared for”; Holland-Bukit Timah GRC MP Liang Eng Hwa wanted to know where the Government intends to pivot given these external economic uncertainties; and Workers’ Party chief Pritam Singh and its chairman Sylvia Lim. MPs for Aljunied GRC, had asked about the measures and strategies the Government has.

Monday’s parliamentary session came after Singapore’s non-oil exports in May saw a sharp 15.9 per cent dive — the worst in three years.

Singapore’s factory activity had also declined for the second month in a row in June, based on the purchasing managers’ index released by the Singapore Institute of Purchasing and Materials Management last week, a key barometer of how Singapore’s electronics and manufacturing industry is doing.

Mr Chan noted that the outlook of Singapore’s economy will depend on how the ongoing trade conflict between the United States and China develops and how Singapore’s major export markets perform. He said the US-China agreement to resume trade negotiations at the G20 summit in Osaka, Japan last month “is welcome news”, though fundamental disagreements still exist between the two countries.

While South-east Asia remains “a bright spark” and the US economy is holding up, Mr Chan said that China’s economy could slow down more sharply than expected due to the ongoing tensions. Europe, too, needs “a decisive resolution” on Brexit, he added.

“We must weather these immediate challenges. At the same time, we must also navigate more fundamental shifts in the global economy that will shape our medium- to long-term prospects,” he said.

These shifts include the emergence of global rules, which could also affect Singapore’s status as a global hub, Mr Chan said. “For instance, ongoing discussions to introduce minimum effective tax rates across countries will affect our competitiveness, and carbon caps will constrain our growth potential.”

He was referring to the project set out by the Organisation for Economic Cooperation and Development to get countries around the world to combat corporate tax evasion together, as well as the carbon accountability rules under the Paris Agreement, both of which involve Singapore as a member.

The multilateral trading system is also under stress as the world becomes increasingly protectionist, Mr Chan said, adding: “When we are all reduced to competing for a slice of a shrinking economic pie, no one wins.”

Mr Chan said that Singapore has adopted a three-pronged strategy for its economic strategy: To strengthen its fundamentals, create opportunities by refreshing offerings to business and investors, and to promote a conducive global and regional business environment with like-minded countries and companies.

Mr Liang asked later how Singapore would break out from the traditional model of gross domestic product (GDP) growth. 

In response, Mr Chan gave the model that port operator PSA has adopted in an environment where trade routes and global patterns change. Highlighting how PSA now operates a string of global ports around the world, he noted that this means it is moving away from the old model of driving trade to its home country only, but still contributing back to Singapore’s economy from outside its borders.

Such business strategies would see an expansion of gross national product instead of GDP only, Mr Chan said. “That is why (trade agency) Enterprise Singapore is spending so much energy to use the world as our hinterland. That will be one way to break the conventional paradigm of the GDP equation.”

In his earlier reply, Mr Chan also highlighted how the Government has supported businesses to harness regional and global opportunities, and revealed that Enterprise Singapore will be launching the Scale-up SG programme on Wednesday. The scheme was first announced during Budget this year to support high-potential companies in their growth and internationalisation efforts.

Mr Chan said: “While there are clouds looming, we believe we have the fundamentals to weather the storm. Our economic fundamentals are sound, we are in a strong fiscal position, and we are making good progress in restructuring our economy.

"The Government also stands ready to step up our support for companies and workers in sustaining our core capabilities, enhancing our competitiveness to seize new opportunities.”

Related topics

economy Chan Chun Sing trade war

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