Govt helping firms, workers 'adjust to new realities' as part of economic strategy

SINGAPORE — The strategies to tackle current economic challenges cannot be like those of the past given that the present economic downturn is unlike previous crises, said Trade and Industry Minister Chan Chun Sing on Sunday (Aug 4).

And so, Singapore’s strategy is to help companies and workers adjust to the new realities in a targeted manner and transform the economy for sustainable growth, he said.

The latest slowdown is exacerbated by the uncertainty caused by the United States-China trade conflict and complicated by structural changes taking place at the same time, said Mr Chan at the annual Tanjong Pagar-Tiong Bahru National Day dinner celebration held at the Tanjong Pagar Community Club.

During the 1997 Asian Financial Crisis and 2008 Global Financial Crisis, Singapore’s economy experienced sharp but short downturns triggered by a sudden loss of confidence in global financial markets, he said.

But the current situation is driven by weaker external demand and a deepening downturn in the global electronics cycle, exacerbated in part by the uncertainties caused by the US-China trade conflict which has dented business and consumer confidence globally, he pointed out.

Mr Chan also cautioned: “Even if the US and China resolve their issues, we cannot expect things to go back to where they were before the recent tensions came to the fore.”

WHY IT MATTERS

Mr Chan’s speech came after second quarter advance GDP estimates indicated that the Republic’s economy grew by 0.1 per cent on a year-on-year basis — the slowest since the 2008 financial crisis.

On Friday (Aug 2), Singapore’s Purchasing Managers' Index (PMI) — a key indicator of manufacturing activity — also reported a contraction for the third straight month in July.

“As an open economy that is heavily dependent on trade, Singapore cannot expect to be insulated from this challenging global environment,” said Mr Chan, adding that it was important to “be clear about the causes of the illness” in order to “deliver the right medicine”.

WHAT CAN SINGAPORE DO?

Here are some of the strategies Mr Chan highlighted:

Capitalise on existing strong business fundamentals

• Mr Chan said that Singapore needs to build on its strengths to distinguish itself from its competitors. These strengths include having a stable, pro-business environment based on the rule of law, a progressive regulatory environment which promotes innovation, a stable tripartite partnership between government, unions and employers, a skilled workforce and good connections to markets in Asia and beyond.

Diversify and deepen access to markets

• Mr Chan said that Singapore must work with like-minded countries to explore new areas of co-operation that can bring about mutual benefits such as in the digital economy, which he said will allow Singapore to transcend its conventional constraints in geographical size and location.

Innovation

• Innovation will allow businesses to compete on the quality of ideas, standards and the trust mark, rather than on price alone. Mr Chan cited the development of the Jurong Innovation District as part of Singapore’s ambitions to become a hub for advanced manufacturing. “It will enable companies to collaborate with researchers to develop new products that can push the boundaries of manufacturing,” he said.

Helping enterprises expand beyond Singapore

• Mr Chan also said that it was the job of the Government to help local enterprises grow, so as to create better jobs. “We are also helping more companies to scale up and penetrate markets beyond Singapore. This is the reason why MTI launched the Scale-up SG Programme, to help our local promising enterprises,” he said.

Remaining relevant

• Singapore needs to be attuned to shifts in global supply chain patterns and distribution networks, Mr Chan said. “No matter where they shift, we must seek to plug ourselves into the global trading system,” he said. “We don’t just wait for people to trade with us and through us, we aim for people to trade on our platform.”

• He also said that existing industries such as agri-tech, precision medicine as well as autonomous vehicles and smart mobility are being transformed.

NOTABLE QUOTES

Besides addressing economic challenges, Mr Chan also spoke about trends in global politics, and Singapore’s own brand of governance.

On politics in other countries

• “In many countries, political divides are accentuated and instability has grown. Populist politicians narrow cast their messages just to win votes but not to seek common ground nor to bring their societies together to achieve things. Coalition governments have become incoherent and they cannot govern properly. Those who feel left behind by globalisation are now asking themselves: “Why should they continue to support this system?” They want more protection for their individual or their group’s interest. And because of that, society fractures and their societies pull apart. It is not a healthy development.”

On being “an accountable government”

• “Being accountable means that we run a fiscally prudent system and not leave debts to our children to pay. Today we have the privilege of enjoying more than one dollar’s contribution for every five dollars we spend in the Budget. One other significant economy is in a situation whereby every five dollars they spend, one dollar goes to paying the debt of their forefathers. We should thank our forefathers and we should similarly pass on the same to our children and future generations.”