Singapore glued to reforms in midst of recession

Singapore glued to reforms in midst of recession

SINGAPORE (AFP): Singapore is not going to let anything stop
its dogged pursuit of painful economic reforms, even as its four
million people struggle to cope in a recession induced by a
global downturn in electronics, analysts say.

Careful economic planning since establishing statehood in 1965
transformed the former British colony in three decades from among
the poorest Asian nations into one of the richest.

And the government is not about to let the current recession,
less than four years since the 1997-98 regional financial crisis,
delay its grand vision of placing the city-state ahead of its
neighbors in an era of globalization.

"It's a centrally planned economy. The government works with a
long-term view and won't get distracted by short-term
complications," said Song Seng Wun, a regional economist at GK
Goh Securities brokerage house.

When Trade and Industry Minister George Yeo presented a 2.2
billion Singapore dollar (US$1.2 billion) relief package in
parliament last week he stressed the city-state must look beyond
the recession and persist with efforts aimed at sharpening its
competitiveness.

"Even though the present slowdown is largely cyclical, we must
press on with the restructuring of the Singapore economy," Yeo
said.

"As companies tighten their belts, they should not put off
longer-term improvement plans. They should build up their
capabilities and reposition themselves for the turnaround."

The government's persistence with engineering a restructuring
of the economy, already ranked as one of the most competitive
globally, will stand Singapore in good stead once it rides
through the recession, economists say.

"With Singapore being such a small place and with far sighted
policies, the economy will definitely emerge stronger once the
downturn is over," said Arjuna Mahendran, head of economic
research for Southeast Asia at SG Securities.

Key sectors of the economy, notably banking and
telecommunications, had been opened up to more competition and
shaking up the workforce.

The thrust of the message coming from the relief package was
the government's determination to help workers equip themselves
with skills that will keep them relevant in the so-called new
economy which the Singapore has staked its future prosperity on.

Forty million dollars of the economic stimulus was to help
retrenched and older workers, and Yeo said money was not a
constraint.

The government was "prepared to spend as much as is needed to
help more Singaporean workers stay employable," he said.

Singapore, one of Asia's strongest economies, is in recession
and an estimated 20,000 workers will be retrenched this year,
primarily because of a steep downturn in global demand for
electronics, a crucial export for the city-state.

The government's strategy of shifting the emphasis away from
electronics was pragmatic, economists said.

"The direction has been set by the government. It's now a
question of how fast the firms can face up to the challenge,"
said Mahendran at SG Securities.

Singapore's economy is overwhelmingly dependent on external
trade, with overseas demand driving more than two-thirds of total
economic activity.

Economists say the city-state's economy was expected to remain
weak until the electronics sector and the United States economy
recover.

The government has already revised downward this year's
economic growth forecast to 0.5-1.5 percent from 3.5-5.5 percent
previously.