Singaporean investors to be given incentives

Singaporean investors to be given incentives

SINGAPORE (AFP): Singapore will give investors incentives to
restructure operations as part of efforts to keep the city state
competitive before its graduation to developed-nation status next
year, deputy premier Lee Hsien Loong said yesterday.

The government incentives were to help them upgrade operations
and manage the relocation of lower value-added activities to
places with lower labor and land costs, Lee told 600 corporate
and government officials at a forum here.

The one-day Singapore Economic Forum, based on the theme "the
changing environment: Singapore's response," discussed
Singapore's long-term strategy for sustaining economic growth and
to face a more competitive environment.

Lee did not specify the proposed incentives but said that the
government will keep tax rates as low as possible, particularly
personal and corporate income taxes, as a carrot for
entrepreneurs and firms to create wealth.

The Paris-based Organization for Economic Cooperation and
Development (OECD) decided in May that Singapore would lose its
official status as a developing country from January, earlier
than Taiwan, Hong Kong and South Korea.

The OECD ranking is three years ahead of Singapore's own
target of achieving developed-nation status in 1999, officials
said.

Challenges

Although Singapore's per-capita income -- exceeding US$22,400
-- ranks ninth in the world, its entry into the rich club was
fraught with challenges, Lee said.

This was because its technology base was much shallower than
the other developed countries, its largest companies were small
by international standards and the skill and education level of
the city state's workforce was still relatively low, he said.

"It is tough to compete against developed economies when we
are not truly developed," Lee said, adding that Singaporeans had
to work harder and smarter as well as be more efficient and
productive to succeed.

He said Singapore had to capitalize on opportunities arising
from the regional economic boom and compete successfully for
foreign investments.

Singapore's premium so far was based on its costs being lower
and efficiency being higher than developed countries, but Lee
warned that the cost advantage was narrowing as its incomes
reached developed-country levels.

"The efficiency premium too is being squeezed by rising
efficiency elsewhere," he added.

Trade and Industry Minister Yeo Cheow Tong, who also spoke at
the forum, said Singapore's economic agencies should establish
benchmarks to measure their performance relative to past
performance, performance of competitors and their clients'
expectations.

Lee said Singapore's economy should grow at an average annual
rate of seven percent to 2000 after two years of double digit
growth.

This year, the trade and industry ministry has forecast
Singapore's export-driven economy to grow moderately by 7.5-to-
8.5 percent. Economic growth was 10.1 percent in each of the last
two years.

The forum was organized by Singapore's Economic Promotion
Club, comprising heads of government agencies, which is drawing
up several strategic programs for the 21st century.