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.