Spore economic tsar drafting a new growth blueprint

Spore economic tsar drafting a new growth blueprint

Bernice Han
Agence France-Presse
Singapore

The man being groomed to be Singapore's next prime minister is
working on a new blueprint to restore economic competitiveness
and identify future growth areas as the city-state goes through
its worst recession since independence.

Deputy Prime Minister Lee Hsien Loong is now the undisputed
economic tsar as finance minister, chairman of the Monetary
Authority of Singapore (MAS) and head of a committee assigned by
Prime Minister Goh Chok Tong to map out a plan to overhaul the
economy.

"How to restructure the economy domestically and buy itself a
share in growth outside the region. Those are the two key issues
facing Singapore," Sanjeev Sanyal, a regional economist at
Deutsche Bank, told AFP.

Before the 1997 regional crisis broke out, resource-poor
Singapore had always been able to ride on the back of the booming
economies of its larger neighbors by successfully promoting the
island as a gateway into Southeast Asia.

As those halcyon days of robust growth fade into the distance,
economists said Lee and his policymakers must map out a new game
plan that allows the island to retain its luster in a region that
has ceased to be the darling of foreign investors.

At the same time, Lee has to manage the delicate task of how
his country should respond to the economic challenge from China
without jeopardizing its commercial and trade opportunities in
the world's fast-rising trading giant.

The 49-year-old Lee's performance will have a direct impact on
his rise to the top. Goh, 60, in power since 1990, has declared
plans to step down as prime minister in two or three years, but
only if the economy is back on the growth path.

"What can Singapore do to remain relevant in the ASEAN
(Association of Southeast Asian Nations) region when it may not
be growing as fast (as) pre-1997? " said Sanyal.

"This should also be seen in the context of China emerging as
a major player. How does Singapore tackle the new competition and
take advantage of opportunities that may emerge in China?" he
said.

Chia Woon Khien, a regional economist at ING Barings, said the
committee was unlikely to stick to the tried-and-tested policy of
national industrial planning practiced in the 1980s which enabled
Singapore to build up a world-class manufacturing base.

"Gone are the days of planned industrial engineering," she
said.

"Instead, they will outline the broader structural issues
facing the economy so that as investors, you can have a more
comfortable place to set up whatever business you want in
Singapore," Chia said.

Singapore, whose economic activity is more than two-thirds
driven by external demand, is one of the worst hit by the global
downturn.

As the U.S. economy sinks into a recession and demand for
electronics wanes globally, the island's reliance on external
demand was cruelly exposed with its gross domestic product set to
shrink 3.0 percent this year after a sizzling 9.9 percent growth
in 2000.

It is Singapore's worst slump since gaining independence in
1965 and zero growth is likely next year.

Goh has warned the recession could last up to two years and
vowed there would be no let-up in his drive to prepare Singapore
for the stiff challenges ahead.

He appointed Lee to head the restructuring committee formed
immediately after his government won a resounding mandate at the
November 3 polls with an increased share of the popular vote.

"You have heard, nothing is sacred," Goh said at his People's
Action Party convention last week. "We have to look at our income
tax levels, both personal income tax and company income tax," he
said.

Lee is scheduled to give a broad outline of his committee's
plans this week and has indicated that creating and saving jobs
will take center stage.

"We've already sketched out what we are doing, what we will do
to create jobs, to save jobs, to make sure existing jobs are not
lost because wages are out of line," said Lee, son of former
premier Lee Kuan Yew.

He said some of the policies being considered by his committee
may also involve tapping into the island-state's massive foreign
reserves of nearly US$80 billion.