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.