MEASURES TO HELP SINGAPOREANS COPE WITH SLOWER ECONOMIC GROWTH

MEASURES TO HELP SINGAPOREANS COPE WITH SLOWER ECONOMIC GROWTH: 3.

Mrs Mildred Tan asked the Minister for Trade and Industry in view that Singapore is likely to hit a high growth of around 15% this year and an anticipated drop of about 10% next year (a) what measures are being put in place to help Singaporeans prepare for the road ahead; and (b) what measures and initiatives will be introduced to help stimulate growth.

The Senior Minister of State for Trade and Industry (Mr S Iswaran) (for the Minister for Trade and Industry): Mr Speaker, Sir, last year’s GDP growth of almost 15% was exceptional and it is not an appropriate indication of Singapore's long-term growth potential. Rather, it reflects a recovery following two years of below-trend growth, coupled with an extremely large expansion in pharmaceutical output and the opening of the Integrated Resorts. If we take an average of economic growth over the last three years, that is 2008 to 2010, it would come to about 5% per annum, which is more reflective of the economy’s underlying potential.

This year’s expected growth of 4% to 6% is still above our medium-term growth potential of around 3% to 5% per annum. This healthy rate of growth will support job creation and wage growth in both

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manufacturing and services industries.There is no need for stimulus measures. If anything, we need to be watchful of over-heating risks and raising inflationary pressures, as the labour market tightens and capacity constraints become more binding.

With the economy at full employment, the emphasis will be on raising the productivity of our workforce and increasing economic competitiveness over the medium term. The Government has been working with businesses and unions to put in place several initiatives to boost skills and innovation. A good example is the Workfare Training Support scheme, which will pay for up to 95% of course fees and provide training commitment awards for older low-wage workers. NTUC has launched the Inclusive Growth Programme (IGP) to drive productivity improvements. The programme targets to benefit 25,000 low-wage workers over the next two years by helping them acquire new skills to handle higher-value jobs.

The Government will also help to raise corporate capabilities. The National Productivity and Continuing Education Council (NPCEC), chaired by Deputy Prime Minister Teo Chee Hean and comprising representatives from the unions and the public and private sectors, has endorsed a number of initiatives to raise productivity. One of these is the SME-Productivity Roadmap, a joint initiative by SPRING Singapore and the Singapore Workforce Development Agency. This initiative will help Small and Medium Enterprises (SMEs) identify weaknesses in their work processes and embark on suitable training courses to increase their productivity. Another example is the Construction Productivity and Capability Fund. Builders can apply to the Building and Construction Authority to fund 50% to 80% of costs incurred for manpower development, technology adoption, and capability building.

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To boost innovation and R&D in the economy, the Government will invest a further $16.1 billion over the next five years in research, innovation and enterprise. We will also focus on enhancing the alignment between research carried out in our laboratories and the commercialisation needs of our industry. We will continue to support foundational research to seed the intellectual capital that is necessary for future innovations.

In addition, we aim to strengthen our position as a leading financial and business hub by attracting new companies, particularly those who are keen to take advantage of rising opportunities in Asia. For example, we are developing Singapore as a leading Asian Consumers' Business Centre, by anchoring the regional operations of major consumer products companies here. Global players that have been successfully attracted include Unilever, Procter & Gamble and Nestle. In fact, Unilever's headquarter in Singapore is its largest outside London.

If we continue to do these things well, Singapore should be able to sustain 3% to 5% growth over the medium term and consequently increase its standard of living for Singaporeans.