GROSS DOMESTIC PRODUCT GROWTH IN CONSTRUCTION INDUSTRY

GROSS DOMESTIC PRODUCT GROWTH IN CONSTRUCTION INDUSTRY: 2.

Mdm Ho Geok Choo asked the Minister for Trade and Industry given that much of our Q3 2007 performance was due to the construction industry, whether Singapore is now overly-reliant on this industry vis-a-vis the other traditional growth industries (manufacturing and services) and, if so, how sustainable is this strategy especially after the integrated resorts are built and a possible cooling of the construction industry arises.

Mr Lee Yi Shyan (for the Minister for Trade and Industry): Mr Speaker, Sir, Mdm Ho has expressed concern that much of our third quarter GDP growth was due to the construction industry. On the contrary, economic performance has been broad-based, with healthy growth by major sectors. Nor has construction been the major source of GDP growth. At less than 4% of the economy, construction accounted for only an estimated 5% of the total GDP growth in the third quarter. Manufacturing, on the

Column: 2327

other hand, which grew by double digits in the third quarter, accounted for an estimated 35% of the total GDP growth in the third quarter.

I would like to point out that the strong growth in construction was not only limited to the two integrated resorts projects, but to a wide range of private sector projects - commercial, industrial and residential. Some examples would include the Shell petrochemical cracker, residential projects - Reflections at Keppel Bay, commercial projects - Orchard Central and Orchard Turn. The growth of the construction sector has reflected the broader growth in economic activity and investment projects.

Mr Speaker, Sir, the Singapore economy is more diversified now than it was 10 years ago. The growth of the biomedical and chemical industries has helped to reduce our dependence on electronics. Financial services, business services, transport services, and tourism have become strong engines of growth, while new industries like energy, environment and water technologies, and interactive and digital media are emerging. As our economic base diversifies, our growth will become more stable and sustained.

Mdm Ho Geok Choo: Given that the economy grows as it has on a quarter-to-quarter, and the real GDP growth for Singapore for three quarters fell 14.4% in Q2 2007 to 6.4% in Q3 2007, and with strong inflationary pressures from wages, up 8.5%, at a seven year high, and office rents up at about 50%, how does the Government intend to allay fears that the economy is over-heating?

Mr Lee Yi Shyan: On the supply side, Sir, obviously, we have to increase the supply, whether the bottleneck is in real estate, commercial space or industrial

Column: 2328

land. I think by increasing supply, we will be able to achieve price stability.

The other fact that we should take note of is the fact that Singapore's economy is about two-thirds services and one-third manufacturing. And construction, as I have said, is but 4% of the GDP. Therefore, many of the sub-sectors in the manufacturing and services would each have their cycle and their cycle patterns closely in a world trend.

So our job is to make sure that each industry's sub-sector enjoys and maintains its competitiveness with respect to the world. We accept the fact that the various industry sectors will have their own cycles. But if we have a broad-based economy, we will be able to ride through these cycles and yet achieve sustainable growth.