MINISTRY OF FINANCE

Treasury Division

The total revenue for the financial year 1970-1971 (actual) was $1,266.46 million, giving an increase of 20.0 per cent over the previous financial year. This increase is largely due to the buoyancy of the economy and to specific measures that have been taken during the year for more efficient tax collection. The budgeted revenue estimate for the current year is $1,307.2 million, which is an increase of 25.5 per cent over the estimated revenue for 1970-1971. Revenue collection for the first two months of this financial year amounted to $223.0 million.

The ordinary recurrent expenditure for the financial year 1970-1971 was $1,206.5 million (actual), an increase of24.2 per cent over the expenditure in the previous year. For the current financial year the estimated expenditure is $1,306.8 million. This is an increase of $266.0 million or 25.5 per cent over the estimated expenditure last year, or $100.3 million or 8.31 per cent over actual expenditure. This has largely been due to increases in expenditure on defence (33.3 per cent), economic services (71.0 per cent) and social services (7.1 per cent). The increased expenditure on economic services reflects the policy of further expanding the infrastructure.

To encourage further foreign investment, double taxation agreements have been entered into with eight countries Norway, the United Kingdom, Sweden, Denmark, Malaysia, Australia, Japan and the Netherlands. The agreements with Japan and the Netherlands have been signed but have yet to be ratified by their Parliaments before the agreements are deemed to have come into operation with retrospective effect from 1st January 1971 and 1st January, 1969 respectively.

Economic Development Division

The time is now opportune for Singapore to review its overall economic strategy in the light of experience gained during the past few years as well as of the changing economic and political conditions, which will face the Republic in the 1970s. It has become obvious that whilst the traditional entrepot activities will continue to sustain to some extent the economy of Singapore, the diversification of the economy commenced in the last decade will have to be further extended. Industrialisation, which for purely short-term considerations emphasised the need to take up large numbers of unemployed persons, will now have to be re-examined in order to get the maximum advantage from our already stretched resources, especially those of skilled manpower. Also, an optimum investment policy with regard to foreign investment and industrialisation is necessary. This will involve the promotion of those industrial undertakings with worldwide markets and high technological content. Again, to maintain the momentum of economic growth, a large reservoir of skills will have to be established, especially of managerial and technical staff.

Turning to the new growth centres of tourism, finance and communications, maximum effort will have to be concentrated to develop these so that they play a more significant role in Singapore's economic development. A comprehensive plan is being prepared for the establishment, promotion and marketing of tourist facilities in Sentosa over the next few years. A Corporation charged with the development of Sentosa is being formed, and work has commenced on the infrastructure facilities on the island. To handle the large number of aircraft and ships that will be arriving in Singapore for trade, commerce, tourism and other purposes, the present air and seaports will be greatly expanded, and already a Master Plan team is studying the long-term development of the port facilities of Singapore to meet requirements in the 1990s. Decisions on the second runway and future airport development will also have to be taken soon.

To develop Singapore into the banking and financial centre of South-east Asia, it is intended to develop a modern money market in Singapore which will not only serve the needs of the Republic but also assist in the economic and financial development of our neighbours. Regulations regarding the establishment of financial organisations and institutions in Singapore are being liberalised to encourage a more efficient banking system and the development in due course of secondary markets for commercial paper, securities, bonds, etc. In this connection, it is intended to encourage the use of Asian Dollars to enable the many viable projects in Southeast Asian countries to have a cheap and ready source of external financing. It may become necessary for Singapore to study the changes in store in our traditional relationships with the Sterling area as a result of Britain's entry into the European Economic Community. We must expedite the growth of the Republic as a centre for investment capital in the region. Already Singapore is developing as a gold and capital market for the region and, with a sound and stable currency and growing foreign exchange reserves, it will be possible for Singapore to become a major financial centre for South-east Asia in the coming decade.