ADDENDUM TO PRESIDENTIAL ADDRESS AT THE OPENING OF THE FIRST SESSION OF THE THIRD PARLIAMENT ON THURSDAY, 12TH OCTOBER, 1972 MINISTRY OF FINANCE

For the next few years, the principal objective of financial and economic policy in the Republic is to sustain the momentum of economic growth achieved in the last few years. The package of incentives, the build-up of infrastructure, the sustained effort at industrial promotion in overseas countries and the restructuring of our financial institutions to support economic expansion, they have contributed to the present state of Singapore's economic well-being.

To sustain the momentum that has been achieved, a policy of "more of the same" would not be entirely adequate. This is because Singapore's targets as well as the socio-economic environment itself are not those of the past. Today, it is no longer a matter of inducing more and more industries into Singapore, whatever the cost. It is possible to be somewhat more discriminating; to seek industries that do not ruin the environment, industries which hold good prospects for the continuous upgrading of manpower skills, be they plant operatives, supervisors and technicians, or higher level engineering and scientific staff, and industries that have a catalytic effect on the economy, encouraging a growth of allied and supporting industries.

These objectives, however, have to be reached under conditions totally different from those of five years ago. There is no large pool of cheap unemployed workers. But, on the other hand, Singapore's vocational institutes, industrial training centres, Polytechnic and universities are turning out each year more and more of the skilled manpower that industry needs. And work permits are issued, liberally, to those industries and enterprises which upgrade the skills of the workers, or where the level of sophistication of the products manufactured is high.

A more refined economic policy is required in the new situation to ensure that intending investors, both from overseas as well as our own citizens, will be able to obtain the essential factors of production - capital, labour and land - in such proportions, grades, skills and quantity as they may require.

If we succeed in this, we should see a continuation of the fast rate of economic growth of previous years, subject to one proviso. This is that no severe disruption of the international monetary system will occur to seriously affect world trade. An economy like Singapore's, highly geared to export markets of the world, is extremely sensitive to changes in conditions in world trade. There is little that Singapore can do to promote the badly needed reforms of the international monetary system. What it can do is to protect itself against the adverse effects of economic troubles created by such problems. Fortunately for us, sufficient reserves have been accumulated in the past which we can use judiciously to cushion off the worst effects of such crises. Also, the further development of an efficient and highly sophisticated banking and financial sector will help in providing solutions to monetary problems.

Should conditions be more or less as favourable as in the last five years, our economy will continue its robust rate of growth. The Ministry of Finance should be able to meet its other main obligation, to provide sufficient funds to other ministries for their current as well as development needs. While changes in tax rates and additional taxation may from time to time, be necessary or desirable to effect social or economic policies, continued economic growth will generate the increased funds to be made available to expanding ministries as in the past. As long as the economy is buoyant, and labour-management relations sensible and reasonable, there will be no need to impose major or painful increases in tax rates. But it will be necessary to constantly review the tax machinery to ensure a high level of efficiency, particularly to ferret out tax evasion.

While rapid economic growth has given tax payers the same tax rates for nearly seven years now, it has created a major problem for the government services. As the demand for skills and talent increases, the problem of attracting and retaining high calibre personnel in the government services has become increasingly severe. It is necessary to reexamine once again the structure of pay and service conditions and to make the rewards in certain departments, ministries, grades and professions more comparable to what they can get in the private sector. This is not a new problem. But whereas in the past we had resorted to ad hoc solutions, it is now necessary to look for a more fundamental and lasting solution.

Concurrently with increased rewards for, and consequently higher costs of, Government personnel, it will be necessary, by greater mechanisation, and computerisation, to streamline the organisation of the Government and the Statutory Boards to increase efficiency and productivity.

Finally, to achieve quality in jobs, homes, schools, hospitals, social and recreational amenities, much more money will have to be spent on capital equipment, on more intensive and more prolonged training of skilled workers and technicians. We must increase our capital by adding to it what foreign investors can bring in by way of machinery and foreign exchange in manufacturing industry and finance. More expenditure will go into educating the professionals, engineers, scientists, especially in Applied Sciences, computers and systems analysis, accountants, architects, doctors, managers, bankers, lawyers, economists, and other professionals whose expertise is part and parcel of an industrial society. We are producing more and more middle-technology products, whilst developing into an international banking and financial centre.