MINISTRY OF FINANCE

DR RICHARD HU TSU TAU Minister for Finance

Fiscal Policy

To foster the growth of the private sector, the Government intends to limit the share of the nation's financial and manpower resources taken up by the public sector. We will tax factors of production as lightly as possible, so as to improve resource allocation and to strengthen long term economic development.

We aim progressively to simplify our tax system, to achieve an equitable balance between taxes on income and on consumption. Legislation on a broad-based consumption tax will be introduced this year. Actual implementation will be deferred for as long as the revenue position permits.

We will continue to invest in the human and physical infrastructure needed to support long term economic growth, e.g. housing, schools and tertiary institutions, research and development, arts, culture and recreation, and other programmes to improve the environment and quality of life in Singapore.

Development of the Financial Sector

We will continue to encourage financial institutions to expand and diversify into a full range of sophisticated and higher value-added services such as capital market trading, fund and risk management and offshore reinsurance. Incentives will be provided to attract international financial institutions to locate their regional headquarters and treasury operations in Singapore.

Regulation of Financial Institutions

Our regulatory environment must promote innovation without compromising the integrity or reputation of the financial system. We will supervise financial institutions to ensure prudent financial practices and to safeguard the interests of the public. This will be done without stifling initiative or hindering ability to adapt to international financial and technological innovations.

Privatisation

Privatisation of government-owned companies in mature industries will continue. Activities of statutory boards which are primarily commercial in nature will also be privatised. Both Singapore Telecom and PUB have announced plans to do so.

The Civil Service

A major revision of Civil Service salaries and careers was carried out last year. We will adjust Civil Service salaries responsively, wherever they are out of line with the market, to keep the service attractive to talent. The flexible wage system implemented since 1988 links public sector wages with the overall performance of the economy and the productivity of the Civil Service.

As public service salaries move nearer market rates, the performance of the service must come under stricter evaluation and public scrutiny. Management accounting systems will be introduced in all Ministries by 1993. The systems will measure more accurately the economic costs of services the Ministries and their statutory boards provide, and help us to identify poor performance and wasteful practices.

To optimise use of the limited talent pool, a Corps of Senior Administrators (CSA) will be formed this year. The scheme encompasses the Civil Service, statutory boards and the Singapore Armed Forces. Talent will be identified and tracked, so that the most promising and suitable officers can be appointed to key posts.