MINISTRY OF FINANCE

Dr Richard Hu Tsu Tau Minister for Finance

Fiscal Policy

1. Fiscal policy will continue to support sustained economic growth. The aim is to strengthen the dynamism of our economy and maintain our international competitiveness. This will underpin Government's efforts to help Singaporeans generate wealth and share in the success of the nation.

2. Operating and development expenditures of Government will be kept in line with operating revenues, achieving a modest budget surplus over the medium term. The size of the public sector will be contained to free resources for the private sector to generate economic growth.

3. Government expenditures will be directed to areas which support growth, enhance quality of life and strengthen social cohesion and community bonding. These include education, healthcare, security, public housing and measures to preserve and protect the environment.

4. Management reform of the public sector will continue to achieve a leaner, more responsive and effective public sector.

5. Our tax structure is broad-based and equitable. We will continue to tax factors of production as lightly as possible to encourage effort and enterprise. The tax system will encourage Singaporeans to work, save, invest, and to build up their assets. As long as we keep expenditures in check, there should be no reason for any major tax increases.

6. We will keep our corporate income tax rate internationally competitive. We will use fiscal incentives to encourage investments in Singapore, to promote selected sectors with high growth potential, and to help Singapore companies to expand overseas. We will also widen our network of double taxation agreements and improving existing ones. This will help our regionalisation drive.

Monetary Policy

7. Our monetary and exchange rate policies will continue to be geared towards price stability and non-inflationary economic growth.

Singapore as a Financial Centre

8. We will develop Singapore as a leading international financial and business centre in East Asia. Singapore is the home of the Asian dollar market. We will widen the range of financial services available. These currently include the stock and financial futures exchanges, foreign exchange, fund management and other capital market activities.

9. We will maintain a conducive fiscal and regulatory environment, and stimulate development of new activities with appropriate fiscal incentives, and keep business costs low.

10. The soundness of our financial system has been Singapore's hallmark as a financial and business centre. We will uphold the integrity and high standards of our corporate environment, and supervise our banks, financial institutions and other corporations vigilantly. At the same time, we will review rules and regulations to ensure that they do not stifle innovation or impede enterprise.

11. As international financial markets become increasingly globalised, individual financial centres are facing new systemic risks from closer linkages with other financial centres. We will cooperate more closely with other international regulators to minimise such risks to world financial markets.

Privatisation and Asset Enhancement programme

12. The Government will continue to privatise and list suitable statutory boards and Government-owned companies on the Singapore Stock Exchange. Shares in such companies will be offered to Singaporeans at a discount as part of Government's share ownership and asset enhancement programme. This will help Singaporeans build up their assets and give them a bigger stake in Singapore.