NEW INVESTMENTS AND JOB CREATION (Strategy and plans)

Mr Gan Kim Yong asked the Minister for Trade and Industry if he will elaborate on (i) his strategy and plans to bring in new investments and create jobs and (ii) the progress made so far.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, the global economic landscape is changing dramatically. The rise of China, India and other emerging economies has created new challenges for us. The competition for investments has become more intense. But there are also many new opportunities not available to us before. We have therefore to reappraise our strengths and weaknesses in the light of this new situation and reposition ourselves.

Our strategy to attract investments and create jobs has two components - the external component and the internal component. First, our external strategy is to work for the economic integration of ASEAN, strengthen our linkages to the advanced economies and develop new links to China, India and other emerging economies. To date, we have already signed Free Trade Agreements (FTAs) with New Zealand, Japan, the European Free Trade Association, Australia and the US. We are currently negotiating FTAs with Mexico, Canada, India and Jordan. We are also part of the negotiations for an FTA between ASEAN and China. We have commenced negotiations with New Zealand and Chile for a trilateral FTA. We are also likely to start negotiations with South Korea soon.

Together, these FTAs expand our economic space, improve our connectivity to the major economic centres in the world, and strengthen our position as a major hub for manufacturing and services. Our FTAs complement our Investment Guarantee Agreements and Double Taxation Agreements and reduce the friction to trade and investment.

The second component of our strategy is internal. There are many things that we have to do to upgrade our capabilities and to improve the efficiency of our economy. These were covered comprehensively by the Economic Review Committee. Let me summarise the four main thrusts.

First, we must ensure that our infrastructure and factors of production are priced competitively. Corporate and personal income taxes will have to be reduced. Our CPF contributions should be restructured to reduce the statutory burden on employers while meeting basic retirement needs.

Second, we will develop the services sector as a major growth engine of our economy. The services sector will create jobs both in traditional areas like logistics, ICT, financial services and tourism, as well as in new areas like healthcare, education and the creative industries.

Third, we have to push for greater creativity and entrepreneurship. We have deep strengths, and our international reputation has never been higher. We need creativity and entrepreneurship to convert our strengths and reputation to economic value. We need many more Singaporeans and Singapore companies to exploit new opportunities in the region, China, India, the Middle East, Central Asia and Latin America.

Fourth, we will upgrade our human capital by investing heavily in the education and training of Singaporeans, and by attracting global talent to Singapore.

Mr Gan Kim Yong also asked about the progress made in our investment promotion efforts. Notwithstanding the competition and the uncertain global economic environment, EDB has managed to bring in last year manufacturing fixed asset investment (FAI) commitments of S$9 billion, and services total business spending (TBS) commitments of S$2 billion. These investment commitments would create 21,000 jobs when fully implemented.

In the first half of 2003, EDB secured S$3.7 billion worth of manufacturing FAI commitments, and S$1.1 billion of services total business spending commitments despite SARS. These would create an additional 9,000 jobs. EDB is on track to bringing in S$7.5 billion of manufacturing investment commitments this year and S$1.9 billion of services total business spending commitments for the whole of this year.

Mr Gan Kim Yong (Holland-Bukit Panjang): The Minister mentioned that one of the strategies was to promote the services sector. Could the Minister give an update on the status of promoting the services sector in Singapore?

BG George Yong-Boon Yeo: The three new areas that we identified in the ERC are education, healthcare and the creative industries. Recently, I made a media announcement on our moves to promote education as a growth sector. For healthcare, we will be doing so in the near future. For creative services, I believe MITA is heading this project and some presentations will be made.

The services sector requires coordination across a number of Ministries, and DPM Lee Hsien Loong chairs a Ministerial Committee on the promotion of the services sector to ensure that coordination across Government Ministries and departments is well carried out.

Mr Gan Kim Yong: Sir, could the Minister give an update on whether any services investments have been brought to Singapore?

BG George Yong-Boon Yeo: I do not have the details now but I have just given the total numbers when I referred to total business spending for services investments. They refer to the investment commitments that we have gotten in the services area. We are not doing badly. We are achieving our targets.