CHALLENGES OF "NEW WORLD"

CHALLENGES OF "NEW WORLD": 4.

Mdm Ho Geok Choo asked the Minister for Trade and Industry (a) if he will elaborate on the challenges of the "New World" that the Prime Minister referred to in his recent CNN "Talkasia" interview; (b) whether Singapore has embarked on a new economic blue-print or white-paper to meet these challenges; (c) what measures and programmes are being contemplated to inform and educate Singaporeans, especially the workforce, on the opportunities and the threats of the

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"New World"; (d) what are the new programmes to foster the growth of local world class companies and will this become our preferred national strategy.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, with the end of the Cold War, countries like China and India are re-joining the global marketplace with a vengeance. Technology has facilitated the movement of goods and capital, of people and ideas. With tariffs coming down world-wide, manufacturing for example has become global in nature. For simpler products, China has now become a giant factory for the world. Services are also increasingly outsourced with India becoming a major supplier. Businessmen have to consider different global options carefully before deciding where to invest. Capital has never been more mobile. All this presents Singapore with new challenges, both threats and opportunities. There is no doubt that the competition has become more intense and positioning Singapore well for the New World PM Goh talked about is critical to the well-being of our economy. The Economic Review Committee under Deputy Prime Minister Lee Hsien Loong addressed these challenges, and we debated at length the recommendations in this House last year.

On economic structure, our tax and wage systems are being reformed in a fundamental way to make our economy more competitive. We have been bringing down our direct taxes, liberalising our economy, especially the services sectors, and making the labour market more flexible. Our FTAs help to expand our external economic space. We are promoting entrepreneurship and innovation on a broad front, with particular emphasis given to smaller companies. The education system is

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being revamped to prepare our students for the economy of the future. WDA has been formed to facilitate job matching and worker retraining. We are also investing significant resources in R&D and the build-up of our scientific manpower.

We have been highlighting these challenges to Singaporeans through speeches, media campaigns and public forums. However, there is no greater incentive to learn than the pressure of necessity itself. The economic difficulties of the last few years have done more to alter our mindset than any particular publicity exercise. Just recently, NTUC Secretary General Lim Boon Heng told me how workers now welcome overtime work when only a few years ago there were complaints of too much overtime. IE Singapore has reported a significant increase in interest by small Singapore companies in overseas business missions. Many young Singaporeans are now prepared to work overseas. It is right that we are always worrying about the future, because the greatest danger is complacency. We must not let up on our efforts to alert Singaporeans to the new trends in the world.

We have many programmes to foster the growth of world-class companies. These are broadly in three main areas: capability development, market opportunities and finance.

For capability development, IE Singapore helps companies with branding and design and the training of manpower for internationalisation. Smaller companies identified by SPRING to have growth potential beyond Singapore are passed on to IE Singapore. A*STAR, EDB, IE Singapore and SPRING have also come together to provide comprehensive assistance to companies in the areas of innovation, technology development, operations upgrading and overseas expansion under a scheme called Growing Enterprises with Technology Upgrading (GET-Up).

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Second, as for access to market opportunities, we have a number of schemes. Let me highlight just a couple of them. The S$30 million iPartners Programme encourages companies to form alliances in venturing overseas. A market leader becomes the anchor company, drawing on board other companies with complementary products or services. SPRING has recently launched the Business Alert Internet portal, which alerts local enterprises to some 90,000 business opportunities worth S$120 billion each year, including information on Government procurement opportunities in the US. Under the US-Singapore FTA, Singapore companies can compete on an equal basis with US companies for tenders of value greater than US$56,000 put out by the US Federal government

.: In future, this service will also include tenders by the governments of Australia, New Zealand and other FTA partners.

Third, to help companies secure financing for international expansion, the Regionalisation Financing Scheme under IE Singapore offers loans to Singapore companies when they expand their operations overseas. Last year, IE also launched its iFinance Consulting Programme to help companies get professional advice on the financing of their overseas ventures. In addition, the Government is facilitating efforts by private sector players to set up a private equity exchange, which may become an important additional source of finance.

However, our strategy is not to depend only on the success of our local companies. MNCs will remain the mainstay of our economy. We are also encouraging SMEs from other countries to hub in Singapore with some success so far. Our strategy is to develop a strong economy that is knowledge-intensive, creating a range of good jobs for Singaporeans and conducive to the

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growth of entrepreneurship, for which we need to be broad-based and well-connected internationally. It is important for us to diversify our risks and not be overly dependent on particular companies, sectors or markets.

Mdm Ho Geok Choo (West Coast): Sir, I would like to clarify with the Minister whether that means that our local companies will never become the main preferred economic strategy for Singapore. My second question is: are there any specific programmes that are geared towards preparing Singaporeans' mindset for the new challenges? Much has been talked about in the education industry and in skills acquisition, but is there any specific programme for mindset change? My third question is with regard to enhancing the customer service skills of Singaporean service providers in this new economy.

BG George Yong-Boon Yeo: Mr Speaker, Sir, I do not think Singapore companies by themselves can ever become the mainstay of our economy. We will always need foreign players in large numbers to operate here. That has always been the history of Singapore and I believe that it will remain the basis of the Singapore economy well into the future.

As to efforts to change the mindset of Singaporeans, I believe this is already happening. Among young Singaporeans now, there is a more realistic assessment of where we stand in relation to present and potential competitors in the future. And this is seen in the growing number of Singaporeans who are prepared to work overseas. As I mentioned earlier, more and more Singapore companies are now taking part in overseas missions and sniffing for prospects and opportunities elsewhere.

As for the Member's third question on

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specific programmes, I have mentioned some of them. There are others which she can take up during the Committee of Supply.

Mr Steve Chia Kiah Hong (Non-Constituency Member): Mr Speaker, Sir, can the Minister explain why is he not confident that Singapore companies can be the mainstay of our economy? Can the Minister elaborate as to why it cannot be?

BG George Yong-Boon Yeo: This is because of the limitation of our size and population base. We are a city-state. We run a big economy which is far beyond what a population base of three million by itself can support. It is like cities such as London and New York. The economies of London and New York cannot be based on the native population of London and New York alone. So, it is the same for Singapore. And we have ambitions far greater than what we by ourselves can sustain on our own.