S'pore needs to restructure economy to sustain growth: Tharman

SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam said Singapore's economic growth will be weak in the short-term mainly because of the gloomy world economy.

And the challenge for Singapore, he said, is to restructure its economy to ensure sustained growth over the long-term.

Mr Tharman, who's also Finance Minister, was speaking to reporters on the sidelines of a community event in his Jurong GRC.

Many countries in the world are now bracing themselves for the possibility of a "fiscal cliff" in the US.

This means a huge economic crisis may be looming for the US - if its deeply divided Congress is not able to come to an agreement.

Congress, which is made up of the House of Representatives and Senate, will still be controlled by two parties in the new Obama administration.

The Republicans regained control of the House, while the Senate is dominated by the Democrats.

Mr Tharman pointed out that even if the US gets past this hurdle, the bigger challenge is to put its mid-term budget on a more sustainable path for the years ahead in order to restore investor confidence.

He said: "That's what's necessary to really get the economy to restart. And it requires common ground to be found on both taxes and spending on the parts of the Democrats and the Republicans.

"The experience of the first term was one of intense partisanship. Hopefully in the second term, there will be a willingness to find common ground. The initial signs are positive but it's too early to say."

The effects of sluggish growth in the US and Eurozone are likely to cascade to Singapore, even though Mr Tharman said Asia continues to do reasonably well.

"Demand will be weak, but our real challenge in Singapore is in restructuring our economy. We've got to persevere in restructuring our economy so that we can get sustained growth over the long term, over the next five to 10 years based on productivity growth. That's the big challenge. Demand will be weak in the short term but it's not a fundamental problem for us because our unemployment rate is low, and that's the bottom line of the short-term. Unemployment rate is low, jobs are available and training places are available. Our real challenge therefore is to focus on restructuring our economy so that we can move one whole level higher - productivity, skills, expertise," Mr Tharman shared.

He said this means using management methods and technology to improve efficiency and productivity so that workers can get paid more.

"They can have more satisfying jobs and we can grow our economy without growing employment year after year, especially foreign employment. So we got to find the right balance. It's something that affects every sector of the economy. And, we look at the most developed countries and we can see how it's done. They too went through that transition. In some cases not very long ago, they went through the same transition. They ramp up on labour and they have to upgrade, do with less labour, but using technology and everyone playing that part, including customers, everyone playing that part. You can move up to a higher level. That way, our workers can get good wages, get good jobs," he said.

Mr Tharman added that the government will provide every form of support to help companies, especially small and medium enterprises, to make this transition.

S'pore's economy to grow 1-3% in 2012

SINGAPORE - Singapore's economy is expected to grow by one to three per cent in 2012, said Prime Minister Lee Hsien Loong in his New Year message yesterday.

Mr Lee explained that as a small, open country, Singapore will inevitably be affected by the debt problems in Europe as the external environment is uncertain and 2012 looks to be a difficult year for the global economy.

In 2011, Singapore achieved a 4.8 per cent economic growth.

The prime minister also highlighted that the tightening inflow of foreign workers will also slow economic growth.


"Admitting fewer foreign workers also means forgoing business opportunities and accepting slower growth," said Mr Lee. Adding that, Singaporeans must raise productivity, "to make up in quality what we will miss in quantity".

However, Mr Lee said: "Overall, we have every reason to be confident and optimistic."

"Amidst this flux, we need to be confident of our position, and clear about our priorities and plans to build a better Singapore," he emphasised.

The government is working hard to tackle the immediate challenges and the long-term issues to improve Singaporeans' lives.

Among pressing issues, the government is committed to keeping homes affordable to all Singaporeans. In 2012, PM said that there will be another 25,000 new launches of BTO flats.

The government will also redouble efforts to improve the public transport system and expand the train and bus network. He said that more MRT lines are on the way and bus services will be enhanced to improve the daily commuting experience.

In the long run, the prime minister pledged to keep healthcare affordable and accessible, enhance the education system and uphold inclusive growth and social mobility.

Mr Lee noted that population is a "particularly complex and critical challenge," which will be discussed over the year, so that Singaporeans can better understand what is at stake and what choices we must make as a nation.

"I am confident that in a changing world, we will continue to bond as one people and walk shoulder to shoulder into a brighter tomorrow," said Mr Lee, as he wished Singaporeans a happy new year.