Download Economic Review Committee (ERC) Report

Report of the Economic Review Committee
New Challenges,
Fresh Goals
- Towards a Dynamic Global City
Ministry of Trade and Industry
Republic of Singapore
February 2003
Published February 2003
© MINISTRY OF TRADE AND INDUSTRY
SINGAPORE
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system or transmitted in any form or by
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otherwise, without prior permission of the copyright holder.
ISSN 0219-791X
Printed by SNP SPrint Pte Ltd
Preface
Preface
The Economic Review Committee (ERC), set up in December 2001, has completed
its work. This Report outlines its key recommendations to remake Singapore into:
a. a globalised economy where Singapore is the key node in the global network,
linked to all the major economies;
b. a creative and entrepreneurial nation willing to take risks to create fresh
businesses and blaze new paths to success; and
c. a diversified economy powered by the twin engines of manufacturing and services,
where vibrant Singapore companies complement MNCs, and new startups coexist with traditional businesses exploiting new and innovative ideas.
The Report is divided into two parts. Part I summarises the ERC’s
recommendations, both longer-term strategies and more immediate proposals,
against the backdrop of our external environment and domestic circumstances.
Part II provides more details of the proposals for changes in policies on taxation,
wages and CPF, land, creating a more entrepreneurial Singapore, growing
manufacturing and services, developing our human capital and helping
Singaporeans adapt to all these changes.
The Committee has endeavoured to distill all the contributions it received in
the course of its work into a coherent overall plan of action. This main Report
could not include all the numerous ideas thrown up during the deliberations.
These have been set out in more detail in the reports of the seven SubCommittees. The Committee recommends that the relevant government agencies
study those remaining proposals further, and implement those found to be
feasible and worthwhile.
Contents
Contents
ERC REPORT
Executive Summary
Part I
Chapter 1:
The Road Thus Far
Chapter 2:
A Turning Point
Chapter 3:
Lowering Costs, Staying Competitive
Chapter 4:
The Way Forward
Chapter 5:
A Globalised, Entrepreneurial and Diversified Economy
Part II
Chapter 6:
Fiscal and Monetary Policies
Chapter 7:
Wages and the CPF
Chapter 8:
Land
Chapter 9:
Entrepreneurship
Chapter 10:
Manufacturing
Chapter 11:
Services
Chapter 12:
Human Capital
Chapter 13:
Restructuring and Employment
Credits
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Executive
Summary
Summary
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Summary
Turning Point
Singapore is at a turning point. We have gone beyond the phase of rapid
economic expansion. Globalisation, the rise of China and the Asian Financial
Crisis have changed our environment fundamentally. But many new opportunities
present themselves. We need to reposition ourselves to compete and to exploit
these new opportunities.
External Environment
The Asian Financial Crisis in 1997 abruptly ended two decades of exuberant growth
in the region. Southeast Asia is still dealing with its political and economic
aftermath. On top of this, the recent US recession marked the end of a long boom,
and the beginning of a new period of more uncertain global growth.
After September 11, 2001, the global economic malaise was compounded by the
war on terrorism, and, within our region, by political and security uncertainties,
particularly the rise of political Islam and the threat of extremist Islamic terrorist
groups, as highlighted by the bombing in Bali in October 2002. Just as Singapore
had earlier thrived with the growth of our neighbours, now we share their anxieties.
Meanwhile, globalisation and rapid technological advances have changed the way
we live and conduct business. Market conditions are constantly changing.
Competition for talent and investment is intense.
But it is also a more collaborative world in which countries rarely make entire
products from start to finish. Design, production, distribution and servicing are
each split into segments and spread all over the world. Every country has to carve
a niche for itself by excelling in some areas, while linking up with other countries
in the supply chain. In this new age of globalisation, Singapore’s lack of a domestic
hinterland becomes much less of a disadvantage.
China has rapidly become a major producer in the world economy and India is an
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emerging player. Even as they offer major new markets, they have changed the
competitive landscape for trade and foreign investment. Countries, industries,
businesses and workers face dislocation, and have to restructure to secure
opportunities with these large new players. Eventually, however, China’s and India’s
growth will bring prosperity to Southeast Asia, which has always been the case
historically.
Domestic Challenges
Domestically, Singapore is also at a crossroads. Our economy is already at an
advanced level, with our per capita Gross Domestic Product (GDP) at developed
country levels. We cannot expect the same dramatic transformation as we
achieved over the last two decades, or the same rates of growth in output and
living standards.
Restructuring will speed up. There will be more changes to our economy, more
companies turning over. Our workers will experience painful displacement and
structural unemployment, which were never serious problems before. This will
especially affect older, less-skilled workers who missed their secondary education,
but even white-collar workers and professionals will not be spared.
Our fiscal position will become tighter. With a slower growing economy, revenue
will be less buoyant. Against this, there will be pressure to increase government
spending on social needs, such as healthcare. We are unlikely to accumulate
budget surpluses as easily as we used to.
The Way Forward
Overall, we have made tremendous progress since the last major recession in
1985. Our per capita income has doubled. We have attracted many world-class
companies to use Singapore as a total business centre. We have developed an
advanced logistics and transport infrastructure, and a reputable financial centre.
However, our competitors are striving to do the same. Other Asian cities and
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countries are vying to attract investment and become business hubs. The
economic race has become tougher.
In this fundamentally altered environment, Singapore cannot fall back on tried
and tested strategies. The ERC's task, therefore, was to fundamentally rethink
our strategies to propose ways to tackle the challenges ahead, and to create a
better future for ourselves and our children.
While it is right to be sober about the challenges we face, we have reasons to
be confident. Our fundamentals remain strong. We are better prepared than
many other countries to confront the new challenges. The ERC’s recommendations
will help us remake and upgrade the Singapore economy. We must steel our
collective resolve to stay the course and press on with the necessary changes.
Building on Our Strengths
We need to build on the strengths that we have developed over the years, to
gird Singapore for the future.
We have kept our society and economy open, flexible and adaptable. We have
promoted competition and relied on free market forces, to enable the private
sector to create wealth. We have welcomed global talent.
We have pursued prudent macroeconomic policies. The Government has spent
within its means, avoided budget deficits, and progressively lowered taxes. We
have a stable Singapore dollar and one of the lowest inflation rates in the world.
These policies have sustained growth and preserved the value of Singaporeans’
savings.
We have a worldwide reputation for excellence, reliability and honesty. The
Government and Judiciary are transparent and trustworthy. People know that
in Singapore, their property, including their intellectual property (IP), will be
protected. Here their investment, their businesses and their families will be safe.
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We have built first-class, up-to-date infrastructure, well-connected to the world.
Businesses can rely on the port and airport, the telecommunications and public
utilities, and the financial system. Everything works.
We have invested heavily in education and training. To reskill working Singaporeans,
we have expanded continuing education and training.
We enjoy harmonious tripartite relations. A strong and responsible labour
movement takes pride in being an equal partner in Singapore’s progress, alongside
employers and the Government. This has helped to convince workers to support
difficult but necessary policies that promote their long-term interests.
Finally, we have upheld meritocracy as a cornerstone of our society, and developed
an ethic of individual self-reliance. But we have also moderated the free market
system with social equity and full opportunities for all. The Government has
heavily subsidised the provision of housing, education and basic healthcare,
enhanced Singaporeans’ assets and enabled them to share the wealth they have
collectively helped to create.
A Globalised, Entrepreneurial and
Diversified Economy
By remaking and upgrading ourselves, we will make Singapore a leading global
city, a hub of talent, enterprise and innovation. Singapore will become the most
open and cosmopolitan city in Asia, and one of the best places to live and work.
In another decade and a half, Singapore will connect China, India and Southeast
Asia, and beyond. We will become an Asian centre of choice for global talent,
attracting skilled technicians, managers, entrepreneurs and creative people from
all over the world. We will be a creative and innovative society, always eager to
try out new ideas and change for the better, with a culture that respects
achievement in the sciences and the arts.
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Summary
Globalised
In 2018, the US and the EU will still be the largest economies in the world. But
the combined GDP of East Asia will exceed the US or the EU. China’s transformation
will be well advanced. India, too, should have made progress reforming its
economy and raising its growth rate. Southeast Asian countries should have
resolved their problems and returned to the path of stability, growth and
development. Similarly, Japan should have shaken off its economic troubles,
and be growing again.
Singapore will be a key node in the global economic network, linked to all the
major economies. Within Asia, we will be a major hub serving the region, together
with others like Hong Kong and Shanghai. Our efforts to build links to China
and India will be yielding dividends. Our companies would have established
significant presence in them and the region.
Entrepreneurial
Singapore will have graduated into a knowledge economy. We will be a creative
and entrepreneurial nation, open to new ideas, always ready to take risks and
seize opportunities to create new businesses and blaze untrodden paths to
success. Society will celebrate the success of those who dare venture into
uncharted territory. It will accept those who meet setbacks, and encourage them
to pick themselves up and try again.
Singapore will develop the full spectrum of risk capital to fuel entrepreneurship,
bringing together savvy investors and dynamic entrepreneurs with promising
ideas.
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Summary
Diversified
We will have more engines of growth and a more diverse base of players, as we
upgrade existing activities and companies and nurture new ones.
We will maintain the broad balance between manufacturing and services in the
economy. But within each sector, we should see major transformation.
Manufacturing will continue to move up the value chain, supported by strong
research and development (R&D) capabilities. Services exports will have grown
in importance. Singapore will be Asia’s leading provider of world-class services,
whether in traditional areas like trading and logistics, financial services, infocommunications technology (ICT) and tourism, or new areas like education,
healthcare services and the creative industries.
Multinational corporations (MNCs) will continue to thrive in Singapore, basing
high value-added activities, R&D and regional HQs here, to cover a broad
hinterland and coordinate their regional and international strategies. They will
co-exist with a stable of vibrant Singapore companies, some of which will be
international players, while others will complement and support the MNCs and
larger Singapore companies here.
A more entrepreneurial Singapore will see the emergence of many new companies,
some engaging in activities at the frontiers of technology, others pursuing novel
business ideas in more traditional areas. Through innovation, creativity and
technology, they will create value and carve out market niches for themselves.
Over time some will upgrade and grow into industry leaders in their own right.
Jobs
Our education reforms and training initiatives would have resulted in a globally
competitive, creative and employable labour force.
Many jobs will be knowledge-intensive, while other jobs will require higherlevel technical skills, as well as interpersonal skills. These will involve quality
craftsmanship, complex and customised activities aided by computers, or servicing
and maintenance of systems and equipment, or plants and buildings. Significant
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numbers of jobs will still involve semi-skilled work, whether in high-tech industries
or high-end services. They can pay well, but will often require workers to be
flexible and adaptable.
Every Singaporean, regardless of age or educational level, who is willing to adapt
to these job conditions and makes the effort to learn new skills, will find a place
in the new Singapore economy.
Growth & Incomes
Barring external shocks, the economy has the potential to grow by an average
of 3–5 per cent per annum, with real wages growing by 2–3 per cent per annum.
This is lower than the 7.3 per cent average that we enjoyed since 1985. But it
will be an achievement given our more mature economy and a more difficult
environment. Few developed countries, at similar levels of per capita GDP, have
managed to sustain growth exceeding 3 per cent. But we will achieve 3–5 per
cent growth only if we persevere with restructuring and upgrading and provide
an environment for local and foreign talent to flourish and grow. We have to
become a hub for knowledge-based activities and talent like London, New York
or Boston.
Remaking Singapore
To realise this vision of Singapore as a leading global city – a hub in the new
Asian and global economic networks, and an entrepreneurial and diversified
economy – the ERC has identified six key areas which are critical.
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Summary
Expanding External Ties
We need to embrace globalisation, and continue linking ourselves to the developed
economies, to attract investment and expand our markets. While Asian markets
are growing, and Southeast Asia makes an essential contribution to our economy,
the main driver of our economic growth remains the US, the EU and Japan.
As a major trading nation, we continue to strongly support the multilateral
trading framework of the World Trade Organisation (WTO). But we need to
supplement this with bilateral Free Trade Agreements (FTAs) with key trading
partners, to secure our economic ties and access to their markets.
The emergence of China and, to a lesser extent, India will pose enormous
challenges as well as offer promising opportunities. We must respond decisively
to both. Regionally, we must continue to work with our ASEAN partners toward
closer economic integration and strengthen our competitiveness as a group.
And we must strengthen our hub status within our wider hinterland, which
encompasses a radius of seven hours’ flying time from Singapore, spanning India
to Northeast Asia and Australia.
Competitiveness and Flexibility
To stay competitive as an economy, we must offer investors that extra plus, in
terms of superior capabilities and an efficient and flexible business environment.
The business environment that supported past growth is no longer sufficient.
We must take decisive steps to enhance it and improve our microeconomic
competitiveness.
First, we must keep the burden of taxes on the economy as low as possible,
especially direct taxes on companies and individuals. The ERC has recommended,
and the Government has agreed, to bring the top rates of corporate and income
taxes down from 25 per cent to 20 per cent over the next two years. To partially
make up for the loss in revenue, the Goods and Services Tax (GST) should be
raised from 3 per cent to 5 per cent.
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Second, we must refocus the Central Provident Fund (CPF) back to its core
purpose of providing for the basic financial needs for the majority of our people,
including saving for basic retirement, home-ownership and medical needs. To
be sustainable in the long term, the CPF cannot impose an unnecessarily heavy
statutory burden on companies, especially when they employ older workers.
The Government has already accepted the ERC’s recommendations to refine the
CPF system. The aim is to have a CPF structure which enables our workers to
save enough for these basic financial requirements, while keeping employer
costs to a minimum. The lighter the statutory burden on employers, the easier
it will be for Singaporeans to be employed and the lower our unemployment
will be.
Third, with business cycles becoming more volatile, the labour market and wage
system must be made more flexible. This will help our workers keep their jobs
when times are bad. Wages should be linked less to the seniority of a worker,
and more to his performance and his company’s profitability. We should also
amend our legislation to allow companies to adopt more flexible working and
compensation arrangements, without compromising the safety, health and
welfare of workers.
Fourth, we must price our infrastructure services and factors of production
competitively. Whether it is telecommunications, port services, power supply or
industrial land, we should encourage competition and ensure adequate supply,
in order to promote efficiency, lower costs and raise standards. We cannot
subsidise services below their true cost, but neither should we allow cost-plus
or monopoly pricing to push up business costs.
Entrepreneurship and Singapore Companies
We must upgrade ourselves and make Singapore a knowledge economy powered
by innovation, creativity and entrepreneurship.
Apart from knowledge and technical skills, Singaporeans need the right mindset
to thrive in an environment of rapid and unpredictable change. In particular,
we need to nurture the spirit of entrepreneurship and creativity. We need to
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strengthen incentives for Singaporeans to be innovative and venture beyond
their comfort zones. We need to welcome diversity, accept failure, and embrace
broader notions of success.
We need to refocus safety nets on the truly needy, and minimise the people’s
dependency on the State. An individual’s success must depend on his own efforts
and abilities, rather than on handouts from the State. Our people and our
companies will then have every incentive to be enterprising, and the competition
will strengthen the players and produce winners who can hold their own.
Promoting entrepreneurship and creativity will take many years. The Government
should therefore designate a Minister (or Minister of State) to be responsible for
promoting and driving the initiatives to develop a more entrepreneurial Singapore.
We want strong Singapore companies which can develop new ideas and businesses,
tap new export markets, broaden our economic base and make our economy
more resilient. They will complement the MNCs, and help to support and anchor
MNCs here.
These Singapore companies include the Government-linked companies (GLCs),
many of which have built up significant technical capabilities and management
depth, and are among the leading firms in their industries. All GLCs should be
run on strict commercial principles and be subject to the discipline of the market.
GLCs which lack a strategic rationale or the potential to grow into regional or
international players, should be divested.
We must foster the growth of enterprising startups and small and mediumsized enterprises (SMEs), whether they are high-tech or low-tech. We have to
minimise rules and procedures that stifle enterprise and discourage small players.
Ministries and statutory boards should avoid spawning companies to provide
services which private firms can provide, and crowding out the private sector.
We must find innovative, market-oriented ways to encourage the early-stage
funding of deserving companies, develop cashflow financing, and grow the
equity and debt capital markets to marry global investors with companies
from China, India and across Asia.
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We should encourage major Singapore companies with the scale and organisational
depth to venture abroad, to tap opportunities in regional markets. The larger
companies can lead clusters of enterprises, including SMEs, overseas.
As our external wing grows, overseas income will become more important to
companies and individuals. We must find more effective ways to eliminate
double taxation of foreign source income that is remitted to Singapore.
There exists a group of small, traditional companies, particularly in retail and
personal services, which have difficulty adapting to the knowledge economy.
We must help them rationalise and upgrade, to meet the needs of a new
generation of customers.
While we do all we can to encourage enterprise among Singaporeans, we also
need to attract foreign entrepreneurs and SMEs to make Singapore an
entrepreneurial hub. Singapore can offer a funding platform, excellent connectivity,
as well as interaction with the large base of MNCs here. We can be a hub not
only for MNCs, but also for SMEs and startups from all over the world, which
seek to expand their networks or to penetrate Asian markets.
Twin Engines: Manufacturing and Services
Manufacturing will continue to be an important growth engine. To hold our
own in this increasingly competitive sector, we must maintain our cost
competitiveness, equip our people with relevant skills and expertise, and continue
to attract high-quality investments.
We must strengthen and upgrade the four key manufacturing clusters (i.e.
electronics, chemicals, biomedical sciences, and engineering) which now form
the core of our high value-added activities. We must also develop new
capabilities in emerging technologies such as micro-electromechanical
systems, nanotechnology and photonics.
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Manufacturing will become more knowledge- and research-intensive. We must
strengthen R&D efforts in the research institutes, universities and industry, so
as to create and exploit IP. MNCs should make Singapore a key node in their
global R&D networks, and should be encouraged to base major R&D and product
development efforts here.
While we maintain manufacturing as a growth engine, we need to promote our
services sector more actively, particularly exportable services, as a second growth
engine. As China and India grow and prosper, their expanding middle classes
will seek high-end, better-quality services, whether educational, medical, or
financial.
We are well-placed to meet part of this demand and be a regional services hub.
We must continue to upgrade, liberalise and develop established industries like
trading and logistics, ICT, financial services and tourism. We should also promote
promising new areas such as healthcare, education and creative industries.
Unlike manufacturing, where the Economic Development Board (EDB) is the
single promotion agency, services are too varied to be promoted by a single
champion. Services are also subject to more complex regulations, because of
their greater implications for our social policies. Wherever possible, we should
relax these regulations in order to strike a better balance between our economic
and social objectives. The ERC recommends that the Government set up a
Ministerial Committee on Services to drive the development of these services
industries.
As both manufacturing and services will become more innovation and knowledge
driven, we should enhance the protection and commercialisation of IP. We
recommend setting up an IP Academy and promoting Singapore as an IP
management centre.
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People
To realise all these strategies, we must develop our people to the full. Competitive
advantage now rests in talent and information, rather than natural resources
or geographical location. We must continue to invest heavily in education, and
further improve our education system. Every Singaporean must be equipped
with the necessary skills and know-how for a knowledge economy.
We must encourage a greater diversity of talents starting with pupils in school.
We must also develop a stronger research culture among young Singaporeans,
and nurture those with a passion for research through exposure and postgraduate
education.
Our emphasis on developing services industries will require changes to our
manpower planning and training priorities. We will continue to equip people
with hard technical skills to support a vibrant manufacturing sector. But we also
need to train enough people with the capabilities and knowledge to work in the
new services industries as these expand.
We must continue to welcome global talent to augment our indigenous talent
pool. While we have many talented Singaporeans, the pool is much smaller than
in cities like London, Shanghai, Boston or San Francisco which draw people from
larger hinterlands as well as from all over the world. We need a wide range of talent
to supplement our own. Our openness to global talent will be a key competitive
advantage for a Singapore that aspires to become a leading global city.
More and more Singaporeans are venturing to live and work abroad, in all the
major cities in the world. We must maintain links with this overseas network,
and tap their contacts and expertise. The ERC has proposed, and gladly notes,
the setting up of the Majulah Connection to engage overseas Singaporeans.
Such a network will help a valued part of our Singapore family to contribute
to the nation, and stay rooted to Singapore.
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Restructuring
Economic restructuring will inevitably have a major impact on Singaporeans.
Job displacements will be more frequent, and employment structure and work
arrangements will need to respond flexibly to change. Structural unemployment
will be a growing problem, as people whose skills have become redundant fail
to find new jobs. We must manage the dislocation and difficulties that economic
restructuring will bring, and help Singaporeans make the urgent and essential
changes.
Training and retraining remain critical to helping Singaporeans upgrade and
update their skills, and ensure that they remain employable. The ERC recommends
that the Government set up a national Continuing Education and Training (CET)
body to oversee the promotion and development of CET in Singapore.
We must also help Singaporeans who are out of work find new jobs as quickly
as possible. We need to shift our mindsets and expectations, and consider a
wider range of job possibilities. We need to counsel retrenched workers, to
identify their skill sets and training needs. Some jobs need to be redesigned and
upgraded to make them more attractive to Singaporeans. We should improve
our job matching efforts, and also promote part time work.
But despite our efforts, some retrenched Singaporeans will take longer to find
re-employment and, meanwhile, will need assistance. The ERC recommends that
the Government refine its assistance schemes, focussing on Singaporeans who
need help most, giving the most help to those who make the best effort.
A minority of Singaporeans will find it hard to keep up with the changes,
notwithstanding all the help they will get. But our sustained emphasis on skills
training and upgrading will minimise their numbers, and so long as our economy
is growing, all will share in the fruits of our success.
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Summary
Immediate Issues – Lowering Costs,
Staying Competitive
While we make changes to our economy in the six key areas listed above, we
cannot ignore the current slowdown. The Singapore economy has still not fully
recovered from the 2001 recession. Our immediate prospects are clouded by
uncertainties in the region, the slowdown in the G-3 economies, the prospect
of war in Iraq and the significant challenges posed by China. While there is a
reasonable chance that the Singapore economy will improve in 2003, full recovery
will probably take place only in 2004.
We must press on with our longer-term strategies, but implement them carefully,
taking into account prevailing conditions. Hence the Government decided to
phase in the GST increase to lessen the burden on Singaporeans, and help them
cope with the current uncertainties.
More importantly, we must continue to manage our business costs carefully.
This will help us remain competitive and give more time for the longer-term
restructuring to work.
CPF Restoration
Wages form the largest component of that part of business costs which we can
influence. The ERC supports the National Wages Council’s (NWC) recommendation
for continued wage restraint. However, it does not recommend an across-theboard wage freeze. This would be rigid, distort the labour market, and work
against the interests of workers.
Instead, the ERC recommends that the Government defer for two years, any
further restoration of the CPF contribution rate, beyond its present level of 36
per cent. This will avoid adding to the statutory burden on wages for employers
at a difficult time, and help reduce further job losses. It will also send a strong
signal to investors that Singapore is acting decisively to strengthen its competitive
position.
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The Government has stated its intention to restore the CPF contribution rate
to 40 per cent, when economic conditions permit. The ERC supports a progressive
restoration of the CPF rate to 40 per cent after the two-year period. However,
the timing and pace of the restoration should take into account economic
conditions then, especially Singapore’s cost competitiveness vis-à-vis other
countries.
Two other CPF changes were linked to the restoration of the CPF contribution
rate: the reduction in the salary ceiling for both employers’ and employees’
contributions from the current $6,000 to $5,000, and the lowering of the
employees’ contribution rate for workers aged 50-55 from the present level of
20 per cent to 16 per cent. The ERC recommends that the Government proceed
to start phasing in these two changes, and not defer them for two years. These
two changes will lower the statutory burden on the wages of professionals and
older workers, and thus help these groups to keep their jobs or find new ones.
Foreign Worker Policies
At the same time, we must ensure that our foreign worker policies are flexible
enough to allow companies to employ the workers they need, especially those
which cannot find enough Singaporean workers. This will help keep their overall
costs of production down and make their operations here more viable. However,
businesses cannot compete on low wages alone. To survive and prosper, they
must continually upgrade their capabilities and improve productivity.
While we must keep our doors open to foreign workers, we must carefully
manage the inflow to benefit our economy and our people. An appropriate levy
will regulate the demand for foreign workers, and ensure that they complement
rather than displace Singaporean workers, and ultimately create more jobs for
Singaporeans.
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Land and Other Business Costs
In addition, we must manage the other components of business costs. The
opening up of the electricity market to competition has helped lower tariffs
for consumers, and especially the large users. JTC’s recent move to lower
industrial land prices and posted rents will not only help existing businesses
tide over the current difficulties, but reassure new investors that the Government will make available sufficient industrial land at internationally competitive
prices for their projects.
Tackling Unemployment
Helping businesses to do well is the best way to create more jobs for Singaporeans.
But we must also assist Singaporeans more directly to cope with the current
economic difficulties. The measures proposed earlier to help retrenched
Singaporeans find new work, and assist those who despite their best efforts still
cannot find work, will be especially needed during a slowdown.
These recommendations on the CPF, foreign worker policies, industrial land costs,
and reducing unemployment will address the immediate challenges facing
Singapore. They should be implemented as quickly as possible. They also support
our longer-term strategies, and will lay the basis for the strategic shifts that we
need to make.
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Summary
A Better Future for All
Achieving this future Singapore will require solidarity and hard work. We must
deal with immediate problems without losing sight of long-term challenges.
Being small and open, we must expect rough weather from time to time.
However, by persevering with sound and imaginative strategies, and staying
united and resolute, we will emerge stronger.
In many ways, globalisation is an advantage to a city-state like Singapore. We
will become a nation that is more relevant and valuable to the world, and a
society that is more cohesive with a national character of our own. Together,
we will create a better future for ourselves and our children, in a Singapore
which we will all be proud to call home.
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The road thus far
Chapter 1
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Chapter 1
Transformation of the Singapore Economy
The Singapore economy has grown rapidly in the last two decades. Economic growth averaged
7.3 per cent per annum between the major recessions in 1985 and 2001. GDP in nominal terms
has increased to S$154 billion in 2001. Per capita income has more than doubled, reaching
S$37,200 in 2001. This has placed Singapore among the ranks of OECD countries like France and
Germany, and ahead of others like Italy and Australia1.
1
Singapore’s per capita income in US$ terms was US$20,700 in 2001, compared to France (US$21,500), Germany (US$22,500), Italy (US$18,900) and Australia (US$18,500).
A More Globally Connected Economy
The economy has also undergone significant transformation. Today, it is more globally connected
than it ever was before. Exports have grown significantly. The nominal value of our non-oil
domestic exports grew by 12 per cent per annum to close to S$100 billion per year today with
markets spanning all major economies [see Chart 1.1]. More than 140,000 vessels called on our
ports in 2001 compared to 37,000 in 1985, and container throughput has grown from 1.7 million
to 15.6 million TEUs. Air cargo rose five-fold from 0.3 million to 1.5 million tonnes.
Chart 1.1: Singapore’s Top Ten Destinations for
Non-oil Domestic Exports
US
ASEAN
EU
Japan
Hong Kong
Taiwan
China
South Korea
Australia
India
Others
Per cent
0
5
10
15
20
25
15 years of growth and transformation
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Chapter 1
An Upgraded Manufacturing Sector
The broad structure of the economy is largely unchanged, with manufacturing
remaining as a key sector [see Chart 1.2].
Chart 1.2: Structure of Singapore Economy
Per cent
100
90
18
17
Others
22
28
Financial &
business services
13
11
16
15
Transport &
communications
Commerce
10
6
Construction
21
23
Manufacturing
1985
2001
80
70
60
50
40
30
20
10
0
Within manufacturing, however, we moved up the value chain. Electronics and
chemicals have increased in importance, accounting for 53 per cent of total
manufacturing value-added (VA), up from 34 per cent in 1985 [see Chart 1.3].
The chemicals cluster has also grown. Jurong Island, conceived during the mid1980s and developed in the early 1990s, has helped us realise our vision of a
world-class chemical hub with an optimal combination of petroleum,
petrochemicals and supporting industries. Today, chemicals-related products
constitute more than 10 per cent of our non-oil domestic exports.
!$
Chapter 1
Chart 1.3: Structure of Manufacturing
Sector
100%
80%
40
60%
5
10
40%
11
8
20%
25
25
Others
5
8
9
Fabricated metal products
Machinery & equipment
Transport equipment
17
Chemicals & chemical products
36
Electronic products
0%
1985
2001
The sector has upgraded, as lower value-added, commoditised products like
textiles and consumer electronics moved to other lower-cost countries. Driven
by foreign as well as domestic investment, Singapore’s manufacturing sector
is now more capital- and skill-intensive [see Chart 1.4]. R&D activities have
grown, not only in the traditional manufacturing-related areas like electronics
and engineering, but also in new areas like biomedical sciences. Productivity
growth has been strong, averaging 5.3 per cent per annum from 1985–2001,
outstripping the other major sectors.
!%
Chapter 1
Chart 1.4: Manufacturing Has Moved Up
the Value Chain
S$ (000)
Per cent
120
100
80
50
Capital expenditure per worker
VA per worker
Share of skilled workers (RHS)
40
30
60
20
40
10
20
0
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
0
Changed Structure of the Services Sector
The services sector has undergone tremendous changes in the past two decades.
Singapore has strengthened its position as the services hub for the region. The
major services industries have enjoyed strong growth and created many employment
opportunities for Singaporeans. Our services exports have grown by 9.9 per cent
per annum between 1985 and 2001 to close to S$50 billion, resulting in a healthy
net export balance of more than S$10 billion today [see Chart 1.5].
!&
Chapter 1
Chart 1.5: Growth of Services GDP, Exports
and Employment
$ Billion
Thousand
120
100
1600
Nominal GDP
Services Exports
Employment (RHS)
1200
80
800
60
40
400
20
0
0
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
Singapore has become a major tourist destination. Today, we receive more than
7 million visitors per year compared to only 3 million in 1985 – the fastest
growth coming from Asian markets, averaging 6.3 per cent per annum. This
has boosted the VA of hotels and restaurants from S$1.4 billion in 1985 to about
S$4 billion today. There have also been considerable spin-offs to other services
industries such as retail, transport and communications.
!'
Chapter 1
More significantly, the face of the services sector has changed, as we liberalised
areas like financial services, telecommunications and media. This has sharpened
competition, strengthened domestic firms and benefited Singaporean consumers.
In financial services, for example, a new industry landscape has emerged, since
progressive liberalisation began in 1998. Foreign banks have greater access to
domestic retail banking, and competition has led to the consolidation among
the local banks. Fund management activities and the capital markets have
developed and grown. A plethora of financial products are now available to
Singaporeans.
In the telecommunications industry, mobile phones and internet subscriptions
have increased dramatically, and prices have come down rapidly since the
industry was liberalised in a big bang in 2000. Consumers and businesses enjoy
new services and lower costs. Singapore is building itself up as a
telecommunications node.
A Better Educated Workforce
The educational profile of our population has improved dramatically. From one
university in 1985, Singapore now has three universities. There are more
polytechnics and institutions of higher learning. Our institutes of technical
education have also been upgraded and transformed. As a result, the output
and quality of the educational institutions have gone up. In 1985, we produced
8,000 polytechnic and university graduates. By 2001, this rose to 25,800, not
including Singaporeans who were educated overseas.
Our workforce has therefore become better educated, as younger cohorts enter
the labour market. The average years of schooling has increased from 5.7 years
in 1985 to 8.4 years in 2001, with the proportion of graduates in our total
workforce more than tripling from 5.2 per cent to 17 per cent. 66 per cent of
the workers have secondary and above education in 2001, compared with 46
per cent in 1985 [see Chart 1.6]. The improvement in educational attainment
!(
Chapter 1
has raised the skill profile of the workforce. The share of Professionals, Managers,
Businessmen and Executives (PMBEs) has increased from 22 per cent to 42 per
cent of total workforce over the same period.
Chart 1.6: Higher Proportion of Skilled
Labour
100%
5
11
17
Degree
29
21
Post secondary & diploma
28
Secondary
20
Primary & post primary
14
Below primary
80%
60%
40%
32
20%
23
0%
1985
2001
Improvements in Social Conditions
In tandem with the growth and transformation of Singapore’s economy, our
society has upgraded itself dramatically.
Singapore’s resident population has increased from 2.5 million in 1985 to 3.3
million in 2001, without compromising the quality of life on this small island.
Economic growth has not been achieved at the price of social inequity. The vast
majority of Singaporeans have enjoyed the fruits of economic progress, as
reflected in better social conditions.
!)
Chapter 1
Home ownership reached 94 per cent in 2001, unmatched by any other country
in the world. The quality of housing has also improved. In 1985, 41,000 households
lived in five-room flats. By 2001, this figure had risen to 194,000. There were
close to 200,000 private residential properties in 2001 compared to only 84,000
in 1985.
Life expectancy, which was 73.9 years in 1985, has increased further to 78.4
years. The infant mortality rate has fallen from 7.6 to 2.2 per 1,000 live births
over the same period, one of the lowest rates in the world.
With globalisation, Singaporeans travel much more. In 1985, Singaporeans only
made a total of 480,000 trips overseas. Today, this figure stands at 4.4 million.
Singaporeans on the whole have a much more international outlook.
Our arts and sports scene has become livelier. The number of arts performances
more than doubled from 1,700 in 1991 to 4,100 in 2001. The number of visual arts
exhibition days increased from 2,400 to 8,500 in the same period. The Esplanade
is a new international icon for Singapore. It will bring the arts to more Singaporeans
and spur our artists on to create more meaningful and original works.
We have made encouraging progress in sports as well. Singapore achieved its
best ever results in international competitions such as the Commonwealth
Games and Asian Games in 2002. Events such as the Rugby 7s, Tiger Skins and
Standard Chartered Singapore Marathon have established Singapore as an
attractive venue for international sports events.
The arts and sports scene will offer both Singaporeans and non-Singaporeans
a vibrant and gracious quality of life. This will help us to retain and attract talent,
create more jobs and stimulate ideas across other sectors of the economy.
!*
Chapter 1
Conclusion
Overall, the Singapore economy and society have made tremendous progress
since 1985. Our economic development in the past two decades has placed us
squarely as an investment-driven economy. We have attracted many worldclass companies to use Singapore as a total business centre. The inflows of
foreign investment have helped to drive our economic growth.
However, our competitors are doing the same. Other regional and emerging
countries are also striving to attract investment and vying to become business
hubs. Global competition has intensified. As Singapore becomes more developed,
the economic race ahead will become harder. We will need to work doubly hard
to overcome the challenges ahead and sustain healthy economic growth.
!"
A turning point
Chapter 2
!#
Chapter 2
Singapore has reached a turning point in its economic development. For more
than two decades until the Asian Financial Crisis in 1997, Singapore enjoyed
consistently high growth. Southeast Asia was doing well, foreign investment
grew year by year, and our exports expanded. We upgraded our economy, and
transformed the lives of Singaporeans in less than a generation.
The last five years, however, have shown clearly that this phase is over. The Asian
Financial Crisis plunged Southeast Asia into political and economic uncertainties.
The US recession marked the end of a long boom, and the beginning of a new
period of slower growth. After September 11, 2001, the discovery of terrorist
groups in Southeast Asia linked to Al Qaeda brought new anxieties that will stay
with us for many years. We are facing significant challenges both in our external
environment and on our domestic front.
External and domestic challenges
in a new environment
!$
Chapter 2
External Challenges
Globalisation and Technological Advances
First, globalisation and rapid technological advances are driving fundamental,
long-term changes in commerce, industry and our daily lives. Markets, industries
and companies are becoming global in scope, reaping huge economies of scale,
and recouping expensive investment in R&D.
Globalisation extends to the market for talent. Talent is the key resource in the
knowledge economy, and today, is in enormous demand everywhere. Talented
people are internationally mobile. They have the option of pursuing their
interests and living and working wherever the ‘buzz’ excites them. The alternative
to a job in one country is not another job in the same country, but another job
almost anywhere in the world. Talent therefore commands a world price. To
attract world-class talent, employers have to offer them challenges and rewards
comparable to what they can expect elsewhere.
Globalisation and technological advances open up tremendous opportunities
for Singapore. Physical size and natural resources become less of a constraint
as we tap markets in the global economy to broaden the basis of our prosperity. Technology itself is a powerful force. The US economy shows just how
powerful it is, coupled with the flexibility and dynamism of free markets.
But globalisation and technological advances present enormous challenges too.
Countries jostle intensely for pole position, but it is not just countries competing
against one another. It is countries together with the talent and capital they
have attracted, plus the MNCs which have invested in them. China is a formidable
international player not just because of the drive and dynamism of its people
and economy, but also because of the growing investment by Fortune 500 MNCs,
and the hundreds of thousands of foreign entrepreneurs and professionals who
live and work there. Hence skilled workforces, strong supporting industries and
a business- and talent-friendly environment have become critical ingredients
of international competitiveness.
!!
Chapter 2
Paradoxically, globalisation has also created a more integrated and collaborative
world. It is more critical than ever for countries to be plugged into the global
grid. Supply chains have become globalised. The international division of labour
is being taken to extremes. Few products are now made entirely in a single
country. The task is split into many small components distributed all over the
world, in a dynamic production network that is constantly adapting itself to
changing market conditions. The dual challenge for every country is to carve
a niche for itself by excelling in some areas of production, while linking up with
as many economic partners as possible, so that its exports fetch the maximum
value in world markets.
To survive and grow in this environment, companies must continually restructure
themselves and upgrade their products and processes, or else be pushed aside
by competitors. Old jobs are being destroyed, to be replaced by new ones which
demand greater knowledge, skills and adaptability from workers.
Workers everywhere, therefore, can no longer expect the security of lifetime
employment, but must be prepared for job changes several times in their working
lives. This constant flux means uncertainty and insecurity. In many countries,
workers have responded by clinging to the status quo and resisting change. It
is a challenge for countries plugged into the global grid to manage these changes,
so that their workers can not only cope, but can take advantage of new
opportunities. The alternative, to opt out of globalisation and get off the treadmill,
no longer exists.
China and India
Second, new players, especially from Asia, are emerging in the world economy.
As they strengthen their capabilities, attract more investment and export more
sophisticated products, they will become increasingly formidable competitors.
One key emerging player is China, which has been completely transformed since
opening up to the world economy in 1978. China’s GDP has grown from US$215
billion in 1978 to US$1.2 trillion in 2001. Its exports have increased from US$10
billion to US$266 billion over the same period, expanding its share of the US,
!%
Chapter 2
Japanese and the EU markets dramatically compared to Southeast Asian countries
[see Chart 2.1].
Chart 2.1: Share of China and ASEAN
Imports by Major Markets
Per cent
18
16
14
12
10
8
6
4
2
0
1985
EU
US
2001
Japan
CHINA
EU
US
Japan
ASEAN
Source: US Census Bureau. Ministry of Finance, Japan. International Monetary Fund
China is already a global centre for hardware manufacturing. It is rapidly building
up its capability in the more knowledge-intensive areas such as software
development and R&D, supported by a plentiful supply of highly educated and
skilled workers1.
MNCs are investing heavily in China. Since 1992, China has been the largest recipient
of foreign direct investment (FDI) in Asia. The OECD has even predicted that FDI flows
to China could amount to US$100 billion in 2010. ASEAN, on the other hand, has
lost some of its attractiveness to foreign investors since the Asian Financial Crisis
[see Chart 2.2].
However, China is unlikely to soak up all the FDI to Asia. MNCs will want to
spread their exposures, and not concentrate everything in one or two countries.
And as incomes in China rise, the cost advantage that it now enjoys will narrow.
1
Each year, Chinese universities produce about a million new graduates, of which about 500,000 major in science and engineering. In
comparison, Singapore’s three universities produced just about 10,000 graduates in 2001.
!&
Chapter 2
Chart 2.2: FDI Flows to China/ASEAN and
as a Share of Asia’s Total FDI
Per cent
100
China share
ASEAN share
Asian Financial
Crisis
ASEAN FDI (RHS)
China FDI (RHS)
US$bn
50
80
40
60
30
40
20
20
10
0
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
0
Source: United Nations Conference on Trade and Development
China is not the only awakening giant in Asia. India, with a population of 1
billion, including a middle class of about 300 million, has the potential to become
a significant economic power as well. A consensus is gradually emerging in India
that the country must abandon the old model of the ‘licence raj’, lower its high
trade barriers and plug itself into the international grid, in order to prosper with
the rest of the world.
The reforms in India may not yet be as vigorous and profound as those in China,
and the results not as spectacular. But in the decade since India started liberalising,
the economy has been growing 6 per cent annually, reaching US$480 billion in
2001. Some specific sectors have taken off, especially IT. India exported US$7.6
billion of software and related services in 2002. By 2008, India’s software industry
is expected to employ 4 million people and generate US$57 billion in exports.
In the longer term, the emergence of China and India is undoubtedly a positive
development for the world economy. A more prosperous China and India will mean
bigger markets, more investment opportunities and bigger trading partners for
Singapore and the region. As China and India export more, they will also import more.
!'
Chapter 2
In the short term, however, the entry of China and India into the market will
mean dislocation in many countries, as industries restructure and relocate, and
trade patterns change. Some workers will lose their jobs, while other industries
will need workers, but those with different skills. Furthermore, while the overall
global economy is wealthier, not every country will necessarily emerge better
off. Countries which are competing head-on in the same products and markets
will have to make painful adjustments. But those which have kept ahead will
find opportunities to expand trade and investment with China and India, and
benefit from their growth.
Southeast Asia
In contrast, Southeast Asia has suffered a reversal in its fortunes. Before the
Asian Financial Crisis, Southeast Asia played a star role in the Asian economic
miracle. The region was booming, with economies recording double-digit growth.
The Asian Financial Crisis in 1997, however, ended the boom abruptly.
Unemployment rose, businesses folded, and governments and societies came
under stress. Global investors’ confidence in the region was severely dampened,
and FDI was diverted away to Northeast Asia.
Southeast Asian economies are still working through the aftermath of the Asian
Financial Crisis. Although growth picked up somewhat in 1999-2000, the region
was hit by the downturn in the global electronics industry and the US recession
in 2001. Today, the combined GDP of the original five ASEAN members is still
about one-fifth lower in US$ terms compared to 1997 and growth rates have
not recovered to pre-crisis levels.
The economic malaise has been aggravated by the uncertainty in the regional
political and security situation, particularly the rise of political Islam and the
threat from extremist regional terrorist groups linked to Al Qaeda, as recently
highlighted by the bombing in Bali.
!(
Chapter 2
Being part of the region, Singapore had thrived as we serviced our neighbours
and invested in their prosperity. But today, we share their worries. While
Singapore is too small to influence events in the region, we must nonetheless
monitor developments carefully as they will affect us. Going forward, we must
adjust our policies and strategies to secure Singapore’s long-term growth amidst
the difficult regional environment.
Challenges on the Domestic Front
On the domestic front, Singapore is also at a crossroad. We have grown rapidly,
and transformed our economy within a generation. However, the days of heady,
double-digit growth are behind us. We must prepare for slower and more
difficult growth.
On the demand side, the external environment has changed. The region is facing
difficulties that will not be resolved in the short term. The US economy, which
has long been a key driver of the Singapore economy, will grow more slowly
than during the years of the long boom.
On the supply side, our economy is maturing. Our per capita GDP has reached
OECD levels. So too our education profile is nearing developed country levels.
It will not be possible for us to repeat the same dramatic transformation as we
achieved over the last two decades, and therefore the same rates of growth in
output and living standards.
On top of this, the speed of economic restructuring is likely to remain high and
in fact, accelerate in the future. Lower-educated, older workers still in our
workforce, mostly from the post-war baby-boom generation, will bear the brunt
of this restructuring. In addition, our ageing workforce makes it harder for our
economy to adapt to restructuring. Our workers will experience painful dislocation
and structural unemployment, which were never serious problems in the past.
!)
Chapter 2
In addition, our fiscal position will become tighter. With a less buoyant
economy, revenue will be reduced. On the expenditure side, there will be
increasing pressure for greater spending on social infrastructure, including
healthcare. We cannot look forward to the easy budget surpluses that we
have become used to.
Conclusion
Singapore has entered into a new environment with a fundamentally altered
set of conditions. The days of relative political stability and the booming
economies of Southeast Asia and the US, experienced in the past two decades,
are over. So are the days of double-digit GDP growth for Singapore. We will
have to grapple with slower growth amidst tighter resources.
However, this new environment also offers opportunities that benefit small and
nimble states like Singapore. Globalisation, technological advances and the
emergence of China and India all present new prospects for growth.
The ERC’s objective is to fundamentally rethink our strategies for economic
development in this changed world and deal with the challenges ahead.
!"
Lowering
costs, staying
competitive
Chapter 3
#$
Chapter 3
Near-term Uncertainties
Even as we tackle the strategic challenges, we need to manage the current
economic situation. A sound recovery from the severe recession in 2001 will
help us to make the fundamental changes needed to prosper over the longer
term. Our recovery thus far, however, has been less vigorous than expected. The
economy is still weak, though growth has been positive, and non-oil domestic
exports are picking up. Overall, the economy grew by 2.2 per cent in 2002.
The outlook for 2003 is clouded and uncertain. The Ministry of Trade and
Industry’s (MTI) preliminary forecast is for 2–5 per cent growth. The risks are
not only economic, but also security and political, especially with the possibility
of another major terrorist attack, and a war in Iraq. The EU and Japanese
economies remain sluggish. In the US, most analysts expect a gradual recovery,
supported by steady consumer spending and a more substantial pickup in
corporate investment, in the second half of 2003. On the whole, the major
advanced economies are expected to grow by 2.3 per cent in 2003, slightly
better than the 1.4 per cent in 2002, but below their full potential. The lethargic
G-3 economies will, in turn, cause a drag on the growth prospects for Singapore
as well as our neighbours [see Chart 3.1].
Dealing with immediate economic
uncertainties
#%
Chapter 3
Chart 3.1: Slow Recovery in G-3 Economies
US
Per cent
4
EU
Japan
3
2
1
0
2000
2001
2002
2003
-1
2002 and 2003: Forecast
Source: US Department of Commerce, Bureau of Economic Analysis, Economic and Social
Research Institute, Cabinet Office, Government of Japan, International Monetary Fund
Against this difficult backdrop, globalisation is proceeding apace. Every country
is facing intensified competition. Asia is already feeling the impact of China’s
transformation. MNCs and financial institutions see more business opportunities
in China and fewer in Southeast Asia, and are restructuring their activities and
presence in Asia correspondingly.
Nearer to home, Southeast Asian countries, particularly our immediate neighbours
Indonesia and Malaysia, registered positive growth in 2002. But their FDI inflows
have fallen significantly, in response both to regional uncertainties and to
competition from China. One significant concern is the security threat. Since
the terrorist attack in Bali in October 2002, analysts and financial institutions
have revised downwards GDP growth forecasts for 2003 for Indonesia and
Malaysia.
#&
Chapter 3
Singapore has not been immune from these trends. Over the past three years, our
manufacturing sector too has been restructuring. Familiar names like Hitachi and
Sanyo have closed manufacturing plants here and shifted their operations to
China. In 2002, companies like Philips and ING Investment Management relocated
their Singapore regional head offices to Hong Kong to save costs and be nearer
to their biggest Asian market.
This restructuring is a major reason why we are experiencing higher retrenchments
and unemployment. The unemployment rate reached 4.8 per cent in September
2002 and is expected to stay around 4–5.5 per cent in 2003. For the whole of
2002, the number of workers retrenched is expected to be around 18,000-20,000.
We expect this pace of restructuring to continue into 2003.
Fortunately, unlike other regional countries, Singapore has maintained the inflow
of foreign investment. In 2002, we registered $9 billion of manufacturing fixed
asset investment, including nearly $7 billion worth of foreign investment, and
accounting for nearly $2 billion in total business spending. This is about the
same amount as in 2001. But the going is getting tougher. Companies are still
keen to learn what we have to offer. They know that Singapore is taking decisive
steps to strengthen itself. But they weigh this against the attractions of emerging
new players like China, as well as the regional climate in Southeast Asia. Our
economic agencies have to offer more incentives to get companies to commit
projects to Singapore.
Given these cyclical and structural factors, therefore, our assessment is that
while the Singapore economy should continue to grow moderately in 2003, it
is likely that full recovery will only take place in 2004. We cannot be complacent.
Dealing with Immediate Issues
These immediate problems make it more urgent that we restructure our economy
to strengthen our position, rather than slow down essential changes. However,
we should adjust the detailed implementation of our strategies, to take into
account the present economic situation. Hence, in tax restructuring, the
Government is phasing in the GST increase from 3 per cent to 4 per cent this
#!
Chapter 3
year, and then to 5 per cent in 2004, while retaining the original offset package.
This will lessen the burden on Singaporeans, and help them cope with the
uncertainties we are now facing.
More importantly, we must not undermine our cost competitiveness before the
longer-term strategies can take effect. We must continue to manage business
costs carefully, so as to give ourselves time to carry out the restructuring, and
avoid giving companies any added incentive to move out their Singapore
operations.
CPF Restoration
Wages form the largest component of the part of business costs which we can
influence. The ERC supports the National Wages Council’s (NWC) recommendation
for continued wage restraint, including wage freezes or wage cuts for companies
whose business, profitability or prospects are still adversely affected by the
economic downturn. It is far more important to tighten our belts and save jobs
than to have wage increases which will lead to the jobs moving elsewhere.
These NWC recommendations are for six months, until July 2003 when the NWC
will return to its normal annual cycle. But the imperative to watch our cost
competitiveness is unlikely to change soon, and the tripartite partners should
take this into account in assessing the outlook and setting guidelines for wage
settlements over the next two years.
The ERC does not recommend an extended across-the-board wage freeze,
because this would be rigid, would lead to distortions in the labour market and
be against the interests of workers. For the labour market to work properly,
wages have to respond to market forces, not just the immediate prospects but
also the medium-term outlook for the industry and the whole economy.
Instead, the ERC recommends that the Government defer any further restoration
of the CPF contribution rate, beyond its present level of 36 per cent, for two
years. While the CPF constitutes important old age savings for workers, it is also
a statutory burden on wage costs for employers. Deferring further restoration
##
Chapter 3
will avoid adding to this statutory burden at a difficult time. It will also send a
strong signal to investors that Singapore is acting decisively to consolidate its
competitive position.
The Government has stated its intention to restore the CPF contribution rate
to 40 per cent, when economic conditions permit. The ERC supports a progressive
restoration of the CPF rate to 40 per cent after the two-year period. However,
the timing and pace of the restoration should take into account economic
conditions then, and especially Singapore’s cost competitiveness vis-à-vis other
countries.
The restoration of the CPF contribution rate was linked to two other key CPF
changes: reduction in the CPF salary ceiling for both employers’ and employees’
contributions from the current $6,000 to $5,000, and lowering of the employees’
CPF contribution rate for workers aged 50-55 from the present level of 20 per
cent to 16 per cent. The ERC recommends that the Government proceed to
phase in these two changes and not defer them for two years, as the rationale
for deferring the CPF restoration does not apply to them. We continue to urge
employers to share their cost savings from the reduction in the CPF ceiling to
deserving workers, such as through the variable component of their wages.
Foreign Worker Policies
A major advantage that companies in Singapore enjoy is the flexibility to hire
not just Singaporeans, but also foreign professionals and workers whom they
need. Even in a downturn, some industries and firms still cannot find enough
Singaporean workers, especially those with the right skills and experience. This
is so in the manufacturing sector, notably in the shipbuilding and repair industry.
Our foreign worker policies should be flexible enough to allow such industries
and firms to employ the workers they need. This will help to keep their overall
costs of production down, and make their operations in Singapore more viable.
However, businesses cannot compete on low wages alone. To survive and prosper,
they must continually upgrade their capabilities and improve productivity.
#'
Chapter 3
While we must keep our doors open to foreign workers, we must carefully
manage the inflow to benefit our economy. An appropriate levy will regulate
the demand for foreign workers, and ensure that they complement rather than
displace Singaporean workers, and ultimately create more jobs for Singaporeans.
Land and Other Business Costs
We must manage the other components of business costs. The opening up of
the electricity market to competition has helped lower electricity tariffs for
consumers, especially the large users.
Land is another significant component of costs. Land costs are especially
important for manufacturing projects, where Singapore is in direct competition
with other countries. Our industrial land costs must therefore be kept competitive.
JTC’s recent move to lower industrial land prices and posted rents will not only
help existing businesses tide over the current economic conditions, but reassure
new investors that sufficient land at internationally competitive prices is available
in Singapore for their projects.
Helping Singaporeans Cope
Even as we work to contain our costs and maintain our competitiveness, we
must continue to help Singaporeans cope with the current economic difficulties.
Skills training and upgrading remain of paramount importance. New jobs are
being created, and existing jobs are still unfilled, even during this slowdown.
However, many of the jobs are in different industries, requiring new skill sets.
To help workers upgrade their skills and qualify for these new jobs, the Government
enhanced the Job Training Programme and the Skills Redevelopment Programme
in 2001. The ERC supports the extension of these enhancements for another
year until October 2003.
#(
Chapter 3
In addition, the ERC is recommending measures to help retrenched Singaporeans
find new work, and keep unemployment to a minimum. These include encouraging
part-time work, augmenting the Ministry of Manpower’s job bank, improving
job-matching efforts through better dissemination of information, and counselling
to manage the expectations of retrenched workers and ensure proper job fit.
These recommendations on the CPF, foreign worker policies, industrial land costs
and reducing unemployment will address the immediate challenges facing
Singapore, and should be implemented as quickly as possible. But they also
support our longer-term strategies, and will lay the basis for the strategic shifts
that will take us forward.
Conclusion
The outlook for 2003 is uncertain, especially in the first half of the year. We
should monitor the situation carefully and fine tune our immediate strategies
to maintain our competitiveness, while marshalling our resources and options
to deal with the challenges at hand. This will ensure that we can stay afloat
while we reposition Singapore for the future.
!"
The way forward
Chapter 4
!#
Chapter 4
Introduction
The dramatic transformation of the Singapore economy over the last 15 years
was the result of strong fundamentals built up through consistent, rational
policies, based on sound principles and strategies.
The ERC has reviewed the principles which have guided our strategies, and
believes that they remain valid today. However, with the changing environment,
they cannot be static. We need to build on them, to suit the unfolding situation.
Longer-term strategies to remake
the Singapore economy
!$
Chapter 4
Principles and Strategies Reaffirmed
Since Independence, we have pursued rational, prudent macroeconomic policies.
Fiscal spending has been disciplined and kept to essentials, avoiding budget deficits
and allowing progressive reduction in taxes. Monetary policy has focussed principally
on price stability and a stable Singapore dollar. These policies have sustained
economic growth, kept inflation low, and preserved the value of Singaporeans’
savings. Together with careful supervision of our banking and financial system,
they have enabled Singapore to weather the Asian Financial Crisis better than most,
and will continue to serve us well in an uncertain environment.
We have stayed open and outward-looking. We embraced globalisation long before
it became a buzzword, tapping world markets and attracting foreign investment
and talent. We kept our doors open to MNCs, when the conventional wisdom was
to protect and grow domestic players.
We have created an overall environment where firms can operate smoothly, efficiently
and profitably. We have a worldwide reputation for excellence, reliability and
honesty. The Government and Judiciary are transparent and trustworthy. People
know that in Singapore, their property, including their intellectual property, will
be protected. Here their investment, their businesses and their families will be safe.
Our infrastructure is first-class, up-to-date and well-connected to the world.
Businesses can rely on the port and airport, the telecommunications and public
utilities, and the financial system. We have built a vibrant enterprise ecosystem in
Singapore, where MNCs, larger companies and SMEs flourish and support one
another with ideas, innovations, expertise and experience.
We have pursued pro-market, pro-competition policies, leaving the private sector
to create wealth. We have allowed free market forces and competition to prevail,
avoiding trade barriers or subsidies for our domestic enterprises, as these distort
the market and lead to inefficient, uncompetitive industries. Our industries are thus
able to properly respond to market signals, adjust their strategies and allocate
scarce resources efficiently.
%&
Chapter 4
However, the Government is not passive. It scans market developments, sizes
up promising industries and sectors in which we can develop an advantage, and
builds up capabilities and infrastructure to increase our chances of success. We
have to do this because we are small and need to specialise.
The Government has also started enterprises where there is market failure, or
where the private sector does not have the capability or capacity to develop the
market on its own. Wherever possible, however, the Government has corporatised
and privatised these entities, and run them along commercial lines subject to
full market discipline.
We have also invested heavily in the education and training of Singaporeans.
To help Singaporeans reskill themselves after they have started work, we have
expanded facilities and implemented programmes for continuing education and
training.
In addition, we have maintained harmonious industrial relations and ensured
that the system has the flexibility to deal with changes in our environment,
rather than rigidly resisting them. We have developed a strong and responsible
labour movement that takes pride in being an equal partner in Singapore’s
economic success, together with the Government and employers. This unique
and proven tripartite formula is one of our major competitive strengths.
Finally, we have upheld meritocracy as a cornerstone of our society, and developed
an ethic of individual self-reliance. We have eschewed a welfare state with
handouts and subsidies, which create dependence and sap the will to achieve.
Instead, we have balanced the free market system with social equity and full
opportunities for all. The extremes of laissez faire have been tempered with
economic and social policies. The Government has heavily subsidised the provision
of housing, education and basic healthcare, and enhanced Singaporeans’ assets
and enabled them to share the wealth they have helped to create.
We must build on these strengths, and shape them in response to new challenges,
so as to position Singapore for the future.
%'
Chapter 4
The Road Ahead: Remaking Singapore for
a Different World
Expanding External Ties
The developed countries – the US, the EU and Japan – have been our main
growth engines. Despite more uncertain growth in the US, the burden of welfare
in the EU, and banking and corporate debts in Japan, these three economies
will remain important sources of growth for Singapore, especially the US.
But new and significant engines of growth will emerge. The transformation of
China and, to a lesser extent, India will pose enormous challenges as well as
opportunities for us. We must position ourselves to exploit these opportunities.
We must build up our linkages to these economies, to tap opportunities to
expand trade and investment with them.
To do so, we must acquire up-to-date knowledge of China and India, and a good
understanding of how business is done there. Our companies must understand
well the opportunities and complexities of the business environment in China
and India, in order to engage them effectively.
In parallel, we must continue to build up Singapore as a hub for foreign companies
to base strategic and high value-added activities here, and to do business with
the broader hinterland around us. This is defined by a radius of seven hours’
flying time from Singapore and includes not only ASEAN, but greater China,
India and even Australia.
We must continue to work with our ASEAN partners to achieve closer economic
integration and strengthen our competitiveness as a group. Investors can exploit the
complementary strengths of ASEAN countries, and expand their activities in the region.
We have also tapped opportunities for cooperation at the sub-regional level.
Batam and Bintan, for example, have ample land and low-cost workers. Singapore
has expertise in engineering, design, logistics and quality control. These combined
advantages make Singapore, Batam and Bintan very attractive for manufacturing
activities, and a viable alternative to China.
%(
Chapter 4
We will continue to support the World Trade Organisation (WTO) framework as
it remains the foundation for world trade, and protects small countries like
Singapore against unfair unilateral trade policies. However, a purely multilateral
approach has its limitations. We are therefore supplementing it with bilateral
FTAs with key trading partners. We have secured FTAs with Australia, New
Zealand, Japan, the European Free Trade Association and the US, and are now
actively seeking deals with other partners including Canada and Mexico.
Our bilateral FTAs have sparked off interest from key players to engage the region.
The US, China, Japan and India have declared their intentions to conclude FTAs
with ASEAN. We must press on with these initiatives, which will increase trade
and investment, and bind our economies and destinies more closely together.
Competitiveness and Flexibility
The emergence of China is exerting deflationary pressure on costs all over the
world. However, Singapore cannot compete on the basis of low costs alone, as
some of our factor inputs are fundamentally constrained by our unique situation.
Land-scarce Singapore will never be able to compete with the land prices of
larger countries. Our electricity generation is dependent on imported fuel, and
prices can never match countries with hydro-electric power or coal resources.
Our sound macroeconomic policies and favourable business environment are
pluses, but no longer adequate. We must make decisive changes to improve
what we already have and to enhance our microeconomic competitiveness.
First, there is a worldwide trend towards lower direct taxes because what matters
to businesses is after-tax returns. We must, therefore, keep the burden of direct
taxes on companies and individuals as low as possible, to attract foreign
investment and talent, and encourage Singaporeans to create wealth.
The ERC has therefore recommended, and the Government has decided, to
reduce corporate and personal taxes, to bring the top rates down from around
25 per cent to 20 per cent over three years. In order to partially make up for
the loss in revenue, we must raise the GST from 3 per cent to 5 per cent.
%)
Chapter 4
Second, we must refocus our CPF on its core purpose of providing for the basic
financial security for the majority of our people. To be sustainable over the long
term, the CPF cannot impose an unnecessarily heavy statutory burden on
employers, especially for older workers.
The Government has accepted the ERC’s earlier recommendations for changes
to the CPF framework including higher contribution rates for the Special Account,
reduced mandatory contributions for high income earners, imposition of a limit
on CPF withdrawals for housing and lower CPF contribution rates for older
workers aged 50–55. The ERC’s further proposal to defer any restoration of the
CPF contribution rate for two years, will help us to avoid increasing the statutory
burden on wage costs until the economy has fully recovered.
Third, we must continue to make the labour market more flexible, to keep workers
in jobs, and help retrenched ones to find new jobs. The CPF changes contribute
to this goal. The Government should also facilitate companies wanting to adopt
more flexible working arrangements to suit the demands of their businesses.
We should move faster on wage reform. Wages need to be more flexible. They
should depend less on the seniority of a worker, and more on his performance
and his company’s profitability. The ERC recommends that companies move
away, more quickly, from the seniority-based wage system. It also recommends
that companies build up the Monthly Variable Component (MVC) expeditiously.
Finally, we must ensure that our infrastructure services and factors of production
are priced as competitively as possible. Whether it is telecommunications, port
services, power supply, or industrial land, we should encourage competition and
ensure adequate supply, in order to promote efficiency, lower costs and raise
standards. We cannot subsidise services below their true cost, but neither should
we allow monopoly pricing to push up business costs.
In particular, the land market must be flexible and efficient, so that Singapore
can make optimal use of the limited amount of land available. It is especially
important for industrial land to be appropriately priced, so as to help the
manufacturing sector stay competitive.
%!
Chapter 4
Entrepreneurship
For the longer term, our basic strategy is to upgrade ourselves and make Singapore
a knowledge economy, banking on creativity and innovation to power the
economy and tapping the potential of IT in all areas. For a small, resourcescarce country like Singapore, this is our only option to survive.
In addition to the relevant knowledge and technical skills, Singaporeans must
have the right mindsets and attitudes for a knowledge economy. Our culture
should accept diversity and failure, and embrace a broad notion of success.
Singaporeans need to be more entrepreneurial, willing to take risks, seize new
opportunities and thus create niches for themselves, whether they launch startups,
work for MNCs or the public sector. As regional markets like ASEAN, China and
India open up, our people must have the drive and spirit to conceive new business
ideas, strike out on their own and venture abroad.
We need to strengthen incentives for Singaporeans to be innovative and venture
beyond their comfort zones. We also need to refocus safety nets on the truly
needy, and minimise the people’s dependency on the State. There will be no
entrepreneurship without self-reliance. Ultimately, the way to promote enterprise
and creativity is through less Government intervention rather than more. An
individual’s success must depend on his own efforts and abilities, rather than
on handouts from the State. Then our people and our companies will have
every incentive to be enterprising, and the competition will strengthen the
players and produce winners who can hold their own.
Promoting entrepreneurship and creativity raises deep issues of culture and social
values, and is a long-term exercise. It is therefore all the more important to start
early, and to sustain the push. The Government set up the Technopreneurship 21
Ministerial Committee in 1999 to oversee the development of technopreneurship
in Singapore. To broaden the scope of this effort, in 2001, the Government
redesignated the committee as the Entrepreneurship 21 Ministerial Committee.
To sustain our efforts to encourage entrepreneurship and creativity, the Government
should designate a Minister (or Minister of State) to work with the Entrepreneurship
21 Ministerial Committee, and focus on driving the initiatives for a more
entrepreneurial Singapore at the operational level.
%%
Chapter 4
A key outcome of our efforts to promote entrepreneurship and creativity for a
knowledge economy should be the growth of strong Singapore companies which
can expand beyond Singapore, broaden our economic base and make our
economy more resilient.
Growing Singapore companies should be addressed at three levels. First, we
want to encourage the growth of enterprising startups and SMEs. We want
more of our domestic enterprises to develop their own products and own the
associated IP. Such companies can be a breeding ground for new wealth creators
and revolutionary ideas, capturing more of the value accruing to upstream
activities like R&D or product development, and downstream activities like
branding and marketing. Not all will make it, but some will be successful, and
in time will form a new generation of major companies.
This requires an environment in which enterprises can start up and grow. We
need to keep our regulations to the minimum, and ensure that regulatory/licensing
requirements do not bog them down. The ERC also recommends that the
Government undertake initiatives to improve the access of emerging enterprises
to financing, while still subjecting the companies to the discipline of the
marketplace. Ministries and statutory boards should avoid spawning companies
to provide services which private firms can provide, and crowding out the
private sector.
Second, we have a group of major Singapore companies, including GLCs, which
have the capacity to become international players. These companies have
attained significant scale, technical capabilities and organisational depth, and
need to venture beyond our shores to continue growing their businesses. As
regional markets like ASEAN, China and India open up, they must be prepared
to seize these opportunities, and should be encouraged to do so.
The ERC recommends that the Government adopt a holistic approach in developing
a global brand name for Singapore, and encourage and support Singaporebased enterprises in their branding efforts. As not many Singapore enterprises
have all the necessary competencies to compete abroad, the Government should
promote a cluster approach among companies venturing overseas, where larger
%*
Chapter 4
companies lead a cluster of enterprises, including SMEs. The ERC also recommends
that the Government eliminate double taxation of foreign source income that
is remitted to Singapore.
Finally, there is a group of small, traditional companies, particularly in retail and
personal services, which face serious difficulty adapting to the new, knowledge
economy. We need to help them rationalise, upgrade themselves and meet the
needs of a new generation of customers. We need to encourage these smaller
domestic enterprises to become more innovative, and to experiment with new
concepts, processes, products and services. We should also promote a new
orientation towards service excellence by initiating a national movement for
service excellence. The excess capacity in small local enterprises should be
rationalised and restructured, including through the use of financial incentives.
Manufacturing and Services: Twin Engines
One area where the Government has intervened successfully is the manufacturing
sector. Manufacturing accounts for more than half of our exports. It generates
many spin-offs for the economy, contributes to the development of our domestic
support industries, and gives us precious access to technology and management
know-how. It creates well-paying jobs for Singaporeans with the technical skills
and inclinations suited for the manufacturing sector. It also gains us valuable
links to global markets.
Manufacturing will continue to be a key growth engine, but the competition
will be tough. Every country is seeking to upgrade its manufacturing and we
must do likewise to stay in play, especially in the face of competition from
lower-cost economies like China. We must continue to attract high quality
investments, by ensuring that our business environment remains competitive
and the skills of our people are commensurate with our cost levels. We must
develop capabilities in new areas such as industrial IT, micro-electromechanical
systems, nanotechnology and photonics to improve the sophistication and
growth potential of our existing manufacturing base of electronics, chemicals,
biomedical sciences and engineering.
%"
Chapter 4
The ERC recommends that the Government improve our infrastructure by
providing cluster-focused, shared facilities for new technology industries as we
have done with our petrochemical complex on Jurong Island.
Manufacturing will become more knowledge- and research-intensive. We must
strengthen our R&D efforts, so as to create and exploit IP. MNCs should make
Singapore a key node in their global R&D networks, and should be encouraged
to base major R&D and product development efforts here.
To achieve this, IP protection is critical. The ERC recommends that the Government
strengthen patent protection laws, facilitate low-cost filing and establish an IP
Academy to train IP professionals. The Government should also promote cooperation
and co-development of products and processes between research institutes and
local enterprises, to bridge the gap between research and commercialisation.
While we maintain manufacturing as a growth engine, we need to put more
emphasis on growing our services sector. A strong manufacturing engine
contributes to the growth of services, and likewise, a strong services sector
makes factories in Singapore more competitive.
We must pay particular attention to exportable services. As China and India
grow and prosper, their expanding middle classes will seek high-end, betterquality services, whether educational, medical or financial. The ERC believes
that Singapore is well-placed to meet part of this demand and be a regional
services hub. High quality service industries rely on a well-educated workforce,
good physical infrastructure, a conducive legal environment and a sound
reputation for quality and reliability.
Because our resources are limited, we have to focus on services which we are
already or can become strong in. Traditional areas like trading and logistics, ICT,
financial services and tourism have grown and we must continue to upgrade,
liberalise and develop them.
At the same time, we should promote new areas such as healthcare, education
and creative industries. We must market these services more aggressively, and
systematically build up Singapore as a hub for them. In parallel, we must simplify
our procedures and regulations to make it convenient for overseas customers
to come to Singapore to make use of our services.
%#
Chapter 4
Unlike manufacturing, where EDB is the single promotion agency, services are
too varied for all types of services to be promoted by a single champion. Some
services have a social or public welfare element, for example education, healthcare
and media. Others have high market concentrations, like telecommunications
and port-related services. Still others require supervision to uphold standards
and safeguard the public, as in the case of professional services.
As a result, services are subject to more complex regulations and policy trade-offs
than manufacturing. Wherever possible we should relax or lift regulations that
impede the development of our targeted services industries. But in doing so, we
must strike a careful balance between economic and social objectives. The ERC
recommends that the Government set up a Ministerial Committee on Services,
to review these issues, make rational trade-offs between conflicting objectives,
and coordinate Singapore’s efforts to develop our key services industries.
Human Capital
To successfully implement these longer-term strategies, our people must have
the right mix of hard and soft skills. We must focus on developing our human
capital, ensuring that as many Singaporeans as possible are equipped with the
know-how and skills for a knowledge economy.
In promoting entrepreneurship and creativity, we must start with pupils in school.
An entrepreneurial and enterprising spirit is one of the Ministry of Education’s
(MOE) Outcomes of Education for secondary and pre-university education. The
school curriculum has been streamlined and revised to provide our students with
opportunities to think, reflect and explore, through open-ended activities, project
work and more skills-oriented assessment modes. The Government has accepted
the recommendations of the Review Committee on JC/Upper Secondary Education
for a broader and more flexible JC curriculum and a more diverse JC/Upper
Secondary education landscape. The on-going restructuring of the university
sector will inject greater diversity in the provision of university education to better
cater to larger cohorts with more varied educational needs and aptitudes. These
efforts should continue and extend even to the adult workforce.
%$
Chapter 4
Hitherto, we have deliberately directed our education and training policies
towards producing numerate and technology-savvy people to support a vibrant
manufacturing sector. We should maintain this emphasis on technical and
engineering education. However, as we develop service industries with good
growth potential, we will also need to train and equip sufficient people with
the capabilities and knowledge to work in these new areas. We must also develop
a stronger research culture among young Singaporeans, and nurture those with
a passion for research through exposure and postgraduate education.
Even as we develop Singaporeans, we must continue to welcome global talent.
We have many talented Singaporeans, but the indigenous pool is too small to
meet the needs of an increasingly sophisticated and globalised economy. We
need to bring in people to supplement our talent pool. We not only need
managerial and technical talent. We also need to attract foreign entrepreneurs,
so that Singapore is a hub not only for MNCs, but also for SMEs and startups
from all over Asia.
In addition, more Singaporeans are venturing to live and work abroad. We must
maintain links with this overseas network, and tap on their contacts and expertise.
The ERC has proposed, and gladly notes, the setting up of the Majulah Connection
to engage overseas Singaporeans. Such a network will help a valued part of our
Singapore family contribute to the nation, and stay rooted to Singapore.
Restructuring and Employment
Economic restructuring will invariably have a big impact on Singaporeans, with
more frequent job displacements, changing employment structure and work
arrangements, need for continual education and upgrading, and the increased
threat of long-term unemployment. We must manage the pain and dislocation
associated with economic restructuring so that they will not cause Singaporeans
to resist urgent and essential changes.
Training and retraining remain critical to help Singaporeans upgrade and update
their skills, and ensure that they remain relevant and employable. We are making
changes to the education system to prepare our children for the future. But
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Chapter 4
the time spent in formal education is only a fraction of the economically active
life span of an individual. To promote continuing education and training, the
ERC recommends that the Government set up a national Continuing Education
and Training (CET) body.
We need to help unemployed Singaporeans find new jobs as quickly as possible.
The Ministry of Manpower should work with employers, including the public
sector, to augment its job bank, and help match the jobs with retrenched
Singaporeans. Counselling is also important to manage the expectations of our
workers and ensure proper job fit. The ERC therefore recommends a comprehensive
approach to helping the structurally unemployed, with the assistance of career
counsellors, to identify their personal competencies and aspirations, suitable
jobs and the additional skills that they need to develop to secure employment.
Despite our efforts, there will be retrenched Singaporeans who will take more
time to find re-employment. They will need assistance to tide over their longer
period of unemployment, especially lower-income individuals and families. As
the basic intent is to provide temporary and not prolonged assistance, we must
help these unemployed Singaporeans return to work as quickly as possible. The
ERC therefore recommends that the Government refine its existing assistance
schemes, focussing on those who need assistance most, ensuring stronger
linkages between assistance and efforts by the recipients to find work or attend
relevant training, and improving the delivery of assistance.
Conclusion
The ERC recommendations sketch out the broad roadmap for our future
economic strategies. But the world is not static, and we cannot pursue these
strategies independent of the changes taking place. We will need to review
their implementation after 2–3 years, and make adjustments and fine-tuning
as we press on with the necessary changes. If we persevere as we have done
in the past three decades, we will be able to build a better Singapore in the
years ahead.
!"
A globalised,
entrepreneurial
and diversified
economy
Chapter 5
!#
Chapter 5
Each generation of Singaporeans will face its own unique test of fire. Their
response will determine the fate and future of the nation. Our founding fathers
confronted and overcame great odds. They developed our character as a nation,
a spirit of resolve and sacrifice, and also of solidarity. They built and handed
down to us solid foundations upon which to withstand storms and adversity,
and realise our dreams and aspirations.
We have seen two major phases of economic transformation in our history,
taking us from the third world to the first world in a generation. In the first two
decades from 1965, we transformed Singapore from a colonial economy
dependent on entrepot trade and the British Army, to a newly industrialised
economy. This phase ended with the recession in 1985.
The Economic Committee’s Report in 1986 set out strategies for the next phase
of development. From 1985 till now, we attracted new, higher-valued investment
in manufacturing and services, and deepened our pool of skills. Singapore moved
up to first-world incomes.
The Asian Financial Crisis marked the end of this second phase. Today, we stand
at the threshold of the next phase in the upward path of the Singapore economy.
This transformation will be as challenging, if not more so, than our earlier two
phases of development.
Singapore - a leading global city, a hub
of talent, enterprise and innovation
!$
Chapter 5
Our Future
Our next leap will be to make Singapore a leading global city – a hub of talent,
enterprise and innovation, and one of the best places in Asia to live and work.
By remaking and upgrading ourselves, we can achieve this in another decade
and a half.
We will host both global MNCs and emerging business networks that link up
China, India and Southeast Asia, and beyond.
We will be an oasis of knowledge and talent, more open than any other Asian
city. We will be a hub of enterprise and innovation.
We will have a broad economic base, with services complementing manufacturing,
startups complementing established companies, and Singapore companies
complementing or becoming MNCs.
We will also be a fun and fulfilling place – vibrant, cosmopolitan, unique and
confident in our blend of cultures and the arts, where East meets West and
diverse ethnic heritages co-exist with modernity. Our society will be one that
respects all achievements, be they in business, the sciences or the arts.
Our Strengths
We already have significant strengths which provide the foundation for our
efforts. We have an attractive business environment with a reputation for
excellence, reliability, transparency, stability and honesty. Our infrastructure is
first-class and we are well-connected to the world. Our labour force will continue
to upgrade as younger, better-educated Singaporeans enter the labour market
and older workers are retrained. Global talent will supplement our talent pool.
Our multiracial population, English speaking but bilingual and familiar with
different cultures, is well-placed to tap the growing opportunities in an Asian
economy which is plugged into the global grid.
We must build on these strengths, and be willing to make bold adjustments.
!%
Chapter 5
Globalised
By 2018, the global economy should be more integrated, as WTO members
continue to liberalise their economies. The US and the EU will remain major
economies. But by then, it will be a different Asia.
The combined GDP of East Asia will be bigger than the US or the EU. China’s
transformation will be well advanced. Shanghai and other coastal cities will pull
along the inland provinces, like leaders of a flock of flying geese. China’s export
industries will command a major share in world markets. Its own already large
market will continue to grow with the growing affluence of its populace.
Like China, India should see exponential growth of its middle class, if it continues
reforming its economy and raises its growth rate. Japan should have broken
out from the economic doldrums and be growing again.
Southeast Asian economies would have resolved their political and security
difficulties, and returned to a path of stability and progress. Despite the problems
in some countries, this would still be one of the faster growing regions of the
world. Within 15 years, countries like Vietnam should have taken off economically.
ASEAN would have achieved deeper economic integration with a market of over
500 million people, and stronger links with the rest of the world especially
through FTAs with China, Japan, the US and India.
Singapore would be a key node in the global economic network, linked to all
the major economies. In Asia, we will be a major hub serving the region, together
with other cities like Hong Kong and Shanghai. Our efforts to build links to
China and India would be yielding dividends. Both will be large export and
investment markets for us, as well as significant sources of technology and
talent. Our companies will have established a significant presence in them and
the region. China and India will have started investing overseas, though to a
lesser extent than the US, the EU and Japan today.
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Chapter 5
Entrepreneurial
Singapore will have graduated into a knowledge-based, innovation-driven
economy. We will be a trend-setting city-state, a creative and entrepreneurial
society.
We will be a society open to new ideas, always eager and quick to change for
the better. New immigrants and visitors will bring new thinking and diversity
and create new linkages and opportunities. Our people will pounce on halfopportunities, be willing to take calculated risks to create fresh businesses and
blaze new paths to success. Society will welcome those who dare to be different,
and celebrate those who succeed brilliantly. But it will also accept those who
meet setbacks, and encourage them to pick themselves up and try again.
In a rapidly changing environment, each Singaporean will be alert to the world
around him, respond creatively to it, and by his or her resourcefulness, create
further opportunities and wealth. These values will be expressed not only by
entrepreneurs launching startups, but also by workers in offices and factories,
managers and professionals, and public officers in the Government.
Singapore will have developed the full spectrum of risk capital to fuel
entrepreneurship. Just as more Singaporeans will take the road less travelled,
so too more investors will fund promising ventures in their different stages of
growth. Markets bringing together savvy investors and budding entrepreneurs
will support the continuing renewal of our economy.
Singapore will also embrace global talent, attracting not only technical and
management professionals, but also those with entrepreneurial and creative
flair. They will add to our dynamism and cosmopolitan character.
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Chapter 5
Diversified
We will have more engines of growth and a more diverse base of players, as we
upgrade existing activities and companies and nurture new ones. In broad terms,
we will maintain the current mix of manufacturing and services. But within
each sector we should see major changes.
Manufacturing and Services
The manufacturing sector will continue to move up the value chain, and become
more knowledge- and research-intensive. The key clusters of electronics, chemicals,
engineering and biomedical sciences will be more concentrated in high valueadded activities. Our long-term investment in R&D and training of skilled
manpower in the research institutes, universities and industry would have yielded
a portfolio of IP, to be skilfully commercialised. MNCs will base major R&D and
product development activities here, and make this a key node in their global
R&D networks.
Advances in the biomedical sciences, embedded software and micro-electromechanical systems, and new technologies such as nanotechnology and photonics
will enable us to grow new industries.
Services exports will be a major engine of growth. Singapore will be Asia’s leading
provider of world-class services. Established areas like tourism, trading and
logistics, ICT and financial services will continue to grow as we deepen our
capabilities and strengthen our competitiveness. New areas like education,
healthcare and other professional services will have taken off and become
significant contributors to our GDP. Clusters of creative industries, especially
in performing arts, design and media, will add breadth and buzz to our economy.
Both manufacturing and services will become more innovation- and knowledgedriven, thriving in an environment that offers good protection and opportunities
to commercialise IP. Singapore will become an IP management centre and a
trusted conflict resolution centre.
!'
Chapter 5
Broad Base of Economic Players
Our economy will have a broader range of firms. MNCs will continue to play a
significant role, as they base regional HQs and more sophisticated activities here
to do business with the broader hinterland around us and coordinate their
regional and international strategies. This will be balanced by a larger and more
vibrant stable of Singapore companies. Some Singapore companies with the
scale and organisational depth will have grown their Asian and worldwide
franchises, and become international players. Others will complement and
support the MNCs and larger companies in Singapore, providing key components
and services.
One visible result of a more entrepreneurial Singapore will be the emergence
of a dynamic group of startup companies. We will host startups from many
countries, just as we host MNCs. Not all will be at the frontiers of hightechnology. Some will be pursuing new business ideas in traditional areas like
food and agri-products, restaurants, lifestyle services and logistics. Through
innovation, creativity, and technology, they will create value and carve out
special niches for themselves. Some will succeed and over time upgrade and
grow into industry leaders in their own right.
Wide Range of Jobs
Our education reforms and training initiatives would have resulted in a globally
competitive and creative labour force. Changes in our national school system
and universities will nurture young Singaporeans with greater breadth and
flexibility, and a willingness to experiment. We will see more diverse talents. In
addition, many world-class universities will have set up branch campuses in
Singapore to complement our own tertiary institutes. They will educate some
of our students and attract more talented foreign students to our shores.
Singaporeans will be culturally adept and outward-looking, able to operate in
any city in the world. They will have built a reputation for technical and scientific
!(
Chapter 5
competence, for being problem solvers with good managerial skills. They will
add and create value through constant innovation. These strengths will keep
Singaporeans employable.
The mix of jobs will shift, matching the better education profile of our workforce
and the diversifying needs of the economy. Many of the new jobs created will
be knowledge- and skill-intensive, such as professional services, engineering and
scientific work, software development or management functions. They will require
new skill sets and competencies, especially those in the creative clusters.
Other jobs will require higher-level technical skills. These will involve quality
craftsmanship, complex and customised activities aided by computers, or servicing
and maintenance of production systems, laboratory equipment, factory plants
and buildings. The job demands go beyond hard skills like technical knowledge
and IT competence, to inter-personal skills as well as commitment, pride and
professionalism.
Our ITE, polytechnic and university graduates will be well-equipped for these
jobs, and well stretched by them. But not every job will be knowledge-intensive
or technical. We must expect many routine jobs in factories and offices to be
automated and upgraded, or moved out altogether to lower-cost countries. But
even high-tech industries and high-end services require a proportion of semiskilled workers. These jobs can pay well, but they often involve working in clean
room environments, keeping irregular hours, or handling demanding customers.
Every Singaporean, regardless of age or educational level, who is willing to adapt
to these job conditions and who makes the effort to learn new skills will find
a place in the new Singapore economy.
Growth & Incomes
In this next phase of our development, we are striving for dramatic qualitative
change. However, our economy is maturing. Our population is ageing, with
smaller cohorts of young Singaporeans. So in quantitative terms, our growth
will not be as fast as before.
!)
Chapter 5
After the 1985 recession, the Economic Committee had projected that the
Singapore economy could grow at an average of 4–6 per cent per annum in the
medium term, based on 1–2 per cent annual growth of the labour force and
3–4 per cent productivity growth. We managed to exceed this over the past
15 years, and achieve an average of 7.3 per cent annual growth, because while
productivity growth averaged 3.5 per cent per year, our labour force expanded
by an average of 3.8 per cent per year, made possible by the inflow of foreign
workers.
We believe that going forward our sustainable growth rate would be 3–5 per
cent per annum, barring external shocks. This comprises labour force growth of
1–2 per cent, and productivity growth of 2–3 per cent.
3–5 per cent growth will already be an achievement. Few developed countries,
at similar levels of per capita GDP, have sustained growth exceeding 3 per cent.
But Singapore should be compared not with countries like the UK or the US,
but with cities within these countries like London, New York, or Boston, where
knowledge-based activities and creative talent concentrate. The cities can grow
as fast as or faster than their hinterlands, with much higher per capita incomes
than their national average, and indeed than Singapore’s. Singapore should
emulate the performance of these cities.
Slower growth will have implications on wage increases. In the long run, wages
cannot increase faster than productivity. Between 1985 and 2001, real wages
increased by 3.9 per cent per annum. Going forward, we expect real wages to
increase on average by 2–3 per cent per annum. However, at the lower end of
the skill spectrum, our wages will continue to come under pressure from lowercost countries like China.
Despite this slower increase in wages, if we can sustain productivity growth
rates of 2–3 per cent, by 2018 our per capita GDP, measured in today’s prices,
should reach US$29,100, 40 percent higher than today1. This exceeds today’s
per capita GDP of the UK, Germany and Sweden, and is slightly lower than
Japan’s.
1
Assuming 4.0 per cent average real GDP growth, total population growth of 2.0 per cent.
'*
Chapter 5
A Better Future for All
Change will not be effortless. Some Singaporeans will have difficulty adapting
and keeping up with the changes. But if they make the effort, with help from
the community and the State, nearly all should be able to make it. A few will
still fall behind, but with skills training and upgrading, and by focussing Government help on those who need it most, we can keep their numbers as low as
possible. As long as our economy prospers, all Singaporeans will share in the
fruits of our success.
Making Singapore a leading global city by 2018 will require solidarity and hard
work. Even with the right strategies, our progress will depend on external
conditions. We are small and open, and must expect to encounter rough weather
from time to time. However, if we remain united, and deal resolutely with
difficult challenges and unsettling changes, we will stay on course and emerge
stronger.
Globalisation is an advantage to a city-state like Singapore. We will be a
nation that is relevant and valuable to the world, and a society that is cohesive
with a national character of our own. Together, we will create a better future
for ourselves and our children, in a Singapore which we will all be proud to
call home.
'"
Chapter 5
Chart 5.1: Singapore’s Projected Per
Capita GDP in 2018
US $
40,000 Norway
United States
Switzerland
Japan
Denmark
30,000 -
Singapore (2018)
Ireland
Hong Kong
United Kingdom
Sweden
Germany
France
Singapore (2001)
20,000 -
Italy
Australia
New Zealand
Taiwan
10,000 Korea
Malaysia
China
0
India
Source:
International Monetary Fund, Ministry
of Trade and Industry
!"
Fiscal and
monetary policies
Chapter 6
!#
Chapter 6
Summary
There is a worldwide trend towards lower direct taxes. We must therefore keep
the burden of taxes on the economy as low as possible, especially the burden
of direct taxes on companies and individuals, to remain competitive, attract
foreign investment and talent, and encourage Singaporeans to create wealth.
To balance the budget, we must make up by raising GST.
Key Recommendations
Fiscal and Monetary Policies
• Continue to pursue rational, prudent macroeconomic policies. Maintain
fiscal discipline and a stable Singapore dollar.
Reducing Direct Taxes
• Cut direct tax rates (corporate income and personal income tax rates) to 20
per cent over the next two years to signal Singapore’s intent to compete for
investment and talent across all sectors.
Towards lower direct taxes and an
attractive tax regime
!$
Chapter 6
Raising GST
• Raise the GST from 3 per cent to 5 per cent as soon as possible. Retain acrossthe-board coverage of GST, with as few exemptions as possible.
• Provide an offset package to help Singaporeans adjust to the GST increase
and ensure that most households, and all lower-income households, are no
worse off during the transition.
Corporate Tax Reforms
• Introduce group relief to allow local corporate groups to offset unutilised
losses and excess capital allowances of one company against taxable profits
of another company within the same group.
• Shift from a full-imputation system to a one-tier corporate tax system to
simplify tax administration and compliance.
• Exempt business-related foreign source income for companies from tax.
• Allow more generous tax treatment of intellectual property.
• Review and rationalise withholding tax provisions to ensure that our
withholding tax regime does not discourage cross-border transactions and
disincentivise people and companies from locating their activities in Singapore.
• Consider giving tax deductions for mergers and acquisitions, to encourage
consolidation in heavily fragmented industries.
• Consider giving tax deductions for selected expenses incurred prior to the
startup of new businesses and in the listing of companies, to help promote
enterprise development.
!%
Chapter 6
Personal Tax Reforms
• Exempt individuals’ interest income earned from onshore bank deposits from
tax.
• Consider tax exemption for individuals’ foreign source income remitted back
to Singapore.
• Enhance tax treatment of stock options to encourage employers to use stock
options as a performance-linked compensation tool.
• Exempt employment income attributable to time spent outside Singapore
for ‘temporary tax residents’ who have not been living in Singapore for a
long period before their current jobs.
• Exempt tax on employers’ contributions on behalf of expatriates to overseas
private pension funds.
Enhancing the Tax Incentive Regime
• Enhance the tax incentive regime so as to attract new activities and promote
growth in new areas.
• Streamline and rationalise current incentives for easier administration and
compliance.
!&
Chapter 6
Introduction
The competition for foreign direct investment and global talent is intense and
will grow sharper. Our strategy must be to create an environment to foster the
growth of new economic activities, bring in new investment and increase
economic growth. This is the only sustainable way of creating good, well-paying
jobs for Singaporeans.
One key factor is a stable macroeconomic environment, underpinned by sound
monetary and fiscal policies. The Government must keep the budget in balance,
the currency stable, inflation under control and interest rates low.
Another important factor is keeping the tax burden on the economy as light as
possible, especially the burden of direct taxes on the production of wealth.
Hence the imperative to restructure our tax regime, and shift from direct to
indirect taxation.
We must also enhance our tax incentives, to attract businesses and talent in
priority areas.
Fiscal and Monetary Policies
At the macro level, the rational, prudent macroeconomic policies that we have
consistently pursued have served us well.
Monetary Policy
Monetary policy in Singapore has centred on the exchange rate, which is focused
on maintaining a stable Singapore dollar and ensuring low inflation for sustained
economic growth over the medium term. The Government has refrained from
pursuing competitive devaluation of the domestic currency to boost export
competitiveness, choosing, instead, to address cost competitiveness issues directly.
!!
Chapter 6
This policy has delivered results. Our inflation is one of the lowest in the world.
We have maintained confidence in the currency and the value of Singaporeans’
CPF savings. The stability of the Singapore dollar promotes investment and
exports by providing a conducive business environment for long-term planning
and investment decisions, and minimising earnings losses arising from exchange
rate volatility. It has also contributed to the continued development of Singapore
as a major regional trading, manufacturing and financial hub.
The ERC strongly supports the continuation of this approach to monetary policy.
Financial markets are becoming even more integrated globally, as cross-border
flows increase. Conducting monetary policy through the exchange rate will
become increasingly challenging. The Government must ensure that the exchange
rate policy continues to be aligned with underlying economic fundamentals,
and stays focussed on the objective of medium-term price stability.
Fiscal Policy
In fiscal policy, the Government has adopted a disciplined, prudent approach.
First, it has consistently kept the budget balanced, achieving modest budget
surpluses in normal years, and building up our reserves over time. We have
eschewed government borrowing and deficit spending that have led to inflation
and a heavy burden of national debt in many countries.
Singapore should maintain this conservative fiscal policy, spending within our
means and aiming for a modest budget surplus over a business cycle. We may
not be able to enjoy easy surpluses as in the past, but we cannot afford to live
on borrowing, or to run down our hard-earned reserves. Given the more uncertain
environment, we must continue to build up our reserves whenever we can, for
rainy days.
Second, we have maintained a lean Government. By focussing spending on
essentials, we have kept total Government spending below 20 per cent of GDP,
compared to 40 per cent or 50 per cent in many developed countries. This has
minimised the overall burden on the economy, and allowed the Government to
progressively reduce tax rates.
!'
Chapter 6
Looking ahead, it will become increasingly difficult to keep spending down and
balance the budget. With slower growth, revenues will be less buoyant. Yet
there will be more pressure on public expenditures, especially in healthcare and
other social needs. Singapore’s population is ageing, and expectations of higherquality public services continue to rise. Singapore will have to continue to invest
in its security and economic infrastructure, to create a more attractive environment
for investment and talent.
Nevertheless, we must endeavour to keep the Government as lean as possible, spend
only on what we need to and contain expenditures at the lowest possible level.
Shifting from Direct to Indirect Taxes
Given the revenue needs of the Government, the tax system should raise this
amount in the most efficient and equitable way. We need to shift from direct
to indirect taxation, in order to keep income taxes on individuals and corporations
as low as possible. The tax regime is an important factor in determining how
attractive Singapore is to investment and talent.
Reducing Income Tax Rates
While Singapore has one of the lowest income tax rates in the world, the gap
is narrowing. Countries all over the world are lowering their income tax rates.
Ireland, for example, recently brought its corporate tax rate down from 20 per
cent to 16 per cent, and intends to bring it further down to 12.5 per cent in
2003. Germany cut its corporate tax rate from 40 per cent to 25 per cent in
2001. Even in countries where the headline tax rates are high, there could be
generous tax breaks and incentives that lower the taxes that companies and
individuals actually pay.
!(
Chapter 6
As global competition intensifies, a pro-growth tax system to facilitate the
creation of new economic activities and attract new investment becomes
increasingly vital to Singapore’s continued economic survival. We need a
competitive tax system to ensure the sustained generation of good, well-paying
jobs for Singaporeans well into the future.
We recommend that Singapore cut corporate and personal income tax rates to
20 per cent over the next two years. With these tax cuts, companies and
individuals will be able to retain a higher portion of the wealth generated and
thus be encouraged to create new wealth and growth in Singapore. Such a
decisive move will strongly signal Singapore's intention to compete for investment
and talent across all sectors.
Raising GST
Given the need for continued fiscal prudence and the uncertain global economic
and security climate over the medium term, it is important that the revenue
loss arising from the direct tax cuts be made up, at least in part, as early as
possible. To do this, Singapore should continue its shift from direct taxes to
indirect taxes - a direction set out in the 1986 Economic Committee Report.
Since its introduction in 1994, the GST has proved to be a resilient and vital
source of revenue. Revenue from the GST enabled us to cut the corporate
income tax rate from 30 per cent in Year of Assessment (YA) 1993 to 24.5 per
cent in YA2002.
We recommend that the GST rate be raised from 3 per cent to 5 per cent as
soon as possible. Even at 5 per cent, Singapore will continue to have one of the
lowest GST rates in the world. The GST should continue to be applied at the
same rate across the board on all goods and services, with as few exemptions
as possible. This is because higher-income households spend more on essential
items than lower-income households, and exempting these items will benefit
higher-income households more. It would be far better to have GST across the
board, and then help the lower-income groups through targeted assistance
schemes.
')
Chapter 6
GST Offset Package
As it will take time for the proposed tax changes to bring in more and better
paying jobs, we recommend that a GST offset package, similar to the package
of measures introduced in 1994, be introduced to help Singaporeans adjust to
the GST increase. The offset package should ensure that most Singaporeans and
all lower-income households are no worse off during the transition. The
Government should similarly set up a committee to combat profiteering and
undue price increases, as was done in 1994.
Still a Progressive Tax System
Although the shift from direct to indirect taxes reduces the progressivity of our
tax system, on the whole, Singapore still maintains a very progressive tax regime.
Before the changes to the tax system, the total tax burden of a high-income
household1 was about 15 times that of a low-income household. In contrast,
the tax burden of high-income households is only around two times that of the
lower-income in many European and US cities. This is mainly because of high
consumption taxes, for example, 22 per cent VAT in Finland, 21 per cent in Ireland
and 17.5 per cent in the UK. In addition, most working adults in these countries
pay income tax, unlike in Singapore where two-thirds of working adults do not
pay any income tax. The corresponding ratio of tax burden between high- and
low-income households in Kuala Lumpur and Taipei is higher than the US and
Europe, but still significantly lower compared to Singapore [see Chart 6.1].
1
The 'high-income' assumption is based on the scenario of a one-earner (with CEO-type salary) married couple with two children, owns a
car, and a private apartment. The 'low-income' assumption is based on the scenario of two-earner married couple (with factory-worker
salary) with two children, owns a small-sized car in Europe/US, but uses public transport in the Asian countries, and rents an apartment.
'*
Chapter 6
Chart 6.1 : Ratio of Tax Burden of Highincome to Low-income
Singapore
K.Lumpur
Taipei
London
Los Angeles
New York
Sydney
Dublin
Helsinki
0
5
10
15
In fact, after taking into account government transfers, such as CPF top-ups
and New Singapore Shares, the lower- and middle-income households effectively
pay ‘negative’ tax. For example, households in the lowest 30 per cent income
bracket faced an average net tax burden of -33 per cent of household income
in the year 20002. Those in the next 30 per cent income bracket faced an average
net tax burden of around -8 per cent of household income.
Corporate Tax Reforms
To make our business environment more attractive, significant changes would
also need to be made to the corporate tax system to reflect changes in the
corporate landscape and simplify tax compliance for companies.
2 The
taxes and charges included in this computation include property tax, GST, water conservation tax and other expenditure-related taxes
(e.g. alcohol and tobacco). The government transfers include CPF top-ups, New Singapore Shares and the various non-tax rebates, for example,
rebates for HDB rentals and service and conservancy charges.
'"
Chapter 6
Group Relief
As economies mature, corporate groups will become increasingly common. Our
current tax system taxes each company within a corporate group as a separate
entity, leading to economic irrationalities such as the taxation of companies
that register losses on a group basis.
In recognition of the fact that companies within a corporate group are essentially
one economic entity, and to encourage risk-taking and enterprise, we recommend
introducing group relief for local corporate groups. A group relief system allows
the unutilised losses and excess capital allowances of a company to be offset
against the profits of another company within the same group.
With group relief, companies would be better placed to embark on new and
risky ventures as they would be able to offset any losses from new ventures
against the corporate group’s taxable profits from its more established business
lines. At the same time, the corporate group can enjoy the benefit of limited
liability for its new subsidiaries. This provides companies with a more supportive
environment for innovation and risk-taking.
One-tier Corporate Tax System
We also recommend shifting from a full-imputation system to a one-tier
corporate tax system. Under the one-tier system, tax would only be imposed
once at the corporate level and dividends would be exempted from tax. This
simplified system would reduce the compliance costs for companies and simplify
tax administration. Together with the group relief regime and the corporate
income tax cut, the one-tier system would make more profits available for
distribution as dividends.
'#
Chapter 6
Exemption of Foreign Source Income
Most foreign source income currently received in Singapore does not attract
further Singapore tax. This is because the existing tax credit system allows for
foreign tax paid on foreign income to be relieved against Singapore tax upon
remittance. To simplify procedures and encourage the export of local services, the
Government should exempt business-related foreign source income for companies.
By helping companies manage their business-related foreign source income from
Singapore, this will boost Singapore’s bid to become the business hub of choice
in an increasingly globalised world.
Intellectual Property (IP)
In the knowledge economy, intellectual property and other intangibles will drive
growth. As a late-starter in the IP industry, our tax system must actively encourage
investment generating IP assets that could reap significant economic returns
when they are commercialised.
R&D is a significant element of the investment that create IP. Currently, we
allow tax deductions for R&D expenses incurred in-house or R&D expenses
incurred by approved R&D organisations that conduct their research activities
in Singapore. However, these concessions may not be sufficient as companies
increasingly conduct research activities in collaboration with offshore affiliates
or the R&D outfits of other companies.
We therefore recommend that deductions for R&D expenses incurred in the
creation of IP be liberalised to include R&D outsourced to any organisation,
local or foreign (instead of only local organisations).
Besides building up our own IP creation capabilities, acquisition of IP from
overseas companies is another way to build up a critical mass of IP in Singapore.
As IP is critical for the next stage of Singapore's economic growth, we recommend
that the writing down allowance for acquisition of IP be made automatic and
across the board, similar to the current practice for physical assets.
'$
Chapter 6
Withholding Tax Mechanism
Withholding tax is a mechanism to facilitate the collection of taxes from nonresidents for income derived in Singapore. This is done by requiring the Singapore
payer to withhold taxes due on the non-resident, on behalf of the Inland Revenue
Authority of Singapore.
There are, however, certain problems with the current withholding tax regime.
First, many Singapore-based businesses have weaker bargaining powers vis-àvis the non-resident suppliers and invariably end up bearing the cost of the
withholding tax when those suppliers insist on net-of-tax payments. Withholding
tax therefore inadvertently increases the cost burden on businesses. Second,
the administrative requirements can be quite onerous, particularly for businesses
that have numerous transactions with non-resident persons (for example, banks).
To ensure that our withholding tax regime does not discourage cross-border
transactions and disincentivise people and companies from locating their activities
in Singapore, we recommend a review of the withholding tax system. The review
should rationalise the scope of the withholding tax provisions and study possible
improvements to the administrative process.
Enterprise Development and Expansion
The cut in corporate tax rate will result in significant tax savings for small and
medium enterprises. Many of these companies will pay effective tax rates of
5-10 per cent3. However, many of our local companies are unable to compete
effectively on a global basis because of their small size and lack of sufficient
funds. To compete effectively and capture business opportunities in the global
marketplace, companies would have to pool their resources and capabilities
together.
3
After taking into account the partial exemptions for chargeable income of up to $100,000.
'%
Chapter 6
To encourage consolidation in heavily fragmented industries, the Government
should consider a tax deduction, targeted at small and medium enterprises, for
the front-end costs incurred in merger and restructuring exercises. The
Government should also consider giving tax deductions for selected expenses
incurred prior to the startup of new businesses and expenses incurred in the
listing of companies to help promote enterprise development.
Personal Tax Reforms
The mobility of talent has increased dramatically with globalisation. Today, there
are few barriers impeding talent from moving to where opportunities and aftertax rewards are greatest. Besides lowering personal income tax rates, other
changes to the personal income tax system would also be required to ensure
that Singapore can compete effectively in the global war for talent.
Interest Income and Overseas Income of Individuals
To encourage individuals to locate their funds in Singapore and bring back their
overseas funds, we recommend that the Government exempt from tax individuals’
interest income earned from onshore bank deposits. In line with the
recommendation to exempt business-related foreign source income for companies,
the Government should also consider tax exemption for individuals’ overseas
income remitted back to Singapore. The additional savings and investment will
generate significant spin-offs for the financial sector and the Singapore economy.
Employee Stock Options
Employee stock options have become increasingly prevalent tools for nurturing
a vibrant entrepreneurial environment and improving corporate performance.
The way we tax stock options in Singapore will therefore significantly affect our
attractiveness as a talent magnet.
'&
Chapter 6
There are already several schemes in place to encourage employers to use options
as a performance-linked compensation tool. However, to further strengthen the
entrepreneurial culture in Singapore and compete effectively for talent, we
recommend enhancements to the tax treatment of stock options, in view of the
incentives available in other countries such as Ireland, the US and the UK.
Not Ordinarily Resident Scheme
To further enhance Singapore’s attractiveness as a hub for international executives
and centre for management of Asian business activity, we note that the
Government has introduced a Not Ordinarily Resident Taxpayer scheme, which
accords favourable tax treatment for persons who have not lived in Singapore
for the preceding three years, but are currently based in Singapore. Under this
scheme, income attributable to time spent outside Singapore is exempt from
Singapore tax, subject to certain conditions. We recommend that the Government
monitor this scheme, with a view to making enhancements.
Overseas Private Pension Funds
Currently, when an employer contributes to an overseas private pension fund
on behalf of an expatriate in Singapore, the contributions are subject to Singapore
tax. This makes us less attractive compared to countries such as Ireland, the
Netherlands, and the UK where employers’ contributions to approved funds are
not taxable. We are also viewed less favourably vis-à-vis countries such as Hong
Kong where all employer contributions for employees into private pensions are
not taxable at the point of contribution.
With our current system, expatriates stationed here on overseas assignments
may suffer double taxation as they are taxed once in Singapore at point of
contribution and again, at the point of withdrawal in their home countries. To
enhance our attractiveness as a talent hub, we recommend that employers’
contributions on behalf of expatriates into overseas private pension funds be
exempt from tax.
'!
Chapter 6
Enhancing the Tax Incentive Regime
Tax incentives have played a pivotal role in Singapore’s economic development
strategy since the 1960s. For 30 years, tax incentives have helped attract
investment and create jobs for Singaporeans.
We agree with the 1986 Economic Committee that Singapore should move
towards a low corporate tax regime, with minimal tax incentives as a long-term
goal. By doing so, we will avoid inefficiencies in resource allocation, ease tax
administration and reduce compliance costs for businesses.
Nevertheless, we believe that tax incentives will continue to be an important
tool for attracting new strategic activities to Singapore over the medium term
and for maintaining competitive tax rates in sectors that traditionally operate
in low tax environments.
We thus recommend two broad thrusts in enhancing our tax incentive regime:
a. Enhance current incentives so as to attract new activities and promote growth
in new areas.
b. Streamline and rationalise current incentives for easier administration and
compliance.
Conclusion
The global environment has significantly altered. Competition is keener and
change is happening at a faster pace. To succeed, we must anticipate and
respond to these rapid changes. To this end, we have recommended significant
adjustments to the tax system to strengthen Singapore's economic competitiveness
and enhance our attractiveness to businesses and individuals.
!!
Wages and the
CPF
Chapter 7
!"
Chapter 7
Summary
With greater volatility in the business cycle, our labour market must be more
flexible to keep structural unemployment as low as possible. The wage system
must be more flexible, with wages linked less to the seniority of a worker, and
more to his performance and his employer’s profitability. In addition, we must
refocus the CPF scheme on the basic needs of workers, to enable them to have
enough funds for retirement, healthcare and housing, but reduce the statutory
burden on employers, especially for older workers. These measures will ensure
the financial security of our people, prepare ourselves for a rapidly ageing
population, make our economy more flexible and responsive to market forces,
and more dependent on individual drive and responsibility.
Greater wage and labour market
flexibility, a more focused CPF system
"#
Chapter 7
Key Recommendations
Wage Competitiveness
• Continue to raise real wages of Singaporeans through higher productivity.
• Continue to ensure that real built-in wage increases lag behind productivity
increases at all levels of the organisation.
• Wage adjustments to take into account global trends to maintain
competitiveness vis-à-vis new players.
Enhancing Wage and Labour Market Flexibility
• Move away from the seniority-based wage system.
• Accelerate the implementation of the Base-up Wage System (to be renamed
the ‘Competitive Base Wage System’) to replace the seniority-based wage
system.
• Companies to build up the Monthly Variable Component (MVC) expeditiously.
Those which have not yet created an MVC, and those which MVC makes up
less than 2 per cent of workers’ basic wages, to top up their MVC to 2 per
cent immediately, out of their basic wages.
• To build up variable components in the wages of all levels of employees, with
higher variable components for management staff, particularly top
management.
• Introduce portability of medical benefits, either through a Portable Medical
Benefits Scheme (PMBS) or Transferable Medical Insurance Scheme (TMI).
• Amend the Employment Act to empower the Commissioner of Labour to
grant exemptions to companies that intend to employ flexible work
arrangements.
"$
Chapter 7
Refocusing the CPF System
• Refocus the CPF on its core purpose of providing for the basic financial needs
for the majority of our people, including saving for basic retirement, home
ownership and medical needs, and addressing the issues of labour market
flexibility and lower-income earners.
• Defer restoration of the CPF contribution rate beyond its present level of 36
per cent, for two years.
Tripartite Cooperation
• Further strengthen tripartite cooperation for implementation of changes to
ensure competitive wage levels and inject flexibility into wages and the
labour market.
• The NWC to continue to issue wage increase guidelines and make proposals
on wage-related issues, including wage flexibility, shifting from the senioritybased to productivity-based system and portable medical benefits.
"%
Chapter 7
Introduction
Singapore is entering a different phase in our economic development, and the
employment landscape is undergoing tectonic shifts that will affect all
Singaporeans.
First, we must expect higher unemployment rates than we have been used to,
even after we recover from the recession. We will not go back to a situation of
virtually zero unemployment. Our economy is maturing. Continuing restructuring
will mean higher levels of unemployment, both frictional and structural. There
will be more turnover in the job market, and retrenched Singaporeans will find
it harder to be re-employed, as the new jobs created demand new and different
skills. This will be a particularly serious problem for our older, less-skilled workers
who still make up a significant proportion of our workforce1. Most developed
countries have unemployment rates of around 5 per cent or higher. In Europe,
unemployment is typically 8-10 per cent. If we can keep our unemployment
rate around 3-4 per cent in normal years, we will have done well.
Second, in the longer term, our changing demographic structure will affect the
employment landscape. The population is ageing rapidly, while life expectancy,
already a high of 78 years, will continue to increase. The proportion of older
Singaporeans will grow, and our labour market and employment practices must
adapt to this. Singaporeans cannot expect to work for 40 years, retire at 62, and
live off their savings or their children for another 20 or 25 years. We have to
find ways to keep older people employed and working beyond their 50s or 60s,
although not necessarily in the same job or at the same pay.
These trends underline the vital importance of labour market and wage flexibility
to minimise unemployment, and cope with an ageing population. Our labour
practices must be flexible enough to allow Singaporeans to start second, even
third, careers. This requires us to move away from the seniority-based wage
system. Employers will have to change their attitudes towards older workers,
who will be paid according to their contributions. Our workers too, must adapt
and moderate their expectations of their lifetime earning profiles. Initially, as
1
Workers aged 40 years and above with below secondary education accounted for 21 per cent (or 0.4 million) of total employment in 2001.
The majority of the less educated workers aged 40 and above was in lower-skilled, blue-collar jobs. About 37 per cent were employed in
production & related jobs. Another 23 per cent worked as cleaners and labourers.
"&
Chapter 7
they gain skills and become more productive, their wages will increase. But as
they grow older and take on less burdensome or less taxing work, their wages
will plateau and eventually decline, and they must expect this.
The CPF system, which is a major feature of the labour market in Singapore,
should be re-focused on providing for the three key retirement needs of retirement
income, healthcare and home-ownership, at a basic level, to avoid imposing an
unnecessarily heavy statutory burden on employers, especially for older workers.
Wage Competitiveness
Wages form a key component of costs, and we must ensure that our wage level
is internationally competitive. This is especially important because of the
emergence of economies like China, with their low costs, ample talent, and
industrious workers and professionals earning less than those in more developed
economies, including Singapore. While the economic restructuring that is
underway is unavoidable, we should not inadvertently force companies to
retrench and relocate faster, by pushing up wage costs excessively and eroding
our overall competitiveness. We should continue exercising wage restraint until
the economy has fully recovered from the recession.
In the longer term, however, our aim is not to hold down or lower wage levels
of Singaporeans. Indeed the fundamental objective of economic development
is to raise the real wages of Singaporeans in order to improve their standard of
living. But the only way for this to be sustainable is through higher productivity.
This underlines the crucial importance of raising our productivity.
Our wages are already much higher than many countries. Our manufacturing
workers, for example, are paid US$7.14 per hour. In comparison, workers in
China are paid US$0.53 per hour while those in Malaysia are paid US$2.68.
Even manufacturing workers in Taiwan are paid less (US$6.13 per hour).
Nevertheless, we are still competitive because our productivity is higher too, so
adjusted for productivity our labour costs are not excessive.
"'
Chapter 7
As wages adjust from year to year, we must make sure that annual built-in wage
increases continue to lag behind productivity increases at all levels. This should
remain a guiding principle for the NWC in recommending its annual wage
guidelines.
Our wage adjustments must also take into account global trends, especially
developments in emerging economies like China. Overall, if we can sustain growth
of 2-3 per cent in real wages over the medium term, we will have done well.
Enhancing Wage and Labour Market
Flexibility
On top of competitive wage levels, however, we need wage and labour market
flexibility. The external environment is constantly and rapidly changing, and
labour market demand is unpredictable. We need flexibility in the labour market
so that workers can move smoothly out of old jobs and into new jobs. Wages
need to be flexible too, so that in a downturn employers can adjust wages rather
than retrench workers. It is far better for our workers to have jobs at lower pay,
than no jobs at all.
The issues of wage flexibility and the problem of seniority-based wages were
first highlighted in the 1985 recession. We have made progress since then. Most
companies have adopted a flexible wage system with a variable year-end payment
linked to the company’s performance. The average ratio of maximum to minimum
salary has declined from the norm of 2-3 times then to 1.7 today.
However, we have not gone far enough. In the recent downturn, a large part
of the wage adjustment was borne by the reduction in CPF contributions. This
is not desirable, as CPF represents long-term savings of workers. In addition, our
wage system is still largely seniority-based. We have to move decisively away
from the seniority-based wage system, and link wages more closely to productivity
and performance.
"(
Chapter 7
Competitive-base Wage System
The Base-up Wage System, recommended in 1997 as an alternative to the
seniority-based wage system, is founded on the principle that wage increases
should be closely linked to productivity and performance. Under this system,
the long salary scale for job positions should be gradually reduced to reach the
desirable salary maximum to minimum ratio of 1.5, or other appropriate ratio
to be agreed between union and management.
We should accelerate the implementation of the Base-up Wage System to
replace the seniority-based wage system. To do so, the ERC recommends the
adoption of the following principles:
a. Both unions and employers should work towards narrowing the salary ratio
to 1.5 within two collective agreements, i.e. 4 to 6 years; and
b. Companies, in consultation with the unions, could regularly review the salary
ratio when job requirements change so that workers would continue to be
rewarded based on the value of the jobs and their contributions.
We also recommend renaming the Base-up Wage System as the ‘Competitive
Base Wage System’ to emphasise that wage increases should lag behind
productivity growth so that we can stay competitive.
MVC
To further enhance wage flexibility, the NWC recommended the introduction
of a MVC in 1999. MVC was to be built up from future wage increases to form
about 10 per cent of total wages. Unfortunately, the progress in implementing
the MVC has been slow. In 2001, only 4.8 per cent of firms in Singapore had
adopted the MVC structure.
We recommend that all companies build up the MVC expeditiously. To kickstart
the process, companies which have not yet created an MVC, and those whose
MVC makes up less than 2 per cent of workers’ basic wages, should top up their
MVC to 2 per cent immediately, out of their basic wages. Companies that have
")
Chapter 7
2 per cent or more MVC in their wage structure should discuss with trade
unions/workers whether a further percentage of basic wages could be used for
building up the MVC further.
Variable Wage Component
While wages need to be flexible in order to adjust in downturns, workers also
need some certainty in their income, so that they can plan ahead and make
major commitments, such as buying a house. There should thus be an appropriate
balance between the fixed and variable components of wages.
We recommend that different ratios of variable component be adopted for
different levels of employees. As the contribution of management staff, particularly
top management, is more closely linked to the company’s performance, their
variable component should be higher than rank-and-file employees. The proposed
ratios are:
a. Rank-and-file employees: 30 per cent of their annual wages should be
variable, comprising 10 per cent in MVC and 20 per cent in annual variable
component;
b. Middle management: 30-40 per cent of their annual wages should be variable; and
c. Top management: Not less than 40 per cent of their annual wages should be variable.
Introducing Portability to Medical Benefits
Many employers provide medical benefits to their workers. Often the employer
pays the entire cost of the benefits, up to a cap, though some employers do
require co-payments from their workers. This is not satisfactory. As a worker
grows older, he will need more medical services. A worker who has developed
a medical condition will find it hard to find new employment if he is retrenched.
A new employer will be reluctant to hire him, and take on the burden of his
medical expenses. At most, the new employer will offer him limited medical
benefits, less than those he enjoyed at his old job.
"*
Chapter 7
This is increasingly pertinent because the proportion of older workers is growing
as Singaporeans work longer and the population ages. And with continuing
economic restructuring, workers will need to change jobs several times in their
career. We should restructure provision of medical coverage by employers to
be more portable and flexible.
We recognise that there is no easy, complete solution to the problem. One key
issue is whether these portable medical benefits schemes should be compulsory.
We are of the view that we should avoid doing so if possible. It would make the
labour market more rigid and add to costs which not all companies will be able
to afford, especially the smaller companies which often provide fewer medical
benefits to their workers. Our proposal is therefore to have voluntary schemes,
which employers and unions decide to participate in after due consultation.
We therefore support the recommendation of the Tripartite Committee on
Portable Medical Benefits to introduce a Portable Medical Benefits Scheme
(PMBS) with deductible and copayment elements.
As an alternative, we have, in consultation with the Monetary Authority of
Singapore and insurance providers, explored the possibility of designing a portable
insurance product. The General Insurance Association and the Life Insurance
Association have proposed the Transferable Medical Insurance (TMI) Scheme,
which could also meet the objective of allowing employees to enjoy continued
medical coverage when they change employment or are in between jobs.
Deliberations on the TMI are still at the preliminary stage. Should this alternative
be found feasible, we recommend that a Tripartite Taskforce be set up to study
the details like how SMEs with less than 30 employees could be covered and
whether the co-payment and deductible features should be introduced.
Flexible Working Hours Scheme
The rapidly changing economic environment necessitates changes in employment
practices. Some companies do not require employees to report for work on a
regular basis when there is no demand for their services, but require them to
work overtime when they are needed to complete a task.
"!
Chapter 7
To ensure that additional flexibility is given to companies whose nature of
business justifies it, the Employment Act2 should be amended to empower the
Commissioner of Labour to grant exemptions to companies that intend to
employ flexible work arrangements to meet these demands.
As the proposed flexible working hours scheme has an impact on workers, we
recommend setting up a tripartite taskforce to work out the principles, operational
details and safeguards against abuses. The taskforce should take into consideration
the need to provide flexibility to companies without undermining the interest
of workers, and productivity gains from optimal utilisation of manpower resources
should be shared with the workers.
Refocusing the CPF System
Since its introduction in 1955, the CPF system has provided Singaporeans with
a sound framework to save for their own retirement, reflecting our strong
emphasis on individual responsibility. The role of CPF, however, has grown over
the years, and it needs to be refocused to keep the statutory burden on employers
as light as possible. This will contribute to labour market flexibility.
In July 2002, the Government accepted the main ERC recommendations relating
to the CPF system (see Annex 1). These include:
a.
b.
c.
d.
e.
f.
g.
Setting aside more in the Special Account;
Increasing the Minimum Sum;
Encouraging prudent withdrawal for housing;
Enhancing returns on CPF balances;
Strengthening provisions for healthcare needs;
Reducing mandatory contributions for high-income earners;
Enhancing employability of older workers through lower CPF contribution
rates; and
h. Giving low-income earners more take-home pay.
2 The Employment Act currently covers all employees, i.e. manual workers (defined in the Act as workmen) and non-manual workers but
exclude all employees in executive, managerial and confidential positions, domestic workers, seamen and public sector employees. The Act
also prescribes protection to employees and workmen on matters concerning contract of service, payment of salary, maternity benefits, parttime employment and employment of children and young persons.
""
Chapter 7
In addition, the ERC notes that the Singapore economy has still not fully recovered
from the 2001 recession. Immediate prospects are clouded by the slowdown
in the US, Europe and Japan, and the likelihood of war in Iraq. Amidst these
uncertainties, we expect full recovery to come only in 2004.
It would thus be critical for us to maintain our cost competitiveness, even as
we implement longer-term strategies to restructure our economy. In this context,
the ERC is further recommending that the Government defer any further
restoration of the CPF contribution rate, beyond its present level of 36 per cent,
for two years. This will avoid adding to the statutory burden on wages for
employers at a nascent stage of our recovery, and help reduce further job losses.
It will also send a strong signal to investors that Singapore is acting decisively
to strengthen its competitive position.
We note that the Government has stated its intention to restore the CPF
contribution rate to 40 per cent, when economic conditions permit. We support
this progressive restoration of the CPF rate to 40 per cent after the two-year
period. However, the timing and pace of the restoration should take into account
economic conditions, especially Singapore’s cost competitiveness vis-à-vis other
countries.
To be sustainable over the long term, particularly in view of demographic trends,
the CPF structure and contribution rates have to balance the need to save
enough for these basic financial requirements, with the need to keep employer
costs to a minimum. The lighter the statutory burden on employers, the easier
it will be for Singaporeans to be employed and the lower our unemployment
will be.
Tripartite Cooperation
These measures to ensure competitive wage levels and inject wage and labour
market flexibility into the system can only be implemented with the willing
cooperation of the trade union movement and the full support of the private
sector.
$##
Chapter 7
Singapore has come a long way from the days of confrontational industrial
relations in the 1950s and early 1960s. Over the years, the tripartite partners
have developed close relationships, mutual confidence and rapport. This tripartite
relationship has withstood difficult economic times. Each time our strategy
worked, we were able to turn the economy round, and the relationship was
strengthened. The tripartite partners must work together to implement these
and other ERC recommendations.
The tripartite NWC, set up in 1972 to bring together employers, workers and
the Government to guide wage adjustments each year, is an especially important
forum. The annual NWC recommendations have for 30 years enabled wages to
rise in an orderly way, assuring Singapore workers a fair share of the rewards
of growth, while avoiding any wage explosion that would have undermined our
competitiveness. The NWC must continue to provide timely wage guidelines and
focus on wage-related issues including wage flexibility, shifting from the senioritybased to productivity-based system and portable medical benefits.
Conclusion
Singapore faces significant economic and social challenges in the years ahead.
We need to bring about greater flexibility in the wage system to enable companies
to make quick adjustments to their wage cost in line with the changing business
conditions. With increasing job mobility, there is also a need to introduce greater
flexibility and portability in the provision of medical benefits by companies. In
addition, we need to refocus the CPF to strengthen our financial resilience and
inject more flexibility into our labour market for all segments of workers. If we
persevere with these changes, Singaporeans will be in a stronger position to
meet the challenges of the new employment landscape ahead.
$#$
Chapter 7
Annex 1: Refocusing the CPF system
Safeguarding Funds for Retirement
Key Initiatives
• Increase the contribution rate to the Special Account by an additional
1 percentage-point to 5/7/9 (5 per cent for members 35 years and below,
7 per cent for members above 35 to 45 years, and 9 per cent for members
above 45 to 55 years) when the CPF contribution rate is restored to 40
per cent.
• Increase Minimum Sum gradually as wages rise over time.
• Limit CPF withdrawals for housing to 150 per cent of the value of the property
starting 2002, and bring this Valuation Limit down to 120 per cent over 5
years. This cap should not apply to subsidised loans for HDB flats and all
existing loans.
Enhancing Returns on CPF Balances
Key Initiatives
• Facilitate the provision of low-cost privately-managed pension plans to CPF
members, as an additional option under the CPFIS framework.
• Peg the interest rate paid on SA balances to an appropriate long-term interest
rate, such as the yield on long-term government bonds.
$#%
Chapter 7
Strengthening Provisions for Healthcare
Needs
Key Initiatives
• Reaffirm Government’s intention to increase the contribution rate to the
Medisave Account by 1 percentage point to 7/8/9 (7 per cent for members
35 years and below, 8 per cent for members above 35 to 45 years, and 9 per
cent for members above 45 years) when the CPF contribution rate is restored
to 40 per cent.
• Increase risk-pooling via enhanced medical insurance, while retaining the
framework of copayments and deductibles. Explore devolving the health
insurance system and other CPF-based insurance schemes to private insurers
to operate and manage.
Enhancing Employability of Older Workers
Key Initiatives
• Keep the employer CPF contribution rate for those in the 50-55 age group
at its present level of 16 per cent, even as the rate is restored to 20 per cent
for those below 50. Allow CPF members aged 50-55 to continue using their
Special Account to meet shortfalls in mortgage repayments for a longer
transition period.
• Lower the employees’ CPF contribution rate for those in the 50-55 age group
from the present level of 20 per cent to 16 per cent.
$#&
Chapter 7
Reducing Mandatory Contributions for
High-income Earners
Key Initiatives
• Lower the CPF salary ceiling for both employers’ and employees’ contributions
from the current $6,000 to $5,000.
• Encourage employers to make appropriate adjustments to salary packages
to offset the CPF reduction and to reflect the employees’ market value.
Giving Low-income Earners More Takehome Pay
Key Initiatives
• Raise the employee CPF wage bands for lower-income workers from
$200-$363 to $500-$750.
!"#
Land
Chapter 8
!"$
Chapter 8
Summary
International competitiveness of land is not just about setting the lowest land
prices, but is also about optimising the value-added from available land. We
must therefore maximise the value creation from our land resources as well as
keep the cost of land competitive, by managing the supply of land judiciously
and ensuring that the land market is flexible enough to allow market forces to
work more effectively.
Optimising land use, more competitive
land prices
!"%
Chapter 8
Key Recommendations
Role of Government
• Ensure adequate supply of land to achieve competitive, stable land prices.
• Minimise Government participation in areas where there are no developmental,
strategic or socio-political considerations.
• Develop a single mechanism to regulate the supply of land and property by
government agencies into the market, to ensure that the release of land and
properties from the various Government agencies is coordinated.
Maximising Value Creation
• Consider ways to sell land in bigger pieces with more flexibility for integrated
phased development, like an integrated Business Financial Centre (BFC). The
development of the BFC will allow Singapore to cater to the specific needs
of business and financial tenants to strengthen Singapore’s position as a
financial hub.
• Consider advancing transportation infrastructure in strategic developments
such as One-North, Jurong Island, Tuas and the proposed BFC to catalyse the
attractiveness of these areas to workers, companies and foreign investors.
This would have to take into consideration externalities and the economic
viability of such projects.
• Continue to give priority to the sale of sites in the vicinity of MRT stations
in the Government Land Sales (GLS) programme to allow the concurrent
development of such sites to be better integrated with the development of
the MRT stations.
• Widen the initiative to put vacant State properties and land to interim use.
!"&
Chapter 8
Reducing Costs
• Inject flexibility in Singapore’s land tenure system to match user needs.
• Charge a time-based enhancement levy for businesses instead of full
development charge by granting temporary planning permits.
Sector-specific Recommendations
Industrial Sector
• Ensure an adequate supply of industrial land at internationally competitive
prices, so that Singapore can continue to attract high-quality manufacturing
investments.
• Adopt a pay-as-you-use concept for the acquisition of development rights
wherever feasible, instead of requiring full payment for the maximum
development potential of sites at the point of alienation.
• Adopt a more responsive market-based approach for industrial rental policy,
with rentals regularly marked back to prevailing market rates.
Residential Sector
• Review HDB’s role in public housing, and relax HDB’s flat rental rules.
• Undertake a fundamental review of the home-ownership policy to examine
the optimal mix of home ownership and rental, and their effects on areas
such as entrepreneurial risk appetite, rate of family formation and Singaporeans’
sense of a tangible stake in the nation’s success.
!"'
Chapter 8
Introduction
Land is one of the key factors of production and its cost has a direct impact on
Singapore’s overall cost competitiveness.
Singapore’s size sets a natural constraint on our supply of land. Land-scarce
Singapore will not be able to compete with the land prices of larger countries.
But international competitiveness of land is not just about setting the lowest
land prices. It is also about optimising the value-added from available land.
Therefore we need to maximise the value creation from our land resources, as
well as keep the cost of land competitive.
Role of Government
Singapore’s land sector is best described as a public-private sector
partnership – the Government, as the largest supplier of land1, provides a
strategic orientation, while the private sector adds a degree of responsiveness
to changing market conditions. Broadly, the Government affects the market by:
a. Directly intervening through its agencies like the Housing and Development
Board (HDB), JTC, Urban Redevelopment Authority (URA) and Singapore
Land Authority (SLA);
b. Influencing land supply by releasing land through the GLS programme; and
c. Managing the land regulatory framework, which includes policies affecting
land pricing and the efficiency of the market.
Going forward, the Government should ensure that there is an adequate supply
of land into the market, so that prices are stable and competitive. We also
recommend that the Government minimises its participation and allow the
private sector as much leeway as possible to respond to changing market
1 Government agencies such as JTC and HDB own about 89 per cent of the industrial land stock in the market, while HDB has developed 81 per
cent of the residential housing stock.
!"(
Chapter 8
circumstances, in areas where there are no developmental or socio-political
considerations. This minimises the crowding out of the private sector, and
expands the available competitive space.
As the largest land supplier, the Government should develop a single mechanism
to regulate and coordinate the supply of land and property to the market by
the various Government agencies. There is a need to ensure that the release
of land and properties from the various Government agencies is properly
coordinated and controlled. The quantum of supply should also be constantly
reviewed and monitored to be responsive to market developments.
The Government should also take into consideration the cumulative, economywide impact of policies on effective land supply when setting the regulatory
framework. Individually sound policies that add flexibility, such as the white
site zoning scheme and making more State land available for interim use, can
have a significant, unintended and cumulative impact of increasing the supply
of available land.
Maximising Value Creation
The land sector should be viewed as an industry in its own right. Land-related
sectors account for 18 per cent of Singapore’s GDP2. We recommend the
following measures to unlock value in land assets.
Developing an Integrated Business Financial Centre
Singapore should consider ways to sell land in bigger pieces with more flexibility
for integrated phased development, like an integrated Business Financial Centre
(BFC), while taking into consideration the state of supply and demand so as not
to destabilise the market. The development of a large integrated BFC will allow
2 This is composed of: (a) construction (both residential and non-residential): 6.1 per cent, (b) real estate activities, including letting of privately-
owned homes: 7.1 per cent (c) architectural and engineering services: 1.1 per cent (d) imputed rent of owner-occupied dwellings: 3.6 per
cent. Source: Singapore Department of Statistics.
!!"
Chapter 8
Singapore to cater to the specific needs of business and financial tenants to
strengthen Singapore’s position as a financial hub.
A master developer of such a centre should be given the flexibility to plan,
design and phase the development of the project to match rapidly changing
global needs. In addition, the Government can facilitate the development of
the BFC by making the payment scheme as flexible as possible. Commitment
from several suitable anchor tenants should also be sought before it is developed.
Consider Advancing Transportation Infrastructure for Strategic
Developments
The provision of transport infrastructure for strategic developments is often a
case of the proverbial ‘chicken-and-egg’. The current policy is that investment
in transportation infrastructure (for example, rail or buses) are made only when
there is sufficient passenger volume to cover operating costs.
However, the lack of transportation infrastructure in the early stages of a
development usually diminishes its attractiveness, as companies have to incur
costs providing transportation for their staff. Takeup rates are adversely affected
and in turn, the time to reach the critical mass of passengers is further pushed
back. For certain key strategic developments (e.g. such as One-North, Jurong
Island, Tuas and the proposed BFC), there is a possible economic case for the
Government to ‘jump start’ these developments by providing transportation
infrastructure before a critical mass of passenger volume is attained. These
would have to be carefully evaluated on a case-by-case basis to take into account
externalities and ensure that the projects are economically viable.
Giving Priority to the Sale of MRT Sites in the GLS Programme
Wherever possible, the Government should continue to prioritise the sale of
sites in the vicinity of MRT stations as part of the GLS programme, for concurrent
development. This encourages fuller utilisation of MRT lines. The concurrent
!!!
Chapter 8
development of the site with the MRT line also affords additional efficiency
gains by allowing developers and the LTA to work out a mutually acceptable
support structure and urban design, avoiding duplicative work and lowering
construction costs.
Widening Initiative to Put Vacant State Properties and Land to
Interim Use
Vacant State properties and land not required for development in the short
term should be let out to encourage innovative uses or to meet demands not
adequately met by the market at the relevant time. For example, vacant lands
within or near housing estates could be put to recreational or community uses
to add more life and vitality to the area and to encourage greater community
bonding.
Reducing Costs
The other dimension of enhancing competitiveness is to reduce costs. Cost is
a function of many factors such as demand and supply, rules and regulations,
construction costs and pricing policies. We recommend the following measures
to reduce land costs in Singapore.
Inject Flexibility in Singapore’s Land Tenure System to Match User
Needs
The Government should introduce the option of shorter leases so that land users
can choose what best meets their needs. Shorter leases also reduce the upfront
land costs and lower barriers of entry.
!!)
Chapter 8
There should also be greater transparency in current policies pertaining to the
extension/renewal of leases. This would provide more certainty and enable
current owners of leasehold properties to make informed decisions of whether
to upgrade or redevelop their properties.
Charge a Time-based Enhancement Levy for Businesses on
Temporary Planning Permission
Business startup costs can be lowered by granting entrepreneurs temporary
planning permission, and allowing them to pay a pro-rated levy instead of the
full development charge, which poses a hurdle to some entrepreneurs trying
out new business ideas.
Sector-specific Recommendations
Singapore has adequate industrial land. Only about half of the land safeguarded
for industrial use is occupied. Our system of supplying industrial land on a
leasehold basis also allows a turnover of industrial land. We are therefore in a
position to ensure an adequate supply of industrial land at internationally
competitive prices, so that Singapore can continue to attract high-quality
manufacturing investment.
Industrial Sector
Until now, Singapore’s industrial land has commanded a premium compared to
other locations, given our stable political and business environment, and good
infrastructure. Going forward, global competition to be a prime location for
manufacturing will intensify. We need to ensure that Singapore is not priced
out of the competition. Many of our competitors are able to support lower land
prices. Although we may not be able to match their prices, we must factor
international prices into our considerations.
!!*
Chapter 8
JTC should take into account international prices when it sets prices for industrial
land. Although Singapore only has a limited supply of land, we can leverage on
our capacity to manage this supply through the leasehold system to achieve
competitive prices in the industrial sector.
We should also increase the flexibility in industrial land use. We recommend
the following measures to achieve this:
a. Adopt a pay-as-you-use concept wherever feasible. To lower land costs and
avoid tying down valuable capital resources unnecessarily, land users should
be allowed to pay for only the extent of land rights needed, instead of the
maximum development potential of the land. There should also be flexibility
in allowing for additional rights to be purchased when required; and
b. Adopt a more responsive market-based approach for industrial rental policy.
With the shorter and less predictable business cycles in today’s world, JTC
should review the automatic escalation feature of its rental revision schemes
and adopt a more market-responsive approach.
Residential Sector
Housing costs have a direct impact on the wages that workers demand, which
in turn impact economic competitiveness. In Singapore, where 85 per cent of
the population lives in public flats, public housing policy can have significant
bearing on economic competitiveness. We recommend that the Government:
a. Review HDB’s role in public housing. HDB today has a wide-ranging role
and performs a variety of functions in the provision of public housing,
including serving as the public housing authority, developer, building
consultant, financier and lessor. The HDB should review its role in parts of
the value chain where the private sector is able to perform similar functions
without compromising the achievement of social policy objectives. This
rescoping of the role of HDB will create more competitive space for the
private sector and makes greater use of market forces to achieve more
efficient outcomes. In the longer term, a more robust residential sector will
develop, with the Government coming under less pressure to intervene in
the market; and
!!#
Chapter 8
b. Relax flat subletting rules. HDB flat subletting rules should be relaxed, to
offer a wider range of affordable housing options to different categories of
income earners. It also offers a means of monetising the assets for those
whose most significant asset is property, hence helping to address the assetrich cash-poor phenomenon.
The Government should also undertake a fundamental review of the homeownership policy to examine the optimal mix of home ownership and rental,
and their effects on areas such as entrepreneurial risk appetite, rate of family
formation and having a more tangible stake in the nation’s success. The impact
of housing policy on the adequacy of funds for retirement, upward social mobility
and fostering a mindset of less reliance on Government intervention should
also be examined.
Review of Specific Rules, Regulations and
Practices
To maintain a flexible environment to allow market forces to work more effectively,
we recommend the Government consider change to the following rules,
regulations and practices:
a. Review the Planning Act to allow for longer tenancies (beyond 14 years)
without requiring subdivision to better meet the emerging trend towards
longer tenancies;
b. Change Controller of Housing regulations to give private housing developers
more flexibility and, at the same time, to give private property buyers more
information to support their purchase decisions;
c. Review relevance of requirement for Qualifying Certificates for companies
undertaking residential property development in Singapore;
d. Review Street and Buildings Names and Advisory Committee approval
procedures and guidelines for names of developments, with a view to speeding
it up, especially in situations where the initial application is rejected; and
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Chapter 8
e. Grant more Gross Floor Area (GFA) exemptions to encourage the provision
of communal areas for residential developments and common areas for
commercial developments so as to improve the quality of the living and
working environment.
Conclusion
Land is a platform for other economic activities. Managed properly, land policy
can deliver optimal value from land use and keep land costs competitive. This
can prove to be a decisive factor in maintaining Singapore’s competitive edge.
!!"
Entrepreneurship
Chapter 9
!!#
Chapter 9
Summary
For the longer term, our most basic strategy is to upgrade ourselves and make
Singapore a knowledge economy, banking on creativity and innovation to power
the economy and tapping the potential of IT in all areas. In addition to technical
skills, we need to promote the spirit of entrepreneurship in Singapore to take
advantage of global markets and to create new ideas and businesses.
A key outcome of our efforts to promote entrepreneurship should be the growth
of strong Singapore companies which are entrepreneurial and can venture
abroad to become international players. We also want to encourage the growth
of enterprising startups. At the same time, we must help the group of traditional
companies which face difficulties adapting to the new economy, to rationalise,
upgrade themselves and meet the needs of a new generation of customers.
Nurturing an entrepreneurial and
creative Singapore
!!$
Chapter 9
Key Recommendations
Entrepreneurial Culture & Capability
• Evolve new social values which celebrate entrepreneurship and risk-taking
by promoting a culture that accepts diversity and failure, and embraces a
broad notion of success.
• Develop entrepreneurship programmes at all education levels.
• Attract Global Entrepreneurial Executives (GEEs) to Singapore by ensuring
flexibility in our employment pass system, and engaging various associations
to help them settle in Singapore.
• To designate a Minister (or Minister of State) to be responsible for promoting
and driving initiatives for a more entrepreneurial Singapore.
Encouraging Growth of Enterprising Startups
• Encourage the development of a more vibrant culture for business startups.
• Create a pro-enterprise environment by:
a.
Imposing a sunset rule on all licences to cut red tape;
b.
Outsourcing licensing and other Government functions to the private
sector through competitive tender;
c.
Allowing enterprises to retain IP arising from Government projects; and
d.
Enacting a generic competition law to institutionalise a regime where
no company enjoys unfair privileges, and must compete on equal footing
in the market with others.
• Ensure availability of and access to capital through:
a.
Encouraging cashflow funding, by liberalising the finance companies
sector to broaden financing facilities to enterprises;
!!%
Chapter 9
b.
Supporting and facilitating the establishment of a private equity exchange
that allows startups or emerging enterprises to raise funds through the
issuance of shares, and for investors to trade their shares;
c.
Implementing an equity financing scheme equivalent to the Startups
Enterprise Development Scheme (SEEDS) to support a broader base of
enterprises other than startups with innovative or intellectual content;
d.
Reviewing Government loan schemes such as the Local Enterprise
Finance Scheme (LEFS) and Regionalisation Finance Scheme (RFS) to
ensure they are relevant to enterprises; and
e.
Considering introducing a hybrid debt-equity financing scheme to
support emerging enterprises in their growth and internationalisation,
either organically or through acquisitions.
• Develop export industries with the capabilities to help domestic enterprises
franchise or license business concepts overseas.
Internationalisation of Major Singapore Companies
• Encourage large Singapore-based companies to internationalise through:
a.
Tax exemption for companies’ business-related foreign source income
remitted back to Singapore;
b.
Adopting a holistic approach in developing a global brand name for
Singapore, and encouraging and supporting Singapore-based enterprises
in their branding efforts;
c.
Fostering a cluster approach among companies venturing overseas, such
as by expanding the Local Industry Upgrading Programme (LIUP) to
cover instances where GLCs and larger companies lead a cluster of
enterprises, including SMEs to venture abroad; and
d.
Facilitating consolidation and alliances between companies.
!&'
Chapter 9
Helping Smaller, Traditional Companies Adapt
• Help smaller, traditional companies consolidate, restructure and improve
their competitiveness by:
a.
Creating an environment of change and innovation among domestic
enterprises;
b.
Promoting a new orientation towards service excellence by initiating
a national movement for service excellence, developing effective training
programmes for domestic enterprises and providing funding for domestic
enterprises to develop suitable scripting of their services; and
c.
Rationalising and restructuring the excess capacity in small local
enterprises, especially retail outlets in HDB estates, including through
the use of financial incentives.
Role of the Government
Government-linked Companies (GLCs)
• Government to own and control companies only when it involves critical
resources or public policy objectives. Non-strategic GLCs should be divested.
• Ensure GLCs are commercially run, with no interference from the Government.
• Temasek Holdings to constantly review the stable of GLCs to rationalise,
consolidate or divest GLCs where it makes commercial sense and benefits
shareholders.
• Temasek Holdings to focus GLCs to grow into global businesses rather than
concentrate on the local market to build up unrelated businesses.
• Temasek Holdings to cast a wide net to attract world-class managerial talent
into GLCs. Underperforming board members and management staff should
be removed.
!&!
Chapter 9
• Temasek Holdings to limit new investment to businesses which have the
potential to internationalise, and are in new growth sectors that the private
sector deems too risky to enter.
Ministries and Statutory Boards
• Institute a ‘Yellow Pages’ rule to avoid encroaching on the space of the
private sector.
• Statutory boards to avoid corporatising regulatory functions which could
lead to rent-seeking by the enterprise.
• Proactively divest enterprises owned by statutory boards where appropriate,
through mandatory periodic housekeeping.
• Statutory boards to avoid conflicts of interest. Their enterprises should not
utilise the name of the statutory board in the domestic market, and the
board of directors should be independent of the management of the statutory
board. We also need to ensure that these enterprises do not enjoy a moratorium
while competing in the market.
!&&
Chapter 9
Introduction
For the longer term, our basic strategy is to upgrade ourselves and make Singapore
a knowledge economy, banking on creativity and innovation to power the
economy and tapping the potential of IT in all areas. In this environment,
technical skills alone will not be enough. We will need a class of entrepreneurs
in Singapore to find and develop new economic niches and to exploit economic
opportunities for Singapore.
We cannot manufacture entrepreneurs but we can create the environment and
conditions that allow, encourage and facilitate entrepreneurship. Moving
forward, the challenge for Singapore is to create the desire in enough Singaporeans
to want to make it on their own rather than work for someone. This will require
a change in the Singaporean mindset and will take time to achieve.
!&(
Chapter 9
Entrepreneurial Culture
At the most fundamental level, we need to inculcate an entrepreneurial culture
in which Singaporeans want to be entrepreneurs. This involves reaching out to
the young in our school system, and must continue through to the tertiary
institutions and extend even to entrepreneurship programmes for the adult
workforce.
It also involves changing society’s response to entrepreneurship. Society must
uphold successful entrepreneurs as role models rather than resent them for
their affluence. It must be forgiving towards those who try and fail, and not
humiliate them or dampen their ability to start afresh.
More fundamentally, we must strike a right balance between providing social
safety nets for Singaporeans, and extending the nets so wide that Singaporeans
become dependent and reliant on the Government. Ultimately, the way to
promote enterprise and creativity is through less government intervention rather
than more. An individual’s success must depend on his own efforts and abilities,
rather than on largesse from the Government. Singaporeans will then have the
incentive to be enterprising, and the competition will strengthen the players
and produce winners who can hold their own.
We therefore support the inclusion of an entrepreneurial and enterprising spirit
in the Ministry of Education’s (MOE) Intermediate Outcomes of Education for
secondary and pre-university education. There already exist various schoolbased initiatives that foster enterprise and innovation. We should extend
entrepreneurship programmes to all education levels, in different formats suited
to each level. Beyond schools, we should try to deliver such programmes to
young people through the National Youth Council (NYC) and Community
Development Councils (CDCs). This will improve the outreach of such programmes.
To train the adult workforce, commercial programmes can be supplemented by
public organisations such as the Ministry of Manpower (MOM), the Singapore
National Employers’ Federation (SNEF) and the National Library Board (NLB).
!&)
Chapter 9
Entrepreneurial Talent
Given the finite size of our talent pool, and the long time lag for promoting a
more entrepreneurial culture among Singaporeans, we must tap entrepreneurial
talent from abroad. Already an encouraging number of Chinese and Indian
entrepreneurs have come to Singapore, to take advantage of our incubators.
But we should do more to attract foreign entrepreneurs, or Global Entrepreneurial
Executives (GEEs), with international experience and good track records, to
Singapore, to start and grow enterprises here, and act as mentors to Singaporean
entrepreneurs who do not have the experience of starting up new companies.
To do so, we need to tailor incentive programmes that appeal to the individual.
This would include:
a. Having sufficient flexibility in our employment pass system to allow GEEs
to come to Singapore without a well-paid job or a specific opportunity and
facilitating the entry of their close family members;
b. Having EDB, together with the relevant agencies, establish a comprehensive
programme to attract entrepreneurs to Singapore and develop and increase
the number of foreign incubation centres in Singapore; and
c. Engaging various non-government associations to help GEEs settle in
Singapore.
In addition, to increase our chances of developing entrepreneurial capability in
industry, there is a need to ensure that the private sector is not crowded out
of the local talent pool and deprived of its fair share of talent.
We accept that the public sector needs its fair share of talent and scholarships
to continue to be the key channel through which the Government identifies
and recruits talent. However, the Government should ensure that it does not
take up a disproportionate share of top students from each cohort. It should
focus its scholarships in specific, critical areas where talent is required. There
should be a healthy turnover of scholars from the public to the private sector,
as in the case of scholarship schemes such as EDB’s industry scholarships, where
scholars flow through to the private sector over time. This will help seed the
private sector talent pool downstream.
!&*
Chapter 9
Implementation Strategy
The Government set up the Technopreneurship 21 Ministerial Committee in
1999 to oversee the development of technopreneurship in Singapore. To broaden
the scope of this effort, in 2001, the Government redesignated the committee
as the Entrepreneurship 21 Ministerial Committee. To sustain our efforts to
encourage entrepreneurship and creativity, the Government should designate
a Minister to work with the Entrepreneurship 21 Ministerial Committee to
promote and drive the initiatives for a more entrepreneurial Singapore.
Growing Singapore Companies
A key outcome of our effort to promote entrepreneurship should be the growth
of vibrant Singapore companies which can develop new ideas and businesses,
tap new export markets, broaden our economic base and make our economy
more resilient. These Singapore companies will complement the MNCs, and also
help to support and anchor MNCs here.
Encouraging Growth of Startups
We need to encourage the growth of enterprising startups and SMEs, whether
they are high-tech or low-tech, whether they develop their own products and
intellectual property or expand the market for existing products, and whether
they compete in the domestic market or abroad. This will yield benefits not only
in terms of output and GDP growth, but will also have a leavening effect, adding
dynamism and buzz to the economy.
Growing enterprising startups is not only about expanding the population of
start-ups. More fundamentally, it requires setting the right tone of society and
a culture of starting up new enterprises among Singaporeans so that we grow
!&"
Chapter 9
our own stable of local startups and SMEs. Not all will survive or make it big.
Hopefully, some will be successful, and in time will form a new generation of
local companies, like BreadTalk, Coffee Bean, Tee Yih Jia, Thong Siek and Qian Hu.
There are also some impediments in our business environment that hinder
startups.
Regulatory Landscape
Collectively, regulations can create significant barriers to new businesses entering
the market. We recommend that the Government adopt a structured,
institutionalised and coordinated programme to cut public sector red tape. The
Government should also take enterprise-friendly approaches to economic
management, industry regulation, and procurement.
The Government has already embarked on reviewing rules that are onerous and
stymie enterprise. It established a ‘More Vision, Less Bureaucracy’ (MVLB)
movement in September 2000. This currently comprises:
a. The Pro-Enterprise Panel (PEP) which deals with business-related feedback
on Government rules;
b. The Zero-In Process (ZIP) which deals with non-business (social, community
and administrative) issues;
c. The Public Officers Working on Eliminating Red-tape (POWER) which deals
with internal feedback generated by public sector officers; and
d. The Rules Review Process (RRP) which reviews all government rules over the
next three years and thereafter on a five-yearly cycle.
In addition, we recommend the following:
a. Imposing a ’Sunset Rule’ where all licensing requirements will become
automatically obsolete within three years of its introduction. All licensing
requirements in the future would need to be justified periodically;
!&#
Chapter 9
b. Ensuring the Pro-Enterprise Panel (PEP) set up in 2000 and chaired by the
Head of Civil Service will continue to maintain the momentum of the major
push to the pro-enterprise movement. The PEP should also have appropriate
representation from the Singapore Business Federation (SBF);
c. Allowing suppliers to retain IP arising from Government projects. In the US,
the Bayh-Dole Act enables SMEs, non-profit organisations and universities
to retain IP that they create with federal funding. This has spurred the
transfer of technology from laboratories to the marketplace. We should
consider enacting a similar Act; and
d. Not ruling out products and services offered by SMEs automatically from
Government procurement, simply because they do not have the necessary
track record. The Government should also continue with The Enterprise
Challenge to function as test beds for SMEs’ products and services that would
lead to significant improvements in public services, while maintaining the
current principles of openness, non-discrimination and value-for-money in
Government procurement.
Financing and Government Support
A key condition for entrepreneurs to flourish is the availability of capital at the
various stages of their enterprises. We propose the following:
a. Encouraging cash flow financing. Financial institutions traditionally rely on
collateral in the form of physical assets. Lending against cash flow is not
considered prudent in the case of new and emerging enterprises. This is
compounded by a lack of domain knowledge in various industries. We
recommend that the Government encourage financial institutions to develop
cash flow financing;
!&$
Chapter 9
b. Setting up a private equity exchange that allows enterprises to raise funds
through the issuance of shares to selected investors, and providing a forum
for investors to trade their shares. An additional advantage is that such an
exchange provides market valuations for startup or emerging enterprises,
hence allowing owners to use their shares as collateral to secure bank loans.
We propose that either the Singapore Exchange or a private sector company
drive this project with the support of EDB and adequate incentives from the
Government;
c. Implementing an equity financing scheme similar to the Startups Enterprise
Development Scheme (SEEDS) to cover a broader base of enterprises rather
than limiting the scheme to startups with innovative or intellectual content;
d. Periodically reviewing Government debt financing schemes such as LEFS and
RFS which help local enterprises to grow domestically and overseas, to ensure
that they are relevant in promoting entrepreneurship and the growth of
enterprises; and
e. Implementing a hybrid debt-equity financing scheme to support promising
emerging enterprises seeking funding to finance their growth, organically
or through acquisitions.
Developing Capabilities to Franchise and License Overseas
There are domestic enterprises in Singapore with exciting and viable business
concepts that can be exported. These businesses are often not big or capable
enough to venture abroad on their own. Yet, if they wait until they are large
enough, their concepts would have been replicated overseas. We should thus
develop export industries so that they have the capabilities to help domestic
enterprises franchise and license their business concepts overseas.
!&%
Chapter 9
Competition Framework
Singapore does not have a generic competition law to prevent cartel activities
like price-fixing and market division, and abuse of dominance by significant
market players. We have enacted such rules only for specific sectors, like energy
and telecommunications, which are more prone to anti-competitive behaviour.
We therefore welcome the Government’s recent announcement to enact a
generic competition law and set up an independent competition authority in
two to three years.
Internationalisation of Major Companies
We have major Singapore companies which have made their mark on the
international stage, including Creative Technologies, Singapore Airlines and PSA
Corporation. We also have companies which have the potential to become
global players, such as Ascott, Pacific International Lines, Achieva Limited, ECS
Holdings, and Singapore Aircraft Leasing Enterprise. We should encourage these
and other major Singapore companies with the scale and organisational depth
to venture abroad, to tap the opportunities in regional markets, as ASEAN, China
and India open up. Those which still lack scale at this time, but are in industries
where scale is increasingly important, should be encouraged to pursue strategies
to keep pace with developments, including growing organically or through
mergers and acquisitions.
We propose the following initiatives to help these companies internationalise:
a. Eliminating the double taxation of foreign source income that is remitted
into Singapore. As businesses are increasingly globalised, we need a tax
regime that will encourage the export of local services to overseas markets
and to grow Singapore-based companies’ foreign income. As proposed in
Chapter 6, the Government should exempt from tax, companies’ businessrelated foreign source income remitted back to Singapore;
!('
Chapter 9
b. Developing a strong, global brand image for Singapore. Singapore is already
well-known for its strong leadership and the successful implementation of
its economic plans and strategies. This should be built upon to portray a
rounder image for Singapore as a global city of the 21st century where arts,
sports and culture also feature prominently. Government agencies should
coordinate their efforts to market this new brand image of Singapore. At
the same time, the Government should give more recognition to the branding
efforts of Singapore-based enterprises, and profile Singapore brands to
foreign investors and visitors, especially at exhibitions and events organised
by Government agencies;
c. Adopting a cluster approach when venturing overseas. Not many enterprises
have all the necessary competencies to compete abroad. IE Singapore and
SPRING should identify and catalyse the development of specific industry
clusters which can venture abroad together. A good scheme to help foster a
mindset of partnership is the LIUP, which encourages MNCs to help upgrade
SME vendors. We should expand the LIUP to cover instances where GLCs and
larger enterprises with experience overseas, lead a cluster of enterprises,
including SMEs, to venture overseas; and
d. Encouraging consolidation and strategic alliances. Domestic enterprises tend
to be highly fragmented and getting them to band together to form economic
groupings and strategic alliances will help them to overcome their limitations
in size. The Government can act as a catalyst in providing matchmaking
services between different parties to form alliances. It can also encourage
different forms of consolidation and strategic alliances through incentives.
!(!
Chapter 9
Helping Smaller, Traditional Companies Adapt
Even as we help facilitate internationalisation of those Singapore companies
which are able to do so, we must not forget the group of smaller, traditional
companies which face difficulties adapting to the new, challenging environment.
These would include HDB retail shops and small industries in HDB industrial
parks which are considerably affected by the changes in our economy. They do
not have the economies of scale, lack management expertise and face difficulties
hiring capable people because they cannot match the pay of larger companies
or offer the same kind of exciting career opportunities.
We need to help these companies by facilitating their rationalisation, consolidation
and upgrading so that they can adapt to the changed circumstances.
Fundamentally, the new environment requires an innovative culture among
these smaller domestic enterprises. Many of them lag far behind in terms of
new ways of doing business. They should adopt more innovative approaches
to doing business, and be encouraged to experiment with new concepts, processes,
products and services. The Government on its part should constantly review the
regulatory environment to ensure that rules and regulations do not have the
unintended consequence of hindering speedy implementation of ideas.
We should also promote a new orientation towards service excellence. A national
movement for service excellence can be initiated to promote a new service
orientation by the domestic enterprises. Publicity can be generated to emphasise
the benefits of good service. Effective training programmes such as SIA cabin
crew training can be developed into suitable programmes for domestic enterprises.
At the same time, we need to improve the image of the domestic sector. Domestic
enterprises tend to give an impression of low-end jobs and unexciting job
prospects. We must address this poor image if we want to make our domestic
enterprises more vibrant. One way of gaining more recognition for domestic
enterprises is to encourage the international rating systems such as Michelin
Award to set up their offices here in Singapore.
Finally, the ERC recommends that the excess capacity in small local enterprises
be rationalised and restructured, especially retail outlets in HDB estates, including
through the use of financial incentives.
!(&
Chapter 9
Role of the Government
The Government plays an important enabling role in the efforts to grow strong
Singapore companies.
GLCs and Temasek Holdings
In the early years of Singapore’s development, when the private sector was
under-developed, the Government provided services critical for the growth of
the economy, such as development banking, telecommunications, ports, and
power. Today, the private sector is more sophisticated and the market functions
well in allocating resources. With the business environment changing rapidly,
it is private enterprise, not the Government, that is the most knowledgeable
about and best able to exploit evolving market trends and technologies.
The Government should encourage the private sector to be at the frontier of
developing new business ideas. Its primary role is to ensure a level playing field
and provide opportunities for all enterprises to have a fair chance to succeed.
It should intervene only under exceptional circumstances, such as market failure.
The Government should therefore continue to allow the GLCs to be run as
commercial entities, which must compete on equal footing in the market,
without any special privileges. The recent announcement of the Temasek Charter
is a major step forward. In line with the direction set out by the Charter, we
propose that the Government abide by the following principles in setting up
and maintaining GLCs.
a. The Government should own and control companies only when it involves
critical resources, where ownership of a resource is critical to Singapore’s
security or economic well-being, and public policy objectives, where ownership
enables the Government to achieve specific objectives by providing services
or assuming control for the public good;
!((
Chapter 9
b. The Government should not interfere with the day-to-day commercial
decisions of GLCs. These companies should not be asked to perform 'national
service'. This is defined broadly as any project or activity that the company
would not have done if it were evaluated purely on a commercial basis; and
c. The Government should constantly review the stable of GLCs and keep only
those which serve strategic purposes. Non-strategic companies should be
divested in an orderly fashion.
Temasek Holdings should seek to maximise shareholders’ return in the long term
and benchmark the performance of its stable of companies against industry
peers – domestically, regionally and globally. We also propose that Temasek
Holdings reinforce its Charter in the following ways:
a. GLCs are natural candidates for internationalisation given their size, depth
of management and the competencies that they have built up over the years.
Temasek Holdings’ key mission should be to grow GLCs into globally competitive
enterprises that are anchored in Singapore;
b. Temasek Holdings should make a conscious effort to cast a wide net to attract
world class managerial talent into GLCs. Underperforming board
members and management staff should be removed; and
c. Temasek Holdings should limit new investment to businesses with the potential
to internationalise. These are to be in new growth sectors where the private
sector in Singapore is unable or unwilling to undertake the risks, such as
large investment with long gestation periods.
!()
Chapter 9
Ministries and Statutory Boards
The primary role of many Government agencies is to regulate and promote
certain industries in an impartial manner, and ensure a level playing field for
all market players. In carrying out their missions, many statutory boards have
also set up enterprises, which can also encroach into the space of the private
sector. We therefore propose that statutory boards abide by the following
disciplines when setting up enterprises:
a. Government to institute a ‘Yellow Pages’ rule. Statutory boards should not
set up enterprises if private sector players performing similar activities can
be found in the yellow pages;
b. Statutory boards should as far as possible not corporatise regulatory functions
because these are often monopoly functions and could lead to rent-seeking;
c. Even if setting up an enterprise under a statutory board is necessary, there
should be proactive plans to encourage the private sector to take over the
function eventually. There should be a mandatory periodic housekeeping,
say every three to five years, of all enterprises set up by ministries and
statutory boards to decide which to divest and which to keep; and
d. Statutory boards should avoid conflicts of interest. They should ensure that
the enterprise does not utilise the name of the statutory board in the domestic
market, and that the board of directors is independent of the management
of the statutory board. The enterprise should also not enjoy a moratorium
on its domestic business from the Government while at the same time being
allowed to compete with the private sector in that market segment.
!"#
Manufacturing
Chapter 10
!"$
Chapter 10
Summary
Many economies with Singapore’s level of per capita income are unable to
sustain their manufacturing sectors as they find it more efficient to specialise
in higher value-added, knowledge-based services and move out production
activities to other low-cost locations. Hence, the structure of mature industrialised
economies such as the US, the UK and Japan typically show a small and shrinking
manufacturing base as a share of GDP with a rapidly expanding services sector.
We will face similar challenges in sustaining Singapore’s manufacturing sector.
However, we believe that there is a future for manufacturing in Singapore
notwithstanding competition from developing countries such as China and India
with their low labour and land costs. We have competitive strengths and can
remain a manufacturing hub. To do so, we need to continue to attract MNCs
to Singapore, upgrade the sector, and move beyond being a mere
production base, to become an innovative creator of products and new businesses.
Singapore as a global leader in value
manufacturing
!"%
Chapter 10
Key Recommendations
• Continue to attract MNCs to provide access to technology, management
know-how and markets, and jobs for Singaporeans.
• Continue to strengthen and grow existing electronics, chemicals, biomedical
sciences and engineering clusters.
• Grow new, potential growth areas including industrial IT, microelectromechanical systems (MEMs), nanotechnology and photonics.
• Increase productivity and contain costs in areas such as land and utilities
costs, where possible.
• Keep our doors open to foreign workers, while carefully controlling the inflow
primarily through the levy.
• Promote R&D, especially the cooperation and codevelopment of products
and processes between research institutes and local enterprises, to close the
gap between research and commercialisation.
• Strengthen patent protection laws, facilitate low-cost filing and establish an
Intellectual Property (IP) Academy.
• Develop the right infrastructure for new growth areas by creating clusterfocused infrastructures for new technology industries.
• Develop supporting services, especially supply chain management capabilities
in Singapore.
• Extend our overseas markets through active pursuit of FTAs on a bilateral
and multilateral basis, and running more trade missions to better understand
business opportunities in these new markets.
• Tap low cost areas close to Singapore, including maximising the potential
of Singapore-Riau twinning by improving supporting industries and a logistics
network between the two islands, as well as incorporating Riau in more FTAs.
Manufacturing is a prime engine of growth in Singapore. Since 1985, the
manufacturing landscape has been transformed through high growth in
sectors, such as electronics, aerospace and specialty chemicals [see Table
10.1].
!"&
Chapter 10
Introduction
Table 10.1: Growth of Manufacturing Over the Years
Manufacturing
1985-2001(% per annum)
1985
2001
Output
8.2
$38,956m $138,323m
Value-Added
8.8
$8,251m
$31,923m
Value-Added per Worker
i.e. worker productivity)
6.7
$0.03m
$0.09m
Employment
1.9
253,510
345,141
R&D Expenditure
28.1
$37m
$1,945m
Source: Economic Development Board
Over the last 20 years, Singapore has benefited from its pre-eminent position
as a high-quality, low-cost base in Asia. However, this position is increasingly
difficult to sustain. The economic contest is becoming more intense. We face
increasing competition, not only from developing countries such as China and
India with their low labour and land costs, but also from developed nations such
as the US and the UK with their more advanced innovations and technologies.
Moreover, most countries with roughly the same level of per capita income have
found it difficult to sustain their manufacturing sectors. European economies,
with the exception perhaps of Germany, Japan and Taiwan, have seen their
manufacturing base shrink while services have grown. Whether Singapore can
sustain our manufacturing sector at around 20 per cent of the economy is
therefore not a foregone conclusion.
Having reviewed our position carefully, we are satisfied that there is a future
for manufacturing in Singapore. Singapore has significant competitive strengths,
and we must make the concerted effort to build on our existing competitive
strengths to sustain manufacturing as an integral part of our economy contributing
!"'
Chapter 10
20 per cent or more to GDP over the next decade. This is important because
Singapore is a city-state, unlike economies such as Hong Kong, which has the
Pearl River Delta as a production base and can afford to have its manufacturing
base moved offshore.
To achieve this, we must continue to attract MNCs here to provide access to
technology, management know-how and markets. We must maintain our cost
competitiveness, to ensure that we do not price ourselves out of the market.
At the same time, we should focus on providing an attractive business environment
for value-added manufacturing, facilitating their adoption of new technologies
and development of new markets. This entails establishing Singapore as a
premier regional hub, which companies use as a base for their high value-added
manufacturing activities. In particular, we should actively participate in the
opportunities that lie in China, leveraging on our unique position of technology
leadership, financial centre status and bilingual managers to ride on the growth
of China. With the right measures in place, we can ensure a robust future in
manufacturing with continued investments and creation of good jobs.
The proposed strategies to further enhance and sustain Singapore’s competitive
advantage in manufacturing centre on:
a. Global leadership in niche areas through technology, market and
enterprise development.
b. Value manufacturing, where there are synergies between high- and lowerend activities, closely integrated by multiple, IT-enabled functions [see Chart
10.1].
Chart 10.1: Value Manufacturing
Value manufacturing spans entire value chain
Research
Development
Production
Commercialisation
SCM
Post sales
--- plug and play infrastructure facilitates competitive business environment ---
!()
Chapter 10
Singapore must no longer remain a mere manufacturer of products. We need
to develop new capabilities to become an innovative creator of products and
businesses. Strengthening the close interlinkages between research and
development, IP development and industry will be key to achieving this.
Key Recommendations
Enhancing Existing Areas of Strength and Developing New
Growth Areas
We have focussed on developing chemicals, electronics, engineering and
biomedical sciences as the four key clusters that form the nuclei of our current
value manufacturing base, upgrading and moving them up the value-added
chain over time. The chemicals and engineering clusters have provided a stable
base for growth, constantly contributing about a third of our manufacturing
value-add. Electronics has been a fast growth cluster notwithstanding the
current cyclical downturn. Biomedical sciences is a key growth area for the
future. We must continue to grow these areas. The detailed recommendations
for each cluster are attached as Annex 1 to this chapter.
Going forward, we need to identify and develop new clusters for manufacturing.
Industrial information technology, nanotechnology, photonics and MEMS,
alternative fuels and performance materials are promising areas of growth. They
cut across various industry clusters and offer enormous potential in the future.
Singapore should monitor developments in these areas closely and build up our
capabilities in them where necessary in order to retain the relevance of our
existing industries and ride on such emerging technologies as a vehicle to create
new industrial clusters. We can leverage on our semiconductor, precision
engineering and chemical materials capabilities to grow these new areas.
!(!
Chapter 10
Tackling Cost Issues
We need to maintain the competitive position of Singapore by increasing
productivity and reducing costs where possible, especially in the following areas:
a. Land Cost – Land cost is particularly important for manufacturing. We must
maximise the value of land resources in Singapore and find ways to keep the
cost of land competitive. In particular, Singapore should price industrial land
at internationally competitive rates, and even consider renting land on a
profit share basis. The colocation with Riau should also be used to reduce
overall land costs; and
b. Utilities – Utilities costs in Singapore are higher than in other countries.
Electricity, for example, is more expensive because we do not have coal,
hydro-electric or nuclear power. Transmission costs are higher because of
our urban environment, which require underground cables. Notwithstanding
this, however, we should encourage competition and ensure adequate supply,
in order to promote efficiency, maintain competitive rates and raise standards.
We should avoid cost-plus or monopoly pricing, which will push up overall
business costs.
Workers
Manufacturing will continue to provide good jobs for Singaporeans. We will
need to prepare our workers for the new manufacturing jobs in the existing key
clusters as well as in the new clusters, such as photonics, MEMs and performance
materials. We will continue to assist companies with preparation, training and
upgrading of their Singaporean workers.
Foreign workers have played a vital role in the manufacturing sector by helping
to keep our labour costs competitive. At the low end, foreign workers fill jobs
for which we cannot find Singaporeans, especially in factories, and in the
construction and ship-repair industries. At the middle level, a proportion of
skilled or semi-skilled foreign workers in our workforce help to average down
labour costs for businesses and thus increase the number of jobs for citizens.
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Without foreign workers manning the night-shifts, there would be no day-shift
jobs for Singaporeans. Production costs would go up, and companies would be
forced to move elsewhere, where workers are cheaper and more readily available.
We must continue to allow the manufacturing sector to employ a proportion
of foreign workers. The inflow must be managed carefully and flexibly, so as to
maintain our cost competitiveness, while avoiding serious social problems. This
should be done primarily through the foreign worker levy, supplemented with
some administrative controls where necessary. This is a more flexible way of
managing the number of foreign workers not only in the manufacturing sector
but in the other sectors as well, which allows the market to determine where
the foreign workers can be most efficiently deployed.
Promoting Research and Development (R&D)
To attract more foreign manufacturing to Singapore, we need to seed more R&D
activities in Singapore, putting in place the infrastructure, training the necessary
manpower and attracting foreign researchers. We should encourage both public
and private organisations to cooperate with MNCs in R&D work so as to encourage
the MNCs to base their product development and charters in Singapore. We
should also continue to build up our international reputation for R&D.
We have set up the Biomedical Research Council (BMRC) and the Science and
Engineering Research Council (SERC) under the Agency for Science, Technology
and Research (A*STAR) to drive the overall development of the public R&D
infrastructure. We have established and built up research institutes (RIs) to
support our industry clusters. We have brought in leading scientists to help
expand and deepen our research capabilities. We have incentive schemes to
encourage R&D activities.
In the last three years (FY1999-2001) alone, the R&D expenditure of the RIs has
totalled $1.1 billion. These are long-term investment to sharpen our scientific
and technological edge, and to build new competitive advantages for Singapore
Our commitment to R&D does not only involve ploughing money into R&D.
We need to generate ideas and see that these are commercialised. The focus
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should not be on ‘research’ alone, but on ‘development’ as well. RIs should
therefore concentrate on R&D in new growth areas to attract foreign investment
and to spin off high-tech companies in these growth areas.
RIs should also concentrate on developing R&D manpower for industry. This is
because a ready and abundant supply of highly trained scientific and technical
manpower will be an important competitive factor as industry R&D activities
extend upstream beyond product and process development to applied research
and technology development, and our industries become more technologically
advanced and science-based.
To promote research and commercialisation of innovative ideas in general, we
recommend that innovation-oriented tax incentives be considered, including
double tax deduction for patent filing costs for companies and individuals.
Singapore should also renegotiate current tax treaties with foreign countries
to lower withholding taxes for IP income flow into Singapore. Personnel in the
research and academic community can be coupled with business mentors and
given funds through venture capital schemes such as the Startup Enterprise
Development Scheme (SEEDS). Companies can be incentivised to be test beds
for new technologies through rapid depreciation allowances or grants for costs
of acquisition and skills training.
Strengthening IP Protection & Management
Innovation requires protection, and the acquisition of skill sets required for both
IP and legal documentation should be actively encouraged by the Government.
The Government has already attracted a strong legal cluster and has joint
arbitration agreements with the UK and the US. Companies which have invested
here have expressed strong confidence in our IP protection regime. To further
strengthen this legal infrastructure, we recommend the setting up of an IP
Academy that will become the regional centre for thought leadership and
training IP professionals. The goal is to position Singapore as an IP management
centre. Royalties will then flow back to Singapore registered patent holders,
adding to Singapore’s GNP. We can encourage this through incentives, such as
double tax deductions or grants for filings.
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In addition, many industries have internationally acknowledged regulatory
bodies, such as the Food and Drug Administration (FDA) and the Federal Aviation
Authority (FAA), which certify products and facilities to indicate that they meet
government thresholds for quality and safety. Singapore should secure mutual
recognition agreements with these global bodies to become the Asian regulatory
centre, which is in line with the existing image of Singapore as ‘clean and
incorruptible.’
Developing Cluster-focused Infrastructure
Each industry has a common set of services that it requires, which is often
unique to that industry but used by all of the companies in that industry.
Companies in an industry tend to aggregate in locations where such infrastructure
is already in place, therefore making it quick and efficient to start production.
Singapore should thus create cluster-focused infrastructures for key industries
to achieve economies of scale, and bring in early innovators to establish critical
mass. We have started to do so. Jurong Island, which has positioned Singapore
as a world-class hub for chemical manufacturing activities, is a good example
of cluster-focussed infrastructure. Chemical companies, linked by common
pipeline corridors, buy feedstock and sell finished products ‘over the fence’, and
outsource utilities such as fire-safety services, logistics, storage and terminalling.
We should explore how this concept can be extended to other clusters as well.
Developing Supporting Services
One of our strengths as a manufacturing hub has been the presence of a strong
base of supporting services. We must continue to develop such capabilities,
particularly in the area of supply chain management (SCM).
Facilitating the flow of goods, information and people is key to the success of
a global leader. As a world-class logistics centre with sophisticated SCM services,
we have attracted companies to locate in Singapore both to support their
operations, or as a part of the SCM community. While the Government should
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continue to maintain the excellence of underlying infrastructure (roads, ports,
airport), we recommend further specialisation of SCM capabilities in Singapore.
In particular, Government-established organisations, such as The Logistics
Institute-Asia Pacific (TLI-AP), which are maturing into thought leaders in the
Asia Pacific, should be encouraged to share knowledge with academia and
industry to spark innovations in SCM.
Securing Market Access
Market access is critical for the survival of manufacturing in any country. We
support Singapore’s active participation in the WTO to liberalise trade on a
multilateral basis. Bilateral FTAs complement this by securing access for Singapore
to our key markets. The Government should continue its pursuit of FTAs with
our key trading partners.
Trade missions overseas, run by International Enterprise Singapore (IES), are also
key to market development, as they broaden understanding about the
opportunities for commerce. Such missions should increase in frequency and
depth.
Taking Advantage of Low Cost Areas
Besides these initiatives, we should take advantage of low cost areas close to
Singapore including the Riau Islands and Southern Malaysia. There are synergies
to be tapped from combining knowledge-intensive activities in Singapore with
more labour-intensive ones in these areas, where land and low-cost workers are
more readily available.
For example, we can maximise the potential of the Singapore-Riau twinning
model. One way to do so is to include the Riau islands within our FTA framework.
We also need to build up a strong base of supporting industries and improve
the logistics network between Singapore and Riau. With this infrastructure in
place, manufacturing companies can establish their regional operations in
Singapore to carry out activities such as product design and rapid prototyping
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of system products. At the same time, they can use Batam or Bintan as a lowcost yet nearby location for labour-intensive manufacturing, to be managed
and/or supported out of Singapore. This is a winning combination, which many
companies will find attractive and consider seriously as a viable alternative to
China.
Conclusion
Notwithstanding the intense global competition, Singapore remains a compelling
investment location for MNCs. Many good manufacturing jobs have been
created from these foreign investment and more such jobs will be generated in
the future. In the semiconductor industry, investors have put in billions of dollars
to build wafer fabs here. These significant long-term investment reflect the
MNCs’ confidence and commitment to Singapore. MNCs also speak highly of
the skills, adaptability and productivity of our workers.
Manufacturing will therefore continue to play a key role in the Singapore
economy. By leveraging on our competitive advantage, and strengthening our
supporting infrastructure and business environment, we can position Singapore
as a global leader in value manufacturing, for the next decade and beyond.
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Annex 1: Industry Cluster Initiatives
Electronics
Key Initiatives
• Develop new capabilities in semiconductor equipment, chemicals and materials,
industrial design as well as R&D in new technologies including photonics
and nanotechnologies.
• Centralise cogeneration facilities for wafer-fab parks that could generate 25
per cent cost savings per participant.
• Improve semiconductor-manufacturing infrastructure through development
of shared facilities including training.
• Enhance benefits of twinning with Riau Islands by improving logistical links
and supporting industries.
• Grow new industries in photonics, display, network storage and wireless
products that benefit from existing ‘clean room’ capabilities.
• Develop New Supply Chain Models including ‘forward hubbing/floating
warehouse’ facilities.
• Establish specialised funds for wireless IC and fabless IC design.
Chemicals
Key Initiatives
• Review regulations to encourage more efficient methods of power generation
including cogeneration.
• Ensure cost competitiveness of power, including reviewing Transmission and
Distribution charges.
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• Ensure supply of feedstock by deepening the level of integration and harnessing
the potential of new developments in process technology.
• Investigate feasibility of a common product grid on Jurong Island to strengthen
supply chain management infrastructure.
• Investigate feasibility of common waste treatment facilities on Jurong Island.
• Encourage environment regulations based on sound science for sustained
development.
• Develop quality workforce policy.
• Upgrade logistics capabilities to handle specialised chemicals.
• Build well-connected hub through web of FTAs.
• Enhance supporting maintenance services, with emphasis on enhancing local
capabilities in specialised equipment.
Biomedical
Key Initiatives
• Develop a ‘Plug & Play’ environment for both manufacturing and R&D,
including the support services that span the whole industry.
• Continue to expand and train biomedical sciences manpower pool, through
various approaches including A*STAR’s National Science Scholarships, EDB’s
manpower training schemes as well as the industy-led Biomedical Manpower
Advisory Committee (BMAC).
• Focus on higher value-added manufacturing and new/advanced manufacturing
technologies.
• Build up public research capabilities to support manufacturing activities e.g.
Bioprocessing Manufacturing Technology Centre (BMTC), Institute of Chemical
Sciences (ICS).
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• Promote industry to move towards upstream activities that will help anchor
future manufacturing activities through facilitating collaborations with
centres of excellence/’Luminary Centres’ in our hospitals, the universities and
A*STAR’s research institutes.
• Expand market access through improving the regulatory environment and
increasing recognition by foreign regulatory authorities.
• Enhance marketing & communications strategy to profile biomedical science
manufacturing.
• Continue to nurture local venture capitalists (VCs), incubators and startups.
Transport
Key Initiatives
• Maximise air and sea connectivity to strengthen supply-chain offering to
manufacturers.
• Strengthen urban transport solutions offering by creating a sub-cluster.
• Industrialise shipyard operations and strengthen marine sector with more
knowledge-based activities.
• Explore use of Riau Islands as an alternative for labour-intensive activities.
• Establish multi-agency effort to encourage innovation platforms, e.g. Singapore
Initiative in Energy Technology (SINERGY), using lessons learnt from developing
Singapore’s infrastructure.
• Build well-connected hub through web of FTAs
• Provide funding and risk-sharing support for key local suppliers in key sectors
with high entry barriers to ensure that they become internationally competitive.
!"#
Services
Chapter 11
!"!
Chapter 11
Summary
Even as we maintain manufacturing as a growth engine, we need to put more
emphasis on growing our services sector, in the same way as we have done for
the manufacturing sector. We must pay particular attention to exportable
services, as Singapore has the potential to become Asia’s leading services hub,
providing an array of world-class services. To tap these opportunities, we need
to further upgrade areas in which we already have strong expertise such as
trading and logistics, ICT, financial services and tourism, and ensure that they
are globally competitive. We should also focus on making Singapore the
regional hub for new areas like healthcare, education and creative industries.
Developing the services engine:
upgrading established strengths,
growing new areas
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Chapter 11
Key Recommendations
Focussing on Priority Areas
• Develop areas in which we already have strong expertise such as trading and
logistics, ICT, financial services and tourism.
• Grow new areas such as healthcare, education and creative industries.
Removing Regulatory Impediments
• Put in place the right regulatory structure and framework to promote value
added, export-oriented services such as healthcare, education and creative
industries, while balancing domestic social considerations. This would include:
a.
Setting a clear objective of promoting these services given their economic
value and therefore the need to review current regulations;
b.
Reviewing regulations that negatively impact on development of service
industries;
c.
Reviewing whether the responsibilities of an industry regulator should
be separated from that of a promoter; and
d.
Ensuring that the industry regulator is not a player.
Growing Demand
• Promote regional and global demand by:
a.
Marketing our service industries more aggressively and systematically
building up Singapore’s branding as a services hub; and
b.
Simplifying our procedures and regulations to make it convenient for
overseas consumers to come to Singapore to make use of our services.
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• Stimulate sophisticated local demand, where appropriate, through:
a.
Government outsourcing of activities including fund management and
IT solutions;
b.
Government catalysing experimental and cutting edge projects, for
example, by leading ICT pilots and trials in selected key areas; and
c.
Promoting private endowments to education, arts and healthcare by
favourable tax treatments for gifts to non-profit organisations in these
industries.
Developing Manpower for Services
• Conduct a comprehensive review of manpower training for the service
industries especially in areas with good potential for growth, including
services training at the tertiary level.
Land for Services
• Consider providing land at institutional rates for the development of education
and healthcare institutions.
Implementation Strategy
• Designate the Ministry of Trade & Industry (MTI) to coordinate the development
of the services engine.
• Set up a Ministerial Committee on Services to manage the tension between
economic and social objectives of policies.
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Chapter 11
Introduction
In 1986, the Economic Committee recommended that the Government should
promote services as actively as the manufacturing sector, and make both the
twin engines of Singapore’s economic growth. Since then, the share of services
in our GDP has risen from 61 per cent in 1986 to 65 per cent in 2001. Its share
of total employment has also increased from 64 per cent to 74 per cent over
the same period.
However, the pace of growth of the services sector in Singapore has not been
even. The sector expanded at a rapid rate of 9.6 per cent per annum in
1986-96, until the Asian Financial Crisis threw a spanner in the works in 1997.
The crisis took a heavy toll on our services market in Southeast Asia. Between
1996 and 2001, growth of the services sector slowed considerably to 4.8 per
cent per annum. Despite making good overall progress in growing our services
sector, we have yet to develop it to its full potential. Many of our service
industries are not yet world-class, and trail behind the developed countries in
productivity and capability.
A key factor is that we have not been as proactive and aggressive in developing
the service sector as we have been in manufacturing. Except for ICT and financial
services where notable progress has been made in recent years to liberalise and
deregulate the industries, we have allowed regulatory hurdles to get in the way
of services growth, partly because of genuine socio-political concerns.
Going forward, we need to make focused, concerted efforts to develop our
services sector, especially those with export potential. The opportunities for
services in Asia are tremendous. With a rapidly increasing base of affluent Asian
households, there will be growing demand for higher-end and better-quality
services.
We should tap this market because we have what it takes to be a regional
services hub. We have a well-educated workforce, good physical infrastructure,
a strategic geographical location, a conducive legal environment, and a solid
reputation for quality and reliability.
These are important competitive advantages which we must fully exploit.
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Chapter 11
But because our resources are limited, we need to focus our efforts. We have
strong expertise in services such as trading and logistics, ICT, financial services
and tourism. But to stay ahead in these industries, we need to further differentiate
ourselves, create more value and find new growth niches. Furthermore, we must
identify and develop new growth industries as additional cylinders for our
services engine. In particular, there is potential for Singapore to become the
regional hub for healthcare, education and creative industries. Our detailed
recommendations for each of these areas are attached as Annex 1 to this chapter.
On the whole, we need to actively create the conditions that will allow our
service industries to thrive and flourish, by removing impediments to their
growth and leveraging on enablers that can catalyse their expansion. We propose
the following three broad thrusts.
Removing Regulatory Impediments
Compared to manufacturing, services are subject to more regulations. Services
like education, healthcare and media have social or public welfare dimensions.
Others require regulatory supervision to safeguard standards, as in the case of
professional services. As a result, the social concerns of our domestic demand
have taken priority over the development of the exportable component. The
emphasis is thus weighed towards regulation rather than promotion. For example,
for social policy reasons, we have deliberately restricted the supply of doctors
and lawyers in Singapore. In some service industries, the Government inevitably
gets deeply involved beyond being a mere regulator, to becoming a dominant
player. However, the Government agencies’ Charter is to provide adequate
services for our citizens, not to develop and export these services overseas for
economic gains. This has hindered the growth of the exportable component.
Healthcare and education are good examples.
To enable services to take off as an engine of growth, we need to address the
regulatory issues and remove policy impediments if possible, especially for
certain sensitive industries like education and healthcare, where the social
concerns are real. We should see how we can liberalise these areas, while being
conscious of domestic social considerations.
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Chapter 11
We need the right regulatory structure and framework. We recommend guidelines
and measures to help resolve conflicting priorities and allow maximum freedom
for the exportable component to grow and compete internationally:
a. Set a clear objective of promoting these services given their economic value
and therefore the need to review current regulations;
b. Conduct regular reviews of regulations that negatively impact the development
of service industries, and recommendations should be made to MTI to remove
or modify such regulations;
c. Review in each service industry whether the role of the regulator should be
separated from that of the promoter. There are instances where a single
agency undertaking both regulatory and developmental roles has been able
to carry out its responsibilities successfully. But this should not be the general
rule. Different industries have different characteristics and market structures.
In some cases, there are merits in having the responsibility of growing the
exportable component parked outside the regulator, and maintaining a
healthy tension between regulator and promoter. We should make a conscious
effort to identify the approach best suited to the services industry we want
to grow; and
d. Ensure that the regulator is not also a player. Wherever possible, the
Government should actively outsource services to local enterprises, rather
than be a service provider.
Growing Demand
To develop the service industries in Singapore, we need to grow demand. Given
our small domestic market, we need to leverage on external demand. Some
service industries like tourism and trading are internationally-oriented and cater
primarily to overseas demand. But even for service industries with a significant
domestic demand base, having a strong exportable sector will help to achieve
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Chapter 11
greater scalability. In any case, the greatest growth potential will come from
the fast-rising regional demand, given the rapid development of China and
India. We thus recommend the following to promote regional and global
demand:
a. Marketing our service industries more aggressively and systematically building
up Singapore’s branding as a world-class services hub. This is a key gap in our
services development effort. For example, we do not have the equivalent of the
British Council or Education Australia to market educational institutions to foreign
students. Similarly, for healthcare services, we have lagged behind our regional
competitors in marketing despite our superior clinical services; and
b. Simplifying our procedures and regulations to make it easy and convenient
for foreign students, patients, tourists and businessmen to come to Singapore
to make use of our services. This includes easing entry requirements, expediting
processing, and introducing ‘green lane’ privileges for selected low-risk, highvalue segments.
Domestically, we can further promote sophisticated demand. Having demanding
local consumers who have sophisticated needs and expect high standards and
quality will encourage experimentation, innovative solutions and cutting edge
services. This will raise the overall standard of the local service industries and
enable them to compete effectively in the international arena. We recommend
the following initiatives to boost sophisticated local demand:
a. Government to outsource its activities wherever possible, including fund
management and IT solutions;
b. Government to catalyse experimental and cutting edge projects, for example,
by leading ICT pilots and trials in selected key areas like trade and financial
services, or piloting a ‘creative town’ initiative to integrate arts, business and
technology into community planning and revitalisation efforts; and
c. Fostering the development of private endowments to education, arts and
healthcare by favourable tax treatment for gifts to non-profit organisations
in these industries. We should also continue to acknowledge and celebrate
such donations.
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Chapter 11
Developing Manpower for Services
Developing manpower is a national imperative that is common for both
manufacturing and services. However, services are especially talent-dependent.
Until now, we have deliberately directed our education and training policies
towards producing people with hard technical skills, rather than a softer general
education. This has produced a numerate, technology-savvy society, and
supported a vibrant manufacturing sector.
Our overall strategy should maintain this bias towards technical and engineering
education. However, as we develop service industries with good growth potential,
we will also need to train and equip sufficient people with the capabilities and
knowledge to work in these new areas. We therefore recommend a comprehensive
review of manpower training for the service industries. This review should also
address the absence of training of service at the tertiary level.
Land for Services
Besides manufacturing, we should set aside sufficient land for new service
industries. For example, an education industry will require significant amounts
of land for institutions and support facilities like student housing. The healthcare
industry too will need land for hospitals.
We should also ensure that our land cost for the services sector is competitive.
The Government should consider providing land at institutional instead of
commercial rates for the development of education and healthcare institutions.
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Chapter 11
Implementation Strategy
As the development of services involves issues that cut across the purviews of
various Government agencies, it is not practical for a single agency to be
responsible for co-ordinating the diverse policy positions and reconciling the
different economic and social objectives. A distributed approach leveraging on
the resources and competencies of the various economic agencies is the practical
way to go. However, we should assign a Ministry to play a coordinating role,
and propose that MTI be designated for this task. It should work with the
champion agencies for the respective service industries to tighten inter-agency
coordination, improve client account management, and streamline incentive
and assistance programmes.
MTI and the various service champions can only achieve their mission if they
have the wholehearted support of the regulators. The tension between economic
and social objectives will have to be managed. We therefore recommend the
setting up of a high-level Ministerial Committee on Services to provide a platform
for such policy debates to be conducted so that optimal trade-offs can be made.
Conclusion
We have what it takes to be a world-class services hub. But realising the ambition
will require a concerted effort on the part of both the Government and the
industry players. There is a need above all for a change in attitude and mindset
towards services development.
We have already built up strong competencies in the established service industries
like trading and logistics, ICT, financial services and tourism. The prospects for
Singapore in these industries continue to be good, provided we can reinvent
ourselves and find new ways to create value. We must leverage on our strengths,
upgrade our capabilities and sharpen our competitive edge. At the same time,
we should grow promising new service industries like education, healthcare and
creative industries, which will provide added growth impetus. With renewed
vitality of established services and the growth of new services, we can become
Asia’s leading services hub, providing an array of world class services.
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Chapter 11
Annex 1:
Initiatives for New Services Industries
Education
Key Initiatives
• Develop tertiary education sector. A vibrant university sector would not only
attract and develop top talent, but also help to create jobs and wealth.
• Build up commercial and specialty schools segment. We should build a nexus
of 40 high-quality schools, each enrolling at least 1,000 international students.
• Make Singapore a centre for corporate training and executive education.
Encourage more MNCs to anchor their regional training centres in Singapore
and promote reputable institutions to provide high-quality short executive
training courses,
• Position Singapore as a regional destination of high-quality preparatory and
boarding schools. This would serve as an important feeder into the local and
foreign higher education institutions.
• Develop supporting services, particularly in the areas of eLearning and testing
and assessment.
• Set aside land at institutional rate to support these developments.
• Build up manpower availability. More teachers, faculty, administrative
professionals and instructional designers would be needed. Encourage
prestigious foreign teacher training colleges to set up branch campuses in
Singapore.
• Establish an Education Promotion Agency, along the likes of the British
Council and US Education Information Centre. This would be a centralised
agency with overseas offices to attract international students to Singapore.
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Chapter 11
• Facilitate the establishment of a quality assurance system for the private
commercial and speciality schools. This is to help providers upgrade the
quality of their offerings, introduce transparency in the marketplace and in
the long run, safeguard and upkeep Singapore’s reputation as a hub for
quality education.
• Streamline student visa requirements and processing to attract international
students.
Healthcare
Key Initiatives
• Review the regulations in the Public Hospitals and Medical Clinics Act (PHMCA)
with a view to relax restrictions on responsible, institution-based advertising
locally and abroad.
• Establish and communicate an internationally recognisable quality brand for
Singapore’s healthcare services sector emphasising trust, safety and excellence.
• Establish a responsible healthcare consumer forum for greater transparency
on pricing and clinical practice norms.
• Establish one-stop centres in key regional markets to make it more convenient
for foreign patients to come to Singapore.
• Ensure an adequate supply of land at institutional rates for these developments
• Expand the sources of medical manpower. If necessary, foreign-trained
MD/MBBS graduates could be put through an entry examination to ensure
quality and suitability.
• Increase the supply of nursing and paramedical manpower, especially by
facilitating the flexible recruitment and retention of foreign nursing and
paramedical manpower.
• Lift the quota on the female intake at the NUS MBBS medical school.
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Chapter 11
• Allow dual employment of specialists by the private and public sectors.
This would enable foreign patients to have better access to specialist
expertise in the public sector.
• Introduce, selectively, sub-vented healthcare at private facilities. This would
help generate economies of scale in the private sector and enable them to
provide more cost-competitive services.
• Encourage a Clinician-Scientist mindset by for example, ensuring protected
R&D time, and structuring an alternative career track for Clinician-Scientists;
• Encourage physical clustering of basic and clinical research for public and
private institutions, similar to that of successful Clinical Medical Hubs, e.g.
Mayo Clinic and Memorial Sloan Kettering.
Creative Industries
Key Initiatives
• Embed arts, design and media within all levels of education. For example,
drama and literature could be employed to help students enhance their
language abilities.
• Establish a flagship art, design and media university programme.
• Establish a MediaLab in Singapore to nurture multidisciplinary researchers
of the highest calibre.
• Develop Mediapolis@One-North to strengthen and heighten the visibility
of Singapore’s efforts in developing our media industry.
• Position Singapore as a media exchange to enable us to gain a strategic
foothold in the creation, acquisition and exploitation of media copyrights.
• Establish a National Design Council to champion the design cluster.
• Promote arts and cultural entrepreneurship in areas such as recording music,
publishing, cultural tourism, art, heritage and library consultancy services etc.
!"#
Human capital
Chapter 12
!"$
Chapter 12
Summary
To successfully implement all these longer-term strategies, our people must
have the right hard and soft skills. We must focus on developing our human
capital, ensuring that as many Singaporeans as possible are equipped with the
know-how and skills for a knowledge economy. We must strengthen our people’s
skills at analysing problems, communicating ideas, and managing people. We
must inculcate values such as resilience and openness, and imbue our people
with outward-looking, global mindsets. At the same time, we must entrench
the habit of lifelong learning, and prepare adult workers for the new jobs being
created. We must also open our doors to foreign talent, to supplement our own
talent. This will help make Singapore a vibrant and diverse metropolis where
both local and foreign talent to work and play.
Equipping Singaporeans for the future
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Chapter 12
Key Recommendations
Developing the Full Potential in Every Individual
• Allow for the holistic development of youths through a more flexible school
curriculum that allows for wider access to subjects of humanities and sciences
and the integration of arts and sports.
• Give the universities greater flexibility in admissions criteria and courses to
meet student and industry demands.
Manpower Planning
• Government to continue its role in national manpower planning, but adopt
broader approach to allow greater flexibility and diversity.
Fostering a Global Mindset
• Develop in Singaporeans a global outlook, and the skills, knowledge and
motivation needed to operate in an increasingly interconnected world.
• Facilitate the re-entry of overseas Singaporean students, including looking
into the special relaxation of mother-tongue language requirements for the
relatively small group of Singaporeans seeking re-integration into our school
system.
Tapping Overseas Network
• Set up the Majulah Connection to build on overseas circles of Singaporeans
and Friends of Singapore, and to enhance our business networks.
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Chapter 12
Attracting Foreign Talent
• Continue to attract foreign talent from all over the world to supplement the
local talent pool.
Enhancing Human Capital Management
• Raise the capabilities and professionalism of human resource (HR) practitioners
through training and a recognition scheme.
• Set up a HR Centre of Excellence within the Singapore Business Federation
to drive excellence in HR practices in the private sector.
• SPRING Singapore to work with SME associations to enhance HR functions
and competencies among SMEs.
Enriching the Environment
• Support Arts, Culture, Sports and Recreation (ACSR) through funding strategies
to recognise their contribution to national economic development.
• Increase awareness and provide opportunities for people to participate in
ACSR activities.
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Chapter 12
Introduction
Human capital is a key resource for an aspiring global city-state. It differentiates
major, vibrant cities from the rest. While Singapore may not have the size to be
a mega city like London or Shanghai, we can strive to be a global city like Boston
or San Francisco. Without our own hinterland, the challenge is greater. We
should endeavour to ensure that Singaporeans continually hone their skill sets
as well as strive for excellence. These are amongst the critical success factors
for developing a dynamic knowledge economy in a global city-state.
Education and training have been consistently high on the list of priorities for
Government spending. A well-educated, skilled and hardworking workforce
enabled Singapore to grow and prosper economically over the past 40 years.
Our efforts to attract MNCs to develop a vibrant manufacturing sector were
supported by a rigorous education system. We were able to produce workers
who were competent in vocational skills, technical expertise or scientific knowhow at the post-secondary level.
However, as Singapore charts a new economic course, our manpower strategies
must adjust accordingly to remain relevant and responsive.
First, while we have been ranked top worldwide for technical skills by BERI 2001
and there has been a marked improvement in the educational profile of recent
cohorts, our workforce still lags behind in worldwide comparisons [see Chart
12.1]. There are thus gaps in our human capital distribution. At the top end,
we will continue to need skilled knowledge workers and managerial talent which
we are now lacking. But we also have a large pool of workers who lack formal
qualifications whom we must retrain and upgrade.
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Chart 12.1: Educational Profile of Labour
Force, 2001
27
US
60
13
Japan
20
UK
18
South Korea
17
51
31
Singapore
17
49
34
Hong Kong
16
62
70
0%
17
52
20%
Degree
12
67
12
Taiwan
17
40%
36
60%
Secondary and post secondary
80%
100%
Below secondary
Source: Ministry of Manpower; Census and Statistics Department, Hong Kong Special Administrative Region, People’s Republic
of China; Directorate-General of Budget, Accounting and Statistics, Executive Yuan, Republic of China; OECD
Second, while the manufacturing sector has maintained its share of contribution
to GDP growth over the past ten years, manufacturing employment has decreased
steadily. The sector employed 28 per cent of the workforce in 1991, but the
figure fell to 19 per cent in 2001. The services sector, on the other hand, has
increased its share of employment over the same ten-year period, from 65 per
cent to 74 per cent. With the shift towards services, new capabilities and
knowledge will have to be acquired by the workforce to meet industry needs.
Third, beyond industry-specific skills, broader skills sets are required. Specifically,
we need an environment that encourages creativity, intellectual curiosity and
risk-taking. We must inject more flexibility and diversity in the education system
to develop Singapore’s human capital. With the push to internationalise
Singaporean firms, we also need to inculcate a global mindset among Singaporeans
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and ensure that they can succeed in a global environment. We must also continue
to attract international talent to supplement our human capital.
Singaporeans must be imbued with skills and competencies for lifelong
employability so that organisations can have the competitive manpower they
require for a knowledge-based economy. Besides technical and knowledge
competencies, our workforce will be equipped with people management, problem
analysis and communication skills. We must also embed in an organisation’s
human capital management systems, the development of leaders who can
motivate and inspire their employees and have the drive to nurture and develop
their employees to their maximum potential.
Developing the Full Potential in Every
Individual
To prepare our people for a rapidly changing world, our education system and
adult-training systems would have to change correspondingly. The education
and training roadmap should move from uniformity to diversity, from rigidity
to flexibility, and from conformity to resilience. The aim is to bring out the full
potential in every individual.
Reforms in Education Sector
Much has been done in recent years in the education sector. In schools, the
curriculum has been streamlined and revised to provide our students with
opportunities to think, reflect and explore, through open-ended activities, project
work and more skills-oriented assessment modes. The university admission system
has also been broadened to take into account other components outside the ‘A’
levels, including co-curricular activities, reasoning ability and project work.
Going forward, we welcome MOE’s move towards providing greater diversity of
options and opportunities. The JC/Upper Secondary landscape, for example, will
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cater to different talents and aspirations of students, with a range of educational
pathways, in terms of different programmes, mix of schools and alternatives
with stronger multi-disciplinary orientation. The Integrated Programmes will
provide a seamless upper secondary and JC education for students who
can benefit from a less structured system. The time freed up from not
taking the ’O’ levels can be used to engage in broader learning experiences.
We also welcome the establishment of new specialised Independent schools for
students with talents in special fields. The Sports School will commence
operations in 2004. NUS is planning to run a Mathematics and Science School.
The Ministry of Information and the Arts and the arts community will be studying
the feasibility of an Arts school. Schools will also be allowed to offer alternative
curricula and qualifications for the ‘O’ and ‘A’ levels, so long as these are
internationally recognised.
In the tertiary sector, initiatives to expand opportunities in the post-secondary
sector, including restructuring the Institute of Technical Education into regional
campuses, and the setting up of the new Republic Polytechnic are underway.
The ongoing restructuring of the university sector will inject greater diversity
in the provision of university education to better cater to larger cohorts with
more varied educational needs and aptitudes. In particular, we support
transforming NUS into a multi-campus university with niche campuses NUS
Outram and NUS Buona Vista, and evolving NTU into a comprehensive university
by expanding its disciplinary provisions. These changes will allow the university
sector to expand by leveraging on the strengths of existing institutions, while
positioning the sector as a whole to achieve excellence in attracting, developing
and retaining talent for Singapore.
These efforts will see us developing Singaporeans to their fullest potential, with
the requisite thinking skills, resilience, communication skills, global outlook,
openness and people skills. Their educational experience will also be less uniform
and richer. This will lend us a diversity of talents to draw on.
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Manpower Planning
The Government has traditionally played a significant role in national manpower
planning, and we believe that this should continue. The Government possesses
the necessary planning data and macroeconomic indicators to make informed
assessment at the national level on the future economic trends, and consequently
the future manpower needs of Singapore. Moreover, significant public funds
are invested in education and in manpower development. The Government
thus has an obligation to ensure that these tax dollars are directed in a manner
that optimises the outcome for the nation.
In setting the parameters for manpower planning, however, we believe the
Government can adopt a broader approach. The market is changing more
quickly, demanding a wider range of skills. With rising affluence, Singaporeans
now also have the resources to pursue their own choices in Singapore and
overseas. The Government must therefore allow greater flexibility at the individual
level and be more responsive to market signals, within the broad manpower
planning framework. Our institutions should be given more flexibility to adjust
intakes into the various courses they offer. They should also explore offering
hybrid programmes cutting across multi-disciplines. More timely and focussed
market information will also help the institutes of higher learning, students and
parents be better informed about changes in employment opportunities and
the competencies sought by companies.
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Chapter 12
Fostering a Global Mindset
The success of Singapore in transiting to a knowledge economy necessarily
implies regionalisation and globalisation. Singaporeans therefore must have a
global mindset and be capable of operating effectively in the international
environment. Singaporeans who spend the whole of their working lives in
Singapore are unlikely to fully develop the breadth and depth of skills and
perspectives needed to be effective global managers. We therefore need to
actively develop in Singaporeans a global outlook, and the skills, knowledge and
motivation needed to operate in an increasingly interconnected world.
This requires a multi-pronged effort including, among other things, developing
Singapore as an education hub with a diverse mix of institutions, including
branch campuses of foreign universities in Singapore, facilitating more exchange
programmes between Singapore and other countries, incentivising Singaporeans
to acquire core internationalisation skills and facilitating more mutually beneficial
postings between the civil service and the progressive public services overseas,
and/or the private sector. The Government efforts should be strategically
focussed, to avoid inadvertent hollowing-out.
We would need to address the impediments faced by Singaporeans in taking
up overseas postings. This would include relaxing mother tongue language
requirements for this fairly small group of Singaporeans seeking re-integration
into our school system, facilitating the re-entry of children of parents on
overseas postings, and building a greater network of Singapore International
Schools to cater to the needs of Singaporean children overseas where there
is sufficient demand.
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Tapping Overseas Networks
Today, many Singaporeans are venturing overseas to study, work and live. While
this means an outflow of local talent, we have to accept this as part of
globalisation. There are advantages for Singapore because these overseas
Singaporeans make up an extensive network across the globe, rich in a diversity
of experience and knowledge of different countries. We must maintain links
with these fellow Singaporeans, to keep them connected to Singapore and tap
their vast networks abroad as well as their expertise and different perspectives
from having lived overseas.
This was what the ERC had done. In the making of this report, the Committee
greatly benefited from significant contributions from the Singaporeans Overseas
Networks (SONs) formed in April 2002 by Singaporeans living abroad, specifically
to give inputs to the ERC’s work. We had therefore proposed, and are happy to
note, the setting up of the Majulah Connection by private Singapore citizens,
to maintain links and build up a network of overseas Singaporeans to get them
to contribute to the nation while they are away from home.
Foreign Talent
Talent has become a key resource in a globalised world. The appeal and
receptiveness of cities like Boston and San Francisco to talent, whether indigenous
from their hinterland or from the rest of the world, is a key reason why these
cities thrive. Today, even emerging economies like China and India also compete
for global talent. For example, some Chinese universities are going all out to
attract top academics from abroad with internationally competitive remuneration.
To sustain our economy in this environment, and indeed to maintain the standards
of living which we have achieved as a first-world country, we must do the same.
While there are many talented Singaporeans, our indigenous talent pool is not
deep enough. We must therefore seek talent from around the world, develop
a healthy mix of indigenous and global talent, and encourage all our talent to
identify with Singapore.
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Bringing in foreign talent is a sensitive issue in any society, even an immigrant
society like Singapore. This is especially so during economic downturns when
retrenchments and unemployment rise. The sentiment is understandable, but
the reality is that keeping out global talent will not create more jobs for Singaporeans, while sending away foreigners who are already working in Singapore
may cause the economy to spiral down further. Moreover, global talent
may be attracted to competing cities in Asia, and this will have profoundly
adverse impact on Singapore’s aspiration to become a leading global city.
Singapore must therefore continue to attract and embrace talent from abroad.
We must make Singapore a place where opportunities abound, where able and
enterprising people want to live, work and play, and where global talent are
welcomed and integrated into the Singaporean community. Developing a healthy
mix of indigenous and global talent, and encouraging them to identify with
Singapore, is critical to our continuing quest as a dynamic knowledge economy.
While this will mean tougher competition for Singaporeans, such an economy
would also offer more opportunities for every level of our society.
Enhancing Human Capital Management
We need our organisations to consciously enable workers to be at their best,
and at the same time, build and expand their capabilities to become more
productive, more resilient, able to tap their creativity and initiative, and bring
forth new innovation. In this environment, human capital management (HCM)
is no longer a supporting function for resource administration, but a strategic
leadership and management responsibility. Thus, we propose to develop HCM
as a strategic capability in our organisations and upgrade the manpower industry
to raise HCM competencies.
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Chapter 12
Develop HCM as a Strategic Capability in Our Organisations
HCM must be seen as a strategic function that contributes to achieving the
company’s business mission rather than an ancillary activity. All CEOs and
managers have a key role in developing human capital to sustain a company’s
competitive advantage in the new economy, where growing human capital is
not just a function of good HR practices. Leadership and management of people
can make the difference. This requires a change in existing mindsets of corporate
leaders, managers and HR professionals. We therefore propose to provide
continuing education and training to equip HR managers with business skills
and to raise the people-management and HR capabilities of business enterprises.
Upgrade the Manpower Industry to Raise HCM Competencies
We need to develop the manpower industry because a dynamic manpower
industry will help improve labour market mobility through job matching and
placement, and training of people to meet the needs of industry. The upgrading
of HCM will translate into enhanced development of our leadership, management
and talent pool.
In Singapore, there is currently no practice or requirement for HR practitioners
to seek professional recognition, unlike some developed countries which have
established recognition systems. We need to look into ways to enhance the
professionalism of the HR industry in Singapore, including establishing recognition
systems for competency standards.
In the long run, we believe that the initiative to reposition HR practices for the
future should be driven by the private sector. This is likely to be more effective
and sustainable. We recommend that SBF drive this initiative. A HR Centre of
Excellence can be set up within the SBF to do this.
Special attention is required to transform the HR functions within SMEs. In
contrast with the SBF arrangement, where an umbrella organisation represents
all larger employers, the SMEs are represented by a range of organisations. We
recommend that SPRING Singapore, which oversees SME development, leads
the Government’s efforts in working with these organisations to enhance HR
functions and competencies within SMEs.
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Chapter 12
Re-aligning Human Resource Practices
In the new employment landscape, workers will face increasing uncertainties
about job security. Employers and the HR profession should help to develop
systems that safeguard the interests of workers as they change employers or
are in between jobs. As a start, this could be done in the areas of medical
benefits and retirement savings (for workers on alternative work arrangements).
Employers and the HR profession should also step up efforts to innovate and
design equitable performance-based and flexible wage systems. Such systems
result in companies paying according to the worth of the job and the worker’s
contribution to the company. This will contribute to a more flexible and efficient
labour market for all workers.
The current downturn has shown that mature and better-educated displaced
workers also face difficulties finding new jobs. These workers represent a pool
of resources with a wealth of experience that can be tapped on. We recommend
that employers, together with the HR profession, consider how companies can
maximise the value of these workers.
Enriching the Environment
Besides political stability, work opportunities and a well-educated workforce,
other attributes such as rich cultural and sports programmes are necessary to
create a conducive environment that can provide a competitive edge over other
urban centres in attracting and retaining global talent.
Such a high level of cultural and sports activities compensates for our small
size, strengthens our national identity, deepens our sense of belonging and acts
as a ‘social glue’ for our people. A cultured and gracious environment is a
necessary component in our efforts to develop well-balanced, creative, resilient
and innovative individuals as described earlier. The proposed environment can
be created by:
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a. The Government signalling support for Arts, Recreation, Culture and
Sports(ARCS), through funding strategies to recognise their contribution
to national economic development, tax incentives to encourage
private/people/public sector partnerships, and spearheading the drive to
coordinate the development and promotion of recreation; and
b. Increasing awareness and providing opportunities for people to participate
in ARCS activities. The National Arts Council (NAC) and National Heritage
Board (NHB) should forge partnerships with relevant agencies and intensify
the drive to raise perception of arts and culture in the minds of Singaporeans.
We should accord outstanding artists and sportsmen greater public recognition,
including the conferment of the title of national treasures on deserving
personalities. We should evolve our own Singaporean identity as a unique
cultural icon.
Conclusion
Moving forward, these recommendations seek to produce the globally
relevant, empowered individual for the new knowledge economy. We
envisage each Singaporean being imbued with the necessary mindset, skills
and competencies to excel in the new environment, with resilient and
entrepreneurial individuals creating wealth and ensuring the continued
prosperity for our country. We envision our people rooted in and sustained
by the country that believes in them.
!"#
Restructuring and
employment
Chapter 13
!"$
Chapter 13
Summary
We need to manage the pain and dislocation associated with economic
restructuring so that they will not cause Singaporeans to resist urgent and
essential changes. We need to help workers understand the changes taking place
and what they imply for us. We must provide workers with training and job
counselling and match retrenched workers with new jobs. We must also help
those who are out of work, especially those with young families, to tide over
difficult times.
Helping Singaporeans to face up to
the challenges
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Chapter 13
Key Recommendations
Enhancing Skills Training
• Establish a national Continuing Education Training (CET) body to oversee the
development of lifelong learning in Singapore.
• Establish a Centre for Adult Learning (CAL) to serve as a one-stop centre for
individuals and employers to sign up for training programmes and grants.
• Consider setting up portable training accounts for workers or establishing
training funds based on the pooling model to support individual-initiated
training with industry associations as surrogate employers.
Helping the Unemployed Find Jobs Quickly
• Help Singaporeans understand changing employment scene and its impact
and implications, and adjust their mindsets and expectations.
• Adopt different strategies for different groups of job seekers, including
developing a labour market intermediary industry for the middle band, and
having the Distributed CareerLink Network (DCN) established by MOM focus
on helping the lower band with placement incentives.
• Augment the MOM job bank by tapping on information which EDB, industry
HR groupings and Government agencies have on job vacancies.
• Re-engineer existing industries to create jobs for locals through
professionalisation of jobs and developing turnkey programmes to facilitate
the entry of locals. This should include the development of emerging
industries, such as eldercare and domestic services, and reducing barriers for
informal sector employment.
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Chapter 13
• Adopt a comprehensive re-employment approach with job counselling,
training, job search assistance and subsidised job attachments for the
unemployed.
• Build up a pool of professional job counsellors in the economy to help
Singaporeans adjust their mindset and expectations to the new realities of
the job market. Employers and the HR profession should also be encouraged
to build capabilities in the area of career counselling.
Providing Assistance for the Needy & Unemployed
• Restructure the Interim Financial Assistance Scheme (IFAS) to incentivise
work. Individual progress plans should be drawn up as part of the IFAS
application process to encourage recipients to seek work or attend relevant
training.
• Simplify the assessment system and methods for families with hardly sufficient
household incomes so that they can get assistance more promptly. For families
at the margin with higher level of household incomes, to implement a
thorough assessment of their needs instead of the current practice of
focusing on household income at face value, taking into account savings
and retrenchment benefits received.
• Review and rationalise the assistance schemes run by the Community
Development Councils (CDCs) and government agencies to ensure that they
remain relevant and effective.
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Chapter 13
Introduction
Singapore has had full employment over most of the past four decades. Going
forward, the increasing competition we face and our evolving demographic
profile will change the employment landscape. Workers are likely to face more
frequent job displacements, changing labour market and employment practices,
new requirements for skills and an increasing threat of long-term unemployment.
Our main strategy should be to build the essential systems that would help
Singaporeans develop capabilities in the new economy. This must be
complemented by systems to help displaced workers transit back to employment
quickly, equipping them with new skills and providing interim financial support
where necessary, but not creating dependence or sapping the will to achieve.
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Chapter 13
Enhancing Skills Training
Acquiring new skills to take on changing jobs or entirely new jobs is critical to
staying employed in the new environment. In this respect, employer-based
training has and will continue to be the key approach, as it ensures relevance
in training and ultimately, employability. However, there are limitations to such
an approach. In particular, workers who need to position themselves for new
jobs will not be reached because employers are more likely to train workers for
immediate job needs and not future jobs. Furthermore, the increasing pool of
workers on non-traditional work arrangements, such as temporary and contract
workers, and free-lancers will also not benefit from employer-based training.
We therefore propose complementing the current system of employer-based
training with individual-initiated training. This will provide an avenue for those
who need training but face structural barriers in accessing employer-based
training. One way of providing such training is to set up a portable training
account for workers to fund individual-based training. Workers can then choose
the courses they want to upgrade themselves with. Another approach is that
adopted by the NTUC Education and Training Fund (N-ETF), where funds are
pooled and made available to union members to draw on for skills training.
The effectiveness of such individual-initiated training can be maximised by
ensuring that training courses are relevant to industry. The Government should
work with more industry associations to ensure this. These associations can be
appointed as ‘surrogate employers’. They can then play the role of screening and
cofunding individuals for industry-related training. The Government could also
consider applying the principle of rewarding training service providers according
to the success of their trainees in finding jobs.
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Chapter 13
Continuing Education and Training (CET)
While a person may spend 16 or more years in formal education, he will probably
spend two to three times that period being economically active. However, at
the national level, we are spending less on CET than on pre-employment, formal
education and training. CET efforts have also been less coordinated. SPRING
Singapore has upgrading and retraining of our workers as part of its mandate.
Separately, NTUC runs programmes like the Skills Redevelopment Programme
for union members.
As CET is critical to augmenting Singapore’s human capital, and helping
Singaporeans adapt to the constantly changing economic landscape, we should
adopt a more focussed and sustained approach, backed by the necessary resources
and infrastructure. This will send out a strong message to raise the overall
awareness of the importance of upgrading and relearning for continued skill
relevance and employability.
We recommend that a national CET body be established to promote and oversee
the development of CET in Singapore. This body should look into expanding
the role of the existing Industry Skills Standards Committees (ISSCs) to include
the development of a CET framework for their particular industry or cluster. It
should also reconfigure the national training system to enhance access to
training for those who need it, and to complement employer-based training
with individual-initiated training.
We also recommend establishing a CAL. This can serve as a focal point for
research and development in critical adult training capabilities relevant to local
needs, the training of trainers and the promotion of best practices in lifelong
learning.
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Chapter 13
Helping the Unemployed Find Jobs Quickly
Adjusting Mindsets and Increasing Job Opportunities
Experience during this downturn has shown that there are industries such as
wafer fabrication, hotels and the shipyards, where well-paying jobs are still
available. However, many unemployed Singaporeans have not taken up these
jobs, either because they offer lower pay, involve different and unfamiliar working
conditions, or are in industries which Singaporeans are traditionally biased
against.
We must thus help Singaporeans grasp the changing employment scene and
its impact and implications, and get them to adjust their mindsets and expectations.
Our workers must understand and accept that many of the old jobs lost will
never come back. They must adapt to the new, changing environment, learning
new skills, and accepting new work conditions including more service-oriented
work, less convenient work locations and working shifts. Otherwise, even as
new jobs are created and older, lower value- added ones phased out, they will
face difficulty finding employment.
We should also improve the image of those industries where there are job
vacancies. We propose the following:
a. Embark, more aggressively, on job redesign and professionalisation in sectors
which have potential for the redeployment of local workers. This should lead
to higher productivity and wages, as well as improved work conditions and
job image;
b. Intensify efforts to encourage the training of existing workers in identified
sectors so as to build up a professional industry image;
c. Target efforts to disseminate information on sectors that offer job opportunities
for locals, to dispel misconceptions about certain jobs and increase the pool
of jobs that locals are willing to consider; and
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Chapter 13
d. Expand place-and-train programmes to more sectors. Under such programmes,
unemployed workers are pre-screened by potential employers who would
then agree in principle to hire these workers after training. Experience has
shown that such programmes show better results both in terms of worker
motivation and placement results.
There are also job opportunities in new industries and the informal sector. For
example, with an ageing population, there is likely to be increasing demand for
eldercare, healthcare and domestic services. We recommend that the development
of these industries be spurred to add to the pool of jobs for older and less
educated Singaporeans.
In addition, some of our most vulnerable workers may find employment in the
informal sector a viable option. We recommend that the Government reduce
barriers to such arrangements where possible.
Better Information Dissemination
One reason for the low takeup rate of available job vacancies notwithstanding
the number of unemployed Singaporeans may be the lack of access which some
Singaporeans have to job market information. There is thus a role for labour
market intermediaries to play in reducing labour market frictions and link workers
with jobs, and we should help them strengthen their capabilities to perform this
role effectively.
The establishment of the DCN by MOM is a first step in developing effective
market intermediaries. To further enhance this mechanism, we recommend that
DCN sharpen its focus on the bottom band of workers and where suitable,
involve private sector players with the required capabilities.
Access to a job bank with significant number of jobs of value will also help
labour market intermediaries with their job placement efforts. We recommend
that the MOM job bank be augmented to include more jobs of quality. In
particular, MOM should work with the industry HR groupings to augment the
MOM job bank with relevant job vacancies from the various sectors. In addition,
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Chapter 13
EDB can encourage companies to post their jobs vacancies in MOM’s job bank.
We also suggest that all public sector job vacancies be posted in the MOM job
bank.
Re-employment
Singaporeans who have been out of a job for a prolonged period may also suffer
from a lack of confidence or track record to secure re-employment even after
job training.
Various Government-funded programmes are already in place to help Singaporeans
retrain and re-enter the labour market. This includes the ‘People for Job
Traineeship Programme’ (PJTP) run by MOM and the Skills Redevelopment
Programme run by NTUC. These programmes provide financial support for
Singaporeans to acquire new skills and remain employable. This principle should
continue to be applied. The Government should also evaluate these schemes
from regularly, and improve their effectiveness.
In addition, we recommend a comprehensive approach to help people find new
employment. The objective of such a programme is to help the unemployed
identify his personal competencies and aspirations, find jobs that are suitable
for him and learn about the additional skills that he needs to develop to secure
employment. The trainee then commits to an individual plan comprising funded
training in the appropriate courses, job search assistance and subsidised job
attachments or apprenticeships.
We also recommend that more resources and stimulus be given to build up a
pool of professional job counsellors in the economy. These counsellors can
provide more information on the jobs available and help job seekers adjust their
mindset and expectations to the new realities of the job market. Employers and
the HR profession should also build up capabilities in this area of career
counselling.
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Chapter 13
Providing Assistance to the Needy &
Unemployed
Unemployment insurance (UI) is one of the options adopted by some countries
to help with the financial needs of the unemployed. We studied this and found
that UI schemes were frequently fraught with implementation difficulties. Aside
from reservations that UI might create incentives for possible erosion of work
ethics, such schemes tend to fail to be viable at the point of greatest need.
This is because unlike life insurance or even health insurance, the risks in UI are
not life-cycle driven but business-cycle driven. We therefore believe that a better
approach would be to enhance our current assistance schemes to help unemployed
Singaporeans get back into work.
Restructuring Financial Assistance to Incentivise Work
The IFAS is a short-term social assistance scheme administered by the CDCs to
help lower-income individuals and families tide over difficult periods, including
period of unemployment. As the basic intent is to provide temporary and not
prolonged assistance, we must help these unemployed Singaporeans get back
to work as quickly as possible. We recommend restructuring the IFAS to
incentivise work so as to strengthen the linkage between financial and employment
assistance. This can be done by giving IFAS grants with the expectation that
the recipients actively seek work or attend relevant training.
We also recommend that Individual Progress Plans (IPPs) be drawn up for workers
to enhance their chances of re-employment. Under this arrangement, a CDC
job counsellor could work with the client and the Social Assistance caseworker
to draw up an IPP. Such a plan would indicate obligations that the client has
to comply with for the receipt or renewal of the monthly grant. The IPP obligations
include commitments to attend job counselling and job interviews, take up
suitable job offer or attend relevant job training.
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Chapter 13
Tailoring Help
To be meaningful, help must be tailored to target those who need it most, and
based on an assessment of where we can make the biggest difference. Help
must also be administered flexibly and sensitively, and not based on rigid
application of quantitative guidelines such as minimum household income
conditions.
The Government cannot do this on its own. It should tap on grassroots leaders
and Voluntary Welfare Organisations (VWOs), who come into regular, personal
contact with Singaporeans in need, and thus are able to identify the ones with
genuine financial difficulties.
Streamlining Assistance Schemes
There is currently a multitude of schemes administered by the CDCs, other
Ministries and a number of non-governmental organisations (NGOs).
We should encourage this approach of having many helping hands from NGOs
in tandem in Government efforts. On the Government’s part, we recommend
that the design of various assistance schemes run by the CDCs and different
Ministries and statutory boards be reviewed to rationalise the schemes so that
they are more consistent in their target groups and criteria. The schemes should
not be an end in themselves but rather, aim to help the families move towards
self-reliance. The assistance must be temporary and have built-in review periods.
The availability of a scheme does not mean that the target clientele will definitely
be reached in a timely manner. There may be barriers to quick access to services
in the form of administrative processes. There is a need to review and streamline
processes for timely service delivery. We recommend that clear service standards,
referral processes and audit mechanisms be laid down for social assistance
schemes and that these standards be reviewed periodically for relevance. The
service standards should specify time frame in processing of applications and
service quality.
!$%
Chapter 13
Conclusion
The measures recommended in this Chapter are important to help Singaporeans
cope with the immediate impact of restructuring and unemployment. But more
fundamentally, the unemployment rate is directly linked to the burden of
statutory charges on wages and the state of the economy. The lighter the
statutory burden on employers, the easier it will be for Singaporeans to be
employed and the lower our unemployment will be. The ERC has recommended
measures to keep the statutory wage burden as low as possible in Chapter 6,
including, for example, reducing the employees’ contribution rate for
low-income workers, and for workers aged 50-55, which will help these two
groups of workers find or keep their jobs. These measures should be implemented
as soon as possible.
We should also expect that in a recession, unemployment will go up beyond its
normal level. We will need to do more to help people find jobs quickly, and
assist the unemployed and their families. However, we should avoid taking
protectionist measures such as closing our doors to foreign workers, which will
only worsen the situation. The best solution is really to restore the economy to
growth as quickly as possible, by cutting costs, making ourselves more competitive
and growing our exports.
The changes in the employment landscape will pose great challenges to
Singaporeans. But although unemployment will be higher than before and the
environment will be tougher, Singaporeans should remain united and confident.
If we work together, adapt ourselves to the changes, and acquire new skills
through retraining and upgrading, we will restore growth, create more jobs and
improve the lives of all citizens.
!"!
Credits
!"#
Credits
Main Committee
Mr Lee Hsien Loong (Chairman)
Deputy Prime Minister & Minister
for Finance
Dr Tony Tan
Deputy Prime Minister & Minister
for Defence
BG (NS) George Yeo
Minister for Trade and Industry
Mr Khaw Boon Wan
Senior Minister of State (Transport,
and Information, Communications
& the Arts)
Mr Tharman Shanmugaratnam
Senior Minister of State (Trade &
Industry and Education)
Mr Raymond Lim
Minister of State (Foreign Affairs and
Trade & Industry)
Dr Ng Eng Hen
Minister of State (Education and
Manpower)
Mr Teo Ming Kian
Chairman, Economic Development
Board
Prof Shih Choon Fong
President & Vice-Chancellor
National University of Singapore
Mr Heng Chee How
Deputy Secretary-General
National Trades Union Congress
Mdm Halimah Yacob
Assistant Secretary-General
National Trades Union Congress
Mr Stephen Lee
Chairman, Singapore Business
Federation and President, Singapore
National Employers Federation
Dr Loo Choon Yong
Executive Chairman, Raffles Medical
Group
Prof Arnoud De Meyer
Deputy Dean of INSEAD and Dean
of Operations and Administration
Mr Ong Peng Tsin
President and Chief Executive Officer,
Encentuate Pte Ltd
Mr Johan van Splunter
Chairman & Chief Executive Officer,
Philips Electronics Singapore Pte Ltd
Mr Robert Stein
Chairman & Chief Executive Officer,
Adelphi Capital Partners Pte Ltd
Mr Sunny Verghese
Group Managing Director & Chief
Executive Officer,
Olam International Ltd
Mr Wong Kok Siew
Deputy Chairman & Chief Executive
Officer, SembCorp Industries Ltd
Mr Wong Ngit Liong
Managing Director, Venture
Corporation Limited
!"$
Credits
Sub-Committee
on Taxation, CPF,
Wages and Land
Mr Tharman
Shanmugaratnam
(Chairman)
Senior Minister of State (Trade
& Industry and Education)
Mr Cheng Wai Keung
Wing Tai Holdings
Mr Chia Wee Boon
Hewlett Packard Singapore
Mr Michael Dee
Morgan Stanley Dean Witter
Asia (Singapore) Pte Ltd
Mr Koh Boon Hwee
Singapore Airlines Ltd
Mr Stephen Lee
Singapore National Employers
Federation
Dr Lee Tsao Yuan
Skills Development Centre Pte
Ltd
Mr Wang Chan Wei
First Engineering Limited
Mr Peter Ong
Ministry of Transport
Mr Peter Seah
Singapore Technologies
Pte Ltd
Ms Lim Kwee Enn
Knowledge Engineering
Pte Ltd
Ms Teo Swee Lian
Monetary Authority of
Singapore
Sub-Committees
Ms Jeanette Wong
JP Morgan Chase Bank
Mdm Halimah Yacob
National Trades Union Congress
Mr Matthias Yao
National Trades Union Congress
Mr Robert Yap
YCH Group
Resource Persons
Mr Heng Swee Keat
Mr Liew Heng San
Mr Moses Lee
Dr Khor Hoe Ee
Prof Tan Kong Yam
Dr Paul Cheung
Ms Yong Ying-I
Taxation Working
Group
Mr Ng Keat Seng
Mr Tan Kay Yong
Mr Gerard Ee
Mr Aloysius Tan
Mr Pok Soy Yoong
Mrs Winnie Liew
Mr K Karthikeyan
Resource Person
Mr Ong Khiaw Hong
CPF System
Working Group
Mr Ravi Menon
Mr Jon Robinson
Mr Vijay Advani
Mr Goh Wee Liam
Mr Gerard Lee
Ms Elizabeth Chua
Resource Persons
Mr Willie Tan
Mr Wong Fot Chyi
Mr Lim Boon Chye
Mr Ng Yao Loong
Mr Ow Fook Chuen
Wages Working
Group
Mr Alexander C Melchers
Assoc Prof Hui Weng Tat
Assoc Prof Tan Khee Giap
Mr Mazakazu Ozawa
Mr Shawn Bergemann
Mr William Tan
Mr Cyrille Tan
Mr Thomas Thomas
Ms Nora Kang
Mr Lim Chin Siew
Mr Ong Yen Her
Mr Goh Eng Ghee
Resource Person
Mr Koh Juan Kiat
Land Working Group
Dr Steven Choo
Mr Stan Tebbe
Dr Amy Khor
Dr Han Cheng Fong
BG (NS) Tan Yong Soon
Mr Tan Kee Yong
Mr Regi Wong Shaw Seng
Sub-Committee on
Entrepreneurship
and
Internationalisation
Mr Raymond Lim (Chairman)
Minister of State (Foreign
Affairs and Trade & Industry)
Mr Tony Chew
Asia Resource Corporation Pte Ltd
Mr Goh Yew Lin
GK Goh Holdings Ltd
Mr Neal Kurzejeski
3M Singapore Pte Ltd
Mr Kwek Leng Beng
Hong Leong Group Singapore
Mrs Lim Hwee Hua
Temasek Holdings (Private) Ltd
Mr Ong Peng Tsin
Encentuate Pte Ltd
Dr Ron Sim Chye Hock
OSIM International Ltd
Mr Inderjit Singh
Infinitive Solutions Pte Ltd
Mr Tay Siew Choon
Singapore Technologies
Pte Ltd
Mr Vikram Khanna
The Business Times
Mr Wong Ngit Liong
Venture Corporation Ltd
Dr Wong Tai
Informatics Holdings Ltd
Internationalisation
Focus Group
Ms Olivia Lum
Mr Zulkifli Baharudin
Mr Charles Ong
Mr Choo Eng Chuan
Mr William Tan
Mr Sam Goi
Mr Chong Huai Seng
Mr Lee Kheng Joo
Mr Stanley Lim
!"%
Entrepreneurship
Focus Group
Dr Tan Chin Nam
Ministry of Information,
Communications & the Arts
Dr Dora Hoan
Prof Lim Mong King
Ms Helene Loo
Mr Viswa Sadasivan
Prof Ivan Png
Dr N Varaprasad
National University of
Singapore
Government in
Business Focus
Group
Mr Ang Thiam Huat
Prof Casey Chan
Mr Benny Goh
Mr Goh Chung Meng
Mr Ng Kai Wa
Mr Allen J Pathmarajah
Mr Kirpal Singh Sidhu
Dr Finian Tan
Sub-Committee
on Enhancing
Human Capital
Dr Ng Eng Hen (Chairman)
Minister of State (Education
and Manpower)
Mr Alex Chan Meng Wah
MMI Holdings Ltd
Mr Cheah Kean Huat
HP Services, Asia Pacific
Mdm Ho Geok Choo
SIA Engineering Company and
Singapore Human
Resource Institute
Dr Jennifer Lee
KK Women's & Children's
Hospital
Mr Lin Cheng Ton
Nanyang Polytechnic
Mr Liu Thai Ker
National Arts Council
Mr Colm McCarthy
Bank of America N.A.
Mr Kai Nargolwala
Standard Chartered Bank
Ms Yong Ying-I
Ministry of Manpower
Human Capital
Management
Working Group
Mr David Ang Chee Chim
Mr Sim Hong Boon
Mr Steve Hughes
Mr Yap Eu Win
Mr C.C. Lee
Ms Aileen Tan
Mr Lim Soo Ping
Dr Joseph Pious
Mr Phua King Song
Mr Michael Soo
Mr Nick Thomas
Mr Clifton Chua
Mr Adam Khoo
Dr Shu Moo Yoong
Education and
Training Working
Group
Assoc Prof Yim-Teo Tien Hua
Mr Heine Askaer-Jensen
Mr Jerel Kwek
Mr Aaron Lee
Ms Virginia Cha
Mrs Ou-Yang Geok Cheng
Dr Christopher Chia
Mr Kang Choon Tong
Dr Lynda Wee
Mr Desmond Koh
Mr Farid Hamid
Ms Sandra Davie
Mr Manogaran s/o Suppiah
Mr Winston Hodge
MG Ng Yat Chung
Globalising Talent
Working Group
Mr Goh Eng Ghee
Prof Neo Boon Siong
Ms Janet Young
Mr Andrew Bailey
Mr David Blair
Ms Mildred Tan
Mr Wrix Gasteen
Ms Christine Raynaud
Mr Ravi Vijayaraghavan
Mr Sebastian Conde
Mr Robin Hu Yee Cheng
Mr Lim Chuan Poh
Arts, Culture, Sports
and Recreation
Working Group
Mr Yeo Khee Leng
Mr Ekachai Uekrongtham
Prof Leo Tan
Mr Ong Keng Yong
Mr Dick Lee
Mr Kenneth Tan
Mr Alvin Tay
Dr Robert Liew
Ms Jennifer Pok
Ms Su Yeang
Mr Rick Dovey
Mr Gunalan Nadarajan
Ms Leong Yop Pooi
Mr Nicholas Chan
Mr Tham Khai Meng
Mr Lim Siam Kim
Ms Koh Lee Lian
Sub-Committee
on the
Manufacturing
Sector
Mr Johan van Splunter
(Chairman)
Philips Electronics Singapore
Pte Ltd
Mr Toshimasa Asaka
Matsushita Electric Asia Pte Ltd
Dr Frans M.A. Carpay
Exploit Technologies Pte Ltd
Dr Patrick Gyselinck
Schering-Plough Ltd Singapore
Mr Ko Kheng Hwa
Economic Development Board
Dr Ng Boon Hoo
Sunningdale Precision
Industries Pte Ltd
Prof Dennis L Polla
Institute of Bio-Engineering,
Nanotechnology Lab
Mr Jimmy Quah
Delphi Automotive Systems
Singapore Pte Ltd
Dr Gerhard Roehrlein
Siemens Medical Instruments
Pte Ltd
Mr Renato Sirtori
Asia Pacific, STMicroelectronics
Pte Ltd
Dr Rein Willems
Shell Chemicals Pte Ltd
Sub-Committee
on Service
Industries
Mr Khaw Boon Wan
(Chairman)
Senior Minister of State
(Transport, and Information,
Communications & the Arts)
Mr Chan Seng Onn
Attorney-General’s Chambers
Prof Arnoud De Meyer
INSEAD
Mr Hsieh Tsun-Yan
McKinsey & Co
Mr John Koh
Goldman Sachs (Singapore)
Dr Loo Choon Yong
Raffles Medical Group
Dr Richard Lim
Co-nect Inc
Mr Ong Beng Seng
Hotel Properties Ltd
Mr K Shanmugam
Allen and Gledhill
Mr Robert Stein
Adelphi Capital Partners Pte Ltd
Dr Tan Chin Nam
Ministry of Information,
Communications & the Arts
!"&
Mr Wilson Tan
Mercury Interactive
Mr Sunny Verghese
Olam International
Mr Wee Ee Chao
UOB Kay Hian Holdings Ltd
Mr Wong Kok Siew
Sembcorp Industries
ICT Working Group
Mr Andrew Buay
Mr Bill Chang
Mr Boh Tuang Poh
Mr Claes Odman
Dr Diana Young
Mr Lee Cheok Yew
Mr Lim Liat
Mr Lim Swee Cheang
Mr Noel Hon
Mr Tan Chang Huong
Mr Thomas Frischmuth
Mr Thomas Ng
Education Working
Group
Prof Ivan Png
Prof Lim Mong King
Mr Henry Heng
Mr Jean-Louis Michelet
Mr K L Cheah
Mrs Carmee Lim
Mr A W Bennett
Dr Ho Kah Leong
Mr Tan Tat Chu
Healthcare Services
Working Group
Mr Ko Kheng Hwa
Prof Tan Ser Kiat
Mr Tan Tee How
Dr Lim Cheok Peng
Mr Tan Beng Lee
Mr Yeo Khee Leng
Ms Leong Wai Leng
Prof Lee Eng Hin
Prof Lim Yean Leng
Dr Soin Kanwaljit
Mr Lim Hock San
Healthcare Services
Sub-Group
Ms Karen Koh
Mr Nicholas Miao
Mr Tan Wah Yeow
Ms Hilda Yap
Mr Art Ouellette
Ms Tan Keet Yee
Mr Allan Yeo Hwee Tiong
Dr Djeng Shih Kian
Dr Nei I Ping
Mrs Cecilia Tan
Dr Richard Ng
Ms Cecilia Chua
Prof Soo Khee Chee
Assoc Prof P C Wong
Ms Quay Keng Wah
Tourism Working
Group
BG Tan Yong Soon
Mr Richard Hartman
Dr Andrew Tjioe
Mr Huang Cheng Eng
Mr Robert Palmer
The Honourable Jeffrey
Gibb Kennett
Ms Yang Lan
Mr Dennis Foo
Mr Bernard Harrison
Assoc Prof Lily Kong
BG Chin Chow Yoon
Mr Ed Ng Ee Peng
Ms Saw Phaik Hwa
Financial Services
Working Group
Mr Stephen Stonefield
Mr David Gibson
Mr Tileman Fischer
Mr Low Check Kian
Mr Eugene Lai
Mr Loh Boon Chye
Mr Mark Daniell
Mr Greg Seow
Mr Venky Krishnakumar
Mr Tracy Wolstencroft
Dr Teh Kok Peng
Ms Teo Swee Lian
Financial Services Working
Group Advisors
Mr S Dhanabalan
Mr Steven J Green
Ms Ho Ching
Mr Lee Seng Wee
Mr James Loh
Mr Colm McCarthy
Prof Robert C Merton
Mr Kai Nargolwala
Mr Hubert Neiss
Mr Maurice Newman
Mr Ng Kok Song
Mr John Olds
Mr JY Pillay
Mr Peter Seah
Mr Wee Cho Yaw
Ms Jeanette Wong
Dr Y Y Wong
Mr Peter Lee Chung Shek
Mr Leong Charn Huen
Mr Seah Choo Meng
Mr Jimmy J B Koh
Mr Quek Sze Swee
Mr Chia Kim Piow
Mr David Ong
Mr Ng Boon Yew
Mr Yap Kit Siong
Trading Working
Group
Legal Services
Working Group
Mr Leo Tameeris
Mr Robert McRae
Mr Kwok Kian Hai
Mr Peter W C Tan
Mr Charles Goh
Mr Zeng Fu Zu
Mr Gerard Craggs
Mr Tan Hien Meng
Mr Leon Codron
Mr Hisayoshi Uno
Mr Ram S. Ramanathan
Mr Fabrice Desmarescaux
Mr Thomas Young
Mr Andrew Stone
Mr Chang Kuan Aun
Mr Low Weng Keong
Mrs Lee Suet Fern
Dr S Chandra Mohan
Mr R. Palakrishnan
Ms Indranee Rajah
Mr V K Rajah
Assoc Prof Tan Cheng Han
Ms Serene Wee
Mr Lucien Wong
Mr Alvin Yeo
Logistics Working
Group
COL (Ret) Tan Hong Huat
Mr Flemming R Jacobs
Mr Hwang Teng Aun
Mr Robert Yap
Mr Koh Soo Keong
Mr Henry Tan
Mr Zulkifli Bin Baharudin
Mr C K Lee
Mr Teo Siong Seng
Mr Vincent Lim
Mr Willy Lai
Mr Karmjit Singh
Mr Lim Chee Kean
Mr Charles Adams
Mr Teo Ser Luck
Prof John Jarvis
Mr Ian Scott
Engineering
Services Working
Group
Mr Paul Chain
Ms Loh Wai Kiew
Mr Peter Voegele
Creative Industries
Working Group
Mr Lim Hock Chuan
Assoc Prof Milton Tan
Mr Khor Kok Wah
Prof Anthony Jones
Prof Lo King-Man
Prof Ken Robinson
Mr Arnold Wasserman
Mr Raymond Chow
Dr Lee Yong-Teh
Mr Paul Saffo
Mr Richard Taylor
Renaissance City 2.0 Project
Team
Dr Christopher Chia
Mr Choo Thiam Siew
Mr Lim Siam Kim
Mr Khor Kok Wah
Design Singapore Taskforce
Assoc Prof Milton Tan
Mr Choo Thiam Siew
Mr Khor Kok Wah
Mr Kwok Kian Chow
Mr Yew Sung Pei
Ms Choy Sauk Kook
Mr Gerald Goh
Advisory Panels
Dr Alan Rubenstein
Mr Gunalan Nadarajan
Dr Thelma Lazo-Flores
!"'
Ms Gladys Theng
Dr Chew Kim Liong
Mr Lim Cheng Ton
Mr Lam Chow Yen
Prof Edwin Thumboo
Mr Tan Hong San
Assoc Prof Heng Chye Kiang
Dr Ho Kah Leong
Dr Victor Valbeuna
Mr Ang Keng Loo
Mr Alistair Leung
Mr Eric Berthier
Mr Edwin Beck
Mr James Chia
Mr David Chin
Mr Philip Ng
Mr Simon Ong
Mr Graham Perkins
Dr Ron Sim
Mr Philip Wee
Ms Jessie Yong
BG (NS) Philip Su
Mr Kim Chun Wei
Mr Nigel Smith
Mr Tan Beng Seng
Mr Tham Khai Meng
Ms Su Yeang
Ms Constance Ann
Mr Rajesh Shah
Mr Gan Eng Oon
Mr Derek Mackenzie
Mr Geoff Malone
Mr Lars Pertwee
Mr Nicholas Smith
Mr George Budiman
Mr Henry Steed
Mr John Ting
Mr Patrick Chia
Mr Benny Ong
Mr Peer Sathikh
Mr Ulrich Schraudolph
Mr Edward Tonino
Mr Arnold Wasserman
Prof Anthony Jones
Mr Earl Powell
Mr Andrew Summers
Media 21 Taskforce
Mr Lim Hock Chuan
Mr Frank Brown
Mr Henry H. L. Cheong
Mr Anthony Chia
Mr Eric Khoo
Prof Eddie Kuo
Mr Lai Seck Khui
Mr Lee Cheok Yew
Mr Kenneth Liang
Ms Doreen Liu
Mr Neville Meijers
Mr Raymund T. Miranda
Prof Kenneth Ong
Mr Viswa Sadasivan
Mr Harold Shaw
Prof Bernard Tan
Ms Joyce Tan
Mr Harrie Tholen
Mr Wong Heang Fine
Mr Andrew Yap
Mr Daniel Yun
Sub-Committee
on Domestic
Enterprises
Mr Stephen Lee (Chairman)
Singapore Business Federation
and Singapore National
Employers Federation
Ms Jennie Chua
Raffles International Limited
Mr Edmund Cheng Wai Wing
Wing Tai Holdings Limited
Mr Choo Si Sen, JP.PBM
Choo & Joethy
Mr Er Kwong Wah
Centre for Cleaning Technology
Private Limited
Mr Sam Goi
Tee Yih Jia Food Manufacturing
Private Limited
Mr Shabbir Hassanbhai
Indo Straits Trading Company
(Pte) Ltd
Mr Peter Husum
Robinson & Co., Limited
Mr Lee Suan Hiang
SPRING Singapore
Mr Ahmad Mohamad Magad
II-VI Singapore Private Limited
Mr Steven Phan
Ernst & Young
Mr Seah Kian Peng
NTUC Media Co-operative Ltd
Mr Tan Kian Chew
NTUC Fairprice Co-operative Ltd
Mr Andrew Tjioe
Tung Lok Restaurant 2000
Private Limited
Mr Philip Wee
Ikano Private Limited
Food & Beverage
Working Group
Mr Teng Theng Dar
Mr Salvatore Carecci
Mr Douglas Foo
Mr Takahiko Tsutsui
Mr Daniel Chuang
Mr Anthony Wong
Mr Samuel Chia
Mr Ricky Chew
Mr Lee Tong Soon
Mr Terence Goh
Mr Roger Koh
Mr Wong Bun Huge
Mr Ang Kiam Meng
Mr Arthur Tay
Mr Simon Lim
Mr Dickson Low
Mr Barry Tan
Mr Ong Siong Kai
Retail Working
Group
Mr Danny Tan
Mr Koh Wee Seng
Mr Rupert Keeley
Mr Silvestro Morabito
Mr Robert Yap
Mr Steven Goh
Mr Tang Wee Sung
Mr Terry D O'Connor
Mr Mustaq Ahmad
Mr Victor Cheong
Mrs Vivienne Tan
Mrs Wong Sioe Hong
Ms Atina Fong
Ms Helen Khoo
Ms Wang Look Tsui
Mr Lim Choo Kuan
Food
Manufacturing
Working Group
Mr Stefan Giezendanner
Dr Raj Singh
Mr Jeff Fraser
Mr David Teo
Mr Lim Boon Chay
Mr Wong Peng Hock
Ms Jocelyn Chng
Mr Francis Goh
Mr Tan Khieng Sin
Mr Richard Wong
Mr Sunny Koh
Mr Jansen Ng
Neighbourhood
Shops Working
Group
Ms Barbara Chan
Mr Benjamin Eng
Mr Chua Ser Keng
Mr Kelvin Tan
Mr Low Yan How
Mr Patrick Tay
Mr Richard Liew
Mr Sim Kim Hwa
Mr Simon Awe
Mr Simon Ng
Mr Tan Kim Huat
Mr Tang Chong Meng
Mr Yeo Hiang Meng
Mr Wong Chin Nai
Construction
Working Group
Mr Lam Siew Wah
Mr Eugene Yong
Mr Andrew Seet
Mr Joseph Sin
Mr Paul Chain
Mr Roland Wee
Mr Lee Kut Cheung
Mr Look Boon Gee
Mr Khor Poh Hwa
Mr Shahzad Nasim
Mr Michael Seah
Mr Henry Lam
Mr Low Soon Sim
Mr Chng Chee Beow
Mr Edward Wong
Ms Lee Bee Wah
Mr Eugene Kwek
Mr Michael Teh
Mr Jack Tan
Mr Bernard Lim
Environmental
Services Working
Group
MAJ (Ret) Surajan s/o
Gangadharan
Mr Michael Lim Tiong Soon
Mr Philip Poh
Mr Alvin Kor
Mr Foo Say Chiang
!"(
Mr David Lum
Mr Kang Kok Hin
Mr Peter Voegele
Mr Eu Leong Seng
Mr Tan Suan Kuan
Mr Edwin T. F. Khew
Ms Jennie Yeo
Ms Alice Wong
Mr Tan Tat Jin
Skills Development Centre
Sub-Committee
on Dealing with
the Impact of
Economic
Restructuring
Ms Yeoh Chee Yan
Ministry of Community
Development and Sports
Mr Heng Chee How
(Chairman)
National Trades Union Congress
Mr Chan Tee Seng
National Trades Union Congress
Mr Chua Taik Him
Economic Development Board
Mr John De Payva
NTUC and Singapore Manual
and Mercantile Workers Union
Mr Lim Geok Hwee
NTUC Choice Homes and SLF
Management Services
Mr Ong Keng Yong
People's Association
Dr Mohd Maliki Bin Osman
National University of Singapore
Mrs Pek Siok Ching
Ministry of Manpower
Mr Dhirendra Shantilal
Business Trends Personnel
Consulting Group
Mr Bob Tan Beng Hai
MK Electric (S) Pte Ltd
Mr Cyrille Tan
NTUC and United Workers of
Electronic & Electrical Industries
Mr Tan Kay Yong
GlaxoSmithKline
Mr Victor Tan
Robinson & Co Ltd
Dr Mary Ann Tsao
Tsao Foundation
Dr Joseph Pious
SPRING Singapore
Dr Tan Ern Ser
National University of Singapore
Assoc Prof Michael Williams
National Institute of Education
!")
Credits
Singapore Overseas
Networks
BOSTON
Mr Lim Kuo Yi
Mr Lim Chee Kiang
Ms Teo Kwee Bin
Mr Mark Sin
Dr Terence Fan
Mr Lim Wee Ping
Ms Lee Sue Ann
Mr Yue Shinji
Ms Tan Seow Hon
Mr Adrian Lai
Mr Anthony Leow
Ms Manesha de Silva
Ms Debbie Tan
Mr Vaughn Tan
Mr Lee Chien Lung
Mr Tham Hoe Phang
Mr Robert Toh
Ms Teresa Tsui
Mr Chang Che Hsien
Mr Alexis John Hooi Keng
Leun
Ms Kwan Le Shan
Mr Tay Boon Kiat
Mr Andrew Tan
Mr Justin Chan
Mr Peter De Costa
SAN FRANCISCO
Mr Richard Yim
Mr Jek Kian Jin
Ms Sharon Sim Krausse
Mr Richard Chan
Ms Emma Koh
Mr Lee Soi Tee
Ms Annie Chew
Mr Chern Chee Song
Mr Lawrence Suan
Mr Andrew Yeo
Mr Kelvin Neu
Mr Leng Lim
Mr Yishen Kuik
Ms Mei Lin Fung
Mr Sajit Bhaskaran
Mr Matthew Kam
Mr Ng How Yong
Singapore Overseas Networks
& Secretariat
Mr Loo Boon Thau
Mr Naresh Parshotam
Mr Cheston Tan
Mr Tan Wee Hong
Ms Koh Shiyan
Mr Terence Chia
Mr Batuhan Aydagul
Mr Jonathan Chua
Ms Meg Gordon
Mr Ben Ho
Ms Ellen Morgan
Mr Soon Sze Meng
Mr Moorthi Palaniapan
Mr John Tang
Mr Johann Noor Mohamed
Mr Woon Lee Leng
Ms Vivian Tan
Mr Gan Yu Hin
HONG KONG
Mr Francis Heng
Mr Anthony Teo
Mr Lye Khay Fong, Ronald
Mr Wong See Meng
Ms Benny Lee
Ms Leong Lau Kheng Janice
Mr Richard Lau
Mr Andrew Lim
Mr How Peck Huat
Mr Low Soon Teck
Mr Kwik Sam Aik
Ms Jennifer Tan
Mr Lee Kheng Joo
Mr Yeo Cheng Swee, Jimmy
Mr Lee Yong Sun
Mr Larry Ma
Mr Wilson Ang
Mr Neo Que Yau
Ms Georgina Chan
Mr Tan Eddie C. S.
Mr Choo Boon Yong
Mr Tan Teik-Heng
Mrs Yeok Chow
Ms Yoke Tan
Ms Lily Lee
Mrs Thio-Poon Lai Choo, Sally
Mr Bobby Lim
Mr Wong Kai Kok, William
Mr Long Jek Aun
Ms Yong Wei Ling Ivy
Ms Celene Loo
Mr Liu Chee Ming
Mr Beat M. Muller
Mr Andrew Kwok
Mr Phoon Chiong Kit
Dr Chua Bee-Leng
Mr Aaron Tan
Ms Lena Chou
Mr Tan Yong Wah
Mr T B Stevenson
Mr Lim Yew Seng
Mr Tony Teo
Assoc Prof Chan Yan Chong
Mr Peter Tan
Mr Kow Ping
Mr Tan Wing Ming
Mr Tan Wing Mun
Dr Y.H. Michael Pao
Mr Poon Wing, Keith
Mr Rick Kent
Mr Kevin Lau
Mr Chia Lye Hin, Anthony
Mr Adrian Chan
Ms Adelaine Lim
Ms Gillian Chee
Ms Joycelyn Ong
Mr Chong Koo Siong,
Lawrence
Mr Daniel Tan
Mr Chua Wah Peng, Robert
Ms Riben Toh
Ms Rebecca Hong
Mr Lee Yong Sun
Secretariat
Main Committee
MTI
Mr Goh Aik Guan
Mr Ho Meng Kit
Mr Tang Hsiu Chin
Ms Chua Boon Loy
Ms Soo Cheng Ghee
Mr Thia Jang Ping
Mr Chua Chin Wei
Mr Ng Kai Wee
Mr Shawn Chen
Ms Fang Min
Mr Choy Choon Ho
Ms Alamelu Subramaniam
Ms Madeline Pereira
Ms Daphne Khong
Ms Cassandra Ng
MITA
Mr Anil Kumar
MAS
Mr Edward Robinson
Dr Leslie Teo
EDB
Ms Wong Wee Kim
Ms Teresa Mok
Sub-Committee on
Taxation, CPF, Wages and
Land
Mr Lionel Yeo, MOF
Mr Lawrence Wong, MOF
Mr Ong Shyue Ping, MOF
Mr Gerald Chiu, MTI
Mr Lim Teng Kiat, MTI
Mr Kevin Chan, MOM
Mr Soh Chin Heng, MOM
Mr Damien Tan, MND
Mr Christopher Koh MeiHung, MCDS
Mr Derrick Wan Yew Meng,
MinLaw
Mr Toh Wee Khiang, EDB
Taxation Working Group
Mr Ong Pang Chan, MOF
Ms Sharon Lim, MITA
Mr Edward Robinson, MAS
Mr James Wong, MOT
Mr Andy Seah, IRAS
CPF System Working Group
Mr Desmond Chew, CPFB
Mr Patrick Chim, MINDEF
Mr Winston Yean, MINDEF
Mr John Lim, MAS
Mr Ng Hwee, MAS
Ms Sheila Wong-Ng, MOM
Mr Kelvin Bryan Tan, MOH
Wages Working Group
Mr Tan Jing Koon, MOM
Ms Anita Ng, MOM
Ms Goh Sor Imm, NTUC
Mr Yeo Han Sia, MTI
Mr Dave Lim, EDB
!""
Land Working Group
Mr Lim Eng Hwee, URA
Mr Cheang Tick Kei, JTC
Ms Ng Guat Hong, EDB
Mr Phua Hooi Boon, MND
Mr Allister Winston Yong, SLA
Sub-Committee on
Entrepreneurship and
Internationalisation
Mr Ong Ye Kung, PMO
Mr Henry Koh, MTI
Mr Kelvin Hong, MOH
Mr Donald Low, MOF
Mr Yeo Kia Thye, MOF
Ms Jacqueline Poh, MOF
Ms Kathy Lai, IE Singapore
Mr Yew Sung Pei, IE Singapore
Ms Esther Kam, IE Singapore
Ms Amreeta Eng, IE Singapore
Mr Wong Peng Wai, EDB
Mr James Loong, EDB
Ms Low Yen Ling, EDB
Mr Steven Tan, SPRING
Singapore
Sub-Committee on
Enhancing Human
Capital
Mr Lim Chee Hwee, MOE
Mr Seah Chye Ann, MOE
Ms Elizabeth Quah, MOM
Mr David Tan, MOM
Ms Kee Ee Wah, MOM
Mr Sia Kheng Yok, EDB
Ms Leonie Lee, PSD
Ms Lim Wan Yong, MTI
Ms Natalie Choo, IE Singapore
Mr Goh Dan Yang, MOF
Human Capital Management
Working Group
Ms Lim Ching Ching, IE
Singapore
Ms Kris Loke, MOM
Ms Annie Lin, MOM
Ms Kee Ee Wah, MOM
Ms Yin Tong, MTI
Ms Yvonne Tham, MITA
Education and Training
Working Group
Mr Pang Sze Kim, MOM
Mr Goh Dan Yang, MOF
Globalising Talent Working
Group
Mr Kevin Chan, MOM
Ms Ong Bee Lee, MOM
Ms Iris Gam, MOM
Ms Ryann Yap, EDB
Ms Rita King, IE Singapore
Arts, Culture, Sports and
Recreation Working Group
Mr Khor Kok Wah, MITA
Mr Yeo Guan Kiat, MCDS
Ms Adeline Kwok, NAC
Ms Lim Ming Boon, NAC
Ms Faith Chan, NHB
Mr Ng Eu Khim, NHB
Mr Oh Cheow Sheng, Nparks
Mr Gilbert Tan, NParks
Sub-Committee on the
Manufacturing Sector
Mr Tan Choon Shian, EDB
Ms Aw Kah Peng, EDB
Ms Ngo Hwee Lee, EDB
Mr Chua Yong Hwee, EDB
Mr Dheeraj Chhabra, EDB
Mr Kelvin Wong Wai Hung,
EMA
Mr Lee Chee Koon, MTI
Dr Wong Woon Kwong,
A*STAR
Mr R. Kumar,
Philips Electronics
Resource Persons
Dr Terence Loke, MTI
Dr Beh Swan Gin, EDB
Sub-Committee on
Service Industries
Mr Ng Wai Choong, MTI
Ms Jerusha Ang, MTI
Mr Bernard Lee, MTI
Mr Mak Kien Hui, MTI
Ms Teresa Mok, EDB
Ms Sin Wun Yi, IDA
ICT Working Group
Ms Tan Li San, IDA
Mr Ng Cher Pong, MITA
Mr Quek Swee Kuan, EDB
Ms Yuvarani Thenavagelu, SBA
Mr Chng Ken-Wei, IDA
Mr Simon Lim, EDB
Mr Hooi Wai Yean, EDA
Mr Low Aik Lim, IDA
Ms June Koh, IDA
Mr Luke Chen, IDA
Ms Karen Tan, IDA
Mr Ong Tong San, IDA
Ms Katy Tan, IDA
Mr Rickson Pang, IDA
Mr Liau Chie Kiong, IDA
Mr Tan Teck Sim, IDA
Education Working Group
Mr Kenneth Tan, EDB
Ms Phoon Lee Chaeng, MOE
Mr Jonathan Kua, EDB
Mr Chan Mun Wei, EDB
Ms Rebecca Chua, MOE
Ms Cindy Koh, EDB
Mr Tan Beng Ti, EDB
Healthcare Services Working
Group
Dr Beh Swan Gin, EDB
Mrs Phoon Chew Ping, MOH
Ms Loh Chin Siew, EDB
Ms Lynette Lee, EDB
Ms Shirley Loo, EDB
Mr Han Kok Juan, MOH
Mr Lawrence Lim,
Raffles Hospital
Mr David Lee,
Raffles Medical Group
Tourism Working Group
Mr Gerald Lee, STB
Ms Yeow Ju Li, STB
Ms Chew Boon Heang, STB
Ms Elaine Lim, STB
Ms Adeline Keh, STB
Mr Colin Liaw, STB
Ms Angie Gan, STB
Mr Teo Eng Cheong, MCDS
Ms Jow Lee Ying, EDB
Ms Christine Cheong, STB
Ms Grace Lu, STB
Ms Melissa Ow, STB
Ms Brenda Ng, STB
Mr Loh Yoon Ping. STB
Mr Alan Tan, STB
Mr Gevin Png, STB
Ms Jacqueline Tan, EDB
Mr Low Wing Hong, Kay Hian
Holdings
Financial Services Working
Group
Mr Edgar Teo, MAS
Mr Adrian Chua, MAS
Mr Paul Chung, MAS
Ms Sandy Ho, MAS
Ms Alison Lim, MAS
Mr Gary Tan, MAS
Ms Irene Yeo, EDB
Trading, Logistics and
Engineering Services Working
Group
Ms Tan Beng Tee, IE Singapore
Ms Wan Sze Mei, IE Singapore
Ms Angeline Chan, IE
Singapore
Ms Ng Sim Yee, IE Singapore
Ms Gina Kek, IE Singapore
Ms Barbara Chng,
IE Singapore
Ms Jennifer Yau, IE Singapore
Mr Hoo Hoe Keat. IE Singapore
Ms Yong Hsin Ann,
IE Singapore
Ms Baani Amrita, IE Singapore
Mr Chang Chin Nam, EDB
Mr Kelvin Wong, EDB
Mr Chong Chan Vee, EDB
Mr Law Tat Win, EDB
Mr Albert Lim, EDB
Ms Lee Hwei Yi, EDB
Mr Leslie Chong, IE Singapore
Mr Cheang Kok Yun, IE
Singapore
Legal Services Working Group
Mr Soh Tze Bian, AGC
Ms Sharon Ong, AGC
Creative Industries Working
Group
Ms Toh Kai Ling, MITA
Mr Ong Kong Hong, MITA
Ms Valerie Cheng, SBA
Ms Yvonne Tham, MITA
Ms Leonie Lee, MITA
Sub-Committee on
Domestic Enterprises
Mr Loh Kok Choy, PSB
Mr Kevin Shum, MOM
Mr Leong Wai Mun, MOM
Ms Carolyn Neo, IE Singapore
Mr Addison Goh, STB
Mr Edwin Ho, JTC
Mr Kenneth Sim, MTI
Mr Daryl Khoo, EDB
Mr Lim Choon, EPC
Ms Jan Tan, EPC
Mr Philip Teo, EPC
Mr Raymond Yoong, HDB
Mr Felix Loh, MND
Sub-Committee on
Dealing with the Impact
of Economic
Restructuring
Mr Chan Heng Kee, MOM
Mr Clarence Tang, MOM
Mr Kevin Shum, MOM
Mr Laurence Lien, MCDS
Ms Liza Goh, MCDS
Ms Chee Liee Chin, MCDS
Mr Tan Wei Kiat, EDB
Mr Calvin Phua, MOE
Mr Paul Sum,
SPRING Singapore
Ms Elizabeth Chang,
SPRING Singapore