``We must target our assistance to those in need, and make a difference where it counts,'' Lee, who has to hold elections before mid-2007, told parliament today. Economic globalization ``poses challenges, especially for our older and low-skilled workers whose wages and jobs are under growing pressure.''

Southeast Asia's fourth-biggest economy grew 8.7 percent in the fourth quarter from a year earlier, the fastest pace in 18 months. That prompted the trade ministry to yesterday raise its growth forecast for this year to as much as 6 percent and has given Lee more room to introduce new tax breaks and boost welfare spending before his first election as prime minister.

``The incentives are targeted and they may make some difference to people who are in the working class or who are unemployed,'' said Garry Rodan, director of the Asia Research Centre at Murdoch University in Western Australia. ``I'd expect elections this year because the economic projections at the moment are reasonably positive.''

The People's Action Party led by Lee has been in power since the city-state's independence in 1965 and holds 91 seats in the 94-member legislature that would be dissolved prior to an election. Lee, the elder son of Lee Kuan Yew, founding father of modern Singapore, took over from Goh Chok Tong as prime minister in August 2004.

Election

Goh was able to improve the PAP's vote in the three general elections he faced as prime minister, winning 75.3 percent support in November 2001 from 65 percent in January 1997 and 61 percent in August 1991, according to the www.singapore-elections.com Web site.

It's going to be ``difficult'' for Lee to match the ruling party's 2001 vote because Goh ``achieved that after being the leader of PAP for a decade or so,'' said Rodan. ``Goh had a different personality that made him more affable, more in touch with the common person.''

Lee today said the government would spend S$2.6 billion (US$1.6 billion) on a ``progress package'' in the year starting April 1, including S$200 million on a bonus for national servicemen and S$500 million extra for older citizens.

The government will form a research and development fund worth S$5 billion in the next five years, Lee said in today's budget speech. The government aims to make research and development account for 3 percent of gross domestic product by 2010, he said.

`Fine-Tuning'

``The really big commitment is research and development, and the S$5 billion commitment is a substantial amount,'' said Chua Hak Bin, an economist at DBS Group Holdings Ltd. ``There is some fine-tuning of the overall restructuring of the economy and Lee is making sure that incentives are aligned with the growth areas the government wants to target.''

The government will also provide tax concessions for banks offering Islamic financing products and ease rules on wealth management companies to attract more overseas funds.

``Tax cuts are always a good thing as they will help to improve competitiveness in the industries involved,'' said Teo Chon Kiat, who helps oversee $1.4 billion in Asian stocks at DBS Asset Management in Singapore.

Earlier this month, the government said the city's jobless rate fell to the lowest in more than four years in the three months to Dec 31, as jobs creation accelerated with economic growth. The overall unemployment rate fell to a seasonally adjusted 2.5 percent in the fourth quarter, from 3.3 percent in the third.

Tourism

Last month, Singapore's tourism board said it's expecting the number of visitors to rise 6 percent to a record 9.4 million this year as it introduces new nightspots including a Ministry of Sound dance club and the Crazy Horse Paris topless cabaret.

The city-state also expects tourism spending to rise 11 percent to S$12 billion, which would also be the highest, based on available records. It's selling three sites for hotel developments and adding tourism products such as the Singapore Flyer, touted as the world's biggest Ferris wheel.

Singapore's government has also set a March 29 deadline for MGM Mirage and three rival bidders to submit proposals for the city-state's first casino, which will be located in the downtown. Other bidders include Las Vegas Sands Corp., Harrah's Entertainment Inc. and Malaysia's Genting Bhd. An offshore site will be offered in the first quarter.

                                                      Home