PM Goh upbeat on prospects for growth

Prime Minister Goh Chok Tong yesterday said steady growth would continue this year but refrained from making a new government forecast.

"I would expect firm growth for this year," Mr Goh said.

"We have a reputation for being conservative in our forecast.

"If our reputation remains true, then growth will be higher than our forecast . . . but at this stage, I would not want to tinker with it."

Singapore's forecast for growth this year is a range of 4.5 to 6.5 per cent.

Mr Goh said in his New Year's address that Singapore's economy grew 5.6 per cent year on year last year, helped by a strong fourth quarter that saw preliminary growth of 8.2 per cent.

The prime minister said robust growth in the electronics sector as well as an improving regional picture were key to fourth-quarter gains.

Mr Goh also said Singapore planned further liberalisation of its insurance and telecommunications sectors within the next six months, following banking-sector reforms last year.

In his new year's address Mr Goh had said developments in the US share market were a "dark cloud" for Singapore's economy.

After a volatile first trading week of the new year in Singapore, Mr Goh said that heavy buying of Internet-related stocks was a cause for concern.

He said the focus on such shares and related initial public offerings was a euphoria that could have side effects.

"I am a little worried that people are getting carried away, chasing Internet stocks," he said.

Another nagging issue from last year for Singapore was the Central Limited Order Book (Clob) share impasse with Malaysia, and Mr Goh said Singapore would take the dispute over the shares to the World Trade Organisation if no solution could be reached bilaterally.

Mr Goh said he hoped to meet Malaysian Premier Mahathir Mohamad after the Lunar New Year holiday to resolve bilateral issues.

"In the ultimate, if there is no solution, Singapore has no choice but to take the matter to the World Trade Organisation," he said.

"Perhaps the shareholders may also take Malaysians to the courts in Malaysia."

Malaysia imposed curbs on capital flows in September 1998, effectively freezing shares worth about US$4.3 billion traded on Singapore's Clob over-the-counter market.

Several proposals have been put forward to allow investors to reclaim shares, but none has pleased Malaysian authorities or the Securities Investors Association (Singapore), representing about 50,000 of the 172,000 Clob investors, who are mostly Singaporeans.

Mr Goh said Malaysian authorities favoured a private-sector solution, but Clob investors would prefer offers from Malaysian companies that were officially sanctioned.

"Private sector offers must be officially sanctioned by the Kuala Lumpur Stock Exchange. Otherwise there is no confidence to the public shareholders that something might change again," Mr Goh said.

On Indonesia, Mr Goh said the country faced security and political risks that could splinter the nation and negate any efforts to stimulate investment.

"The risk of Indonesia splintering is always there. I myself hold the view that it won't happen in the short term, but the risks are there," Mr Goh said.

He said such issues would ultimately determine the success of any investment effort for that nation.

Mr Goh will lead an official Singaporean trade mission to Indonesia this week.

"The security situation in Indonesia causes potential investors to be cautious," Mr Goh said.

"I go [to Indonesia] with some ideas, but I'm also rather hesitant at this stage as to whether ideas can bear fruit because it depends very much on Indonesia more than on Singapore."

Mr Goh said violence in the Indonesian provinces of Ambon and Aceh as well as political demonstrations, made the nation less attractive to foreign money.

"If there are conflicts, disturbances [or] demonstrations on Ambon and Aceh, investors are going to take a watch-and-see attitude. The separatist pressures are worrying enough, but in Jakarta itself we are seeing demonstrations."

• Published in the South China Morning Post January 11, 2000.


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