Reuters
December 3, 2001
SINGAPORE
By Jacqueline Wong

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Economic tsar sets out in search of new growth blueprint

SINGAPORE'S policy makers turned to the task of overhauling the island's economic model on Monday (Dec 3) to ensure it remains a vital business nerve centre in the region when it emerges from recession.

A new economic review committee led by Deputy Prime Minister Lee Hsien Loong, and comprising members of the private sector, will review development strategy and design a blueprint to restructure the economy even as it rides out the downturn.

The committee aims to complete its work and issue its final report within nine months, Lee told a news conference.

"I'm not sure that we will quite hit that target because it is ambitious and there is a lot of ground to be covered," Lee said.

"But we hope to have a first set of recommendations by April next year, particularly recommendations which have fiscal implications because the budget next year will be on the 3rd of May," he added.

Except for fiscal policies, analysts said the nine-month timetable may be too late to address the current downturn.

"The tax structure will take effect immediately as soon as the budget comes out, costs (cuts) as well," said Tan Kang Yong, economist with UOB Kay Hian. But Tan said changes to manufacturing and services were not likely to take place within the few years.

ALL AREAS UNDER MICROSCOPE

Lee said sub-committees will oversee seven areas, the first of which included policies on taxation, pensions, land allocation and a framework for wage competitiveness.

Almost everything will be under the microscope -- reliance on manufacturing, the rigid education system, taxes and pensions, government policy and the lack of risk-takers and entrepreneurs.

Fostering growth and internationalisation of Singapore-based companies, enhancing human capital and helping workers retrain to ensure employability, were other objectives of the committee.

"I don't think that the result of this is to make ourselves less export dependent. We are in a globalised world and we are a globalised economy....that is not going to change," said Lee.

The policy revamp in trade-dependent Singapore is being driven by rising unemployment, already near 4.5 percent, lost dominance in high-end electronics like disk drives and microchips, and an ageing population.

From pole position as Asia's best performing economy at 9.9 percent growth last year, Singapore -- the first to sink into recession -- expects a three percent contraction this year.

By encouraging entrepreneurship, tapping the expertise of foreigners, and diversifying into new industries, Singapore hopes to overcome competition posed by mainly India and China.

Prime Minister Goh Chok Tong said after his election win that every existing policy measure and assumption will be examined.

"Nothing will be sacred, and no stone will be left unturned." In the near term, wage adjustments would be carried out to bring costs down in order to save jobs, while rents and taxes would also be looked at.

But Lee said it was too early to provide details except that short term wage recommendations by the National Wages Council (NWC), a government advisory body, had been presented to the government.

"The NWC has already submitted their recommendations and the government is considering them now. We shall see soon what they have recommended," he said.