Views on the Singapore Economy

INTERVIEW WITH SMART INVESTOR MAGAZINE

1) Over the past few years, the Singapore Government has restructured the economy and sought to remake Singapore. Some of these initiatives (such as CPF cut, shift towards a monthly variable component pay system, emphasis on education & retraining) were not exactly welcomed by the ordinary men-in-the-street. How successful do you think these measures have been?

Reply: Generally, these measures have been quite successful. They have contributed to the robust economic growth that was experienced over the past two years. The ordinary people may look at the immediate impact on their wages, and feel pessimistic about some of these measures. The real test is the ability to grow the economy and create more jobs. The recent increase in employment has led to a tight labour market, which is reflected in higher wages. The ordinary people will benefit from the higher wages soon.

2) Was there any specific measure which left a lasting impression on you?

Reply: I am impressed with the innovative measure to allow the refinancing of a property loan and allowing banks to have higher priority over CPF savings. This allows the banks to keep the property loan for a longer period, even though the property value may have dropped below the total charges (comprising of the loan and the CPF savings). It helps to stabilise the property market and gives it a longer time for the property values to be adjusted. There is no need for the banks to call back many of the property loans that have entered into negative equity. In so doing, we avoid a property crash.

3) Singapore economy is heavily dependent on external factors. With the uncertain global environment today (escalating oil prices, high US interest rates), do you think Singapore could achieve the projected GDP growth of between 5-7 per cent this year?

Reply: I think that it is still possible to achieve the projected growth rate. If the global economic environment continues to be difficult, we will probably be at the low end of the range. It will still be quite encouraging.

4) It has been reported that our employment outlook has improved. Is it likely for China or India to take away a significant portion of the existing jobs in Singapore due to their supposedly lower level of business costs? How successful has the Government's efforts to cut business costs (eg. reducing corporate taxes) been?

Reply: With the adjustment of business costs during the past few years, we are now quite competitive globally. The increase in employment is likely to be sustainable over a longer period. The lower manpower costs of people from India and China have already been factored in. We do not need to worry too much about this source of competition. The key is to upgrade our ecomony and find new ways to utilise our people and resources.

5) Under the Singapore Tourism Board 2015 Vision, the STB aims to triple Tourism Receipts to $30 billion; doubling visitor arrivals to 17 million; and creating an additional 100,000 jobs in the services sector by 2015. Are these initiatives (such as annual campaigns like the Great Singapore Sale, establishment of integrated resorts) sufficient to draw in the tourists, as our regional rivals are miles ahead of us?

Reply: We have to find ways to improve the attractiveness of Singapore to the international tourists. We may get a boost with the opening of the integrated resorts. We can also get some excitement from the development of the sports industry and the arts and culture industry. These activities may take a few years to develop. We have made a start. Let us learn how to make them more successful.

7) What else do you think the Government could do to further grow and sustain the economy?

Reply: We need to improve the efficiency of our financial services industry. At present, there are too many complicated products that are not well designed for the ordinary people. We have to streamline these products. We also have to improve the products to make them more easily understood by the general public, and give people an attractive return for their long-term savings.