PM Lee assures S'poreans they're not alone in coping with
downturn
SINGAPORE: Prime Minister Lee Hsien Loong said the country
cannot simply stimulate demand during this time of crisis by
raising government spending.
While that may be what other countries are doing to stem the
downturn, Mr Lee said it cannot work for Singapore because of its
small economy.
Mr Lee made the point during a dialogue session with business
leaders in Sao Paulo, Brazil.
PM Lee said Singapore is watching what other governments are doing
around the world to deal with the financial crisis.
And he noted that each government is adapting and improvising as
they go along because the current economic slump is
unprecedented.
When asked what strategies Singapore has to deal with the problem,
the Prime Minister outlined several measures in place, including
helping the low income and ramping up training to help Singaporeans
secure jobs.
But one thing Singapore cannot do is to pump-prime the economy the
way other governments do.
Mr Lee said: "In a big economy, you can boost consumption. The
government gives money, people spend it and it's spent within the
economy. Most of it stays in, a little bit of it leaks out. You get
a multiplier and the economic activity goes up.
“In Singapore if people spend money, most of the money goes
overseas because we are so open and most of the demand is abroad.
Most of the money we spend is spent on things which come from
abroad so it's not possible for us to pump- prime the economy in
the same way that other governments do. But there are other things
we can do (such as) reducing costs and helping citizens
directly.”
PM Lee also explained the thinking behind the government's recent
move to support an additional S$2.3 billion in loans to help local
firms gain access to credit.
He continued: "In a downturn, in an uncertain period, all banks
become more cautious because they have to be. And when they become
more cautious, the small companies, the SMEs have the greatest
difficulties.
“Therefore we have had schemes which co-share the risk of banks
lending to small companies. The government takes on a significant
part of the risk and the banks make the evaluation so that the
banks don't just make loans and pass the problem to the
government.
Mr Lee hinted at more help for businesses in areas such as rental
and wage costs to be announced at the upcoming Budget which has
been brought forward to January.
But the key message behind the initiatives is to show Singaporeans
they are not alone in coping with the downturn.
The Prime Minister said: "I think one more very important thing
apart from specific measures is to maintain confidence and make
sure people know that they are not in this alone. The government is
helping them.
“That they have to work together to deal with the problem and they
also have to make maximum efforts because you cannot just sit there
and wait and be carried along to have the problem solved. You have
to make your own effort and that's the political responsibility of
the government.”
Mr Lee's bilateral visit to Brazil is also an attempt at further
diversifying Singapore's economic linkages. Although Brazil is
Singapore's second largest trading partner in Latin America, both
sides said there's definitely more room for growth.
Mr Lee is now in Brasilia where he'll meet Brazil President Luiz
Inacio Lula Da Silva. Both sides are expected to sign separate
agreements on Wednesday in the areas of air
He better make sure that he reduces our cost of living!
