SINGAPORE: Deputy Prime Minister Tharman
Shanmugaratnam said Singapore's economic growth will be weak in the
short-term mainly because of the gloomy world
economy.
And the challenge for Singapore, he said, is to
restructure its economy to ensure sustained growth over the
long-term.
Mr Tharman, who's also Finance Minister, was
speaking to reporters on the sidelines of a community event in his
Jurong GRC.
Many countries in the world are now bracing themselves for the
possibility of a "fiscal cliff" in the US.
This means a huge economic crisis may be looming for the US - if
its deeply divided Congress is not able to come to an
agreement.
Congress, which is made up of the House of Representatives and
Senate, will still be controlled by two parties in the new Obama
administration.
The Republicans regained control of the House, while the Senate is
dominated by the Democrats.
Mr Tharman pointed out that even if the US gets past this hurdle,
the bigger challenge is to put its mid-term budget on a more
sustainable path for the years ahead in order to restore investor
confidence.
He said: "That's what's necessary to really get the economy to
restart. And it requires common ground to be found on both taxes
and spending on the parts of the Democrats and the
Republicans.
"The experience of the first term was one of intense partisanship.
Hopefully in the second term, there will be a willingness to find
common ground. The initial signs are positive but it's too early to
say."
The effects of sluggish growth in the US and Eurozone are likely to
cascade to Singapore, even though Mr Tharman said Asia continues to
do reasonably well.
"Demand will be weak, but our real challenge in Singapore is in
restructuring our economy. We've got to persevere in restructuring
our economy so that we can get sustained growth over the long term,
over the next five to 10 years based on productivity growth. That's
the big challenge. Demand will be weak in the short term but it's
not a fundamental problem for us because our unemployment rate is
low, and that's the bottom line of the short-term. Unemployment
rate is low, jobs are available and training places are available.
Our real challenge therefore is to focus on restructuring our
economy so that we can move one whole level higher - productivity,
skills, expertise," Mr Tharman shared.
He said this means using management methods and technology to
improve efficiency and productivity so that workers can get paid
more.
"They can have more satisfying jobs and we can grow our economy
without growing employment year after year, especially foreign
employment. So we got to find the right balance. It's something
that affects every sector of the economy. And, we look at the most
developed countries and we can see how it's done. They too went
through that transition. In some cases not very long ago, they went
through the same transition. They ramp up on labour and they have
to upgrade, do with less labour, but using technology and everyone
playing that part, including customers, everyone playing that part.
You can move up to a higher level. That way, our workers can get
good wages, get good jobs," he said.
Mr Tharman added that the government will provide every form of
support to help companies, especially small and medium enterprises,
to make this transition.
- CNA/ck
