MTI expects 3-4% economic growth in S'pore for rest of the decade

MTI expects 3-4% economic growth in S'pore for rest of the decade
By S Ramesh | Posted: 11 March 2013 1505 hrs
     
SINGAPORE: Trade and Industry Minister Lim Hng Kiang pointed out that Singapore's economy is expected to grow at an average of three to four per cent for the rest of the decade and for a country that has enjoyed twice that rate of growth since 2003, the slowdown will be a significant change.

He added given the weak external environment and the tighter labour situation domestically, Singapore expects a modest one to three per cent growth in 2013.

He said his ministry has two strategies for achieving quality economic growth.

The first is staying open and flexible to tap global and regional opportunities, and the second is restructuring the economy so that companies and workers can achieve higher productivity and sustainability.

Free trade agreements (FTAs) are also another way to help small and medium enterprises (SMEs) globalise through a large and comprehensive network of trade agreements with major trading partners such as China, Australia and India.

Mr Lim said: "These FTAs improve market access for our companies as they expand overseas. In 2012, more than 1,700 companies benefited from our FTAs, and we expect this number to increase as we expand our FTA networks and make them more user-friendly."

Mr Lim said the Singapore economy must remain open to investment and talent flow, to bring in new activities and bring companies out into the region.

Speaking in Parliament during the ministry's budget debate, he said the slowdown would be most acutely felt in the workforce as the population ages and the citizen workforce shrinks over time. To deal with this slowdown, companies must restructure and aim for higher productivity.

Mr Lim emphasised that restructuring is painful, but it is unavoidable.

Mr Lim said the government sees opportunities for Singapore companies seeking to tap Asia's growth and the continuing economic integration of the region in four sectors.

One is the pharmaceutical industry, which offers high wages and employs more than 5,700 people, where 80 per cent perform skilled jobs.

Mr Lim said biologics is one niche area within the industry that has been gaining momentum.

Over the next three to five years, the sector will create at least 500 highly-skilled jobs for chemists, microbiologists, biotechnologists, engineers and technicians.

The next sector is baby products and services - fuelled mainly by the population boom in Asia and the rising middle class.

Mr Lim said Singapore has become an established hub for commercial and innovation activities in baby nutrition and baby care.

The silver industry is also a potential growth segment, said Mr Lim, and Singapore is well-placed to tap the market.

High-end logistics services, which extend beyond the physical flow of goods, will also see much growth.

But Mr Lim cautioned that while Singapore strives hard to tap new opportunities, it continues to face domestic constraints in land, labour and energy.

However, the manpower and land constraints give companies no choice but to press on with the drive towards greater productivity.

Mr Lim said: "Nonetheless, we are mindful that drastic and sudden policy changes in our domestic business environment can impact businesses adversely."

Several Members of Parliament had also raised concerns about how SMEs could cope with the restructuring.

Mr Lim said: "We pay particular attention to our SMEs, as they are an important part of our economy and they provide good jobs for some 1.3 million Singaporeans."

He added: "This year, we will work with the Asian Development Bank (ADB) and private insurers to expand the ADB's Trade Finance Programme to enhance trade flows for Singapore-based companies. Many companies already benefit from this programme, which currently supports over US$1 billion of trade capacity. Given that our companies are exporting to Asia's emerging markets, demand for such trade financing programmes will continue to be high."

He said the government is committed to help SMEs through this difficult transition period, and many of the assistance measures introduced this year have been weighed to benefit SMEs more.

He said this was done consciously and deliberately to help them.

Mr Lim said: "Overall, we want to create a conducive business environment for SMEs to tap growth opportunities, drive productivity and innovation as well as build capabilities. Last April, Minister of State Teo Ser Luck led a committee of representatives from MTI, SPRING, IE Singapore and key industry partners to comprehensively review our schemes for SMEs. Arising from this review are eight strategies, which will be implemented to help SMEs."

One such programme is the SME Talent Programme, which was earlier announced at Budget. It will create a pipeline of local talent for SMEs.

Under the programme, SPRING will match over 3,000 promising polytechnic and ITE students with SMEs over the next 5 years.

Upon graduation, these students will start their careers with SMEs that can offer them good jobs and training.

Mr Lim said: "We will work through the trade associations and chambers (TACs) for this programme, since they know the industry best and will be able to identify progressive SMEs to work with. We hope that this will attract more local talent to join SMEs and encourage the entrepreneurial spirit in Singapore. The government will co-fund the programme, which will amount to more than S$70 million over five years."

Mr Lim said there are no quick fixes in addressing the challenges, and the path of restructuring will not be easy but the government is committed to help companies face the challenges.

- CNA/xq

- wong chee tat :)