ASEAN’s richest nation is bearing up against the regional slowdown with the right measures in the right place – government programmes to promote skills and innovation, says the country’s confident leader.
By Holly Reeves
It is easy to lose sight of the successes of ASEAN’s most developed nation. GDP per capita in Singapore is more than 30 times higher than neighbours in Laos; and in fact, it is greater than highly powerful economies such as Canada and the United States. There is no nation quite like Singapore; it has come from a point of having little to no natural resources to being an important regional player in finance, electronics and a hub for trade and industry.
However, these are difficult times that we live in as Asia-Pacific regional economies feel the knock-on effects of troughs in the oil and gas market. Meanwhile, the market’s biggest player, China, has fallen back after a period of unprecedented and accelerated growth. But even in this environment, and with oil and gas making up a significant part of the economy, Singapore’s growth remains in the black, and predicted to come in at one to two per cent this year.
Behind this is the long-term planning of the country’s governing People’s Action Party (PAP) and its business-like view of public administration. For example, while some wobbled over recent figures which showed how growth rates had fallen, PAP leader and Prime Minister Lee was steadfast in his faith in government programmes. “(These schemes) are not a magic pill (but) something that will work over time,” said PM Lee. “This (slowdown) is not the kind of infection that…will have a quick cure.”
In particular, Singapore is proud of its low rates of youth unemployment, as well as its practical measures to tackle the looming problems of maintaining its population’s skill base which plague its regional neighbours. For example, projects like the government-supported multi-million dollar NTUC Education and Training Fund is providing new opportunities against a backdrop of government restructuring. Meanwhile, the PAP administration is working to attract new foreign investment from companies like GlaxoSmithKline and Pratt & Whitney.
Back on the shop floor, 23 industries which cover some 80% of Singapore’s economy, are to get Individual Industry Transformation Maps (ITMs) to help grow and promote new opportunities says the Prime Minister. Among these precision engineering, food services, and retail industries are already seeing benefits. The idea, says Lee is that, “We aim to get the whole industry to adopt digital manufacturing techniques so that we can customise solutions, open up new markets, and compete internationally.”
External pressures, internal strength
Trade and Industry Minister Lim Hng Kiang echoes the sentiment of the Prime Minister, saying the city-state’s “small open economy” means it will always feel the effect of external developments. However, the government will “press on with the efforts to steer (Singapore’s) economy to a more sustainable growth path driven by productivity and innovation”.
For example, he says “Tourism-related sectors such as accommodation have benefitted from the recovery in tourist arrivals. Meanwhile, growth in “other services industries” and technology is also expected to remain resilient. Education, health and social services revenue are also projected to remain stable, or grow by a small factor.
And, all things considered, this optimism does seem reflected in the mood of the markets. According to BMI Research, “While we expect the external sector to see a degree of stabilisation over the coming months as the global tech cycle picks up and the Chinese economy obtains a degree of traction, this is unlikely to provide a significant boost to exports… However, we note that the city-state’s economic foundation remains strong, and we do not expect it to enter a recession in the near-to-medium term.”
The hands of experience
It is also worth remembering that, in terms of managing turbulent financial waters, the PAP is a safe pair of hands. Having seen off the 2008-2009 global financial crisis, Prime Minister Lee and his party have experience on their side. This time around the economy does not require the “antibiotics” administered then, says the leader.
Instead, young people are a key part of the PAP strategy. “Move forward steadily, resolutely, resourcefully. You’ve got to have it in you. Things happen – yes. We will take it in our stride; we will respond,” said Lee addressing a group of students. He added, “We are not made of candy floss… We are not like the strawberry generation – these are durians, very tough.”
And they need to be. In the hothouse of ASEAN this growth, of a resilient generation alongside a resilient economy, is vital to face the emerging challenges of disruption, health care, housing and unemployment. The nation and the PAP must grow together to continue to deliver the successes of the past for many years to come.