Business Times - 17 Aug 2009
Stimulus package review by year-end
Job losses have stabilised but still no signs of Xmas orders pouring in, says PM
By CHEW XIANG
(SINGAPORE) The economic crisis though 'worse than we had expected' has been 'less bad than we had feared', Prime Minister Lee Hsien Loong said last night at the annual National Day Rally.
In a wide-ranging speech, the Prime Minister touched on health care and also spoke at some length on the trend of surging religiosity, but focused the first part of his speech on the effects of the global economic crisis. In the first six months of the year, Singapore lost 6.5 per cent of its GDP - over $8 billion - and the full-year prognosis is still likely to be a sharp decline.
But despite a poor first quarter, job losses have stabilised and there are signs of recovery, PM Lee noted. That means there is so far no need for a 'new prescription' on top of the government's $20.5 billion stimulus package announced in the Budget this year. 'Before the end of the year, we will review and we will decide what we need to do for next year.'
The 'resilience' package included $4.9 billion to support employment with cash grants and an 80 per cent guarantee of business loans, as well as tax rebates, research incentives and other fiscal measures.
The Prime Minister noted that unemployment is levelling off, after a sharp increase earlier this year. 'The third quarter should be alright,' he said, as no big retrenchments are expected and companies are starting to hire again, though in small numbers.
But there are still 'no signs of Christmas orders pouring in yet', Mr Lee said. 'Beyond this year, I expect the global recovery to be a subdued one,' he said, though he noted that Singapore, being small, 'can (still) grow by sharpening our skills, enlarging our market share'.
So far workers have been kept off the streets by a mixture of government and private sector labour-saving schemes but 'if the recovery is delayed, then sooner or later they'll have to right-size, they'll have to let go of some of these workers and there could be more job losses'. To cope, the government will continue to spend millions on worker training, Mr Lee said. Its 50 training centres are now 'bursting at the seams' and the government will be setting up two national training campuses in Paya Lebar and the Jurong Lake district. Details will be announced by the Ministry of Manpower later, he said. 'There is still work to be done provided we are prepared to rough it out and take the jobs that are available.'
The government will continue to fully support small and medium-sized companies even as many have been disproportionately hit, Mr Lee said.
For instance, the government is helping them to open new markets, he said, citing the furniture industry as an example. The 'sunset' industry has turned into a 'sunrise' industry, focusing on top-end products, and a consortium of companies participated in the Milan furniture fair this year, supported by Spring Singapore.
Other local companies are expanding into new overseas markets, he said, raising the example of water treatment firm Hyflux, which is now building the world's largest seawater desalination plant in Algeria.
The government is also focused on growing new sectors, such as so-called interactive digital media, or the computer games and animation industry. Leading firms such as Electronic Arts and Lucasfilm have already set up here. '(The industry is) still young . . . but it has produced some impressive work,' he said. 'This should grow into another interesting segment of our economy.'
Meanwhile, the government is still continuing to attract top multinationals to site their headquarters, high-end manufacturing and 'control tower' functions in Singapore to service the region, he said, noting Rolls-Royce's recent decision to move its marine division global headquarters to Singapore. 'They are betting on Singapore, not just for the next five or 10 years, but for the next 20 to 30 years.'
The Prime Minister also spent some time discussing 'the most visceral and dangerous fault line' in Singapore, that of race and religion. It was, he said, an unusually serious and heavy subject, but harmony is critical for a country founded on racial and religious tolerance and the recent Aware saga - when a religiously motivated group attempted to take over an organisation it disapproved of - caused some tension, he said. 'Religion is a positive force in human societies . . . but at the same time, stronger religious fervour can have side effects which have to be managed carefully, especially in a multi-racial and multi-religious society.'
