Global crisis and recession 4 Economic situation and prognosis for Singapore 7



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I.Conclusion

1.Singapore is tied to the fortunes of global markets. We are hit when the global economy goes down, and we move back up when it recovers.
2.But being a global city works well for Singapore. Even including 2008, when our economy fell, we grew by about 7% per annum in the last five years. This is faster than the other Asian Newly Industrialising Economies (NIEs) (Hong Kong, South Korea, Taiwan), and well above growth in other countries with similar income levels. And it is also a strategy that has kept unemployment at amongst the lowest rates in the world.
3.There is no reason why we cannot sustain this superior performance once the global economy recovers from this recession. Singapore has fundamentals that are going for it. Investors trust us. They see advantage in our tripartite system, our open and cosmopolitan society, and a Government that they know will work with businesses and Singaporeans to keep our economy competitive and our society cohesive. Our schools and tertiary institutions prepare Singaporeans well for opportunities at all levels requiring different skills. Our public housing policies give Singaporeans an asset that can appreciate over the long term. And the CPF gives them assurance that their retirement monies are safe and earn a guaranteed return, unlike many elsewhere who have seen the value of their pension plans fall in the crisis.
4.These are fundamentals which will continue to set us apart. But our real strength is in our flexibility, our ability to shift policy gears when required, and the way our people and companies respond to changes in the world by learning something new.
5.Qioptiq Singapore has a factory in Jurong with 900 employees. It competes globally in the market for the highest specification optical products. When they first began production in 1975, things were a little simpler. Their key competitive advantage over competitors in the West was that Singaporeans could use wooden chopsticks to handle delicate lenses without damaging them. Thirty-four years later, its production lines require the most advanced optics technology as well as the most experienced craftsmen and engineers. Qioptiq succeeds because it keeps developing its people: locals who have grown their expertise with the firm and foreigners bringing in more. Many of the Singaporeans have been with the firm since its early days. Tom Chan is one of them. He started off as an apprentice in the company, armed with a Trade Certificate in Fitting from Pasir Panjang Vocational Institute. He is now a Plano Production Manager, overseeing 60 workers in one of the most exacting tasks - producing plano prisms, where the standards of precision are measured in nanometres10.
6.Qioptiq’s good labour relations have helped it ride through the ups and downs of the business. Every worker on the production line is trained in at least two different jobs. This way, when the demand for products changes, they can be quickly re-deployed to different production lines. Even in the current economic climate, Qioptiq did well enough to pay good year-end bonuses to its staff, in fact just yesterday.
7.Qioptiq is, like many of our companies, a description of how Singapore works - flexible, always learning, always improving as a team, so that we move up together.
8.This global crisis will see a reshuffling of the deck. Some countries will move up, while others falter and fall behind. We will do everything we need to ensure that Singapore emerges stronger and more competitive, and we open up space against the rest of the field.
9.Mr Speaker, I beg to move.

1 Singapore’s data refers to non-oil domestic exports.

2 One of the key indicators of risk in the markets is the Libor-OIS spread. It is now about 100 basis points (bp), down from its peak of about 360bp at the end of October, but is still well above normal levels of about 10 bp.

3 The Jobs Credit is based on wages up to the first $2,500, whereas CPF contributions are based on the first $4,500. This explains why the 12% Jobs Credit is equivalent to a 9% CPF contribution rate cut for employers.

4 This includes close to 7,500 in teaching positions and teaching support staff for our schools and tertiary institutions, 4,500 healthcare professionals and administrative staff for our hospitals and 1,400 for our Home Team and over 2,000 for MINDEF, which has been announced earlier by the respective ministries. In addition, the rest of the public service have plans to recruit an additional 2,600 jobs over the next 2 years. These jobs comprise policy, operational and administrative positions in various government agencies, as well as positions in more specialised areas such as Project Management, IT, Accounting and Urban Planning.

5 The CNG rate equivalent to $0.41 per litre of petrol would have been $0.53 per kg.

6 Post-Secondary Education Accounts

7 The new Bridging Loan Programme, new Loan Insurance Scheme and new Trade Credit Insurance Programme.

8 The Basic Balance for FY2008 was in deficit by $1.1b or 0.4% of GDP, before taking into account measures taken in Budget 2009 (which are to be implemented in March 2009)

9 Lifelong Learning Endowment Fund ($100m), Medical Endowment Fund ($100m), ElderCare Fund ($100m), National Research Fund ($400m), CPF Deferment and Voluntary Deferment Bonus ($450m), LIFElong Income (LIFE) Bonus ($260m)

10 A nanometre is one-millionth of a millimetre.

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