News: The Straits Times -  26 January 2010


Grow productivity, not just GDP: PM
Past 5% annual growth will be difficult to sustain, he says
By Jeremy Au Yong, Political Correspondent


SINGAPORE is to adopt a new economic growth strategy focused more on improving productivity than pursuing growth at all costs.

The reason boils down to the country's land and labour constraints, Prime Minister Lee Hsien Loong said yesterday.

'Our total land area is finite, and very little of it is lying fallow,' he told a conference examining the challenges facing Singapore.

'Our own population is growing slowly, and we cannot indefinitely expand our workforce by importing more and more workers from abroad.'

Mr Lee said Singapore would have to adjust its growth strategy and find new ways to continue to do well.

And, with that change, it has to shift to growing qualitatively not just by expansion, but by upgrading.

He said: 'We have to extract maximum value from the resources that we have; every piece of land must be put to optimum use, activities which are no longer competitive or productive have to be gradually phased out.'

Similarly, he said, workers, both local and foreign, need to be upgraded.

His call for higher productivity came a day after Senior Minister Goh Chok Tong spoke on the same topic - a clear sign that raising productivity is high on the Government's priority list this year.

The Economic Strategies Committee report, due for release next Monday, is expected to focus on it.

The Budget statement, on Feb22, will respond to the committee's recommendations.

The general target outlined by both Mr Lee and Mr Goh is to double productivity growth to 2 per cent to 3 per cent a year, from the present 1 per cent.

Productivity growth is usually considered critical to improving living standards. It means getting more value from each worker, resulting in more income being available to be distributed.

Such a change will take a major effort, said Mr Lee. 'But we have to do it so that progressively and inexorably, our economy will be transformed.

'Then, even if our total gross domestic product grows more slowly, our workers can become more productive and our income per capita can continue to rise.'

Previously, Mr Lee has warned that Singapore would not go back to pre-crisis growth levels. Yesterday, he said the average annual growth of 5 per cent enjoyed in the past decade would be difficult to sustain.

This was due to how much Singapore had progressed, and the push for higher productivity would result in slower expansion of the workforce.

'We must acknowledge that we are now more developed economically than we were 10 or 15 years ago, and we can no longer grow as rapidly as before,' he said.

'There will be good years when we should go faster. There will be other years which are tough, where we will do more poorly, but overall, if you take it over the next decade, I think 5 per cent will be a stretch,' he told about 900 people from academia, business, civil society and government sectors who attended the conference.

Called Singapore Perspectives 2010, it was organised by the Institute of Policy Studies.

Mr Lee also disclosed that the Trade and Industry Ministry is studying what a realistic long-term growth target would be.

He was careful to stress that the push for productivity did not mean just working harder.

Businesses needed to innovate relentlessly and be bold in seeking opportunities overseas, he said.

Workers, on the other hand, had to be psychologically prepared to upgrade their skills over and over again throughout their working lives.

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Fewer babies for first time in five years


FOR the first time in five years, Singapore has had fewer babies. The number of births fell by 172 last year to 39,654.

The reason is probably the economic downturn, Prime Minister Lee Hsien Loong said yesterday, in disclosing the dip.

Still, the drop marks a grave trend, he said. 'It may not be a lot less, but it is a lot less than it ought to be, in terms of total numbers.'

It means the total fertility rate (TFR) has gone down further, he added. 'If unchecked, (it) will cause us to have not just a shrinking population, but an even more rapidly ageing population.'

Singapore's TFR was last reported to be 1.29. To replace itself, a society needs a rate of at least 2.1. For Singapore, this means having about 60,000 babies a year.

Since 2004, the number of births has been on an uptrend. The best rise was in 2007, when the number shot up by more than 1,000 over 2006.

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INSTITUTE OF POLICY STUDIES CONFERENCE
Updating political system necessary, but will take time
Challenge is to find a system that will work for generations, says PM
By Rachel Chang


(Picture: PM Lee Hsien Loong chatting to conference attendees, including Institute of Policy Studies director Ong Keng Yong (to Mr Lee's left) and former Nominated MP Braema Mathi (second from right). He identified three key priorities for Singapore in his speech: Restructuring the economy, addressing the population shortfall and updating the political system. - ST Photo)


THE most difficult challenge facing Singapore is finding a political system that works for generations to come, Prime Minister Lee Hsien Loong said yesterday.

He foresees the search taking the longest time.

In the meantime, the system must evolve with the times, rather than be static or frozen, he said at a conference examining challenges facing Singapore organised by the Institute of Policy Studies.

He was responding to Ambassador-at-large Tommy Koh, who asked which of three challenges Mr Lee had highlighted was the most difficult.

In his speech, Mr Lee identified three key priorities: Restructuring the economy, addressing the population shortfall and updating the political system.

Explaining why the last was the most difficult, he said: 'You are talking about intangibles, not just about a few people whom you hope to identify for the next generation of leadership, but the ethos and the spirit of a whole generation of Singaporeans, and particularly the brightest and ablest who have the most options and highest ambitions, to feel that this is something worth doing.'

It will also take the longest time as the task is to 'make this system work for the next generation (in) 30, 40 years' time, in a totally different world with a very different Singapore society'.

That system must be one which young Singaporeans feel is worth their commitment and to which they feel a sense of belonging.

The young, despite being loyal and proud Singaporeans, have the world as their oyster, he noted.

'We want to make sure that enough feel passionately enough about Singapore, not just to participate in discussion and vote in elections, but to say, 'Let's make this place work. I'm going to be part of the team'.'

His responsibility, he said, is to put in place the next generation of leaders who will ensure Singapore's prosperity and vibrancy as a society.

In his speech, PM Lee reiterated that leadership renewal would be the most important issue in the next general election.

He noted that significant changes were being made to the political system, citing proposals to have more single-seat constituencies, smaller Group Representation Constituencies and more Non-Constituency MPs, as well as a 'cooling-off' period on the eve of polling.

The changes will, among other things, ensure a more diverse set of voices in Parliament, and encourage Singaporeans to engage in national issues, he said.

He added: 'A weak government or divisive national politics would be disastrous for Singapore.'

While a sound political system is essential, it is not enough to bring about good governance and political stability without the right people at the helm.

He said the PAP team at the next general election would contain the 'core' of the new generation of leaders.

Asked about reports of well-qualified Singaporeans joining the opposition, Mr Lee said every generation would have a spectrum of views.

It is also one way for societies to develop a breadth of perspectives and an ability to adapt to new situations, with people able to solve problems, he added.

Mr Lee stressed that anybody who enters politics should not just have ability, but also integrity and commitment.

As for the newcomers in the opposition, he said: 'We wish them well.

'But we hope Singaporeans will judge individuals like that as rigorously as they judge individuals who join the PAP...

'In other words, not just what degree do you have, but what sort of person are you and what can you do for Singapore. And that is a matter which...in the PAP we scrutinise very hard before they come in.'

'I can tell you that we interview many, many scholars, each time we field a few of them...and we often field people who are not scholars,' he added.

'So, it is good to see it in perspective. For the opposition, it is a change. You have one scholar or two, and they can think, 'Wow, this is a luminous transformation'.

'It is a significant development... but finally, let's look at the person, not what degrees he has, but what he is able to do for Singapore.'

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General election not imminent: PM

'There is a mini general election fever in town. The general election is due sometime within the next two years, but it is not imminent. We are putting the legislation in place now so that everything will be ready when elections are called.'

PM Lee, keeping his cards close to his chest while talking about elections

ON OBAMA'S CHALLENGES

'President Obama has very difficult challenges. He has many pressing domestic priorities, he also has many pressing international priorities, whether it is Afghanistan, whether it is Iran, whether it is North Korea, whether it is the Middle East, the Palestinian problem. I don't think that the world agenda will give him the luxury of focusing only domestically.

'His challenge is that the American people are domestically focused and feeling unsettled by the economy...That constrains him in what he can do internationally on free trade, on taking initiatives, on regional cooperation, on being active in the Asia-Pacific and taking the leadership role which, in fact, America has.

'I am hopeful that this will not be so because last year, when we had the Apec meeting, President Obama came and had an Asean-US summit meeting.

'He said that he wants to have another such meeting this year. When has not been sorted out yet, but it is a significant statement of his priorities and intent, which we take some comfort in.'

PM Lee, on whether President Barack Obama's problems at home would make him concentrate on domestic issues

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Immigrants a buffer for falling birth rate

SINGAPORE will be grappling with the issue of immigration for some time because it has no alternative to topping up the population, Prime Minister Lee Hsien Loong noted.

The number of newborns here continues to stay below the replacement level of 2.1 - the average number of children every woman must have in order for a society to replace itself.

This is despite the Government's efforts to boost birth rates. As a result, topping up the population through immigration is necessary, Mr Lee said yesterday.

But as immigration has become a sensitive issue among Singaporeans, this would be done in a 'measured and calibrated manner', he added.

While the policy is designed to benefit Singaporeans, some citizens perceive newcomers as unwelcome competition, he noted.

'The Government understands these sentiments,' he said, pointing out that policies had been tweaked to distinguish more clearly between citizens and permanent residents (PRs).

These include changes in housing, education and health care, with PRs getting lower health-care subsidies and paying more in school fees.

The Government is also moderating the inflow of foreigners, he pointed out.

In citing the underlying reason, he said: 'We don't want to shift the tenor of our society, we don't want to dilute the Singapore spirit. We must not feel, or make Singaporeans feel, that our home has become different or alien.'

But he also urged Singaporeans to examine the issue 'dispassionately' and to understand the realities of the situation.

Even as such new stresses are being dealt with, Mr Lee reminded people not to forget the old faultlines of Singapore society:

'Our various races and religions enjoy good relations, but it is only the result of constant tending and vigilance.'

The sensitivity of race and religion in South-east Asia was placed in the spotlight by recent religious tensions that erupted in Malaysia over a court ruling allowing non-Muslims to use the word 'Allah'.

Said Mr Lee: 'We must not let our guard down or allow these external problems to affect our own precious and unique harmony.'

After addressing the issue of those arriving in Singapore, Mr Lee reached out to those who have left. About 180,000 Singaporeans are living overseas for work or study at any one time.

Striking a sentimental note in addressing them, he said: 'We hope that wherever you are, whatever you are doing, Singapore will forever be in your hearts, and you will always remember that Singapore is here, waiting for you.'

- end of ST article