SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam said Singapore's economic
growth will be weak in the short-term mainly because of the gloomy world economy.
And the challenge for Singapore,
he said, is to restructure its economy to ensure sustained growth over the
long-term.
Mr Tharman, who's also Finance
Minister, was speaking to reporters on the sidelines of a community event in
his Jurong GRC.
Many countries in the world are
now bracing themselves for the possibility of a "fiscal cliff" in the
US.
This means a huge economic crisis
may be looming for the US - if its deeply divided Congress is not able to come
to an agreement.
Congress, which is made up of the
House of Representatives and Senate, will still be controlled by two parties in
the new Obama administration.
The Republicans regained control
of the House, while the Senate is dominated by the Democrats.
Mr Tharman pointed out that even if
the US gets past this hurdle, the bigger challenge is to put its mid-term
budget on a more sustainable path for the years ahead in order to restore
investor confidence.
He said: "That's what's
necessary to really get the economy to restart. And it requires common ground
to be found on both taxes and spending on the parts of the Democrats and the
Republicans.
"The experience of the first
term was one of intense partisanship. Hopefully in the second term, there will
be a willingness to find common ground. The initial signs are positive but it's
too early to say."
The effects of sluggish growth in
the US and Eurozone are likely to cascade to Singapore, even though Mr Tharman
said Asia continues to do reasonably well.
"Demand will be weak, but
our real challenge in Singapore is in restructuring our economy. We've got to
persevere in restructuring our economy so that we can get sustained growth over
the long term, over the next five to 10 years based on productivity growth.
That's the big challenge. Demand will be weak in the short term but it's not a
fundamental problem for us because our unemployment rate is low, and that's the
bottom line of the short-term. Unemployment rate is low, jobs are available and
training places are available. Our real challenge therefore is to focus on
restructuring our economy so that we can move one whole level higher -
productivity, skills, expertise," Mr Tharman shared.
He said this means using
management methods and technology to improve efficiency and productivity so
that workers can get paid more.
"They can have more
satisfying jobs and we can grow our economy without growing employment year
after year, especially foreign employment. So we got to find the right balance.
It's something that affects every sector of the economy. And, we look at the
most developed countries and we can see how it's done. They too went through
that transition. In some cases not very long ago, they went through the same
transition. They ramp up on labour and they have to upgrade, do with less labour,
but using technology and everyone playing that part, including customers,
everyone playing that part. You can move up to a higher level. That way, our
workers can get good wages, get good jobs," he said.
Mr Tharman added that the
government will provide every form of support to help companies, especially
small and medium enterprises, to make this transition.
- CNA/ck
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