Minister puts finger on Lion City's sore spot
TONY TAN KENG Yam, Singapore's Deputy Prime Minister and Minister for Defence, knows a thing or two about science, technology and making money. In his younger days he picked up a first-class degree in physics, a masters specialising in operations research and a doctorate in applied mathematics.
In his later years, before duties as a Member of Parliament called, he worked at Oversea-Chinese Banking, becoming general manager of the bank in 1978. He is obviously a bright guy.
Given this background - and his reputation for speaking more forthrightly than many members of the establishment - his contributions to public debates are usually worth watching. Every now and again, Mr Tan goes beyond the parameters of existing policy, his words highlighting possible future trends.
This week's delivery to the Economic Society of Singapore was just such an intervention.
With the economy in recession after two quarter-on-quarter contractions and worse set to come, the mood was pretty sombre.
Mr Tan wasted no time in pin-pointing the difficulty: 'Unlike 1985, when Southeast Asia was growing strongly and unlike 1998 when the US and other global economies provided some cushion for Singapore, the region today is stagnant and the economies of the US and other developed countries are experiencing significantly slower growth.
'The only bright spot on the economic horizon is China, which should again show good growth of 7 per cent to 8 per cent this year.' So far, so ordinary.
It was what came moments later when Mr Tan turned his gaze on the problems of the electronics sector that stood out. After highlighting the economy's dependence on the chip and hi-technology gadget trade, he bluntly said that Singapore had to re-balance the structure of its economy.
'More worryingly, if our manufacturing sector continues to depend largely on electronics to grow, we will have a highly volatile Singapore economy. Instead of steady growth, we will have a see-saw pattern of economic growth,' Mr Tan told the audience.
'We will have growth when the electronics sector goes up, then when the sector turns down we will have a drastic slowdown. We should therefore remedy this defect in the present economic structure of over-concentration of our manufacturing sector on [the] export of electronic products.'
Such language and conclusions may be familiar for many private-sector economists, but they represent fresh thinking coming from one of Singapore's senior policy-makers. While Trade and Industry Minister George Yeo Yong-Boon or Deputy Prime Minister Lee Hsien Loong may have talked clearly enough about the cyclical problems of the hi-tech sector, Mr Tan is the first cabinet-level politician to urge that the dependency be curbed.
Mr Tan is on pretty good ground. Figures from the Trade Development Board show that Singapore's dependence on electronics outstrips that of all other competing Asian nations. The bias also has been deliberately fostered by the state, which has ploughed public funds into hi-tech ventures.
In South Korea and Taiwan, electronics represent less than 40 per cent of non-oil domestic exports compared with 53 per cent in Malaysia and just 16 per cent in Hong Kong. In Singapore the figure is 66 per cent: only the Philippines comes close, with a figure of 61 per cent.
All this does not suggest that Singapore is about to turn its back on the industry or start curbing investment in hi-tech friendly infrastructure, but it may well point to the beginnings of an important shift in industrial policy.
If Mr Tan's views are anything to go by, the Lion City's politicians will in future place greater emphasis on the importance of developing a more balanced export profile.