Senior trade minister the man to watch in Lion City

THE SENIOR MINISTER of state at the Ministry of Trade and Industry, Tharman Shanmugaratnam, is one of the rising stars of the Singapore establishment.

Fresh from fighting his first general election for the ruling People's Action Party last November, the former managing-director of the Monetary Authority of Singapore has been thrown straight into the deep end of government.

His main task at the moment is drawing up a fresh set of policies on taxation, state-mandated pensions, wages and land policy. The in-depth review is part of a wider reassessment of all economic policies headed up by Deputy Prime Minister Lee Hsien Loong, who chairs the so-called Economic Review Committee.

'We are at an inflection point in history,' Mr Shanmugaratnam told the local paper, announcing his decision to enter politics with the Action Party, which has ruled Singapore since self-government was granted in the late 1950s.

'It made me realise that if I can contribute, I should go in now,' he said.

The jump into the political mainstream was all the more interesting as Mr Shanmugaratnam has had his run-ins with the authorities in past.

In the 1980s, he was briefly detained for questioning by the domestic intelligence services when they cracked down on left-wingers, attempting to root out 'Marxists'. In the 90s, when at the monetary authority as an economist, he was charged with breaching the official secrets act in a highly publicised case.

However, both incidents were put behind him and he has continued his upwards climb towards the streets of his multi-member Jurong constituency and the new desk at the ministry.

The results of Mr Shanmugaratnam's fiscal deliberations will be made public at Budget time in May. Official hype suggests that a wholesale overhaul should be expected. Other changes endorsed by the review committee, drawn up by a swathe of other sub-committees and officials, will follow later in the year.

As a teaser of what may be ahead, Mr Shanmugaratnam's first key speech on the matter came up recently at an awards ceremony and threw up some interesting themes.

The main thrust of the address, 'Succeeding in an unpredictable world - moving from a managed to an entrepreneurial economy', echoed suggestions from other ministers that have been floated in recent years. To go on succeeding, he said, the Lion City needed to rein in the long arm of government and encourage more 'chaotic', and less state-directed, economic organisation. All of this leans towards a slightly greater bias towards service industries, although the Government will retain some interests in defence-related manufacturing capabilities.

'We have to create an environment in which individuals and firms take their own chances and succeed on the strength of their capabilities or efforts, rather than on government direction or subsidies. We have to strengthen the incentive for individuals and firms to look for opportunities in uncertainty and to experiment with new approaches in the hope of great reward,' Mr Shanmugaratnam said.

All in all, there was a greater need for something he dubbed 'white space' in the economy - in effect, an arena where market forces would hold greater sway than at present. There would be fewer attempts by the Government to 'pick winners' and more standing back to allow events to run their course.

The address was notable as Mr Shanmugaratnam's pronouncements were blunter than much that has gone before.

What of the overall structure of the economy? 'We will not know if we can retain 25 per cent of gross domestic product in manufacturing. It would be futile to target a precise a percentage,' he said, clearly suggesting that services will be on the ascendant.

What of taxation? 'We should aim to make our tax system and other incentives less targeted and more broad based, so as to accommodate a greater degree of market experimentation.' That points towards possible personal and corporate tax rate cuts.

What of that most favoured of all sectors at the moment, electronics, which accounts for much of non-oil domestic exports? 'We should avoid dependence on one sector alone,' he said. That raises the prospect of a more balanced export profile, although other senior officials appear to remain committed to high-technology goodies.

And pay rates? 'We need greater flexibility in our remuneration structures to cope with the uncertainties of business conditions,' he said.

The actual result of all this brainstorming will be known soon enough.

Before and after the announcement, though, Singapore watchers would do well to keep tabs on Mr Shanmugaratnam as he grapples with this 'inflection point in history'.

He is clearly being groomed for greater things.