Having waited a year for some of Singapore’s brightest minds to distil their wisdom on how to reverse a rut of slowing economic growth, observers could be forgiven if they felt a nagging sense of disappointment this week.
Soundbites such as “loosen regulation”, “embrace risk” and “strengthen free-trade deals” caused some initial excitement when the report by the Committee on the Future Economy (CFE) was finally released to the public on Thursday.
Looser regulation, more risk: how Singapore plans to boost economy amid ‘dark shift from globalisation’
These were among the ways the Southeast Asian city state, already one of the most open economies in the world, could adapt to what the report theatrically described as the world’s “dark shift from globalisation”.
Warning of Donald Trump-inspired protectionism and Europe’s swing to the right, it noted the Lion City and its workers had little choice but to adapt and prioritise innovation. Workers should reinvent themselves with new skills; the government should give more support to emerging industries and smaller firms; companies should embrace the digital world.
So far, so good. But those who closely perused the report’s 109 pages could be forgiven if they had the impression that what was on offer was a case of same wine, different bottle.
Several of the strategies have been announced before. At one point the committee warns workers they can no longer rely on the paper qualifications they received on leaving school or university. But boosting workers’ skills has been part of an ongoing national effort called SkillsFuture that started in 2014.
The committee’s talk of moves to transform each industry to prepare companies and workers for the next leg of growth appears similar to the Industry Transformation Maps first announced in the 2016 Budget. And its appeal to get companies surfing the digital wave appears little more than the Smart Nation push launched in 2014 that aimed to get the entire country wired to the latest technologies.
“The [report’s] thrusts are not intrinsically different or totally groundbreaking from earlier government strategic plans but reinforce the growing need to stay connected even amid an emerging shift by some of our key trading partners towards protectionism and insular growth,” said OCBC economist Selena Ling.
Most of the strategies offered appear to be tweaks to current policies. The committee does not bring to the table a groundbreaking or bold new plan to reverse Singapore’s fortunes – economic growth fell to just 1.8 per cent last year from 15.2 per cent in 2010.
Rather than new ideas, the committee advocates a new approach – one aimed at connecting the dots between various policies and rallying the entire country to get involved in the new economy.
“I do feel that [the report contains] no major new radical ideas that can greatly contribute to the transformation of the economy, which we greatly need,” said former Member of Parliament Inderjit Singh.
“In the past, we saw new ideas like making the finance sector a core sector, [or introducing] casinos and [embracing the] knowledge economy.”
Eugene Tan, an associate professor at the Singapore Management University, said the report reiterated ideas already announced but sharpened its focus on key issues. “Given that the future is going to be very different from the past and present, the CFE report evinces a safe, tried and tested approach with the aim of success as usual, tempered by the economic realities of being a matured economy,” he said.
There are several reasons for the lack of a breakthrough idea, despite the best efforts of 30 of the brightest minds from both public and private sectors who produced the report.
First, Singapore is facing a future in which there are no simple answers, unlike in the past. In 1985, when Singapore endured its first recession since independence, the government convened its first economic committee. It outlined a few key thrusts: focus on the financial sector, cut business costs and boost the property sector.
The suggestions worked magic and within a year, the economy had embarked on a V-shaped recovery, before continuing to grow in double digit rates till the late 1990s.
Today, Singapore’s challenges are more complex. The country is confronting a future in which its land and manpower resources – the basic ingredients of economic growth – are nearing the limits of expansion.
Its only option is to improve the quality of its workers, through skills and education, and rely on capital, such as machines, robots and digital technologies. These are long-term solutions that must be slowly implemented. At the same time, it is facing turbulence from the outside world, where protectionism, antiglobalisation forces and geopolitical tensions are rising. The tiny island state cannot shape the external environment – only adapt to it.
Secondly, Singapore already has many things going for it, including world-class infrastructure, status as a global financial hub and strong fiscal reserves. Why ditch these for a radical re-imagining of the economy?
Lastly, the report is a reflection of the style of Finance Minister Heng Swee Keat, who co-chaired the committee with Trade and Industry Minister (Industry) S. Iswaran. A career civil servant, he is known for his deliberative and consultative manner; he is a steady hand and not a revolutionary. And it shows in the report, which is the distillation of ideas that came from meeting some 9,000 people over the period of a year.
The question though, is whether tweaking policies will be enough to meet the challenges facing Singapore.
Singh is backing the committee, for now, saying it may be best to “wait for implementation before brushing off the recommendations”.
Prior to the report the Singapore government had said growth of between 2 per cent and 3 per cent a year was about right for the economy. The committee agreed, adding that such a rate of growth was a “good outcome for our present stage of development, with our incomes already higher than in many advanced economies and our workforce growing more slowly than before.”
Randolph Tan, an associate professor at UniSim, said that as the economy matured, Singapore would “see less of the heady days of high growth”.
“We have to be realistic about our fiscal strength, and now is the time to begin to face that challenge,” he said.
In other words, these strategies should be enough to sustain the current pace of growth but not to boost it. ■