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     FrontPage Edition: Sat 31 Dec 2005

Prime Minister's New Year Message 2006



2005 has been an eventful year. It began with countries around the Indian Ocean struggling to recover from the Boxing Day tsunami, and Singa­pore doing our best to help them.
Later, the world saw the devastation caused by Hurricane Katrina in the US and the earthquake in Kashmir. The war on terror continued, with terrorist attacks in London, Bali and elsewhere.
Although Singapore was not directly hit, we too felt the impact. We live in an interdependent, borderless world, and are affected by events far away from us.
Fortunately, the overall environment in Asia stayed favourable. Powered by the twin engines of China and India, the region brims with confidence and dynamism. Closer to home, our immediate neighbours continue to do well.
Economic Performance & Outlook
The Singa­pore economy has grown steadily, not only because of this favourable external backdrop, but also because our restructuring and upgrading policies are working.
We grew by 5.7% in 2005, better than expected. Growth was broad-based. Manufacturing output rose sharply and the services industries also did well.
Many businesses, from banks to shipyards, reported better results. A record 9 million tourists visited Singapore, significantly boosting our hotels and restaurants. Retail sales were brisk and the property market showed signs of improvement.
In the first three quarters, we created 78,000 jobs. This reduced the unemployment rate to 3.3%. For the whole of 2005, employment creation should match or even exceed the 108,500 jobs recorded in 2000. Wages increased by around 4% and many workers enjoyed good bonuses. Overall, Singaporeans have become more confident and optimistic.
Our external trade grew strongly by 14% in 2005, helped by our expanding network of free trade agreements (FTAs). We signed the Comprehensive Economic Cooperation Agreement (CECA) with India in June 2005, and our FTA with South Korea is expected to come into effect by early 2006.
We are fostering ties with new partners like the Middle East and Russia. In addition, ASEAN is building up links with major economic partners like China, India, and Japan.
Singapore continues to draw in high quality, high value-added investments. Despite stronger competition, the Economic Development Board (EDB) attracted $8 billion of fixed asset investment commitments in the manufacturing sector in 2005.
In addition, project commitments in the services sector are expected to generate total business spending of $2.4 billion annually. These investments will generate over 18,000 new jobs and many spin-offs for the economy.
Looking ahead, our economic prospects remain positive. Barring shocks, the Singapore economy should grow by 3 to 5% in 2006.
In manufacturing, we are exploiting research and development (R&D) to become a global leader in niche areas. We are consolidating our position as a major chemicals hub, with many investments in the pipeline. We are developing the biomedical sciences as another key growth area. Major investments in new pharmaceutical plants will boost our production capacity.
The electronics industry is also moving upstream into new areas such as next generation display technologies. This upgrading of the manufacturing sector will mean more jobs in coming years for engineers and skilled workers, and provide a boost to the rest of the economy.
In services, we successfully hosted the International Olympic Committee (IOC) Meeting in 2005 and will be hosting the International Monetary Fund/World Bank Group Annual Meetings in 2006. We are calling tenders to build two integrated resorts, which will bring in many more tourists and add buzz and excitement to our city.
We are developing competitive strengths in new, rapidly growing service industries like digital media. Leading game developers and media production companies are setting up studios in Singapore to create video games and feature films. In 2005, we played host to the World Cyber Games, the equivalent of the Olympics for computer games.
Other service activities like wealth management, international trading, logistics, education and healthcare are also doing well.
To sustain growth, we must press on with economic restructuring. We have to continue to change and adapt, in order to stay competitive and vibrant.
Other countries are rapidly transforming themselves, so we too must reinvent ourselves to stay ahead. Central to this strategy are our efforts to educate our people, and to train and re-train our workers, to keep them employable and in demand as the needs of industries change.

Source: Press Release 31 Dec 2005

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