PRIME MINISTER LEE HSIEN LOONG'S
NEW YEAR MESSAGE 2007
A Year of Achievements
2006 has been
another eventful year. The world continued to face a daunting array
of challenges, from a nuclear-armed North Korea to the stalling of
global trade talks to growing racial and religious tensions in many
One major hotspot was
the Middle East. The
month-long war between Israel and the Hezbollah in Lebanon, the
chaos and sectarian conflict in Iraq, and the threat of nuclear
weaponisation in Iran all heightened tensions and pushed up oil
prices. Fortunately despite these problems, the world economy grew
strongly, at one of its fastest paces in 30 years.
Growth in Asia was
especially strong, due to the continued expansion of China and
India, and the revival in Japan. Southeast Asia was generally
lifted by the rising Asian tide, although several countries faced
political difficulties. At the same time, growing competition from
China and India is galvanising ASEAN to accelerate its integration
efforts and forge an ASEAN Economic Community by 2015.
For Singapore, 2006
has been a year of achievements. The economy did well for the third
year in a row. It grew by 7.7%, higher than we had originally
expected. Both the manufacturing and services sectors enjoyed
robust growth. The construction sector also expanded, for the first
time in six years.
strong economy created more than
124,000 jobs in the first three quarters alone, the highest number
ever. About half of these jobs were taken up by residents.
Unemployment was down to 2.7%.
Companies are reporting better performance, and workers are enjoying
good wage increases and higher bonuses.
2006 was a golden
year for tourism. A record high of more than 9.5 million tourists
the hotel and retail industries. Visitors came from all over the
world, including one million from China alone.
Our efforts to add
buzz and excitement to our city are working. A global survey of
frequent travellers and travel experts ranked Singapore second in
the world for nightlife and dining.
for proposals for the two Integrated Resorts (IRs) were a resounding
very high quality submissions.
The two IR operators will invest over $10 billion in
Singapore, creating many jobs and spin-offs for the economy. By
2010, Singaporeans and tourists can look forward to two new
in Singapore remained strong. The Economic Development Board (EDB)
attracted $8.8 billion in fixed asset investments, the highest level
in recent years. It also secured significant investment commitments
for services and R&D. Major projects include a world-scale
petrochemicals complex by Shell, a wafer fabrication plant by Intel
and Micron, and global water R&D centres by GE and Siemens. Their
choice of Singapore is a telling vote of confidence in our people
and our future.
In September, we
successfully hosted the IMF/World Bank Annual Meetings. This was our
biggest international event ever. Singaporeans rose to the occasion
and showed the world what we could do together. We left a deep
impression on all the delegates and business leaders, and reinforced
our reputation as an international business and financial centre.
regional and international stage, Singaporeans continue to pursue
their passions and excel in diverse fields, like the arts, cooking,
design and sports. At the Asian Games, Team Singapore showed
tremendous fighting spirit, and performed outstandingly. All our
athletes, both home-grown and foreign-born, gave of their best for
the nation, as Singaporeans cheered them on. Team Singapore
returned from Doha with eight gold, seven silver and twelve bronze
medals, our best-ever tally at the Asian Games.
2006 also marked a
significant milestone in our political history. In the General
Election in May, Singaporeans chose the new team to take us
forward. The Government will use its mandate to serve all
Singaporeans, tackle pressing domestic problems like the ageing
population, and stay on top of our challenges and ahead of the
Growing our Economy & Economic
The economic outlook
is positive. There are some downside risks, including a slowing US
economy, weaker global electronics demand, and high oil prices.
Nevertheless, the global climate remains favourable. Europe looks
forward to another year of steady growth. In Asia, China and India
will remain powerful growth engines. Japan also expects to continue
growing. Barring unforeseen setbacks, we expect the Singapore
economy to grow by 4-6% in 2007.
performance can only be sustained with constant effort, change and
innovation. We need to transform the economy to compete on the
basis of knowledge, talent and ideas. The Research Innovation and
Enterprise Council (RIEC) will meet again in March to take stock of
our progress in R&D, and consider new initiatives to spur future
To create more
opportunities for Singapore, we must venture beyond our shores and
expand our international space. We are strengthening our ties with
existing partners and linking up with new ones. We are deepening
cooperation with our nearest neighbours, Indonesia and Malaysia, and
with other ASEAN partners, to make Southeast Asia a vibrant region
which investors cannot ignore. Next year, it is Singapore¡¯s turn to
occupy the ASEAN chairmanship. We are hosting the ASEAN Summit in
November, and planning a whole year of activities to commemorate
ASEAN¡¯s 40th anniversary. This will be a timely occasion
to push for further regional integration, and secure ASEAN¡¯s place
in the world.
At the same time, we
further afield for global opportunities.
One major advantage we enjoy abroad is the Singapore brand name.
People admire what we have achieved, and see us as a model for their
own development. They hold our companies and people in high regard
because of Singapore¡¯s reputation for integrity, efficiency,
reliability and high standards. We are in demand as managers,
partners and investors, whether in China, India or the Middle East.
I am happy that more
Singaporeans are venturing abroad, not just to the major cities, but
also to less familiar destinations. On overseas trips last year, I
met Singaporeans in Chengdu (China) and Doha (Qatar). They are
well adapted, making headway in their ventures, and establishing
little communities to help one another and guide new arrivals to
settle in. They fly the Singapore flag high, and win friends and
supporters for our nation.
Preparing for the Future
is in a strong position. But we must not become complacent and
slacken. Instead, we must capitalise on this strength to move
boldly, and open up a decisive lead over competitors. Now is the
time to press on with restructuring and prepare well ahead for a
more challenging future.
This is why we are
raising the GST to 7%, and amending the Constitution to draw more
Net Investment Income (NII) from our past reserves. These moves
will give us extra resources to launch new programmes like Workfare
and meet future needs.
We will strengthen
our competitiveness by lowering direct taxes when the need arises,
particularly on companies.
We will invest in
the best education for all our children, improve our infrastructure
and our city, and grow our capabilities, including through R&D.
We will consolidate
our social cohesion at a time when incomes are stretching out.
Globalisation has created
prosperity worldwide, but it has also put more pressure on workers
in many countries. They now compete against millions more from
China, India and Vietnam entering the world economy. As a result,
workers are receiving less than a proportionate share of the
increase in their countries¡¯ national output.
This is happening in
Singapore too. In the last five years, our real per-capita GDP grew
on average by 4.3% per annum, but real average wages (after
adjusting for inflation) grew at only half this rate ¨C 2.1%.
Higher-end wages have risen by more than this. But at the lower-end
wages have increased by much less, and some have even stagnated.
This is why we are
implementing Workfare as a fourth pillar of our social safety net,
together with the CPF, the 3Ms (Medisave, MediShield and Medifund)
and HDB home ownership. Workfare will provide long-term, systematic
support for lower-income Singaporeans. We will also continue with
programmes to improve the skills and earning power of this group, so
that they can uplift themselves and their families.
We will also pay
attention to the middle- and higher-income groups. We should help
them to provide better for themselves, rather than make them
dependent on state support. NTUC leaders have suggested raising
employer CPF contributions for the middle- and higher-income groups.
Such a CPF increase will complement the Workfare scheme which
covers the lower-income groups. Then all Singaporeans will be able
to save more for their housing, retirement and healthcare needs.
The government is
studying this idea carefully. Our economy is doing well. The labour
market is tight, and wages are rising. A CPF increase makes sense.
But we must not impose too heavy a burden on companies and impair
our competitiveness. Provided the outlook stays good, we should be
able to raise the employer¡¯s CPF contribution rate by 1 to 2
percentage points in 2007. The Government will discuss this with
the employers and unions before making a decision nearer the date of
the Budget Speech.
favourable developments we enjoy today came from the hard and
difficult decisions we made in the last three years, such as the CPF
reforms, the restructuring of the economy, and the decision to
proceed with the IRs. Had we flinched and put off painful
adjustments, our economy would have lost competitiveness and
stagnated. Singaporeans would have had few opportunities, high
unemployment and far fewer jobs than the over 100,000 we created in
each of the last two years.
The Government will
continue to work with all Singaporeans as we embark on our next
phase of development. Taken together, our strategies will enhance
our competitiveness, reinforce our social safety net, and strengthen
our cohesion. They will enable us to grow and prosper, and to
improve the lives of all Singaporeans for many more years to come.
I wish all
Singaporeans a Happy New Year.