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Source:
www.gov.sg |
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SPEECH BY MR LEE KUAN
YEW,MINISTER MENTOR, AT THE TANJONG PAGAR GRC ORCHARD FIESTA, 7
JULY 2007, 6.45 PM AT CIVIC PLAZA, NGEE ANN CITY BUILDING |
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Every night there is this buzz along Orchard
Road. It is because a competent and experienced team of ministers took
painful and unpopular measures in the last few years since the Asian
financial crisis to get our domestic policies to encourage growth. |
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Tourism is up. Consumers have confidence;
restaurants, food courts are thriving; unemployment has remained low at
2.9% with a healthy creation of 49,000 jobs for the first quarter this
year. This is on top of a record creation of 176,000 jobs in 2006. |
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We are into a period of good economic growth
and social development. Singapore made 6.6% growth in the last quarter
of 2006 and 6.1% in the first quarter of 2007. |
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If there are no wars or oil crises, this
golden period can stretch out over many years. Investors from developed
economies are pouring money into East and Southeast Asia through fund
managers who are investing in the stock markets of the region. |
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With 1.3 billion Chinese growing
economically at 9-11% a year for the next 10 or more years, their impact
is felt worldwide. India, with 1 billion people, growing between 8-10% a
year adds to the magnitude and the speed of this change. The whole Asian
region is getting a lift-up. |
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Singapore is at the junction between the two
giants, China and India. We are well placed to benefit because we had
already taken the hard and unpopular decisions starting from soon after
the Asian financial crisis. |
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We have reduced corporate income tax
rate to 18% and personal income tax to 20% to be as attractive as
Ireland and Hong Kong. |
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We had reduced employer¡¯s CPF
contribution rate by 10% soon after the crisis in 1997, and
recently we increased employer¡¯s contributions by 1.5% after the
companies have improved their balance sheet. |
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To make up for the corporate and
personal income tax losses, we have raised GST by 2% and given
compensatory packages to tide all those affected for five or more
years. |
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Perhaps, more important, we decided to
revise our vision for Singapore¡¯s future as a city with a lively
night life with more liberal arts and entertainment scene, the
building of two integrated resorts and Formula 1 night racing.
These initiatives have sparked off a boom in building around the
Marina and Sentosa. |
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We have drawn in many professionals,
especially in financial services, which has expanded to its
highest ever levels. |
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Many financial institutions have moved
their top people and their regional headquarters to Singapore to
manage the wealth that is flowing from the Gulf oil states, the
US, EU and Japan. Demand for high end office and residential
accommodation has increased. |
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Many home owners who sold their condos
in en bloc sales have received windfall gains. Some of them in
turn are buying upper end HDB executive and 5-room flats, pushing
up their values. |
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We must check this spike in rents for
office and residential space or we will lose our competitiveness.
We are releasing more land for new office blocks and condos. |
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While they are being built we may have
to make available other forms of office spaces such as the
transitional office site at Scotts Road and release State-owned
properties for office use to help keep rents from spiralling up.
We must not allow our rents to shoot up as in Hong Kong. |
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As for residences, URA has assured us
that there are more than 42,000 units of private housing being
completed in the next three years. |
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Will all this money pouring into East
Asia lead to another bubble? There is a danger that prices could
run-up too rapidly. We need to ensure that our overall cost
structure remains competitive. |
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There is high liquidity in the money
supply of the US, EU and oil-producing countries. This accounts
for the large in-flow of foreign money that has benefited the
regional stock exchanges. |
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In the past year, the stock markets of
the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and
Singapore) have risen by an average of 48%. Asian currencies have
also strengthened against the US Dollar. |
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Asian current accounts are in surplus,
with their reserves doubling since 2003 to US$2,500 billion. The
stock market and currencies could soften if there were a sudden
pull out of funds as in 1997/98. But if this was to happen, there
will be no crisis as in 1997/98 because no Asian country today is
heavily debted in US Dollars. |
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How well an Asean country does during
this golden period depends upon how sound it has become for
foreign investments. |
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China has been getting the largest
inflow, about US$70 billion a year, with India attracting about
over US$10 billion a year. Singapore has kept up its FDIs at
around S$6-7 billion. Other Southeast Asian countries are also
getting increasing FDIs although they have not recovered to their
pre-Asian crisis levels. |
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Investors know that Singapore has a
government with a strong mandate. Elected in 2006 with nearly five
years to go until the next elections due by May 2012. |
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An experienced team of ministers is
getting our policies set in the right direction. So we can ride on
the growth of China, India and Japan. Vietnam has now become a
favourite investment destination in Asean. |
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This is not to say we have solved all
our problems liked aging and working beyond 62, to make medical
costs affordable as costs of new drugs and procedures go up,
mitigating the income gap between the higher and lower educated
because of globalisation, upgrading and sprucing up our HDB
heartlands, better education at all levels, and so on. But as long
as we are making solid growth most problems can be managed. |
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If we maximise our opportunities in
this golden period, in five years we will have a more vibrant
cosmopolitan Singapore, not only clean, green and safe, but also a
city, fun to work and live in for Singaporeans and for the many
the foreign professionals and their families. |
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Source:
www.gov.sg Media Release 7 Jul
2007 |
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FrontPage Edition: Sat 7 July 2007
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