Singapore is due to deliver a blueprint outlining strategies to boost the economy as the export-dependent nation seeks new growth engines.
The Committee on the Future Economy will publish its recommendations in a few weeks time, Prime Minister Lee Hsien Loong said in his New Year Message, days before the government reported that growth slumped to a seven-year low in 2016. Southeast Asia’s only developed economy faces risks including rising trade protectionism in the U.S. and a slowdown in China.
Here is an outline of the committee and what to expect:
What is the CFE?
The 30-member CFE was set up in December 2015 to develop economic strategies for the city-state, along the lines of earlier groups convened since at least 1985. Comprising government and private sector representatives, such recommendations have helped shape Singapore’s economic policies.
The committee has the weighting of senior officials: it’s led by Finance Minister Heng Swee Keat and Minister for Trade and Industry S. Iswaran. Chan Chun Sing, Minister in the Prime Minister’s Office who is a rising political star in the government, is the vice chairman.
The CFE has consulted with more than 1,000 educators, business leaders and academics, The Straits Times reported. It seeks to identify growth industries and markets as well as ways to make Singapore-based companies more competitive. Job creation, urban development and infrastructure are also part of its remit.
Why is it important?
Singapore has a history of success with similar committees in helping to drive economic change. Recommendations from the previous group – known as the Economic Strategies Committee – released in 2010, were mainly followed. These included raising fees companies must pay to hire foreign workers, a measure designed to curtail immigration growth, and setting up a National Productivity Fund to finance programs to boost productivity.
“Historically, when Singapore convened these kinds of committees they are not for show,” said Brian Tan, a Singapore-based economist with Nomura Holdings Inc. “This will set the tone for policy making over the next period.”
What to expect?
The CFE is likely to focus on financial technology and nanotechnology as well as ways to improve productivity with the working population set to decrease in coming years, said Song Seng Wun, a regional economist at CIMB Private Bank in Singapore.
“Singapore must find a few tricks up its sleeve to make sure it remains relevant,” Song said. “The question is how Singapore, a small open economy, can stay relevant when social media and other developments have made businesses almost borderless. Singapore is not that limited by its small size anymore.”
Singapore is no stranger to innovation. In the 1990s, it shifted its focus to chemicals, electronics, engineering and developed biomedical sciences. In 2015, the biomedical industry had an output of SGD26.9 billion (USD18.6 billion), about 10 percent of overall manufacturing production.
What about jobs?
Employment may feature more prominently in the committee’s recommendations at a time when the city-state is shedding jobs at the fastest pace since 2009. In particular, there is expected to be a focus on initiatives for the re-training of older workers, said Nomura’s Tan.
“There is growing evidence that structural unemployment is rising in Singapore because some careers may not be so viable anymore,” Tan said. “It’s an issue of how you redeploy the workers into the new sectors that the CFE is going to come up with.” David Roman, Bloomberg