CFE report: So what’s the big idea?
by Wan Ting Koh
FINANCE Minister Heng Swee Keat was asked earlier at a press conference to identify a key big idea in the economic report produced by the Committee on the Future Economy (CFE). He didn’t name any but chose to re-frame the question – how Singapore can remain relevant to the world – a question which he pointed out, was not new.
Said Mr Heng: “We just have to keep ourselves very focused on how we are relevant to the world… Significant changes are going around in the world that we have to stay open and stay connected to the region and the global economy. And the way that we navigate this change is to build very deep capabilities.”
His co-chair, Trade and Industry Minister S Iswaran, named the Global Innovation Alliance (GIA) initiative, which offers tertiary institutions and companies more opportunities to link up with overseas partners, as one idea. He also said, however, that he didn’t think “novelty in itself defines the value of a report like this or any other government measure”.
So there you have it.
The much-awaited report, which numbered 109 pages, doesn’t have any specifics that would enthuse anyone. It seems to be a reiteration on the need to keep the economy open in the face of anti-globalisation sentiment, keeping enterprises and workers in pace with the changes through acquiring deeper skills, and collaboration among stakeholders, including trade associations and business chambers.
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If there was one point which stood out, it was about the tax system. The report said that rising domestic expenditures due to ageing and global change in tax rules will necessitate a review of the tax system. When asked for more details, Mr Heng said that specific changes will only be made after consultation processes.
The CFE report was supposed to be a follow-up on the Economic Strategies Committee report in 2010, which emphasised productivity-based growth, setting a target of 2 to 3 per cent per year.
Productivity didn’t figure in this report. When asked about other metrics to measure success, Mr Heng said that one could look into sector-by-sector growth in greater detail.
Likewise, while the 2010 report emphasised the need to make Singapore a home for “talent”, including foreign talent, this report was quiet on the matter. Asked about the role of foreign manpower, Mr Iswaran said that emphasis was not on nationality, but the productivity of the worker, adding that the “cumulative stock of foreign workers” in Singapore continues to grow even though there has been a “re-calibration” over the years.
“The policy on foreign workers has to complement the needs of economy and also balance that with the needs of our population. So it’s about investing in our people, and making sure that their skills and capabilities are up to mark so that they can participate in opportunities, but also recognising that there may be certain gaps in the market,” said Mr Iswaran.
Rather, more sobering is how the CFE had put 2 to 3 per cent as the annual expected GDP growth rate for this decade while the earlier committee said 3 to 5 per cent. It seems the CFE had taken into account the rising protectionistic tide since then, as well as the gloomier global outlook. Mr Iswaran said that the GDP growth was “not unlike what other economies achieve” and was an “appropriate and realistic indication” of GDP.
Why isn’t manufacturing taking up more than 20 per cent of the economy since it has been on the rebound? The sector had its strongest performance of the last year in the last three months before the year ended and manufacturing data from the Economic Development Board (EDB) showed that manufacturing output increased 21.3 per cent in December.
Said Mr Iswaran: “On manufacturing, I don’t think we are wedded to a number as a proportion of the GDP, that would be the wrong way to go about it… But we have good reasons to believe manufacturing continues to have [an] important role in [the] economy, we already have [a] strong base of companies and industries… to build on.”
What are we to take away from the report then?
Past reviews led to growth in areas such as investments overseas, and in Singapore’s links to other global financial centres and trading hubs. This time, the report is more concerned about getting people and businesses ready to capture opportunities as they arise.
To support the development of promising industries, the report said that the G should consider “using lead demand”, adding that new enterprises with short track records would benefit from citing the G as its reference customer. This was the case for example, with water and defence technology industries.
The CFE was convened in January last year to map Singapore’s economic strategies for the future. The committee comprises of 30 members from different industries that operate in global and domestic markets. Here are the nine members of the panel in today’s conference:
The five ministers:
Mr Heng Swee Keat, Finance Minister
Mr S Iswaran, Minister for Trade and Industry
Mr Chan Chun Sing, Minister in the Prime Minister’s Office
Mr Lawrence Wong, Minister for National Development
Mr Ong Ye Kung, Minister for Education (Higher education and skills)
The four speakers from private companies:
Mr Teo Siong Seng, Chairman for Singapore Business Federation
Mr Bill Chang, Chief executive of group enterprise of Singtel
Mr Tan Chong Meng, PSA International group chief executive officer
Ms Mariam Jaafar, Partner and managing director of The Boston Consulting Group
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Featured image by Najeer Yusof.
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