Hansard, 1986-02-20

The President (accompanied by two A.D.C.s) entered the Chamber, accompanied by Mr Speaker, who was preceded by the Serjeant at Arms (without the Mace), the First Assistant Clerk, the Principal Assistant Clerk and the Clerk. On the Clerk announcing "The President", the President delivered his Opening Speech. 8.31 pm

The President (Mr Wee Kim Wee): Honourable Members, last year, at the opening of Parliament, my predecessor announced the new goals of this Government - greater participation by the population, greater opportunities for all, 100% home ownership, attention to the problems of working mothers and the aged, and economic growth. These goals have not changed, but our economic growth may not be achieved, unless we remedy our weaknesses. Hence tonight I shall focus only on the economic goal. The recession of 1985 is a watershed in our economic development. It marks the end of an era of high growth and relatively easy progress. It shows the uncertainties and dangers of an economy that is overwhelmingly dependent on international trade. It reveals how vital it is for us to be flexible, to be ready to weather sharp reversals, to catch the next wind, and be carried along by it. We must react to this adversity cohesively and decisively. My Government has already taken some steps to reduce business costs and restore competitiveness. The Economic Committee has proposed further comprehensive measures to cut CPF, restrain wages, and reduce taxes. My Government accepts, in principle, the policy recommendations set out in the Report of the Economic Committee. But the recession cannot be solved by the Government alone. These measures will only work if we have the full support of the people. This means that we must all hold, and if need be reduce, our standard of living, for the time being. Employees will have less money in the CPF. Wage increments which we had looked forward to, and even counted upon, will now be temporarily postponed. For the first time in many years, things will not be better this year than last. All this is painful, but it is also unavoidable. In the changed economic environment, with US growth slowed, newly industrializing country (NIC) exports affected, and regional economies depressed by low commodity prices, this is the only way we can adjust. By acting now, we shall keep unemployment down, restore our competitiveness, and avoid worse problems later. When conditions pick up, we shall be well placed to grow again. Others have already adjusted - Hong Kong with its free market economy, and Taiwan and South Korea with new export and investment strategies. We too have to adapt. The policy changes are necessary medicine, but they are not an instant cure. It will take 18 months if we are lucky, longer if we are not, for results to show. Only then will orders pick up, new investments flow in, new jobs be created, and business begin to hum again. Meanwhile, it is more vital now than ever that all Singaporeans work together, both with each other and with the Government, to overcome our difficulties. These are trying times. Other societies, confronted with similar challenges, have sometimes been found wanting. Their populations grow restless, factions form, strife destroys harmony. Thus they compound their problems, and instead of surmounting their difficulties, are overwhelmed by their misfortunes. This must not happen to us. We must hold together, renew our common bonds, and emerge tested, tempered, and strengthened by this trial. It is not our first, nor will it be our last one. But even while we wrestle with present problems, we must also lay the foundations of growth to come. We must look beyond immediate worries, to more distant and less dismal prospects. The future is likely to bring slower growth than we have seen, and stronger competition than we have been used to. But it will also bring fresh ways to make a living. There will be dangers, but there will also be opportunities, provided we have confidence in ourselves, set the right course for our country, and make the most of any chances that come our way. The way for Singapore to prosper is to educate our people, work hard, strive for excellence, and make this a place where businesses can prosper. If new companies cannot make profits in Singapore, or if they cannot make larger profits here than they can elsewhere, they will simply not come, and even existing companies will eventually move away. Jobs will be lost, the economy will shrink, and Singaporeans will suffer. Therefore we must never price ourselves out of the market. We must make sure that Singapore always has a good business environment, where companies can set up quickly, do business efficiently, and earn good returns. As they prosper, Singapore and Singaporeans will prosper along with them. But it is not enough for us to be merely a cheaper place to do business. Singapore is small, and has many disadvantages. To be competitive, we must be better than others. Our products must be known for their high quality. Excellence must be our way of life. Each one of us must be well trained. Each individual must seek to do his job conscientiously and competently, and the best persons must be put into the most crucial jobs. This is how we can earn good incomes for ourselves. This is the way to reach the standard of living to which we aspire. The private sector must play a crucial role in achieving this goal. The Government will provide the preconditions for growth. It will administer the country well, provide the infrastructure, and educate the population. Where necessary, the Government will take a share in a risky private sector project, so as to help to spread the risk or finance the investment. But the Government cannot try to spot every new opening, or exploit every chance that comes our way. That must be up to the enterprise and initiative of our people, and of others who see that in Singapore, enterprise and initiative are well rewarded. In a vibrant society, with equal opportunities for all, individuals and companies should not merely be passive beneficiaries of a paternal Government. It is far better for them to venture and dare to take the risks that go with high rewards. Depending on the private sector gives us the important advantage of flexibility. We must live in the world as it is, unpredictable and full of surprises; not the world as we would like it to be, safe, orderly, and shock free. The Government, no matter how efficient, cannot move as fast as can an individual or a company. In order to react quickly, we should leave as much initiative and responsibility as possible to individuals and companies. We must be flexible, to cope with the unexpected and even the unwelcome, to seize opportunities and prosper in a world of change and surprises. We cannot hold fast to old policies, or preserve old attitudes made obsolete by new realities. We cannot maintain institutions which fail to cope with the ups and downs of economic growth. In an era of great technological progress, one constant is change. We cannot afford as a people to reject change, to abhor innovation, or to spurn new methods of production, in order to preserve comfortable old ways. The world will then pass us by, and we will be the poorer and sorrier for clinging to the wreckage of the past. But if we do become a nation of sprightly, nimble and adaptable people, if the private sector lives up to our expectations, and if we attract talent and enterprise from overseas to augment our own efforts, then we can develop into an international business centre, playing a useful role in the world economy, and therefore able to grow and flourish. In that case, by the 1990s, economically we should be a more developed country, with an edge over our competitors. Our people should be well educated and fully trained, venturing into new fields of endeavour, and creating the wealth for a vibrant society. Our society should be a lively, challenging, and fulfilling place to work and live in. We can become a centre of excellence, in fields such as education and health. Then the sacrificies and efforts we are making will be rewarded many fold. When the recession eventually ends, as it must, we would have made another great stride towards realizing our vision of a nation of excellence. At the conclusion of the President's Address, Mr Speaker, preceded by the Serjeant at Arms, the Clerk, the Principal Assistant Clerk and the First Assistant Clerk, escorted the President (accompanied by two A.D.C.s) out of the Chamber, and the House adjourned without question put, pursuant to the Standing Order. Adjourned accordingly at Thirteen minutes to Nine o'clock pm.

The Economic Committee, set up in April 1985, has completed its task. It has focused its attention on reviving the economy from the current recession, and on charting a longer-term course for the economy for the next decade. The main strategies have been identified after extensive consultation with the private sector. Its Report entitled "The Singapore Economy: New Directions", which is attached (Not reproduced), represents a broad consensus view of the best way forward for the Singapore economy. 2 The short-term measures to improve our international competitiveness and overcome the present recession are outlined in the Report. They are mainly in the areas of fiscal policy. The Government intends to use fiscal policy to stimulate economic growth. Taxation policy will encourage private investment and entrepre neurship, and improve the international cost-competitiveness of our products and services. The tax burden, in particular Corporate Tax and Income Tax, will be lightened and kept moderate. 3 Apart from fiscal policy, the Government will take steps to avoid competing unfairly with the private sector in industrial and commercial activities. It will continue to privatise state-owned companies, except where there are over-riding reasons of national or defence interests. Ministries and Statutory Boards will contract out some services hitherto provided in-house to the private sector, where this will not affect operational efficiency and cost. Such measures will encourage the private sector to play a bigger role in our economy. 4 In the longer term, although we may have to adjust our economic policies from time to time to cope with the prevailing economic conditions, our broad strategies will persist. 5 By the 1990s, we must become a developed nation. Our aim is to be as developed as the West in terms of maturity of our economy, and yet more competitive. Our niche in the global economy of the future is to be an international total business centre, and a major exporter of services. To achieve this, we need to allocate our scarce resources to the correct uses. We will need to: (a) Maintain a high savings and a high investment rate; (b) Create a conducive business environment; (c) Depend on private sector initiative; (d) Promote offshore activities; and (e) Nurture both MNCs and local companies. 6 The Government will study the Report of the Economic Committee in detail. Feasible proposals will be implemented expeditiously.