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STRUCTURAL ADJUSTMENT
Our fourth thrust is to make further structural adjustments
to our economy.
OPENING UP
I have met people who have been personally affected by our
economic restructuring. Some are friends and relatives. Remisiers'
commissions have been cut. Bank tellers are competing with
insurance agents to sell insurance policies and unit trusts.
Many bank employees are fearful of being retrenched because
of banks merging.
I understand your distress over the dismantling of protective
regimes. But I hope you will understand that the Government
has to look at the larger picture. We have to consider the
tectonic changes under way, and work out a strategic response
to secure the long-term prosperity of Singaporeans.
The status quo is not sustainable. Even if the Government
does nothing, the market will eventually bring about painful
changes. We can delay the adjustment, but the final result
will be worse. It is far better for us to accept reality and
go with the forces of change, and not to resist them. If you
watch boxing, you will know what I mean. The boxer who sticks
out his jaw instead of rolling with the punch will be knocked
out in no time.
EXPORT SECTOR
To restructure our economy, we have to enhance the competitiveness
of both our export sector and our domestic sector.
Our export sector has been steadily transformed over the
years. We have shifted towards new, higher value-added manufacturing,
as lower-end production moved offshore. 10 years ago, consumer
electronics still accounted for 14% of our electronics production.
Now, it is down to only 2%, having been replaced by the semiconductor
industry. And the remaining 2% of consumer electronics is
no longer radios or VCRs, but exciting new products like digital
TV and DVD players. Soon, it will be wireless applications
that allow your home appliances to talk to one another.
We must accelerate the upgrading of our manufacturing sector,
or we will be hollowed out. Our high tech industries must
go even higher tech. For example, we must be able to produce
more sophisticated semiconductors, and design the chips.
NEW CAPABILITIES
In addition, we have to build up new capabilities in IT, life
sciences and other high value-added activities.
Life sciences, especially bio-medical sciences, are said
to be the third technological revolution after the steam engine
and the computer.
To give you an idea of the potential of life sciences, just
look at the many different ways people make babies nowadays.
Most make them in the usual way, the way married couples do.
A few make babies in test tubes. Some use surrogate mothers.
Now, I read that Australian researchers are trying to make
babies from the cells of two women. They have shown that baby
mice can be produced from the cells of female mice without
any male contribution whatsoever. If they succeed in applying
this technology to humans, will our women still need us?
We must have a piece of the action, perhaps not in finding
new ways of making babies, but in finding new cures for diseases.
DOMESTIC SECTOR
Even as we promote exports, we must not neglect our domestic
sector. We should see how we can make the domestic sector
as efficient as the export sector driven by MNCs. The productivity
of our domestic sector, whether in construction or retail
or hospitality, is low. This is a severe drag on our national
productivity. If you have visited the developed countries,
you would have noticed their superior service standards and
productivity. Yes, there are outstanding exceptions in Singapore
like Robinsons. But they are the exception rather than the
rule.
Years ago, I took a taxi in Paris from the airport to the
hotel. When the taxi arrived at the hotel, the driver got
out and carried my heavy luggage out of the boot. I was astounded.
The driver was a woman.
Chong Lit Cheong, CEO of JTC, related that when he and his
wife were in Hong Kong recently, his wife had to pick up from
a store, a bag she had already paid for. She telephoned the
store to ask them to get her bag ready. The salesgirl not
only got the bag ready, but went the extra mile. She waited
outside at the taxi stand to hand the bag to Lit Cheong's
wife, thus saving her the trouble of getting out of the taxi!
I would like to see such levels of customer service in Singapore.
When Professor Michael Porter was here earlier this month,
he pointed out that unless our domestic sector was efficient,
our overall economy could not achieve high productivity. Export
businesses and consumers alike would have to pay higher costs
for inefficient local services. He cited Japan as an example
where a weak domestic sector had adversely affected the export
sector.
We, therefore, have to open up our services sector further,
to improve its efficiency. We are already doing this for finance,
telecommunications and power generation.
At the same time, we will help our domestic sector to upgrade,
especially the SMEs. PSB has programmes to improve their productivity.
For example, for a long time, the cleaning industry suffered
from low productivity and a poor image. Now, PSB is working
with the industry to upgrade skills and performance standards.
It has set up a Centre for Cleaning Technology.
There is also much room for retailers to upgrade themselves.
Retailers should participate in PSB programmes such as franchising,
economic grouping and shared services. These programmes help
them adopt modern management practices and business models.
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