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Singapore needs to change social culture to transform economy: Tharman

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that to move from an upper-middle-income economy to a truly advanced one, Singapore needs to transform its social culture.

SINGAPORE: Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that to move from an upper-middle-income economy to a truly advanced one, Singapore needs to transform its social culture.

Speaking at the DBS Asian Insights Conference 2014 on Friday (July 4), Mr Tharman also said the Government will continue to encourage businesses to restructure to become more innovative and productive.

Food manufacturing is one sector that has benefited from the government's push to drive productivity growth - in the last three years, Mr Tharman said productivity in the sector has risen 25 per cent.

Other "old economy" industries like the furniture and precision engineering sectors have also seen significant transformation.

Alongside new growth industries, Mr Tharman said Singapore has a good future in manufacturing.

However, some other industries - like retail and F&B - see many new entrants each year, who need to do work harder to differentiate themselves from their competitors.

Mr Tharman said Singapore needs more "disruptive players in every sector" - companies and people who seek different ways to do business without relying on more manpower.

He said: "I believe if we stay on course, keep the labour market tight, provide strong incentives for companies to upgrade, I believe entrepreneurs are going to come forward and some firms are going to innovate in a way that will knock out their competitors. That's when productivity really changes. It is a restructuring of the industry driven by market forces and entrepreneurial innovation.

"The Government can't create it, we can't summon it up but we can provide the conditions that encourage restructuring that rewards the winners - even if it means we lose some companies, even some industries."

Mr Tharman added that social and cultural changes are also needed to drive innovation.

He said: "At the end of the day, we need a less dollars and cents approach to this. The Government has to provide dollars and cents incentives, tax deductions, grants and so on. But at the end of the day, it is a matter of social culture.

"It has to be more intrinsic, not just relying on extrinsic incentives. I have to want to be the master of what I am doing, whatever it is."

Mr Tharman said productivity growth will take time but Singapore has the opportunity to invest in the skills of Singaporeans and to help unleash their entrepreneurial energy.

He also believes that Singapore can be a high-value manufacturing and services hub.

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