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SINGAPORE: New ideas are what will keep Singapore's economy growing in the years ahead. That's the view of Dr Tony Tan, deputy chairman and executive director of the Government of Singapore Investment Corporation (GIC).
Observers say the world is changing from an economy of products and services to one of ideas. And Dr Tan believes this could benefit Singapore by leading to new products and services which require less physical resources.
This would allow the country's exports to remain competitive and grow despite weak economic growth in traditional markets like the US and other Western nations.
Dr Tan was speaking at the Economic Society of Singapore's annual dinner on Thursday evening.
To grow its exports, Dr Tan also suggested that Singapore look for new markets like Russia and launch new products and services of high technological content and sophistication.
Rays of hope are starting to emerge amid the economic crisis, and Dr Tan said Asian economies are expected to continue to improve through 2010.
He expects the US and other major developed economies to also pull in positive growth later this year on the back of factors such as pent-up demand in economies around the world.
In a comprehensive speech, Dr Tan said that the crisis has changed the international economic environment.
Emerging economies like China are now becoming more important, while developed countries are facing lower growth in the coming years. As a result, Asian markets need to boost domestic consumption instead of relying heavily on exports.
Dr Tan said: "A more balanced growth could also help reduce income inequality by improving wage prospects for labour. A strategy that mainly relies on cheap factors of production, labour and other inputs, is not likely to work as well going forward.
"Instead, the rest of Asia will need to look at its own institutions and markets to drive a more sustainable and higher quality growth via strong productivity improvements."
However, Dr Tan said growth in Asia could be derailed if the global economy does not stabilise and recover by 2010.
He said: "The greatest risk to the region is a failure of policies in the developed world and a return to isolationism or protectionism. Downside risks remain high, despite signs of stabilisation.
"Asian banks and capital markets will face both a tremendous challenge and opportunity to intermediate huge regional savings to meet massive capital demand from Asian growth and the integration of major Asian emerging economies into the modern global economy."
For the last two years, Dr Tan has warned of dark clouds and uncertainty in the global economy. But on Thursday, he is cautiously optimistic that Asia will come out stronger after the crisis, thanks to its strong fundamentals.
Dr Tan also noted that GIC conducts regular discussions with policy makers, treasury departments and various central banks. But the international fund management company rarely makes such discussions public.
However, he said, it is useful for GIC to make public its views on current economic matters as it has a stake in the progress of the world economy. He hopes this will also contribute to a better understanding among the public on key economic issues.
- CNA/ir
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