SINGAPORE: To survive and thrive in the long term, Singapore must be agile and robust, and continue to innovate and grow in a manner that will "strengthen our robustness against unexpected shocks", said Finance Minister Heng Swee Keat.
This would help the economy guard against regional headwinds similar to what it currently faces, said Mr Heng, speaking at the UBS Wealth Insights Conference on Tuesday (Jan 12).
While Asia faces forces that are beyond control, Finance Minister Heng Swee Keat says Singapore needs to keep its economy flexible and nimble to strengthen its robustness against unexpected shocks. http://bit.ly/1OfC1pd(Video: UBS)Posted by Channel NewsAsia Singapore on Tuesday, 12 January 2016
"Asia is facing a complex confluence of cyclical and structural forces. These forces are largely beyond our control," said Mr Heng, citing slowing growth in China which has dragged down global commodity prices, as well as a tightening of financial conditions ahead of last month’s US interest rate hike.
All this means that the performance of externally-oriented industries in Singapore will be subdued in the short term, though domestic-oriented sectors including healthcare and education should continue to post steady growth, he said.
And these factors will continue to influence global economic prospects in 2016, Mr Heng added. "My view is that in the short term, investors need to remain vigilant to market volatility, given that asset prices have been supported in part by the period of prolonged low interest rates."
"MAKE THE MOST OF OPPORTUNITIES"
Given the volatile external circumstances, Singapore must continue to persevere with structural reform, Mr Heng told the audience at Fairmont Hotel on Tuesday.
"As global trade and production reconfigure, we too must adapt and restructure," he said.
"What we can, and must, do is to strengthen our robustness against unexpected shocks by keeping the economy flexible and nimble. We must persevere with structural reforms, to reposition ourselves and build new capabilities, especially in innovation, that will secure sustainable and inclusive growth."
For Singapore's financial sector to be future-ready, it is important to be proactive and think long-term about talent development, and build a sector characterised by world-class skills, continuous learning, meaningful careers and a strong core of Singaporeans at all levels, he said, citing the SkillsFuture initiatives.
The Committee on the Future Economy, which held its first steering committee meeting on Monday, "will look deeply into how to keep being innovative and outwardly-attuned, so that we may create good opportunities for Singaporeans and Singapore companies", he added.
Among the long-term growth opportunities Mr Heng identified:
- Niche production activities, providing services that complement the evolving production networks in the region
- Tapping into the increased regional spending on discretionary services - such as insurance, air transport and restaurants, beyond the immediate needs provided by essential services
- Increasing exports of modern services
- Giving greater impetus to Singapore's development as an international financial centre, tapping on Singapore's attractiveness as a regional base due to a stable political and economic environment and robust regulatory and corporate governance framework.
The flexibility to seize such opportunities is key to Singapore's continued success, he said.
"Technology improvements have facilitated a worldwide surge in global services trade. Between 2001 and 2013, Singapore’s services exports soared by 14 per cent on an annualised basis, surpassing the global average of 10 per cent. Estimates show that the income elasticity of services imports is higher than that of goods, especially in Asia. The demand for modern services increases more than proportionately with income growth, as compared to traditional services," said Mr Heng.
"What is within the realm of possibility — indeed the realm of necessity — is to have the innovative agility and that outward orientation that will carry us through a range of scenarios. We must recognise and make the most of opportunities, even as we stay mindful of threats," he said.