S’pore must persist, keep faith with economic restructuring: PM Lee

WASHINGTON — Singapore must persist and keep faith with its economic restructuring in order for it to pay off, even if efforts over the last few years have yet to bear fruit, said Prime Minister Lee Hsien Loong.

Commenting on this year’s Budget statement, which saw a shift in emphasis towards support for businesses, Mr Lee stressed the need to spur economic growth, now that social safety nets like MediShield Life and Workfare are in place.

“This year we have shifted the balance towards promoting economic growth because ultimately, economic growth is how you get resources to do things, including to spend on social purposes, and we have to get it moving,” Mr Lee told the Singapore media on the final day of his work trip to the United States this morning (April 2).

While efforts have been made to encourage productivity growth for some years - from Skillsfuture to the Productivity and Innovation Credit to tax incentives for businesses – it is “hard to see the results, and even when it works, it takes time to work”, added Mr Lee.

Yesterday (April 1), Deputy Prime Minister Tharman Shanmugaratnam said at the Singapore Forum that while outward-oriented sectors such as manufacturing, wholesale trade and finance have been doing “extremely well” in productivity growth, clocking 3.2 per cent per annum over the last five years, domestic-oriented sectors such as construction, retail trade and food and beverage services have not fared as well, only growing 0.2 per cent in productivity per annum in the last five years, or even hitting negative territory.

Mr Lee noted that productivity growth in Singapore has slowed in the last three to four years, and that this is a “difficult problem” that many developed economies including the United States and European countries are facing.

“And they are not sure why, they are not sure what to do about it,” he said. “We are doing all the things which the economists say ought to be done in order to fix it. We haven’t seen the results yet but we are doing what we believe are the right things.”

Unlike the US – which is stymied by political gridlock – Singapore is not “stuck” and is able to do what it needs to do. “I think it’s an act of faith, but I think eventually it will show results,” said Mr Lee.

He added that Singaporeans must be aware of what is happening in the world and how it affects the nation, be it why Singapore’s economy is slowing down, or the political uncertainties and tensions that could affect the nation. “So that when it happens, we are not taken by surprise and we can psychologically gird ourselves, deal with it,” he said.

Parliament will debate the Budget statement, which was delivered on March 24, on Monday.