The Singapore Business Federation (SBF) should be commended for the bold and wide-ranging proposals it has proffered to jump-start and develop a more vibrant economy ("SBF outlines new routes to growth"; yesterday).
At the top of the agenda were the call to relax the foreign manpower regime and ways to lower business costs here.
The suggestion to "create a second Singapore outside Singapore" is laudable, as it challenges companies to go outside Singapore.
In essence, instead of relying on the established model of attracting foreign direct investment into Singapore, the SBF has challenged companies to go overseas, with the impetus of the Government.
The SBF paper has to be commended for its brave and novel approach in addressing the business issues facing Singapore, and steps needed to drive the nation forward in a challenging global economic environment.
However, there is one aspect of the recommendations that raises some concern.
The SBF paper has taken an extraordinary step in calling on the Government to inject Central Provident Fund (CPF) money into the "moribund" stock market ("'Use CPF money to help liven up local stock market'"; yesterday).
The overarching idea must be to inject more liquidity into the market, thereby enabling companies to raise more capital to drive their businesses. On paper, it may be a viable option.
But we need to pause here and ask some serious questions.
Stock prices are primarily a function of a company's earnings. Many of the blue-chips and quality second-liners on the Singapore Exchange do enjoy good ratings and really do not have problems raising extra capital, from either internal or external sources.
The third-liners are a different kettle of fish, with many impeded by their own poor performance in terms of earnings.
So, to inject CPF money into the market does not make sense. We will be artificially supporting the market.
The Chinese experience last year should alert us to the dangers. After the initial euphoria, the Chinese market came crashing down.
What the small and medium-sized companies need are more accessible sources of funding.
Perhaps the solution may be to set up an export-import bank or an infrastructure bank.
CPF money must seek safer returns and should not be an experimental funding investment source. The current investment mandate over CPF monies should remain with the GIC.