Economic transformation 'more urgent by the day'

More local firms have introduced new processes or training programmes to improve efficiency and expanded their operations overseas in the past few years.
More local firms have introduced new processes or training programmes to improve efficiency and expanded their operations overseas in the past few years.PHOTO: ST FILE

The most critical challenge facing Singapore today is to transform the economy, and this grows more urgent by the day, Finance Minister Heng Swee Keat warned yesterday.

In his Budget debate round-up speech, Mr Heng said growing the economy is not only the best way of ensuring strong and sustainable revenues, but also the most important way for Singaporeans to realise their aspirations.

There has been some progress, he noted. More local firms have introduced new processes or training programmes to improve efficiency and expanded their operations overseas in the past few years, he said.

Now, firms must deepen their capabilities at every stage of growth, and the Government has been helping them transform.

Mr Heng had announced several measures in his recent Budget speech to support businesses on their transformation journey, including a new Open Innovation Programme, a new virtual crowdsourcing platform that will match the digital requirements of businesses to solutions created by infocommunications and technology firms.

He also unveiled increases in tax deductions for expenses on research and development and intellectual property registration.

Several MPs, including Mr Low Thia Khiang (Aljunied GRC), Mr Liang Eng Hwa (Holland-Bukit Timah GRC), Mr Sitoh Yi Pin (Potong Pasir) and Nominated MP Ang Wei Neng expressed their support for the Government's strategy to position Singapore as a Global-Asia node of technology, innovation and enterprise.

To achieve this, Mr Heng said, innovation must pervade all parts of the economy, local firms and people must build deeper capabilities while stronger partnerships must be struck at home and abroad to build scale and ride on the region's growth.

But he acknowledged that a big challenge, as cited by MPs such as Mr Melvin Yong (Tanjong Pagar GRC) and Mr Heng Chee How (Jalan Besar GRC), is Singapore's ageing population and shrinking resident workforce. This will cause economic growth to slow unless businesses are able to make full use of this "narrow window before our workforce shrinks further" to raise productivity, he said.

One solution, as raised by several MPs such as Ms Cheryl Chan (Fengshan) and Ms Tin Pei Ling (MacPherson), is for firms to fully embrace diverse hiring practices, including hiring older workers.

Others, such as Dr Intan Azura Mokhtar (Ang Mo Kio GRC) and Mr Zainal Sapari (Pasir Ris-Punggol), suggested this has to be accompanied by fairer compensation policies. For example, they said, the Central Provident Fund system should be reviewed so that employers' contribution rates do not decline as the workers age.

But Mr Heng warned that such measures might instead raise the barriers to hiring older workers.He noted that there are programmes in place to help low-wage and elderly workers such as Workfare, the Special Employment Credit and Adapt and Grow scheme.

"We must continue to invest in our people to ensure that they are equipped with relevant skills to take advantage of new opportunities," he said, adding that this effort requires close partnership of employers, the labour movement and the Government.

Meanwhile, Singapore needs to allow for "a calibrated inflow of foreign workers", especially in areas of critical shortage, he said. "For us to thrive, we must be equally strategic, to develop our Singaporean talent and to draw in the right complement of international talent."

Yasmine Yahya and Ng Jun Sen

A version of this article appeared in the print edition of The Straits Times on March 02, 2018, with the headline 'Economic transformation 'more urgent by the day''. Print Edition | Subscribe