Business confidence high despite Heng's decision: Observers

Business, investor communities continue to have trust in Govt and stability of policies

Deputy Prime Minister Heng Swee Keat with (from left) 4G ministers Desmond Lee, Grace Fu and Ong Ye Kung after the media conference on Thursday, where Mr Heng's decision to step aside as the leader of the 4G team was announced.
Deputy Prime Minister Heng Swee Keat with (from left) 4G ministers Desmond Lee, Grace Fu and Ong Ye Kung after the media conference on Thursday, where Mr Heng's decision to step aside as the leader of the 4G team was announced.ST PHOTO: DESMOND FOO

While Deputy Prime Minister Heng Swee Keat's decision to step aside as Singapore's potential next leader came as a surprise, industry watchers said it should not rattle investor and business confidence or affect the timeline for implementing key policies such as the hike in goods and services tax (GST).

Speaking to The Straits Times yesterday, Singapore Business Federation chief executive Lam Yi Young said that like the rest of Singapore, the business community here was surprised by the announcement.

"But they continue to have trust in the Government and the stability of its policies. Confidence in Singapore as a business destination remains high," said Mr Lam.

Mr Heng will stay on as Deputy Prime Minister and Coordinating Minister for Economic Policies, but will relinquish the finance portfolio at the next Cabinet reshuffle. He had cited the long-term challenges of the Covid-19 pandemic, his age and the demands of the top job as reasons for his decision.

At a media conference on Thursday, the party's fourth-generation (4G) leaders said they would need more time to select another leader from among them.

Mr Kurt Wee, president of the Association of Small and Medium Enterprises (Asme), said the 4G leaders had "thoroughly proven themselves" in steering the country through the Covid-19 crisis.

He added: "They have gained the trust of Singaporeans, and the team of political leaders and Cabinet members. I am sure they will select a leader who will be able to make good calls and lead Singapore over the next decades."

International Chamber of Commerce chief executive Victor Mills said the announcement was surprising, but would not negatively affect business and investment confidence.

"The same political team is in place and we do not expect any policy changes," he explained.

The assurance of policy continuity was a factor highlighted by many other observers.

An example is the GST rate increase from 7 per cent to 9 per cent, which is scheduled to take place between 2022 and 2025, and which Mr Heng had said would happen "sooner rather than later".

Deloitte Singapore indirect tax leader Richard Mackender said the announcement should not change these plans "as the decision to increase taxes is not a personal mission of the Finance Minister, but an agreement by the whole of government that tax revenue needs to be secured for the future of the country".

CIMB Private Banking economist Song Seng Wun said Mr Heng's stepping down "came earlier than (I) expected", but noted that policies such as the GST hike are about fiscal sustainability and have little to do with who is the finance minister of the day.

"It is about when the economy is ready and the time is right for the necessary policy tweaks," he said, adding that while the announcement makes for good coffee shop talk, it is "life as per normal" for the market and businesses.

DBS senior economist Irvin Seah stressed that there should be clarity on the next prime minister by 2023 - the mid-point of the current term of government, and well before the next general election due in November 2025.

The longer the uncertainty persists, the more concerns will surface, he said.

"While I don't foresee a marked change in policies which have already been announced, I do think that we are at a stage where execution is very important."

Nailing down the post of finance minister is important, he added, as the Government has just introduced a slew of post-pandemic transformational policies, from its sustainability agenda to infrastructure financing.

"It is important that whoever is going to assume the role of finance minister must be familiar with these policies and able to carry through all these measures."

A Fitch Solutions report released yesterday said it expected the ruling People's Action Party (PAP) to maintain the high standards of governance Singapore has become known for despite the disruption to its leadership renewal plans.

"Prime Minister Lee Hsien Loong and senior members of his cohort are likely to remain in advisory positions in Cabinet and help guide the next generation of leaders, making up for the likely significant lack of experience the fourth PM will have compared to the predecessors," it said.

It identified Minister for Trade and Industry Chan Chun Sing and Minister for Education Lawrence Wong as the most likely candidates to succeed PM Lee, who has said he will stay on until the next leader is ready to take over.

The Economist Intelligence Unit Asia country analyst Liuqing Yu also flagged Mr Chan and Mr Wong as the two most probable candidates for the country's top post.

Speculation aside, continuity and clarity are hallmarks of Singapore-style governance which are unlikely to go away any time soon, said CIMB's Mr Song.

He added: "We want Singapore Inc to be like this, where changes at the top can happen without creating anxiety and uncertainty among businesses."

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A version of this article appeared in the print edition of The Straits Times on April 10, 2021, with the headline 'Business confidence high despite Heng's decision: Observers'. Subscribe