ECONOMIC restructuring will be painful but it cannot be put off any longer, said Deputy Prime Minister Tharman Shanmugaratnam yesterday, as he presented the choice confronting Singapore.
Noting that Singapore is at a critical period of transition, or an "inflection point in our history", he said the push for an economic metamorphosis is not just an economic issue but also a "key social pillar". Raising productivity would benefit both firms and workers, through higher incomes.
"If we do not achieve momentum in the next three years, there's a real risk that three years from now, we will be in exactly the same position.
"Both workers and businesses will be worse off. There is no choice," he said in Parliament.
At the heart of the efforts are the local small and medium-sized enterprises (SMEs), he added, because without their success, Singapore cannot achieve the quality growth it is aiming for.
SMEs were important not just because they contributed about half of Singapore's gross domestic product. "We also want them to succeed because they are part of the lifeblood of our society."
But SMEs will not journey alone. Mr Tharman assured them the Government is supporting them in the difficult path ahead. The sector will receive - through rebates and subsidies - more than twice the amount of higher foreign worker levies it is expected to pay for the next three years.
At the same time, SMEs will get more than two-thirds of the $5.3 billion package created to support companies to move up the productivity ladder during the three-year transition, he said.
Mr Tharman, who is also Finance Minister, also spelt out the measures the Government would take to help the elderly, the low-income and the middle class.
The philosophy behind the Government's social policies was not redistribution for its own sake, he said. Rather the test was whether policies would help both the lower- and middle-income live a better life.
The Government is looking out for the middle-income group by not levying a large tax bill on them and ensuring they continue to see higher wages.
For the lower-income, he said the Government is supporting as much as 40 per cent of the wages of older workers through Workfare and wage subsidies.
And for the younger lower- wage earners, the Government is sparing no expense in giving them opportunities to move up the ladder through training as well as subsidising the purchase of a home
Wrapping up the Budget debate, he addressed some of the key concerns highlighted by MPs. Most of the 59 MPs who spoke focused on economic restructuring and questioned whether the help package for companies was aiding big firms more than SMEs. Many also said the Budget was a progressive one, noting the shift towards further redistribution of wealth through taxation.
Tackling these issues in turn, Mr Tharman spent an hour elaborating on the Budget's two priorities: economic restructuring and keeping society inclusive.
So far, productivity growth has been weak and last year's 2.6 per cent decline was "miserable".
But productivity takes time to grow. In the next few years, the drive should gain more traction with more companies jumping on the bandwagon, he said.
Rounding off, he sounded an optimistic note, saying that Singapore was "not starting out from a position of despair, but we want to do better".
Success would depend on government, employers and people doing their part. "It's not about incentives, grants and subsidies, it's about responsibilities and values. And that will determine whether we will transform Singapore by the end of this decade."
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