Trade war will affect global economy significantly: Heng

Finance Minister Heng Swee Keat greeting residents on a visit to Kaki Bukit in Aljunied GRC yesterday. Mr Heng launched a voucher scheme for needy families in the ward, where 14 per cent of residents live in rental flats.
Finance Minister Heng Swee Keat greeting residents on a visit to Kaki Bukit in Aljunied GRC yesterday. Mr Heng launched a voucher scheme for needy families in the ward, where 14 per cent of residents live in rental flats.PHOTO: LIANHE ZAOBAO

Singapore has to watch developments with great caution, says minister; US-China tensions can unsettle markets

A trade war between the United States and China will affect the global economy significantly and unsettle financial markets, said Finance Minister Heng Swee Keat.

Singapore has to watch the developments with great caution, he added in response to questions from reporters during a ministerial community visit yesterday.

Mr Heng noted that while there are frameworks under the World Trade Organisation to settle disagreements over trade, these issues should not be escalated.

"I hope that all the countries which are involved in this will take very thoughtful and calibrated action to reduce the tension," he said.

After months of rhetoric, US President Donald Trump imposed 25 per cent tariffs on US$34 billion (S$46 billion) worth of Chinese goods last Friday - in what Beijing called "the largest trade war in economic history". China responded by hitting back with retaliatory measures on US$34 billion in American goods.

Even the party which started the trade war is not going to benefit from it, Mr Heng noted. The global economy is in a delicate stage of recovery after the last severe global financial crisis, he said, adding that financial markets will be looking at the issue with great concern.

During his visit to the Workers' Party-held ward of Kaki Bukit in Aljunied GRC, Mr Heng also commented on the recent property cooling measures, which included raising the Additional Buyer's Stamp Duty by 5 percentage points.

Asked about Malaysian Finance Minister Lim Guan Eng's latest remarks about the water supply agreement between Singapore and Malaysia, Mr Heng said he would not comment at this time, but stressed the importance of standing by international agreements.

He reiterated the importance of prices not getting "decoupled from economic fundamentals".

"I dealt with the global financial crisis. It was a very severe crisis, and it is important for us to keep markets stable and, in particular, make sure that property prices do not run ahead of fundamentals," he said.

Asked about Malaysian Finance Minister Lim Guan Eng's latest remarks about the water supply agreement between Singapore and Malaysia, Mr Heng said he would not comment at this time, but stressed the importance of standing by international agreements.

On whether there has been any backlash from residents to the goods and services tax hike that will kick in between 2021 and 2025, he said the tax increase "is part of our long-term planning to make sure that we can look after our elderly even better".

"When I explain this to our elderly and they know that they are going to be a major beneficiary of this, I think there is much better acceptance," he added.

During his visit to Kaki Bukit, Mr Heng also launched a voucher scheme that could benefit up to 200 needy families in the ward.

The initiative allows eligible low-income households to receive $50 in vouchers monthly, for up to three months on end. The vouchers can be used at six coffee shops, a provision shop and a supermarket in the neighbourhood.

Kaki Bukit division's grassroots adviser Shamsul Kamar, who contested in Aljunied GRC during the 2015 General Election under the People's Action Party, noted that 14 per cent of residents in the ward live in rental flats.

"There are many schemes available for low-income families, but they often require the submission of documents and for residents to meet specific criteria," he said.

In comparison, the new vouchers can be disbursed more flexibly to provide short-term relief, he said. Their eligibility will be reviewed every three months.

There are no plans yet to expand the scheme to other wards in Aljunied GRC, said a People's Association spokesman.

A version of this article appeared in the print edition of The Straits Times on July 09, 2018, with the headline 'Trade war will affect global economy significantly: Heng'. Print Edition | Subscribe