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While Singapore grapples with its ambivalent economic prospects, much hope lies with the Economic Review Committee’s (ERC) economic restructuring blueprint and in an abiding faith in free trade agreements with key trading partners.
The economic statistics for the fiscal year 2002-03 are not encouraging. Indeed, there is a palpable mood of pessimism. The pace of life and change has been relentless and yet Singapore appears to be struggling to maintain its competitive edge. The Prime Minister has urged young Singaporeans, especially university graduates, to hold on to their dreams despite the sobering prognosis.
Overall unemployment for 2002 was 4.4 per cent, a figure exceeded only during the recession in 1986. The labour market remains soft and further retrenchments are expected in 2003. Even statutory boards and government-linked companies are shedding the 'virtual lifetime employment' concept. There is a call for entrepreneurship and, to underline its seriousness, a junior Minister has been given responsibility for fostering it.
Entitled ‘Seizing Opportunity in Uncertainty’, the ERC-inspired budget for the fiscal year 2003-04 has made a clarion call for Singaporeans to pursue this objective with ‘tough minds and warm hearts’, resourcefulness and resilience whilst shaking free of ‘old mindsets’. Yet sentiments remain non-committal. The usual government mantra of enhancing competitiveness and human capital takes on an added urgency as Singapore seeks to be less reliant on foreign direct investment, with the focus subtly shifting towards making Singapore the hub of hubs – the ‘Global Entrepolis’.
However, given that a sustained recovery in export growth is still heavily dependent on manufacturing (specifically, on the demand for electronic goods) and the American market, the persistent structural rigidities in the economy emphasize the need for a paradigm shift – not just in economic terms, but also in state-society relations. ‘Committee fatigue’ is creeping in as people wonder if change really needs to be mandated and directed from the centre through government committees.
In particular, the nascent Singaporean addiction to state handouts must be curtailed. Herein lies the nub. The social contract between the ruling party and the electorate has been one of pragmatism and of the generation of material wealth. In return for strong electoral support, the ruling party produces healthy economic growth with trickle-down effects to the populace. The critical challenge is whether the elites are prepared to genuinely reconfigure Singapore by weaning Singaporeans from a crutch mentality and incur an erosion of support in the process.
The fear of failure and a reluctance to take risks are the inevitable consequences of an enervating paternalistic state. Mindset changes in the ordering of society and domestic politics might just unleash the essential energies needed. The genuine free flow of ideas, even if contrary to prevailing values, dogmas and norms, must not only be tolerated but appreciated as a wellspring of creativity and innovation.
WATCHPOINT: Much effort will be put into hard-selling Singapore’s competitive advantage and strategic attractiveness as a hub city, whilst also seeking to address (in the forthcoming 'Remaking Singapore Committee Report') the mismatch between people's expectations and the government's ability to deliver.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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