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The stage is set for 52 year-old Deputy Prime Minister Lee Hsien Loong to take over from popular Goh Chok Tong as Singapore's third Prime Minister. The final formality is the announcement in mid-July of the date of the handover of power. The atmospherics are right for a leadership transition. The economy is showing sustained recovery with positive endorsements from the IMF and the WTO.
In a move that seeks to secure a stamp of legitimacy, the ruling party has provided a unanimous triple endorsement of Lee as Goh's successor. Lee, who has been Goh's deputy since 1990, was unanimously nominated by ten younger ministers (who will form the core of Lee's Cabinet); by ruling People's Action Party (PAP) parliamentarians; and, by the PAP central executive committee.
Of intense interest will be the appointment of Lee's deputy (or deputies), and Goh's role in Lee's Cabinet, which will almost certainly include Lee's father, Senior Minister Lee Kuan Yew. Lee Hsien Loong has described his taking over as a function of the 'generational succession' in which Singapore's leadership transitions to the 'third generation' of leaders. While there is some speculation that Lee Kuan Yew will retire from politics, he has had an active travel agenda in the last twelve months covering key political and economic partners including China and Japan and intervening in Singapore Airlines' long drawn-out employment dispute with its restive pilots' union earlier this year.
Singapore's need to be nimble and to maintain relevance vis-à-vis the key political and economic players globally and regionally will remain a key theme during Lee Hsien Loong's tenure. According to a June 2004 WTO 'trade policies and practices' report, Singapore faces several longer-term challenges, including its continued vulnerability to external economic shocks, more intense competition from low-cost regional producers, and the need to enhance its competitiveness and growth prospects. The low birth rate is a major policy concern too.
Singapore is in the midst of legislating a Competition Act. Although committed to enacting competition legislation by 2005, the government is seeking to exempt ten sectors, including telecommunications, media, electricity and gas, as well as public transport from the legislation. The government's basis for their exclusion is that they are 'in transition to a more competitive market environment' and that sectoral regulators are adequate and more relevant in the interim. These are also the sectors in which government-linked companies are dominant.
In an attempt to remake Singapore's image as a tourist destination and bolster its standing as a convention and exhibition hub, the government is also examining the feasibility of setting up a casino in Singapore. (It is estimated that Singaporeans spend US$1 billion annually in foreign casinos.) Despite the likelihood of livening Singapore's entertainment scene and stimulating job creation, the social downsides of a local gaming industry will require that the government tread sensitively in this area.
WATCHPOINT: The possibility of a snap general election within a year of the leadership change should not be excluded. The 'second generation' leadership will also be gradually retired as part of the leadership renewal plan. In the transition process, efforts will be directed towards celebrating the return of good times, while stressing the importance of maintaining national unity.
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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