PM Lee redefines 'economy faring well'

Singapore

THE Singapore economy has reached a stage of its development where it is no longer possible to expand by 5 to 6 per cent each year.

As far as Prime Minister Lee Hsien Loong is concerned, the country will have done well if it manages to achieve annual growth of 2 to 3 per cent in Gross Domestic Product (GDP) for the next five years.

"Domestically, we have to get used to what that means. Three per cent (growth) per year means wages will go up correspondingly, gradually, year by year. Maybe not every year, but over four to five years, you will see improvements if we are successful in our policies," he said.

For the whole of last year, the economy is estimated to have grown by 2.8 per cent, down from 2013's 3.9 per cent; this year, the forecast is for between 2 and 4 per cent.

The fact that economic growth will be slower than what the country enjoyed in the past was a point he raised in a wide-ranging, 75-minute interview with reporters at the Istana this week.

In recent years, the Republic has been tightening its policies, including the inflow of foreign labour, to bring the economy onto a path of sustainable, productivity-driven growth.

He said that while Singaporeans have to accept a slower pace of growth, the government would do all it can to help them through this period of economic restructuring.

The state is already doing more for the low-income groups here, while the tax burden for the middle-class has been kept down considerably, compared to what tax payers in Hong Kong and Australia pay.

The prime minister said: "What you earn, you keep, rather than (have the government) spending it on your behalf. If we can maintain that, then we can improve lives progressively. If we cannot maintain that, we will go to zero growth. Then I think we will have a problem."

The global economic outlook is "never going to be certain", he declared. If it were, that would only mean that the world was oblivious to an impending danger and about to experience a crash of some sort.

"That was the situation before 2007 and everybody thought things were well; the markets were brilliant and all making money, and then you ran into a serious disaster (with the global financial crisis)," said Mr Lee.

"The global economy will have uncertainties and will be so for a long time to come. Even if the global economy is doing well, it will always be in a flux - changing new technology, new players, new competitors, new partners to cooperate with - and we have to respond to that."

On a related note, he tackled the issue of productivity improvement in Singapore. The nation's productivity performance has been weak for the last three years, with growth even being negative in the first three quarters of 2014.

He described this ongoing productivity journey as one that needs much perseverance, given that results cannot happen quickly.

"(This is) something which we have to continue working on. We have the schemes. We have the emphasis. We are talking about SkillsFuture and upgrading people. There is no alternative to this," he added.

SkillsFuture is a national long-term drive, launched last year, to help Singaporeans develop skills relevant to their jobs, and to help them advance in their careers.

Meanwhile, this year is shaping up to be an eventful one for Mr Lee, who turns 63 next month. He is now into his second decade as Singapore's leader, at a time when the country is entering its year of golden jubilee celebrations.

"We have come a long way in 50 years. Fifty years for a country is nearly two generations. If you look at other countries which have made a 50-year journey, they have often had a lot more difficult of a time than we have," he said.

"We must use this as a jump-off point, not as a final destination. This is a good time for us. It is like reaching the end of a 50m swim: I touch, take a breath and swim on. I think, swimming on, we have to set broader targets. One common element will be that, in Singapore, we have a home, we have a future and our children can grow up and do well. We can work together to do that."

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