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SBF calls for bold and decisive steps to energise Singapore economy
INVEST Singapore workers' pension funds in the stock market. Appoint a minister to oversee the government's efforts to develop local enterprises. Use more of the reserves to help suitable firms expand overseas.
These were just some of the many wide-ranging proposals and recommendations in a new economic position paper released by the Singapore Business Federation (SBF) on Wednesday.
The 32-page document was put together from June to December last year after a series of discussions with 28 trade associations and about 70 corporate leaders, academics and economists.
The aim, said SBF chairman Teo Siong Seng, is to encourage the government to take "bold and decisive" steps that will strengthen Singapore's position in the global economy.
The immediate priority is to help companies cope with the ongoing economic restructuring, while the goal for the medium to long term should be to encourage more firms to expand abroad but with their home bases firmly anchored in Singapore.
One suggestion in the paper was to consider investing Central Provident Fund (CPF) monies in Singapore's "moribund" stock market, instead of pooling that money with the country's other reserves to be managed by GIC.
"Unlike other jurisdictions where their pension funds have provided strong support for their stock market, Singapore rides against the wave by specifically stating as a policy that the funds managed by GIC are to be invested abroad," SBF said in the paper.
The federation mooted the idea of separating the CPF component and managing it differently, as this would free these funds from GIC's investment restrictions and would probably result in some investments in the Singapore market.
"These investments will send strong signals on our market to other investment professionals.
How the CPF funds eventually flow back into our market will also be a good measurement of the efforts that the Singapore Exchange has poured in to make the market attractive," said SBF.
There is also some scope to explore the development of a new market platform to address the gap between Catalist and the SGX Mainboard that would appeal to a group of so-called "middle class" companies. These firms, said SBF, are those that have achieved stable performance but are relatively moderate in size. They would not have to fight with the other classes of companies for market attention and could have more targeted attention by investors.
The need for more local companies to spread their wings abroad, while maintaining their base in Singapore, was also a key thrust of the position paper.
Among the slew of recommendations was to task a minister to provide political leadership for a whole-of-government approach to the development of local enterprises. This minister would be supported by an institutional structure of public officers for this effort, and SBF thinks that it is possible to streamline the work of several public agencies with such a unified institution.
"In the same way that we've been very successful over the years to have institutions like the EDB (Economic Development Board) to bring in foreign direct investment to Singapore, we need an equally good set-up to help our companies go overseas," said China International Capital Corporation senior advisor and former GIC deputy managing director Teh Kok Peng.
"This is not asking for undue government intervention. If the intervention is done well with proper incentives in place, companies can do well overseas and they can learn to take risks and fail," he added.
Dr Teh also suggested that IE Singapore, the lead agency spearheading Singapore's external economy, should be scaled up and supported with more resources.
On a related note, the paper suggested that the government invest more of Singapore's reserves "in more direct ways, and on a more active and wider scale" in local enterprises that have the potential to expand overseas. "This recommendation may involve the setting up of a new development institution with domain knowledge in the key strategic industries that Singapore can excel in," said SBF, adding that it should be able to offer long-term financing capabilities not available in the market, as well as investment and corporate advisory services.
Mr Teo said that the paper was prompted by a number of factors, including the rising cost of doing business, Singapore's foreign manpower curbs, a shrinking and ageing local workforce and a lacklustre global economic outlook, among others. "Despite all the difficulties, we want to encourage our businesses to embrace the challenges and venture overseas if they can," he said. "We urge (the Singapore) government - which now has a fresh and strong mandate - to consider our proposals, especially those that concern rising costs and the need to expand our economy and grow an external wing."
While he admitted that some of the paper's proposals might seem "radical" and require substantial policy changes, there are risks involved and the proposals may not fully deliver the desired outcomes.
"But we have to act decisively or risk greater failure in the years ahead," said Mr Teo.
The SBF will formally present its position paper to Finance Minister and Committee on the Future Economy chairman Heng Swee Keat at a conference next Tuesday where it will hold further discussions on the recommendations with the broader business community.