A HIGH-LEVEL committee has laid out plans to focus Singapore's economy on what it should do to achieve quality, productivity-led growth of 2 to 3 per cent a year over the next decade.
And in doing so, the Committee on the Future Economy (CFE) is urging the city-state to keep looking outwards, while eschewing broad-based approaches in favour of targeted ones for economic restructuring.
Its ultimate aim: A collaborative economy that is nimble and flexible in the face of fast-changing domestic and external realities.
"Together, we can build a value-creating economy that is open and connected to the world, offering a multitude of opportunities, with sustainable wage growth and meaningful careers for all Singaporeans," said the 30-member CFE in its report that was unveiled on Thursday.
The CFE's formation was announced by Prime Minister Lee Hsien Loong in October 2015.
The 109-page report is Singapore's fourth economic restructuring report in three decades, but circumstances are different this time round.
Major trends that have propelled trade-reliant Singapore to developed-economy status seem to be weakening, the CFE noted.
Global growth is subdued, and economies around the world are seeing demographic shifts.
Added to this are rapid technological changes that have upended traditional sectors. Global value chains are also changing, disrupting trade flows.
Then, there is the "dark shift in mood" away from globalisation, as the report noted.
For trade-reliant Singapore, which counts two-thirds of its gross domestic product (GDP) as coming from external demand, a move towards insularity would endanger its growth prospects.
It is therefore in these uncertain times that the CFE is making recommendations for Singapore to continue to grow 2 to 3 per cent per year on average.
"Whichever way the world goes, a small, open economy like ours will need to adapt," the report said.
It grouped seven wide-ranging, "mutually-reinforcing" strategies to help grow the economy; urging Singapore to:
- deepen and diversify its international connections;
- acquire and utilise deep skills;
- strengthen enterprise capabilities to innovate and scale up;
- build strong digital capabilities;
- develop a vibrant and connected city of opportunity;
- develop and implement Industry Transformation Maps (ITMs); and
- enter into partnerships to enable growth and innovation.
A key theme running through the CFE report is that all stakeholders - workers, companies, unions, trade associations, research institutes and the government - should work in concert to grow the economy.
This would be the best safeguard against risks in today's uncertainty, said Minister for Industry S Iswaran, who is also the CFE co-chair, to reporters on Thursday.
"The need for collaborations becomes ever more important, because they mitigate risks and give us a clearer pathway forward."
The ITMs are thus a major strategy in realising the CFE's vision. The 23 identified industries will each get a growth and competitiveness plan based on input from all stakeholders.
Another major thrust of the CFE's recommendation is its push for trade and international protections. This not only includes a stronger focus on Asia and Asean, but that Singapore must also deepen its links with the world by developing in-market capabilities.
The CFE hopes that Singapore can use its 2018 chairmanship of the Asean regional bloc to push for economic integration in the region, but it also wants more Singaporeans to acquire deeper knowledge of regional markets. "They can only do so by spending time in these markets."
But even as the committee consolidated inputs from more than 9,000 stakeholders into its final report, observers noted that, when compared to previous economic restructuring reports, the CFE one lacks a "wow" factor.
Some economists have also alluded to this, while acknowledging the difficulties that the Singapore economy faces in restructuring.
OCBC economist Selena Ling described the CFE thrusts as not being intrinsically different or groundbreaking from earlier government strategic plans, but she also noted that they reinforce the need to stay connected to the world.
CFE chairman and Finance minister Heng Swee Keat said on Thursday that the report serves more as a focus for Singapore to remain competitive.
"I think the question on how Singapore stays relevant to the world is a question for us all," he said. "So I don't think there's anything new in that question; we just got to keep ourselves very focused on how to stay relevant to the world."
Last year, the world experienced the shocks from China's instability, a commodity price rout, the United Kingdom's vote to leave the European Union and a rising threat of protectionism following US businessman Donald Trump's winning the race to the White House.
This maelstrom of events dealt blows to Singapore's economy on several fronts. Flash estimates put Singapore's GDP growth at 1.8 per cent in 2016, potentially the slowest year since the 2009 financial crisis. Fuller numbers will be released this month.
In a nod to how difficult it is to prescribe broad-based approaches to lift growth in Singapore's advanced economy amid external woes, the CFE noticeably put aside productivity growth targets - something addressed in previous reports - as a measure of the success of its recommendations.
Instead, Mr Heng said that Singapore should look at challenges and opportunities "sector by sector" and measure the success of these recommendations separately.
In a response to The Business Times, a Ministry of Trade and Industry spokesman echoed this view, adding that "raising productivity remains an important objective of the government".
With a 2 to 3 per cent growth target set by the CFE, and should all recommendations be in place, "we can expect the bulk of this to come from productivity", said the spokesman.
In his letter to the committee, Prime Minister Lee said the government accepts the strategies proposed and "will pursue all of them".
The government will respond to the report in Feb 20's Budget 2017 speech by Mr Heng, and also in the Committee of Supply debates.
- CFE hits most of the right notes
- Going on the offensive by deepening, widening external ties
- Future gazing
- More private participation wanted in building up future city
- Foreign talent 'can plug gaps in economy'
- More support for 'high-growth' enterprises to scale up
- Manufacturing sector to be 'around 20%' of GDP in medium term
- Deepen training, adapt to changes
- Singapore advised to be ready to review tax regime