Ask DPM Tharman

The second most popular question voted by you was on the biggest economic challenge facing Singapore in the next 10 years. How can Singaporeans face this challenge?

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ST: Going to question 2 on the top 10 list. In your view, what is the biggest economic challenge facing Singapore over the next 10 years? And what must Singapore and Singaporeans do to face that?

A: Well, the advanced economies are going through a rough period. The US is showing some improvement but the long-term challenges are very significant, particularly because of its fiscal problems. Europe is in much tougher condition and it’s not going to get out of its current problems quickly. Japan is now trying a new approach but the situation is essentially quite similar to Europe – an ageing society, debts that have mounted up and a fiscal strategy that can’t last for long because someone has to pay for the older generation and they’re going to find it very difficult to raise taxes on the scale required. So these are advanced societies, still very rich markets for us, wealthy markets. We shouldn’t take our eye off them as markets. So stay plugged in, stay plugged in to the US, Europe and Japan because they are very valuable markets for sophisticated products, especially, in manufacturing as well as in services. Sophisticated demand is very importantly generated by the most advanced markets.

But the growth isn’t going to be very significant from that source. So we’ve got to increasingly look at the middle and even the bottom of the pyramid, the emerging countries where growth is still significant, a middle class is emerging, becoming more sophisticated. Tremendous opportunity for us. And it means that not just our large companies but our SMEs have to be outward-oriented. In fact, quite impressively, a significant proportion of our SMEs are now deriving more than half their revenue from abroad. Compared to 10 years ago, many more are now abroad in some way, exploiting opportunities in the markets around us. But it also means that our whole orientation starting from young through education and in the workforce has to be to look outward for opportunities, and not just in the advanced countries, or English-speaking countries, but the countries around us.

We’ve got to have that cultural flexibility of being able to work and operate in these environments because there are plenty of opportunities for Singaporeans We have to make it easier in terms of education, children’s education, so that when they come back, they can fit into our system easily. We probably need, in my opinion, a couple of more schools offering the IB (International Baccalaureate), make it easier for them to fit back in, so the parents don’t feel worried about what happens to the children when they come back. We have to provide support for the companies and for Singaporeans to get opportunities in the emerging markets around us. It’s going to be an increasing source of prosperity for Singapore and for Singaporeans.
So if you take a broader view, I think there’s more opportunity than challenge. There’s much more opportunity than challenge for Singapore. And what we have to do is to upgrade our enterprises, train workers and move up productivity, move up skills and expertise so that incomes can go up.

Basically, our level of productivity – and that means also skills and expertise – is at about well below three-quarters of the most advanced countries, the global leaders. And we’re not satisfied with that because it doesn’t deliver as high a level of wages for the average Singaporean and the low-income Singaporean as they deserve. So we’ve got to up everything; up training, up equipment, up the way in which firms are being managed, how a restaurant is being managed for instance, in order to raise skills levels, raise responsibility levels, empower workers more and raise their pay. But very importantly, this is not just about pay. It has to be about values and how we treat each other. It has to be about whether we look down on people who do ordinary jobs and blue collar jobs, or whether we treat them with respect, treat them as equals and respect everyone who is improving in what they’re doing.