PRODUCTIVITY gains will be Singapore’s primary driver of growth as the economy enters a more mature phase, and businesses must thus do their part to transform, said Senior Minister Lee Hsien Loong.
Speaking at a Singapore Business Federation (SBF) appreciation event on Monday (Sep 30), he noted that while growth remains essential, the Republic’s economy has matured. “We will be doing quite well if we can sustain growth at around 2 per cent to 3 per cent annually.”
This growth has only two sources: workforce expansion and productivity improvements.
As Singapore has limited scope to grow its workforce, productivity gains are key, said SM Lee. “This is also crucial because ultimately, we want not just a bigger gross domestic product, but also higher per capita incomes and thus better standards of living.”
Growth that is fuelled by workforce expansion might not necessarily raise per capita income, since the population will also increase.
In raising productivity, businesses themselves are key, he told the audience of more than 800 business, political and community leaders.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
”While the government sets the strategic direction for the country, and must create the preconditions for economic growth, ultimately, it is businesses that actually create wealth and generate prosperity for Singapore.”
Shifting paradigms
SM Lee laid out the challenges for businesses in today’s global environment, with a shift from multilateralism to prioritising national security.
In the past, countries still did business with each other despite tensions, he noted. “As a small country heavily reliant on international trade, Singapore thrived in this environment.”
But now, “national security and resilience are taking centre stage, trumping economic efficiency or mutual prosperity”. This includes the rise of “friendshoring” and protectionism.
As a small country, Singapore must accept this shifting global dynamic as a reality, SM Lee said. “We will just have to make our living in a more adverse global operating environment.”
“But I am quietly confident that we will overcome these difficulties,” he added, stressing that Singapore will continue to pursue trade and investment liberalisation.
The Republic must also seize opportunities in the digital and green economies, and businesses can do their part to raise productivity through upgrading their workforce, creating new opportunities, and developing new markets, SM Lee said.
“We need a competitive corporate sector, with companies that are doing well growing from strength to strength, and companies that are doing less well pivoting to more productive sectors, or possibly exiting the business altogether.”
He also recognised the role of trade associations and chambers in driving industry transformation by bringing businesses together and raising standards.
SME Centres, for instance, have supported more than 25,000 small and medium-sized enterprises over the past year, with business advisory, capability-building and facilitation services.
Appreciation dinner
Monday’s dinner, held at the Shangri-La Singapore, raised S$500,000 for charity.
The proceeds will be distributed equally among five charities: the Chinese Development Assistance Council, the Eurasian Association, the SBF Foundation Employability Fund, the Singapore Indian Development Association, and Yayasan Mendaki.
In his opening remarks, SBF chairman Lim Ming Yan paid tribute to the senior minister’s tenure as prime minister, which ended in May this year.
“As a statesman who led with foresight and gumption, SM Lee made bold decisions in steering the nation through seasons of transformation and change,” Lim said.
“His visionary leadership has strengthened Singapore’s economic and social pillars as well as its standing on the global stage.”
