SINGAPORE, Feb 25 — Responding to sentiments that the government has changed its “pro-growth” economic approach to one that is “pro-redistribution”, Deputy Prime Minister Lawrence Wong set the record straight to say that economic growth is still among its priorities.
Speaking in Parliament yesterday (February 24), Wong added that it is only through such growth that there will be enough resources for the government to redistribute and strengthen the social compact. '
Wong, who is also finance minister, said that it was not long ago that the government had been accused in Parliament of pursuing a “growth at all costs” strategy at the expense of Singaporeans.
“At the same time, now that growth is slower, we are in a different situation. Many members in this House now are concerned that we are not sufficiently focused on growth,” Wong said.
He was speaking at the end of a three-day Budget debate to allay concerns on Singapore’s economic competitiveness, and whether the Government is helping workers and businesses sufficiently.
The debate, which started on Wednesday, saw 55 Members of Parliament (MPs) and three political office holders deliver speeches.
Concerns of businesses
Edward Chia, MP for Holland-Bukit Timah Group Representation Constituency (GRC), and Nee Soon GRC MP Derrick Goh had highlighted sentiments from the business community, who questioned whether the Government had moved from a pro-growth to a pro-redistribution approach.
For instance, Goh said in his speech on Thursday that small- and medium-sized enterprises (SMEs) here “continue to navigate a challenging environment” such as the slower economic growth forecast this year, higher costs and a tight labour market.
He added that businesses here are wondering if this perceived shift away from a pro-growth approach could mean that they should fend more for themselves and expect less help going forward.
Wong said: “Let me set the record straight. We remain focused on growing the economic pie because only then can Singaporeans build better lives for themselves and their families.
“Only then can Singaporeans build better lives for themselves and their families. Only then will we have the resources we need to redistribute, strengthen our social compact and progress as one people.”
He added, however, that pursuing growth will not be easy in the midst of a more challenging external environment.
“Competition and geopolitical tensions will continue to rise as the major powers race for the commanding heights of the global economy.”
Why Singapore needs to stay competitive
Wong spoke of several challenges to growth, such as the introduction from 2025 of a global minimum effective tax rate of 15 per cent for large multinational enterprise (MNE) groups with the intent for them to pay more taxes wherever they operate.
Although Singapore will get more revenue, assuming the affected MNEs here do not leave, this is a “big assumption”, Wong said.
This is because countries are now rolling out “vast subsidies to strengthen their competitive advantage over other countries, and to re-shore and on-shore activities”, he added.
This means that companies will no longer enjoy the same tax advantages in Singapore, while other countries in the region are cheaper and their home countries may offer generous incentive packages.
“This is not just a hypothetical worry,” he said, adding that Singapore needs to adapt to this new era, where it cannot compete on cost alone.
“We will always be a little red dot. Manpower resources will always be insufficient, land will always be limited, and we will always be energy-constrained, and so we cannot compete on the basis of cost alone,” he continued.
“Instead, we must focus on differentiating ourselves in terms of quality and value.”
This is why more resources have been set aside in expanding the scope of the National Productivity Fund, where it will be topped up by S$4 billion, with investment promotion added as a supportable activity.
“Having more high-quality investments here will help grow our economy and create more jobs for Singaporeans, and this will also benefit our local ecosystem, especially through the transfer of technological know-how and expertise to our SMEs.”
Help for businesses, workers
Wong also said that the government is putting in “significant resources” to nurture domestic enterprises, especially SMEs.
For instance, support extended to SMEs through capability building grants such as the Productivity Solutions Grant was doubled between 2019 and 2022.
Over this period, the number of Singapore enterprises that were supported to build new capabilities, innovate and expand overseas increased by about 60 per cent.
Wong added that as the economy grows and evolves, the Government will ensure that workers get better job opportunities and continue to stay relevant.
For instance, the new Jobs-Skills Integrators initiative, which seeks to provide better job matching and targeted skills training for workers, is Singapore's “next move” in helping workers upskill and stay relevant.
He said that up to now, this integrator role has been done in perhaps a more “ad-hoc fashion”, but the experiences of other countries such as Sweden and Switzerland that have formalised such a role have yielded positive outcomes. ― TODAY
