S'pore almost a 'mature economy', needs 'structural changes' for further growth as resources tighten: DPM Heng 

He said Singapore's days of "catch-up growth" are over.

Khine Zin Htet | February 27, 2024, 06:07 PM



Deputy Prime Minister (DPM) Heng Swee Keat spoke about Singapore's economic growth during the 2024 Budget debates in parliament on Feb. 27, 2024.

DPM Lawrence Wong delivered his 2024 Budget speech on Feb. 16, 2024.

DPM Heng said that the Budget was comprehensive and included the Enterprise Support Package and the Enhanced Assurance Package, which provide good support for companies and households to tackle immediate challenges.

He pointed out that the global economy is "facing a slow-growth high-inflation environment", with major economies turning "more protectionist".

"Singapore's economic structure is now closer to that of a mature economy," Heng said. "The days of ‘catch-up growth' are over."

He said that resource constraints are becoming "biting", and there needs to be structural changes and structural policies that can transform Singapore's economy to grow "for the long-term".

"Only then can we create good opportunities for Singaporeans and generate the resources for uplifting our people."

Shared ownership in economic transformation

DPM Heng laid out a three-pronged approach to "undertake and intensify restructuring" in Singapore.

First, he highlighted that a "shared ownership of transformation" is critical for Singapore to afford "greater agility" in Singapore's responses to global changes.

"When enterprises and workers embrace transformation, they can be at the forefront of seizing opportunities," he said.

Tripatism enables transformation and growth to be fair and inclusive

He raised the example of Singapore performing well during the Covid-19 pandemic and attributed it to Singapore's "unique approach" to tripartism.

"This productive-collaborative relationship between employers, workers, and government enables us to shape transformation and growth to be fair and inclusive," he said. "It is a very precious asset to keep Singapore dynamic and harmonious."

Co-ownership and leadership

However, he believes Singapore must "build upon and expand" on evolving its tripartism towards "co-ownership and leadership"

He raised the example of the National Trades Union Congress's (NTUC) efforts in technological transformation, noting how they have "gone beyond the traditional notion of unions" by helping nearly 2,000 companies to use technology to uplift their organisational capabilities and staff's work prospects over the years.

"It is highly commendable that NTUC is not fearing technology," he said. "But it's actually taking concrete action to uplift workers with technology."

DPM Heng also said he is proud that Singapore workers are taking ownership of their lifelong journeys and development, as about 192,000 Singaporeans have utilized the SkillsFuture credit in 2022 for "self-initiated learning".

Research, Innovation and Enterprise Ecosystem

Secondly, DPM Heng said that "Singapore's next round of growth must be powered by an economy that's technology-intensive, innovation-driven and sustainability-focused."

This will involve a "value chain" consisting of researchers, companies, startups, and workers to make up a Research, Innovation and Enterprise Ecosystem (RIE).

The Budget 2024 included "an additional S$3 billion injection to the 2025 RIE plan", DPM Heng noted, saying it is "timely" as Singapore "seeks to deepen capabilities in new growth areas like AI (artificial intelligence), sustainability and advanced manufacturing".

He also said that current efforts are "going well", giving examples of how Singapore has been ranked number five in the 2023 Global Innovation Index and the top in Asia as well as how "many MNCs" have chosen Singapore to "site their R&D (research and development) and innovation centres".

"We must now press on and continue to strengthen commercialization and translational capabilities to produce more output and capture value amid shortening innovation cycles and intensifying competition," DPM Heng said.

Deepen standing as global Asia-node

On the third prong, DPM Heng said that Singapore must deepen its standing as a "global Asia node for technology, innovation and enterprise".

"We must, therefore, lean in to foster greater connection and collaboration at all levels", he said, noting Singapore's reputation as a "trusted connector and node".

He said it's also important to foster "co-ownership and leadership" on the domestic level so that industries, companies, and workers are "empowered and confident".

"Beyond that, it is about leveraging our trusted reputation and extensive networks to encourage like-minded partners to grow in Singapore, through Singapore and with Singapore."

Expanding SkillsFuture

During clarifications, Workers' Party (WP) MP Gerald Giam pointed out that seven in 10 people have not used their SkillsFuture credit since the scheme was started in 2015.

He asked DPM Heng about a possible expansion of the "use of the SkillsFuture credit beyond cost subsidies" to include "more opportunities for hands-on practice".

DPM Heng replied that an "expansion" is certainly an area that the government will be "happy to consider" if there are "specific good suggestions".

He also reiterated that Singapore's academic institutions provide a range of courses on top of those provided by the SkillsFuture Level Up programme.

"That is why the WSG (Workforce Singapore) and SSG (SkillsFuture Singapore) have been mounting lots of programs to reach out to residents, " he said, explaining that they not only try to help people get a job but also advise what courses they can do.

Debating on SkillsFuture

WP MP Jamus Lim followed up with Giam's question, describing recent years' take-up rates of SkillsFuture courses as "slow".

He questions how the government can ensure that, in light of the changes that AI will usher in, SkillsFuture will be able to increase its take-up rate and fulfil the objectives of re-skilling it was "meant to accomplish".

Lim further claimed: "Perhaps, there is a continued scepticism amongst our workers of the benefits of the scheme?"

In response, DPM Heng said that he hoped Lim was "not a pessimist" and said it was a matter of whether one looks at it as " glass half empty or glass half full".

"Name me a country which has started such an extensive SkillsFuture framework," he said. "And where now our older workers are working hard to learn new skills."

DPM Heng then went on to describe the various efforts undertaken by various organisations and agencies to "upskill everybody at all levels".

"It is very good, in my view, that we are able to achieve this progress over time," he added.

He felt that Lim should provide "good suggestions" on how the scheme could do better instead of being "sceptical".

Top photo from MCI/Youtube