PM: We are ready and able to provide aid, stimulus
What if the world economy nosedives and has trouble getting back on its feet? What if companies slash jobs across the board? What if Singapore takes a hard hit?
For every worst-case "what if" on the economic radar, the Government assures it is on guard with a full arsenal.
"We are watching and waiting. And I think we are in a position to deal with anything which comes along," Prime Minister Lee Hsien Loong said yesterday at a dialogue session attended by some 120 top executives from the financial industry, which has become a major employer in Singapore and is gripped by a global credit crisis.
He was the first Singapore leader to raise the possibility of providing aid and economic injections should a downturn occur. Just last week, he had warned of a slowdown that could "last until next year", depending on whether the United States downturn is shaped like a "V", "U" or, the most dire scenario, an "L".
Now, it seems the giant economy's downturn could even come in the form of a "W", where new problems arise just as things looked like they were improving, Mr Lee said yesterday evening.
Come what may, his Government will be ready. "If things do get bad, we are not without recourse because we have the resources, we have the wherewithal," he said in his opening remarks on the topic, "Turbulent times: How will Singapore cope?", a dialogue organised by company Thomson Reuters.
Sketching broad strokes of the possible courses of action, the PM said if the economy needed a leg-up from the fiscal policy side, which includes cutting taxes and boosting public spending, the Government could do that.
If directed assistance is needed to help the low-income because unemployment shoots up, "we have the means to do that", he assured. "And if I have to stimulate the economy or some sector of the economy, I can do that too."
For instance, he said, if the domestic construction industry slackens, the Government can bring on projects, which it had temporarily suspended to prevent red-hot demand from further inflating prices of raw materials.
On the fight against rising inflation, he said policy-makers were doing two things: Giving "targeted assistance" to low-income groups and adopting an "appropriate" monetary policy to allow the Singapore dollar to strengthen.
Aside from immediate measures, however, Mr Lee said the nation had to continue with longer-term initiatives such as education, developing new capabilities and attracting mega projects like the Formula One race, which create economic spinoffs.
The range of measures gives Mr Lee cause for confidence — "because it's not just the economics of it, but also the social cohesion, also the political will and the resilience of the people."
It was precisely on socio-political issues, besides those related to the economy, that many in the high-level audience were raring to ask. Topics ranged from political renewal to why the Olympic torch did not pass through Singapore and the US elections.
One question touched on the possibility of foreigners making up 40 to 50 per cent of the Singapore population, based on the planning projection that there may be as many as 6.5 million people on the island in 40 to 50 years. How does the Government intend to manage such a situation?
Mr Lee replied that this "difficult issue", which countries such as America and those in Europe have had trouble tackling, requires "delicate handling".
In Singapore, the No 1 priority is: "Let's get more Singaporean babies". To do that, policymakers are "actively studying what more we need to do".
It is also necessary to remain open to foreigners, particularly those with skills, he said, while persuading Singaporeans to understand that the foreign presence is for the nation's long-term survival.
Asked why there is urgency to groom a new generation of political leaders, Mr Lee said developing a "deep bench" way in advance ensures that when it is time for a change of guard, the transition "appears natural" when in fact a significant transformation had taken place.
This "uniquely Singaporean approach" is due to the small, local population, he explained.
In an earlier interview with Reuters, Mr Lee was asked about letting foreigners buy major stakes in Singapore banks. He said he welcomed foreign investment as long as the banks remained under local control, because the lenders are a "substantial part of our financial system".
Mr Lee also said the Government of Singapore Investment Corp (GIC) would not be as open as Temasek Holdings in disclosing details about its portfolio. "GIC and Temasek are different," he said. "We do not want to tell people exactly how much we have so it's easier for them to make a run on the Singapore dollar."
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