2.

We have recovered from the Asian financial crisis relatively unscathed and much earlier than expected. The timely implementation of the cost cutting package played an important part in helping the economy rebound quickly. We expect growth for the economy as a whole to remain strong this year. However, not all sectors are fully out of the woods. For example, construction and business services are still under-performing. In addition, the manufacturing and electronics sectors which led the recovery face strong competitive pressures. To ensure that the momentum of economic recovery is sustained, I will be announcing the extension of some tax measures introduced in the cost-cutting package, partially or in full, to help contain cost pressures.

3.

Longer term, we face structural problems posed by an ageing population. The Inter-Ministerial Committee on the Ageing Population (IMC) made comprehensive recommendations and these are being studied. Although many of the problems raised have longer term implications, we should start to address some of the less complex issues. I will therefore be announcing several tax changes to encourage Singaporeans to plan prudently for their needs after retirement and also to encourage greater family cohesiveness. There will also be incentives to enhance our competitive edge, encourage the growth of knowledge intensive and high value-added activities and measures to foster entrepreneurship.

4.

I will first touch on tax changes for individuals and the family.