The government is committed to creating the best conditions for private enterprise to flourish, while adhering to the principles of fiscal prudence. Our aim has always been to keep business costs down wherever possible and to ensure that our corporate tax rate remains competitive. In recent years, many developed economies such as Germany, United Kingdom, Australia and Ireland have lowered corporate tax rates in order to stimulate and attract investments. We have to keep pace.

Furthermore, in the New Economy, picking winners will become harder. Hence, while we will continue to provide tax incentives to spur the growth of strategic industries, we will also lower the tax rate generally so that new industries can mushroom and thrive.

Last year, our corporate tax was reduced by half a percentage point to 25.5 percent. This year I have decided to reduce the corporate tax by a further one percentage point to 24.5 percent, to take effect from YA2002. This will help us maintain our tax competitiveness in an increasingly globalised world. It will also help lower the tax burden of business as in Singapore in the coming year when economic growth is likely to be less robust.

The government also recognises that small businesses are an important component of the Singapore economy. To help such companies, I have decided to introduce a tax exemption scheme that will help them grow and get established.