Mr Speaker, Sir

1.1 I beg to move that this Parliament approves the financial policy of the Government for the financial year 1st April 2003 to 31st March 2004.

1.2 In 2001, our GDP shrank by 2.4% in our worst-ever recession since Independence. Last year began promisingly. Despite the uncertainties of the war against terrorism and the conflicts in the Middle East, initially the recovery of the United States (US) economy boosted our growth prospects. But as the year progressed, a wave of corporate scandals and the WorldCom and Enron collapses shook the confidence of investors and consumers. This slowed down the US economy. The European Union (EU) and Japanese economies also lost steam. However, the East Asian economies did well. Our exports to China grew strongly, but this was not enough to make up for the fall in external demand elsewhere.

1.3 Despite the unfavourable conditions, our economy grew by 2.2% in 2002. Unemployment peaked at 4.6%, but improved slightly to 4.2% by the end of the year. Manufacturing grew by 8.3% driven largely by the small, but fast-expanding, biomedical science cluster. Exports remained resilient, growing by 1.9%.

1.4 Singapore continued to attract investments. We garnered over $9 billion of fixed-asset investments in manufacturing. Foreign manufacturing fixed-asset investments rose from $6.6 billion in 2001 to $7 billion, while committed foreign business spending grew by 35% to $1.5 billion. The electronics cluster continued to attract the largest share of investments followed by the chemicals cluster. Investments in biomedical projects generated the second highest value-added for the economy. All these investments are expected to create 21,000 jobs.

1.5 Despite some public concern about the cost of living, the Consumer Price Index (CPI) last year fell by 0.4%. Healthcare and education costs rose, but housing and car prices fell. Lower electricity tariffs, cheaper accommodation and household durables combined to reduce housing costs by 2.2%. Cheaper petrol and a lower road tax reduced transport and communication costs by 1%. Basic food items like rice, cooking oil, meat, seafood and vegetables all cost less.

1.6 The Government implemented a slate of measures to help Singaporeans cope with the downturn and adapt to the economic restructuring. Last year, our training and upgrading programmes helped 36,000 workers learn new skills to match the jobs that are available or being created. The Off-Budget package helped all Singaporeans, especially the lower-income and unemployed. 800,000 HDB households received 10 months of utilities rebates worth a total of $226 million. A further $110 million went towards helping Singaporeans through rebates on rental and service and conservancy (S&C) charges.