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1.32 Our second strategy is to strengthen our
competitiveness, and enhance the flexibility of
the economy. Given our small land area and our
dependence on imported energy, we cannot compete
based on costs alone, against larger countries
better endowed with natural resources. Instead,
we must redouble our efforts to improve our microeconomic
competitiveness and efficiency. We must offer
a superior business environment and an internationally
competitive cost structure.
1.33 The Government is committed to keeping
taxes low, especially direct taxes on companies
and individuals, in order to keep the burden of
government light, encourage investments and reward
enterprise. We believe that a 20% tax rate will
be highly competitive, but we will continue to
track international trends.
1.34 The CPF must stay focused on its core purposes
of providing basic financial security in retirement,
housing and healthcare for the majority of Singaporeans.
To be sustainable over the long term, the CPF
must not become a heavy imposition on employers
that deters them from employing workers or growing
their businesses.
1.35 Our labour market must be flexible, so
that workers can move freely from one job to another,
and companies can hire or shed workers when they
need to. The more difficult and expensive it is
for companies to downsize, the more reluctant
they will be to employ people in the first place.
This will raise unemployment, to the detriment
of workers, as has happened in Germany. Work arrangements
such as overtime practices must become more flexible
to accommodate the ups and downs in business conditions.
Our wages need to reflect the worth of the job
and the contribution of the employee, instead
of depending rigidly on the seniority of the person.
1.36 Finally, competitively priced infrastructure
will help keep business costs low. We should not
subsidise services below their true cost, but
nor should we allow monopoly or cost-plus pricing
to inflate costs for other businesses.
1.37 Land is one of the most important factors
of production. To make optimum use of this resource,
the land market must be efficient and flexible.
This is especially so for industrial land, because
MNC projects can go to any number of countries.
Hence we must ensure an adequate supply of industrial
land at a competitive price. We can do so, because
we have reserved enough industrial land to meet
the needs of a large manufacturing sector.
1.38 We must improve the quality and efficiency
of infrastructure services like utilities and
port services. NEWater is an economical, assured
and high quality source of water which complements
our other water sources. It will adequately meet
the needs of both industries and households. In
the electricity market, competition in a properly
structured industry will ensure that electricity
is produced and supplied as efficiently as possible.
Since we started restructuring the electricity
industry in 1995, productivity per worker has
increased by 60%, and tariffs have come down.
1.39 In port services, PSA Corporation has cut
tariffs and given $300 million worth of rebates
to shippers, in order to provide better value
to its customers. To meet growing competition,
PSA must cut its costs and be as lean as possible.
This is why PSA is retrenching its staff and rationalising
its operations. These steps are painful, but unavoidable
if PSA is to grow its market share, and remain
the world’s port of call.
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