Speeches

This speech is continued from here.

28. A third area of focus is the development of our human capital, both local and foreign. Singaporeans rank highly in technical skills, and our students often top international mathematics and science competitions. But we need to improve our soft skills, such as people skills, management skills, communications skills, as well as cultural and artistic skills. We will also continue to welcome foreign talent to work, live and play here, to add to our talent pool.

29. Fourth, we need to identify, nurture and promote new areas of growth in both manufacturing and services, the two complementary engines of our economy. The continuing emergence of lower-cost locations spurs us to constantly review and refresh our manufacturing value proposition, be it in refining our division of labour, exploiting economies of scale through shared facilities, or undertaking more innovation and R&D work. For instance, about 70 companies are located on our petrochemical complex in Jurong Island, where they plug into customised infrastructure facilities, specialised services and the supply of feedstock. We cooperate with the Indonesian islands of Batam and Bintan, each specialising in different parts of the manufacturing value-chain that it is strong in.

30. In the services sector, we expect regional demand for health, education, tourism and financial services to grow rapidly as the middle-income group burgeons. Already, Singapore plays host to 50,000 foreign students in tertiary and commercial institutions, and 150,000 foreign patients per year from across the region. They are attracted to local universities and hospitals, as well as to the international arms of top schools and medical research institutes based in Singapore, like INSEAD, University of Chicago and Johns Hopkins.

31. Fifth, Singapore is improving our corporate governance practices and standards. A globally oriented economy needs a robust framework for corporate governance. Singa-pore's standards are high but we must continue to improve them, not only in the form of the rules but also in the spirit of their implementation. Our integrity premium is a precious competitive advantage which we guard zealously, and which will not be easy to replicate.

32. The Company Legislation and Regulatory Framework Committee, a private sector-led body, has been reviewing our company law and regulatory framework. The Committee has made recommendations to simplify the process of incorporating a company, facilitate capital raising and reduce compliance costs for companies in Singapore. Let me highlight some key recommendations.

33. To widen the options available for businesses and investments, the Committee recommended introducing Limited Partnerships and Limited Liability Partnerships. To improve access to finance and lower the cost of raising capital, the Committee advocated allowing additional exempted offerings, such as private placement and small offering exemptions. The Committee also suggested removing statutory requirements for audit and appointment of professional company secretaries, so as to trim compliance costs for companies, especially small private companies and start-ups. Safeguards will be simultaneously introduced to uphold corporate governance standards and protect stakeholders' interests.

34. I am happy to announce that the government has accepted all the recommendations of this Committee. They will ensure that our company law is market-driven, supportive of entrepreneurship and aligned with international best practices. The Ministry of Finance will release further details.

35. Finally, just as we are encouraging greater corporate disclosure, the government is also working towards raising levels of transparency through consultation and collaboration with the private sector. Consultation lengthens the policy-making process and entails commitment of effort and resources on the part of the industry and the public. But it also helps to pre-empt implementation problems, minimise unintended consequences, and foster better industry understanding and support. The Monetary Authority of Singapore (MAS) has introduced guidelines to make public consultation a standard procedure whenever significant changes in the financial services regulatory framework are planned. Over time, these changes will further improve the operating environment for the financial sector. The MAS will release further details.

Conclusion

36. Singapore has not shied away from tough measures to remake our economy and maximise our chances in a difficult environment. These measures will strengthen our competitiveness, make our companies more competitive and consolidate our social cohesion. They will keep our economy flexible, resilient and able to adjust quickly to changing circumstances, and so remain ahead in the race of nations.

37. Although the media impression is that Southeast Asia has stagnated since the Asian Crisis, the reality is less gloomy. ASEAN economies have made progress in picking up the pieces and pursuing domestic reform and restructuring, albeit some more successfully than others. Between 1999-2001, ASEAN economies as a whole grew by about 4% per annum. Last year, an export-led slowdown on the back of a global electronics slump broke the recovery trend. But ASEAN economies weathered the downturn fairly well, with most still managing positive GDP growth. Most are running current account surpluses, in contrast to the large deficits that prevailed in 1997. From a macroeconomic standpoint, the countries have held up well and even shown a certain resilience. Reflecting this, ASEAN stockmarkets have generally performed better than their counterparts in the rest of the world thus far this year.

38. Part of Southeast Asia's negative image is attributable to political and security concerns, which are indeed real. A week or so after the Bali attack, these worries naturally loom large. Many observers, seized by the mood of the moment, are now forecasting the worst for the region. But we should adopt a longer-term, more nuanced perspective. Southeast Asia's economic fundamentals remain positive - a sizeable market with a collective population of 500 million people, high savings, abundance of natural resources, under-developed consumer appetites and a strong work ethic. The political problems can be overcome, provided governments act swiftly and resolutely to counter terrorism and restore order and confidence. Those countries which do so will regain investor interest, while those investors shrewd enough to discern which countries and projects deserve support will be amply rewarded by the risk premiums. Provided Southeast Asian countries adapt themselves to their new environment, remedy their economic weaknesses, and grasp the new opportunities, this region can once again become a vibrant part of Asia.

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