Economic Strategies Committee in safe hands

A 25-member committee has been formed to identify ideas how Singapore can grow economically, but it is stuffed with government ministers and corporate bigwigs. Intellectuals prone to question prevailing wisdom are conspicuous by their absence. Full essay.

7 Responses to “Economic Strategies Committee in safe hands”

  1. 1 Anonymous 27 June 2009 at 14:19

    Basant Kapur suggests that R&D is most effective when associated with the country’s production experience. When a country’s resources are channeled into a small number of industries, the benefits of specialization will naturally produce above average results. In the case of Korea/Japan/Taiwan, such focus is a likely explanation for their success in consumer electronics, though I’m not sure what role their governments play in developing this sector.

    Conversely, Singapore’s macro strategy is grounded in diversification, not specialization. Take a look at EDB’s website, and note the huge number of industries we’re trying to focus on. This is a relic of the 1960s mindset when diversification was necessary for growth and survival. But is this strategy still relevant today? And more importantly, do we have enough depth (i.e. knowledge, human capital etc.) to sustain it while expecting to be top notch?

  2. 2 Tan Ah Kow 27 June 2009 at 15:44

    Now let’s see what the committee is going to give as recommendations……

    My bet goes to the usual suspects:

    (a) Lower corporation tax;
    (b) Lower employer’s CPF contribution;
    (c) Recommend further wage restraints.

    Having seen past economic recommendations, I would be surprise if those were not included. Even if such a committee drew out such recommendations, the actual implementation will no doubt be the usual suspects.

    As for US Tax impacting on US operations operating in Singapore, it is worth pointing out that there is already a strategy in placed to deal with that kind of problem, namely, to:

    (a) Give tax free break;
    (b) To re-register as a wholly Singapore company (i.e. Regional HQ) and give tax free status.

    Of course, this does not in itself address the bigger macro economic issues of the over-reliance on MNC to drive growth, more accurately, the growth-for-growth sake model. But I expect the strategy I mentioned above will probably be used to defend the kind of “threat” posed by US tax laws, thus missing I supposed the bigger argument presented in Kenneth essay.

    It would certainly take a major breakdown of that growth-for-growth sake model for the government and might I add a vast majority of the electorate to realise the cost of pursuing that model. Let alone for anyone in power courageous enough to initiate such a change of mindset!

  3. 3 Robox 27 June 2009 at 23:16

    Will this end up like the Remaking Singapore committees where no actual remaking is meant to happen?

  4. 4 Chui 29 June 2009 at 10:17

    Looking at the composition of the committee, they would probably asked for more of the same
    based on the current economic model rather than to look at it from a fresh point of view. Besides, they have vested interests.

  5. 5 hansolo 1 July 2009 at 09:49

    How important is population size in the domestic economy? Can Singapore feasibly embark on a manufacturing industry drive like the other 3 countries you mentioned?


    South Korea – 48m
    Japan – 128m
    Taiwan – 23m

    Taiwan is the smallest but more than 4 times of Singapore, and they have the advantage of China as hinterland.

    So what kind of domestic economy can we have?

  6. 6 Anonymous 1 July 2009 at 23:36

    I tend to share the same concerns as what hansolo have. Singapore only has a population of (correct me if I’m wrong) slightly above 6 million. We do not come close to any of the economies mentioned to being able to rely on domestic markets for substainability in times of crisis.
    It is true that we rely too much on a few MNCs. What the government should have done and I hope is doing is to encourage a lot of SMEs, with the hope that these SMEs will develop into global MNCs themselves in times to come. However, the market for these SMEs should still be global, with diversification being the key. Unlike what Kapur suggested, we cannot hope to specialize too much. The reason is simple. Just imagine we have a single industry for example the automobile industry that is able to compete with the likes of American, Japanese or Korean carmakers, what would happen if one day, jiust to state a scenario, when oil prices rise too much so much so that people find it too expensive to travel by cars. The whole industry collapses and what is going to happen to Singapore? I am also not convinced by what Kapur said that countries like Japan, Korea and Taiwan narrow their R & D according to their country’s production experience. For example, we have Japanese cars, Japanese computers, Japanese cell-phones, Japanese hi-fis and drugs made by Japanese drug companies. In almost every area that the U.S ventures into, we can almosr always find a Japanese equivalent. Therfore, I am not convinced by Kapur’s observation that these countries actually specialize their R & D. More often than not,these countries are large enough to diversify, rather than just specialize.

  7. 7 Anonymous 10 July 2009 at 03:49

    As a comsumer, I would not want Singapore’s companies’ share of the GDP to increase. I would want to be given the freedom of choice to buy the best products, be it local or otherwise. However, we could still encouarage the growth of Singapore’s companies but they should aim for a global marhet, instead of a local one.

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