SINGAPORE, Feb. 6 (UPI) — A high-level government panel is recommending the government designate a minister to be responsible for driving initiatives to develop a more entrepreneurial and creative Singapore.
“There is a certain amount of encouragement, cheerleading (needed), but it’s important because it sets the tone and makes a difference,” Deputy Prime Minister Lee Hsien Loong said Thursday while presenting the final recommendations of the government-appointed Economic Review Committee.
Encouraging entrepreneurship and creativity is one of the six pillars of a 190-page report of recommendations to revitalize the economy.
“Singaporeans need to venture beyond their comfort zones, accept risks and carve niche for themselves,” the ERC said. “Encouraging this mindset, however, confronts deep issues of culture and social values and is a long term exercise.”
Fourteen months in the making, the recommendations set a blueprint to transform the Singaporean economy for the long-term future, though many observers say they are more of a tweaking of the current system.
“Our idea has not been to come out with a theatrical flourish,” Lee said at the news conference. “We have made significant changes, the less yo7u notice them, the better it is, because the better it will go down and be accepted.”
He said not all the changes were dramatic because the ERC’s purpose was to put forward carefully thought through proposals that would quietly make the economy stronger and more competitive over the long term.
“Our approach was that no cows were too sacred to be examined, but neither did every animal need to be slaughtered. We have recommended major changes to some policies, especially in taxation and the CPF System,” he said. “We have proposed modifying and refining many other policies.”
Most of the ERC recommendations had already dribbled out over the past few months and aim to maintain the country’s competitiveness through changes in the tax regimes and the Central Provident Fund system, while promoting growth in the service sector and encourage entrepreneurship. Some of those recommendations deal with the immediate future, while others deal with the longer-term strategies, although Lee pointed that they themselves are likely to be reviewed in 5 years time.
The new recommendations announced Thursday related to immediate measures to make Singapore more competitive by lowering wage cost for employers.
The ERC recommended that any increase in the CPF contribution rate for employers, currently at 10 percent, be deferred for two years. The government had stated its intention to restore the employer CPF contribution rate to its former rate of 16 percent. The ERC also suggested proceeding immediately with the phasing in of reducing the salary ceiling for both employers’ and employees’ contributions and lowering the employees’ contribution rate for workers aged 50 to 55 from the present level of 20 percent to 16 percent.
Lee, who heads the panel, said many recommended proposals had financial implications, and pointed that the announced phasing in of the Goods and Services Tax rise from the previous 3 percent to 4 percent this and to 5 percent next year will result in a budget deficit. However, he also stressed that the government intended to maintain a balanced budget in the long run.
“But from time to time when the economy is down, and if we have to run a deficit, we will do so…But I think to shift to a position of a permanent structural deficit, that will be a disaster,” Lee added.
The ERC reiterated the Singapore economy will only fully recover in 2004 as the immediate outlook is clouded by the slowdown in the United States, Europe and Japan and the prospect of war in Iraq. But Lee also expressed optimistic views on the economic future of the island-state.
“The immediate prospects may be clouded, but we think that if you look ahead, the way the trends are going, it’s favorable to a country like Singapore. Because we’re small, we’re nimble,” he said.
Prime Minister Goh Chok Tong said the government will respond to the panel’s recommendations in its annual budget, expected Feb. 28.