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Economic restructuring: This time, it’s really different

In Economy on 07/12/2016 at 4:44 am

Speaking to a group of students at the Singapore Institute of Technology, Prime Minister Lee Hsien Loong said on 24 Oct that he is confident S’pore is taking the right growth strategies to move forward.

“We are feeling the pains of restructuring, but not yet seeing the dividends of our hard work. But we are pursuing all the right strategies, and I am confident that given time these strategies will work for us.”

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The Committee on the Future Economy (CFE) will soon issue a report addressing  five key themes: future growth industries and markets; corporate capabilities and innovation; jobs and skills; urban development and infrastructure; and connectivity.
Indeed, in updating the 2010 Economic Strategies Committee (ESC) report headed by Tharman), the 30-member CFE will have to take into account new global and domestic realities. Chaired by Finance Minister Heng Swee Keat, the panel has been tasked with developing economic strategies to keep Singapore competitive; it aims to complete its work by the end of 2016.

As part of this effort, a working group has been formed under CFE to study how to better help small- and medium-sized enterprises (SMEs) “restructure and tide through challenging times”.


I’m sorry but

“We are feeling the pains of restructuring, but not yet seeing the dividends of our hard work. But we are pursuing all the right strategies, and I am confident that given time these strategies will work for us.”

smacks of “Jam to-morrow and jam yesterday – but never jam to-day”*

Pardon my cynicism.

We’ve been here before. How many times has economy been “restructured” since the 80s? And how many times have SMEs been helped to  “restructure and tide through challenging times”?

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Another decade, another restructuring report?

In the 80s, one Lee Hsien Loong as trade and industry minister headed a committee to recommend changes in the economy. In the early noughties when DPM he headed another committee on the same issue.

 In 201o, one Tharman and his committee produced the 2010 Economic Strategies Committee (ESC). And now there’s the CFE. It’s a bit early, but then there wasn’t a report in the 90s: so maybe making up for lost time?
——————————-
But this time, it’s different, really

In the past the spin before the release of a report was always that it was going to be game-changer, this time to my surprise the constructive, nation-building BT** said don’t expect much from the report (Something that could and should have been said about the other reports too).

First there’s the question that looms large is whether or not the CFE report will contain anything “large and decisive enough to make an impact”, as an economist put it.

What don’t trust PAP isit? See Heng no ak? Why liddat?

And then

private-sector economists caution against hopes for a big bang outcome that will significantly address Singapore’s immediate challenges.

That’s largely because technological disruption and the rapidly-changing global environment make earlier strategies – such as the tactic of picking winning sectors to boost economic growth – tougher to execute.

Other domestic factors weigh heavily as well.

It quotes Bank of America Merrill Lynch (BAML) economist Chua Hak Bin on why restructuring will be difficult.

“It’s that much harder now to retool the economy. Singapore has already reached such an afluent stage, and there’s the sense that there are a lot more constraints now – such as ageing demographics and the inability to tap on talent as freely as before.”


Err what about secular global trends?

[T]wo interconnected secular trends that will affect S’pore’s growth prospects: slower global trade caused in part by onshoring (companies making more products locally).

————————————

He talks about

— most find it difficult to imagine how the panel can match past watershed moves – including the decision to create a private wealth management industry from scratch, or the introduction of casinos to boost tourism, or the slashing of income and corporate tax rates.

— the likelihood of a “tinkering at the margins” is high. “I don’t think the policy flexibility is as wide as it was previously, despite the 2015 election result (in favour of the ruling People’s Action Party). It’s no longer just about reviving growth – a lot of social and political constraints have now come into play.”

BT also surprised by quoting CIMB Private Banking economist Song Seng Wun who said the govt had to restructure itself: the government must also think about how it can restructure itself, so as to support the needs of the future economy.

“Rather than point the finger, the government should maybe take a look back at itself … For example, everything is so intertwined now, so rather than having the EDB (Economic Development Board), IE (International Enterprise Singapore), and Spring Singapore existing as separate entities with different functions, why not regroup them into one again? Singapore is a small economy; it can be done,”.

Ownself reform ownself?

But BT being BT has to have a constructive, nation-building bit to show it isn’t TOC:

Still, even as the country looks ahead to seek sustainable growth and opportunities for all, economists stressed the need for Singapore to hold fast to its existing strengths.

“Alongside these new and higher aspirations, we’ll need to be careful that our policies don’t threaten our existing strengths,” said Dr Chua, citing Singapore’s port and financial services sectors as strategic leads to retain.

And then as if on cue it quotes Mizuho economist Vishnu Varathan who thinks there is scope for Singapore to reinvent its hub status – especially with Asean’s ambition of creating a single market and production base (obstacles to that lofty goal notwithstanding) …”I think Singapore has actually underrated itself in areas of competency like regional law and intellectual property law. We already have a nice network of finance marrying up with legal and accounting standards that we can leverage on … That’s where Singapore will have to position itself – as a premier services producer that will enhance the rest of Asean as manufacturing base. In essence, we become the finance department, the legal department, and the front office of this entire (AEC) institution … Even if I can’t get my finger in that pie my neighbour is having, I want to be the one providing him with the silverware to eat off that pie.”

Evidently, the reporting and analysis of the constructive, nation-building media is not really supposed to be “based purely on facts”, as a CCP document said it should be. It’s all about praising the PAP administration after pointing out its flaws?

Maybe taz why the PAP has forgotten what is economic restructurings are supposed to do?

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*“The rule is, jam to-morrow and jam yesterday – but never jam to-day.”

Jam tomorrow or jam to-morrow (older spelling) is an expression for a never-fulfilled promise. It originates from Lewis Carroll’s 1871 book Through the Looking Glass and What Alice Found There.[1] In the book the White Queen offers Alice “jam every other day” as an inducement to work for her:
“I’m sure I’ll take you with pleasure!” the Queen said. “Two pence a week, and jam every other day.”
Alice couldn’t help laughing, as she said, “I don’t want you to hire me – and I don’t care for jam.”
“It’s very good jam,” said the Queen.
“Well, I don’t want any to-day, at any rate.”
“You couldn’t have it if you did want it,” the Queen said. “The rule is, jam to-morrow and jam yesterday – but never jam to-day.”
“It must come sometimes to ‘jam to-day’,” Alice objected.
“No, it can’t,” said the Queen. “It’s jam every other day: to-day isn’t any other day, you know.”
“I don’t understand you,” said Alice. “It’s dreadfully confusing!”

Wikipedia

**http://www.businesstimes.com.sg/government-economy/singapores-future-economy/harder-now-to-retool-singapore-economy

 

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  1. […] – MoneySmart.sg: Is the Slowing Economy Really Going to Be That Bad for Singaporeans? – Thoughts of a Cynical Investor: Economic restructuring: This time, it’s really different […]

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