This is the speech by Minister Mentor, Lee Kuan Yew, at the Tanjong Pagar 43rd National Day celebration, 13 August 2008.
The unintended consequences of a globalised world
The end of the Cold War in 1991 triggered off a series of changes that has resulted in a hugely different world. Our unskilled workers have to meet competition from their unskilled (about 1 billion new entrants) who were previously not in the market. Our highly skilled and knowledge-based workers are in short supply and command premiums.
Economic prosperity for these 2.8 billion people, especially in China and India, has unintended consequences. First, they consume more energy, oil and coal, whose prices have rocketed sky high, with oil going over US$145 per barrel. The increase in the burning of oil and coal has accelerated climate change which was already ongoing. Second, as standards of living went up in China and India, they eat more meals and meats. Grains are fed to animals. Also the high oil prices have instigated America to convert corn and other foodstuffs into bio-fuels. The result is a world-wide food shortage.
To meet these challenges, we have to retrain our workers for more skilled work to earn higher wages. We have many ongoing programs by MOM and NTUC to achieve this.
Singapore has some shock absorbers to buffer these setbacks. We have massive investments with long term implementation periods. We have a construction boom. When the buildings are complete, there will be demand for workers from the integrated resorts, new plants producing solar panels, petrochemicals and pharmaceuticals. These new demands for labour will soften the impact of retrenchments.
It looks increasingly likely that the US credit crunch will cause a downturn when the next President takes over in Jan 2009. Home prices have fallen and Americans are spending less. This may lead to a prolonged slow down in America that will affect Europe, Japan, China and ASEAN. There will be retrenchments in those industries whose exports to America and Europe are affected. Work permit foreign workers will take the brunt of the retrenchments, saving many Singaporeans their jobs.
We and Southeast Asia have the advantage of two new engines of growth, China and India. Their economies have developed an independent internal dynamic of their own. They can continue to grow by investing in more infrastructure and producing more for their own consumers. Trade links between China and India and ASEAN, Japan, Korea, Taiwan have been expanded and can partially make up for the loss of the US and EU demand. So we will not be hit as badly as we were in previous US recessions.
Because our businessmen and government have been increasing investments and trade with China and India and the Middle East, the impact of a slow down in the US and EU will be buffered. With high oil prices, oil states, including Russia, where we have started several projects, will continue to build their infrastructure, and import consumer goods and services.
We have to ready for rougher times ahead. Singapore could grow at 5-6%, even 7 or 8% in some years, if there is no long recession in the US and EU. If they go into recession, then we may grow less at 3-5%.
The government is monitoring the situation of lower-income Singaporeans. We cannot protect our people completely from the high oil and food prices. But we will make sure that they can manage. For this year, the various schemes in place will spread over $3 billion dollars in support. Many schemes are targeted at the low income to help them cope with rising food and energy prices. Under WIS (Workfare Income Supplement) a worker, age 50 (or between 45 to 55) who earns $1,000 a month will get a 10% wage supplement, while a worker above 60 gets 20%. This encourages those unemployed to resume working and companies to re-employ older workers.
Our society will not remain as cohesive unless we address this problem as a united community.
Political flux around us
Thailand and Malaysia are in a state of political flux. Former Prime Minister Thaksin Shinawatra has flown from the Beijing Olympic games to London instead of returning to Bangkok to face corruption charges. He said his foes were meddling in the judicial system “to finish off myself and my family”. The court in Bangkok has issued a warrant for his arrest.
Thai domestic politicking contributed to a confrontation and near clash between Thai and Cambodian troops on their border land surrounding the Preah Vihear temple. Thai Prime Minister Samak’s government, accused of being a proxy for Thaksin, had supported the Cambodian government’s request to have the United Nations declare the temple a world heritage site. Thaksin’s enemies attacked Samak’s government, calling it treason. The Foreign Minister was forced to resign.
Malaysia is inundated with accusations and counter accusations. Anwar Ibrahim, former Deputy Prime Minister to Prime Minister Mahathir, claimed he could form a government by September, and that the charge of sodomy against him was baseless and intended to block his bid to form the next government. However Anwar has refused to give the police his DNA which could prove innocence.
Instead he made counter-accusations against Deputy Prime Minister Najib Razak. Malaysians are confused and do not know what to believe.
Money politics is at the heart of the problems in many countries in Asia. “Money politics” is a code-word for buying of votes to gain power and after gaining power to recover your expenses plus some profit for the next round of vote buying.
There is no money politics in Singapore. The integrity of ministers and public officials is fundamental for political stability.
Politics in Singapore is all above board and so has not been troubled by such politicking.
There are some who yearn for multi-party politics and rotating party governments. They should study Taiwan, Thailand, and the Philippines. Rotating party governments have led to more corruption and misgovernment. And a “free wheeling press” has not cleaned up corruption, although according to American “Democracy” theories it is designed to do so. Furthermore frequent chop and change in governments and policies have hampered Taiwan’s and Thailand’s economic growth and increased unemployment and caused political instability.