GDP decreased by 10 percent in the first quarter and unemployment continues to increase since the fourth quarter of 2008. The Spur, Resilience Package (with Jobs Credit and the Special Risk Sharing Initiative as its key measures), and the go signal by the president to tap on past reserves have encouraged firms to maintain their workforce amid the sharp downturn. But the uncertainties still lie ahead, and nobody knows exactly how the key economic indicators will perform in the third and fourth quarters.
The government has shown its versatility as it adapted to economic blows with sound economic policies. The economic challenges in 1985, 1997 and post-2001 era were met head-on by the government. Since the inception of the Economic Review Committee, major policy reforms have been implemented. Among them were the restructuring of public finance, tax cuts, improvement of capital utilisation, and building a more skilled workforce.
The recent recession has raised important issues pertinent to the long-term health of Singaporean economy. Being a small state, Singapore is poised to face tougher competition with rapidly developing neighbours. Therefore it must further strengthen its market expertise in certain niches where it has competitive advantages, like foreign legal services, malt extracts and oil rig production.
It will also pay off if the government explores other niche opportunities, such as manufacturing aerospace components and new markets catering to developing countries. It’s time that government attracts foreign investors who are underrepresented in Singapore. The need to expand the skilled workforce has never been so pressing since the advent of globalisation. Singapore must start encouraging multicultural atmosphere to attract foreign talents.