Can we overcome the current economic malaise or we so set in our ways that no matter how hard we try, we cannot reverse the economic stagnation or worse the downward trend?
Ex PAP MP, Mr Indrajit Singh commented that the government is in denial and the Committee on the Future Economy made no new recommendations to uplift the ailing economy.
Some economists have called Singapore the “new sick man of Asia.” While the government has been dismissive, the general mood is somber and the business community is watching the budget to see if there’ll be sufficient government stimulus to kick-start the economy.
Fiscal stimulus is one thing and there are short term benefits that SMEs can look forward to, to keep them afloat in this harsh economic environment.
Increased wage credits and social spending is also on the table, but these are just stop-gap measures and do not address the high structural costs of running a business here. One venture capitalist said that he’ll move his investments to other parts of ASEAN if the conditions in Singapore are not favourable.
So it is not just the MNCs that are moving, the money is also going where the opportunities are.
Inderjit’s suggestions are all noble. Hire more Singaporeans – more on-the-job training and hopefully we’ll have a highly skilled workforce with “deep skills” in the next two years. Unfortunately, for most SMEs, the planning horizons are much shorter and often they survive on a month-on-month basis – cash flow is king.
Therein lies the conundrum – it is the GLCs and MNCs that have the financial strength to invest long term but they find other markets with lower cost structures and larger consumer markets more attractive than Singapore.
The SMEs do not have the luxury of investing in human resource like how Inderjit has suggested. What is tenable and practical for these SMEs is to operate in the most cost effective manner and to produce goods and services in economies that are competitive – unfortunately Singapore does not offer that.
The tightening of the flow of talent has also put a strain on local SMEs. With higher wage limits for S-pass and Employment passes, the costs of operating in Singapore has gone up significantly. It is a double whammy for most companies in the tech sector – making the economic environment almost prohibitive to operate in.
Can the PAP do the unthinkable?
The business community has been crying out for more access to talent and to bring down the wage floors for the S-Pass and Employment Passes. But this is a double-edged sword – bringing in more talent will erode PAP’s political capital but keeping the wage floors will eventually erode our economic competitiveness.
If the government decides to lower the wage floor for foreign talent, does it have the courage to provide job insurance to those displaced?