Minister (Industry) S Iswaran oral reply to PQ on economic restructuring and jobs creation

Questions

Mr Saktiandi Supaat: To ask the Minister for Trade and Industry (Industry) (a) how is the Government addressing the sharp fall in private investments which has been contracting for the past two and a half years; (b) what is the Government doing to check the rising number of firm closures this year; and (c) how will falling private investments and economic restructuring affect job creation in the medium term.

Er Dr Lee Bee Wah: To ask the Minister for Trade and Industry (Industry) (a) how is the Government helping companies to remain competitive in the global market; (b) whether there are improvements in productivity across various sectors; (c) whether the Ministry has looked into how local price increases from labour, materials, transport to a stronger Singapore dollar, are impacting on the overall business cost.

Assoc Prof Randolph Tan: To ask the Minister for Trade and Industry (Industry) (a) what has been the achievement rates of expected jobs creation from investment commitments made in the last five years; (b) whether an under-supply of suitable manpower was a factor affecting investment commitments at any point during that period; and (c) whether the Ministry anticipates challenges in the supply of manpower to fill the 16,800 jobs that EDB has reported that its 2015 investment commitments are expected to create.

Oral Answer (to be attributed to Minister (Industry) S Iswaran)

1.Madam Speaker, Singapore, like the rest of the world, faces a challenging and uncertain economic environment.  However, there has been an uneven impact on our industries.   Minister Lim Hng Kiang has spoken on the external headwinds that are affecting industries such as wholesale trade and marine & offshore engineering, as well as the weakness in industries such as food services and real estate.  Nonetheless, there are other industries – such as information & communications, education, and health & social services – where demand remains resilient.

2.Er Dr Lee Bee Wah asked about business costs.   The cost of utilities is expected to remain subdued given sustained low oil prices.  The industrial rental index has decreased by 6.8% over the past five quarters; for commercial rents, the office rental index fell by 12.2% while the retail rental index declined by 9.3% over the same period.  The strong pipeline supply of industrial and commercial space coming on-stream in 2016 should continue to ease rental cost pressures.  For labour costs, there are variations across sectors.  In the manufacturing sector, unit labour cost (ULC) fell by 0.7 per cent (YOY Q2) on the back of productivity improvements.  In contrast, the ULC in the services sector rose by 4.5 per cent.  These trends, and their differential impact on industries, underscore the need to redouble our efforts to improve productivity, and to adopt industry-specific strategies to sustain competitiveness.

Our approach – support for the short term, position for the long term

3.Against this challenging economic backdrop, the Government seeks to help companies manage immediate pressures but also adapt to stay competitive in the medium to long term.  SPRING launched the Working Capital Loan (WCL) this year to help address Small and Medium Enterprises’ (SMEs) near-term cash flow concerns and growth financing needs.  The WCL is expected to catalyse more than S$2 billion of loans over the next three years, and complements existing loan schemes.  There has been strong take-up of SPRING’s loan schemes, with over S$1.2 billion worth of loans given to SMEs so far.

Industry transformation

4.Notwithstanding the cyclical headwinds, there remain good market opportunities for our companies.  For example, annual growth for the ASEAN region is projected to average 5.2 per cent from 2016 to 2020, significantly higher than projected global growth for the same period.  To seize such opportunities, our industries, enterprises and workers must transform.  

5.Structurally, Singapore is entering a new mode of growth.  Rather than increasing manpower, we must anchor Singapore’s competitiveness and growth in increased productivity and greater innovation.  Hence, in April this year, the Government announced a grant budget of over S$2.3 billion under the Enterprise Development Fund (EDF) for the development of local companies.  This will support efforts at the enterprise level to upgrade capabilities, automate processes, and internationalise.  

6.In addition, as part of the S$4.5 billion Industry Transformation Programme announced in Budget 2016, the Government will develop customised roadmaps for key industries.  Each roadmap will comprise a growth and competitiveness plan, supported by strategies to upgrade productivity, develop skills, promote technology adoption and innovation, and help companies expand overseas.

Attracting investments for sustainable growth and quality jobs

7.Mr Saktiandi Supaat asked about falling private investments.  Attracting investments remains a key part of our strategy to grow the Singapore economy.  The investment commitments that EDB has secured for fixed asset investments (FAI) have moderated from S$12.1b in 2013 to S$11.5b in 2015.  This is partly due to uncertain global economic conditions, but also a reflection of our targeted approach towards attracting projects that are consistent with our stage of economic development, manpower policies and international commitments on carbon emissions.

8.Companies generally understand and accept these constraints, which are not unique to Singapore, and have been supportive of our push towards productivity-driven growth.  Re-investments from the existing base of companies have focused on increasing productivity through the adoption of automation technologies and upskilling of the workforce.  In addition, EDB continues to harness investor interest in the growth markets of Asia and ASEAN to establish ‘Homes’ i.e. headquarters that comprise top decision-makers and differentiating competencies.  These initiatives don’t always entail large FAIs but they create good jobs for Singaporeans.

9.Assoc Prof Randolph Tan asked if there have been difficulties filling jobs created via EDB’s investment commitments.  At the project level, EDB works closely with companies to meet their projected job commitments.  This includes partnering academic institutions and industry to ensure that Singaporeans are equipped with the appropriate skillsets to take up the diverse range of jobs on offer.  Specific interventions include curriculum development for pre-employment training (PET), continuing education and training (CET) with local Institutes of Higher Learning (IHLs) as well as partnerships with companies to provide apprenticeship and other applied learning opportunities for students.  These manpower efforts are aligned with our national SkillsFuture movement, which aims to prepare Singaporeans for jobs of the future, with a judicious complement of foreign manpower to address any skills gaps in the short to medium term.

Opportunities for Singaporeans who are prepared to adapt

10.The Singapore economy will continue to generate good job opportunities for Singaporeans who are willing to upgrade their skills and work in growth sectors.  For 2016, EDB expects investment commitments to create 20,000-22,000 jobs.  This represents an increase in job commitments compared to 16,800 in 2015 and 18,600 in 2014.  At the same time, our industry transformation efforts will also support sustainable job creation in the medium term in both new and existing industries.

11.Many of these jobs, and others in sectors like education and healthcare, are suitable not just for new entrants to the job market but also for mature workers seeking a new career.  The Minister for Manpower will be elaborating on measures to help workers adapt and secure these job opportunities.

12.                   Madam, successful economic transformation will require the collective effort of workers, unions, companies, industry associations and the Government.  It is critical that our companies stand ready to embrace new technologies and business models, and that our workers stay open to learning new skills and capabilities, in order to take on new or redesigned jobs.  On its part, the Government is firmly committed to supporting our workers and companies through this transformation.