Population White Paper Debate: A Bright Future for Singaporeans

Speech by S Iswaran, Minister in the Prime Minister’s Office, and Second Minister for Home Affairs and Trade and Industry at the Parliamentary Debate on Population White Paper, 7 February 2013

1.          I rise in support of the amended motion standing in the name of Mr Liang Eng Hwa.

a.           It focuses on Singaporeans who are at the core of this the White Paper – a sustainable population, a dynamic Singapore.

b.           It highlights Singaporeans’ legitimate concerns over infrastructure developments, especially in the near term, and the need to ensure that the benefits of growth flow to all Singaporeans.

c.            It also recognises the dynamic nature of the environment that we have and it calls for a review of the roadmap in the medium term in response to the changing needs of Singaporeans, and our evolving circumstances.

2.          For these reasons, I rise and support the motion.  It would be an understatement to say this debate is important

a.           How we deal with this complex issue will profoundly affect our lives, and that of our children. 

b.           The fact of the matter is there are no easy solutions. And anyone that offers one should be challenged.  We have to make some difficult choices and these are choices we would rather not have to make.

c.            That is why the debate in this House and amongst Singaporeans has been passionate and intense.  We have heard many well considered views, many of which are deeply felt.

3.          But it is precisely because the stakes are so high, and the passions seem to be running even higher at times, it is incumbent upon us to be calm and deliberate in considering what is in the best interest of our people and our country. 

a.           We must establish the facts, clearly understand our fundamental challenges, and seek to build consensus on a sensible way forward.

b.            Above all, we must be honest with Singaporeans on what these choices and trade-offs mean for all of us.

4.          That is what the Government has done in this White Paper.  We have sought to strike a balance between the forces that are pulling us in different directions – the need to create opportunities for Singaporeans, now and in the future; the fundamental demographic challenges that we face; and our domestic resource constraints.  It proposes a middle path that reconciles these challenges and in our opinion, best secures options for our future.     

5.           We seem to have agreement on many points – seemingly even with members of the Opposition although they claim that it is an entirely a Workers’ Party’s proposition. In fact, it is something all of us subscribe to and the Government has been working at 

a.           Our aim is to improve the quality of life for all Singaporeans, whose needs, aspirations and concerns should be at the heart of this endeavour.   

b.           We all agree that we must preserve and strengthen the core of Singaporeans, as the very basis of our identity.   

c.            We must create more and diverse job opportunities for all Singaporeans.  We have to enable more women and the elderly, especially, to rejoin the workforce, if they so desire.

d.           We agree that productivity must be the core driver of our future growth, and we must help our businesses make this transformation.

e.            We must not be over-reliant on foreign manpower.

f.             Ultimately, we all agree that our economy must change course.  It cannot be Business as Usual.

6.           But Madam Speaker, there is a serious difference between what the Workers’ Party proposes and what the Government recommends in the White Paper.  This difference lies in how we propose to make this transition and what impact it will have on Singaporeans and our businesses.     

a.           The Workers’ Party has presented an extreme scenario as a plausible choice for Singaporeans. It proposes to immediately stop any increase in foreign workforce until 2020, capping it at the current levels;  and it further proposes that we should rely exclusively on increasing our resident workforce by 1%.

b.           What does this actually mean? In other words, the Workers’ Party believes that for the rest of this decade, the only source of additional manpower for a new business in Singapore, or one that wants to expand, should be from any natural increase in the resident population, increasing the participation rate of older workers and women, and a limited number of citizenships awarded to the foreign spouses of Singaporeans – and, of course, if foreign workers are freed up elsewhere in the economy because some of the businesses close down or contract.  According to their proposal, we would not even have one more foreign domestic worker in Singapore for the rest of this decade, and certainly no additional workers especially for the construction sector which is in fact critical to our infrastructure plans.

c.            This proposal is essentially the extreme “Freeze” scenario painted by DPM Teo in his opening speech.

d.           Ms Sylvia Lim characterised the trade-off as sacrificing 0.5% GDP growth in the Government estimates, for 1 million less in our population - leading to increased quality of life and wages.

7.           I really wish it were that simple.  It is a clever sound bite but it does not tell Singaporeans the real consequences of such an extreme and risky proposal.  The Government as well as many Singaporeans are deeply concerned by the enormous burden the Workers’ Party’s proposal will impose on Singaporeans, our workers and our businesses.  Let me explain.

8.           Today, our workers and businesses are already going through a difficult restructuring process as they feel the effects of our tightening manpower policies. 

a.           Our businesses and the various business associations are feeling the pain. They cannot find enough workers and have appealed to us to ease our manpower policies. Many have talked quite openly about relocating their businesses out of Singapore.

b.           All this tightening also affects our workers.  More than 1.3 million Singaporeans work in 160,000 SMEs. Many of them are concerned about their job security.  They know that if the business they work in cannot keep up and make the necessary changes, it will have to close.  Meanwhile, they also need to upgrade their skills as part of the productivity drive.  That is why we are investing heavily in our workers, through retraining, so that they remain employable.

c.            Notwithstanding these widespread concerns of the workers and businesses, the Government has been steadfast in tightening our manpower policies.  We are resolute that our economy and businesses must restructure to raise our productivity.  We are very clear about that.

d.           But we want to give our businesses time to adjust because, as Mr Inderjit Singh said, SMEs need time to restructure.  We are also supporting our companies through this difficult transition, and easing their burden, through various measures. 

(i)           To date, about 5,700 companies have benefitted from programmes under the National Productivity Fund (NPF).  Nearly $1bn, $950m to be precise, has been set aside just to support a wide range of productivity programmes.  We can and will do more.

9.           The Workers’ Party’s proposal – with its immediate cessation of any additional foreign manpower – is drastic and inherently very risky.  It will exacerbate uncertainty in the economic environment and accelerate business closures and the offshoring of activities.  Singaporeans will lose their jobs.  Instead of productivity-led growth, it could easily tip our economy into a downward spiral.  This abrupt move will derail our efforts to boost productivity and restructure the economy.

a.           In fact, at last year’s budget debate Mr Low Thia Khiang warned us of this very same risk and urged “the Government needs to be cautious in the restructuring process”, as “it will be a long and arduous journey to restructure the economy and increase productivity”.  He was also “worried that many small businessmen will eventually become unemployed”.  These were very fair observations. I am, therefore, surprised by this extreme and risky approach proposed by the Workers’ Party.

b.           Such a precipitous move will also send the completely wrong signal to the business and investor community, be it local or international.  It will be breaking faith with companies who are already invested here and are in the process of ramping up their operations.  It will damage our reputation and severely impair our efforts to attract new and different businesses which can precisely offer diverse job opportunities that better-educated Singaporeans seek. 

c.            In short, the Workers’ Party’s proposal will have a chilling effect on our economy.  It is a “freeze” scenario under which we might contain the number of foreign workers. The Workers Party is taking an extreme risk of the livelihoods of Singaporeans and the survival of our businesses.  

10.        Madam Speaker, in contrast, the Government is advocating a measured and balanced approach to bring about the transformation of our economy.

a.           We are not fixated on growth as some have alleged.  Neither do we take growth for granted, as Ms Jessica Tan urged.  We seek quality growth so as to create the best possible opportunities for Singaporeans.

b.           The economic aspects of this White Paper are a sharp and significant departure from the past.  It will by no means be business as usual.

a.           In manpower – we are halving the growth rate to 1-2% in this decade, and a further reduction to 1% in the next decade, compared to 3.3% per year in the last 30 years.

b.           In GDP growth – We are hoping for 3-5% per year this decade, but 3-4% is more likely. This is in contrast to the 8% per year we have enjoyed since Independence and 5.6% in the last decade.  And this will drop even further to 2-3% from 2020 to 2030. It is akin to a transition from the bustling economic environment of China/Shanghai, to the more developed economy pace of countries like the US.

 c.            Our productivity projections - 2-3% in this decade and 1-2% in the next - are also a stretch when we consider our historical experience - 3.1% from 1990-2000 and 1.8% in the last decade - and that is also the case when we compare with other developed countries.  But we believe that we can achieve this if we make a concerted effort.   

c.            Does this sound like a Government that is continuing at the same speed?  Mr. Low has accused us of driving at the same speed.  Let me say this categorically. We are slowing down so that we can achieve a smooth landing.  What the Workers Party is proposing is “to jam-brake” and put our economy in a tailspin. Our businesses and workers risk a “hard landing”. Even under the Government’s proposal, this adjustment is not easy. It will affect all of us.

a.           Businesses still have to restructure.

b.           Workers will have to upgrade their skills.

c.            Economy will have to find a new equilibrium.

d.           But this approach will give our businesses and workers more time to adjust, and a fighting chance to survive this transition, with assistance from the Government, which many Members have advocated. 

11.        Even more importantly, this level of growth, though lower than in the past, will help us maintain a certain level of vibrancy in our economy. Without that vibrancy, we cannot attract the new activities or companies that can create the types of jobs that better educated and qualified Singaporeans aspire for.  To draw to our shores or new growth/sunrise clusters that can provide the jobs of the future so that our whole economy can make this transition, we need that vibrancy.  Without that level of growth, these jobs just won’t come.

12.        There are certainly other ways beyond domestic growth that we can create opportunities for Singaporeans outside of Singapore as well. Our agencies such as IE Singapore are working with businesses to expand their external wing, and create opportunities beyond our shores.  But we still need a home based economy which is robust because if the mothership is not strong, and the satellite gets stronger, we risk getting hollowed out.

13.        We have much going in our favour that we can leverage on. 

a.           We are in the heart of a growing Asia. Opportunities around us abound.

b.           MNCs and global businesses are shifting their centre of gravity to Asia and, today, Singapore is a strong candidate as a location for their core operations and functions.   

c.            Unprecedented rates of urbanisation in Asia are creating the demand for innovative urban and infrastructure solutions.

d.           The rise of the Asian consumer, and the growth in the size and disposable income of the Asian middle class, creates demand for high quality products and services.

14.        We are well-placed to capture these opportunities because they play to our strengths.

a.           Urban solutions and city planning are core capabilities that we have built up over the years in the public and private sectors.

b.           As a leading services hub, the growth of Asia will have significant spillover benefits for our sectors like trading, logistics, information, communication and media (ICM), financial services and tourism.

c.            We have the capability to host complex manufacturing processes, especially in areas where know-how and intellectual property are critical. 

d.           We are also a preferred location for manufacturing-related services such as headquarters activities, R&D, intellectual property management and product lifecycle management.

e.           Most importantly, we have a growing pool of skilled and talented Singaporeans who are in high demand.  With different pathways to success, we will have a diverse core of Singaporeans with different aptitudes, capabilities and interests, including 400,000 more PMET-level Singaporeans in the workforce by 2030.

15.        These trends and our unique strengths and positioning have allowed us to create a diversity of jobs.

a.           For instance, the jobs that EDB created in 2012 alone reflect the diversity of opportunities we are trying to create and have been able to.  They include:

a.           Unilever – a global leader in consumer products, which offers opportunities in regional and global digital marketing. 

b.           Leo Burnett – a world-class advertising agency, has created a specific opportunity in Singapore in terms of generating Asia-centric consumer insights and analytics.

c.            Givaudan – a Swiss manufacturer of fragrances and the largest flavouring company in the world, has created opportunities in Singapore for perfume research and development, such as discovering new ingredients.

16.        We are creating attractive opportunities at all levels including the non-PMET level.  For example,

a.           In the aerospace industry, our ITE graduates are highly sought after by companies such as Singapore Aero Engine Service (SAESL), Rolls-Royce and UTC.  These graduates are the backbone of their Aircraft Maintenance, Repair and Overhaul (MRO) operations and enjoy good career progression.

b.           Some of our young may aspire to be chefs in our vibrant culinary landscape. With our tourism strategy, we have attracted many Michelin-starred chefs to open up restaurants on our shores.  There are many opportunities for apprenticeship and career advancement for our aspiring chefs and indeed, when you go to these restaurants, or any other restaurants, you meet many of them and they have a certain glow in their eyes.

17.        The Government will prepare every Singaporean to reach their full potential to stand them in good stead to fill these good jobs that we are creating.  This is painstaking work and we will do this sector by sector to cater to diverse needs. 

a.           EDB will be introducing MBA scholarships over 5 years under the “Global-Asia Management Programme”. It is to groom Singaporeans into leadership positions in different industries to ride on Asia’s growth.

b.           When we bring in global trading companies, we also work with local universities to ensure that the right courses are made available to Singaporeans.  So in this context, IE Singapore has worked with both SMU and SUTD to develop programmes to build up the trading talent pool amongst our undergraduates.

c.           As part of the Precision Engineering productivity roadmap, a new Precision Engineering Vocational CET (PEVC) initiative was started to provide skills-based continuous education and a certification framework for PE craftsmen.

d.           I highlight this to demonstrate that it is not just that we are creating these jobs, we are trying to help, through various programmes, our Singaporeans to secure those jobs.

18.        The Government will also train Singaporeans so that we can take on, either from the very beginning or over time, more of the jobs that are being created in promising new sectors. 

a.           The pharmaceuticals and biological products industry is one example that has seen such localisation.  Starting from a very low base or zero base, the local PME share of total employment has grown significantly by about 14 percentage points in the last 10 years, reaching around a third of total employment in this industry in 2010.  There has been a decline in the Employment Pass (EP) holders’ share of total employment in the industry over the same period and we expect further migration in this direction.

b.           Having created such opportunities, we also want to make sure that Singaporeans have a fair chance of getting them – that we are treated fairly.

c.           My colleague, the Acting Minister for Manpower will address these concerns.

19.        Even as we chart this course to seize opportunities, we must remember that staying open as an economy is fundamental to our continued success.  As a small country, we survive by doing business with the rest of the world. 

a.           We compete against other major cities and developed countries.

b.           We do so and succeed by keeping our economy open, so that Singaporeans, working with international talent, can compete globally.

c.           We also cannot ask other countries to open markets for Singaporeans and our firms while we close ours off to theirs.

d.           These are major considerations for leading organisations like McKinsey, Boston Consulting or Shell when they decide where to locate their global or Asian HQs. 

e.           We must remain open and connected, for trade and talent flows, or risk getting left behind. Bottom line, Singapore cannot afford to just look inwards.

20.        Especially because we sit in the heart of Asia, we must be alive to the rising competition.

a.           We have neighbours who are teeming with energy and activity, growing rapidly, and becoming more competitive.

(i)           Indonesia, Vietnam, Malaysia and India have median ages of 25 to 28, significantly lower than ours.

b.          The competition is real and it comes from all quarters.

(i)           At a recent dialogue, senior executives from Applied Materials, the world’s largest semiconductor equipment company, shared with me that just over the last 4 years, the wage difference between their Singapore manufacturing operations and other advanced locations, including Austin, Texas, has narrowed significantly because of wage increases here.  In the past, when making investment decisions, companies asked “Why not Singapore?”  We had a certain mindshare. As our circumstances are changing, they now are beginning to ask “Why Singapore?”  If we are not careful and make abrupt or precipitous policy moves, companies may soon say “Not Singapore”.

(ii)          If too many companies start saying “Not Singapore”, we will not be able to deliver the opportunities that Singaporeans want and we will lose them to greener pastures.

21.         Having said that, Madam Speaker, I am confident that our economic agencies can work together and convince many companies to say “Yes Singapore” provided:

a.            we remain adaptable to the global economy;

b.            we remain open;

c.             we remain united in our purpose and spirit.

Everyone needs to play a part

22.         In this, everyone needs to play a part.  We have a bright future to look forward to. 

a.           It may be lower growth compared to the past, but it is quality growth that can generate a myriad of good opportunities for Singaporeans.

b.           There will be exciting new industries and jobs.

23.         To achieve that, we need our economy to have a solid core of Singaporeans with a judicious complement of talent from abroad, as envisaged in the White Paper. 

24.         And I would urge all parties to rise above differences on specifics, look at the big picture and play their part.

a.           I have outlined what the Government is doing and our commitment to do more.

b.           For businesses, it is important that they recognise the importance of developing a Singapore core, and build up the capabilities of Singaporean workers.

(i)            One SME that I visited recently - Manufacturing Integration Technology (MIT), a home-grown company in the semiconductor industry, has shown that it is possible to build up, over time, a highly capable workforce made up of more than 80% locals in the manufacturing sector by seizing new growth opportunities and harnessing technology and innovation.

c.           We must persevere and invest in productivity.

d.          I believe Singaporeans also have good reason to be excited.

a.           We have a promising future and certainly, our children are looking forward to the future with great expectations and excitement.

(i)            During my recent dialogue with residents at Jurong Central, I met a young secondary school student, Khoo Xue Ni, a 15 year old Secondary 4 student councillor at Hua Yi Secondary School. She stays in a 4 room flat in Jurong West with her parents and two younger sisters.  She asked me if Singapore will continue to remain vibrant and competitive.  While she worries about her future but even as she does that as she sees other countries in the region are fast catching up, she also hopes there will be exciting jobs for young Singaporeans like her.

(ii)            Her simple question and the aspiration that she brought home to me most vividly what this is all about. We want to be able to tell Xue Ni and other young Singaporeans like her – yes, the world is your oyster but Singapore too will have exciting opportunities for you to realise your dreams.  And that we are doing everything we can to make it happen.

(iii)          And we want to reassure her parents and many other parents like hers that we will create the opportunities for their children so that they will have a reason and purpose to continue to make Singapore their home.

b.            We can look forward to a good quality of life.

(i)            Our economy will be dynamic and abuzz with activity;

(ii)           Singapore will continue to be an energetic and exciting city, like other leading cities of the world.

(iii)         Ours will be a very liveable city that we can call home, where we work and play.

25.        This is the vision that the Government is asking Singaporeans to support:

a.            a global and competitive economy,

b.            so that Singaporeans with different aspirations can have diverse and exciting new opportunities to realise their dreams

c.             to create their own futures;

d.            and to live in a vibrant city that we call “home”.

26.        Madam, I support the motion. Let us work together to make it happen.