2. Speeches
Speech by DPM and Minister for Trade and Industry Gan Kim Yong at MTI's Committee of Supply Debate 2025
6 March 2025
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“Grow our Economy”
Chairman,
Let me first thank Members for their very constructive comments and suggestions.
Introduction
2024 has been a relatively good year.
GDP grew by 4.4%; compared to 1.8% in 2023.
Core inflation came down from 4.2% in 2023, to 2.7% in 2024.
This year, we celebrate SG60. We have come a long way in building a strong, innovative and vibrant economy. We have created good opportunities for Singaporeans and improved their lives. Our economic success did not happen by chance. It was the result of a combination of factors: careful long-term planning; sustained investments in infrastructure; keeping a pro-business environment; and most important of all, investing in lifelong education and training, together with staying open to talent, trade and investment. Generations of Singaporeans have worked together to build a strong foundation for our economy.
Members are well aware that we are now entering a new chapter in our economic journey with new challenges and opportunities unlike those we have seen before.
Mr Liang Eng Hwa asked about the potential headwinds arising from geopolitical contestation.
Sir, the multilateral free trade system has been under tremendous stress in recent years, and is at risk of being fractured.
Members would have heard US President Donald Trump’s new tariffs and his plans for more, including reciprocal tariffs on trading partners to match the duties on US’ exports. China and Canada have also responded with their own tariffs.
This may lead to an escalating, tit-for-tat cycle of tariffs, or worse, a global trade war. This could upend the global rules-based economic order that Singapore, as a small and open economy, is dependent on.
Given that we do not impose tariffs on any American imports, and the US has a trade surplus with us, we may not be significantly affected by the reciprocal tariffs directly. However, rising tariffs and trade wars could cause disruptions to supply chains, slow down global trade and drive up business costs, and therefore affect businesses and consumers. In the longer term, it will also affect confidence and investment flows, and slow down the global economy.
Instead of seeking win-win opportunities with their partners, many countries are now competing aggressively against each other for investments and protecting their domestic sectors.
This will lead to a more challenging external environment for us. Domestically, we will also need to tackle tighter constraints, especially in land, labour and carbon, which I spoke about last year.
Our local workforce growth is expected to continue to slow in the coming years.
With limited land, we need to find new ways to maximise our space utilisation.
To do our part on climate change, we will need to reduce our carbon footprint, while accommodating the growing energy demand as we expand our industries.
Nevertheless, it is not all doom and gloom; amidst these challenges, there are still opportunities for us.
Asia’s economy will continue to grow, and Southeast Asia is expected to become the fourth largest economy in the world by 2030.
AI, digitalisation and the low-carbon transition will also present new opportunities in the digital and green economy.
Singapore can also capitalise on the shifts in production and supply chains to attract new investments and strengthen our position as a key node in the reconfigured trade flows.
On balance, we can be cautiously confident. We expect our economy to expand by about 1 to 3% this year, and inflation to stay moderated, with core inflation at about 1 to 2%, barring major disruptions.
Mr Liang Eng Hwa asked if we can grow faster. We will certainly try to do so, and we hope we can grow faster. Last year, I spoke about four strategies to invest in our future – namely, grow our economy; unlock our resource potential; transform our businesses; and connecting internationally. These strategies remain relevant.
I will speak about how we will grow our economy while my colleagues will elaborate on the other strategies. Sir, we will grow our economy in four ways:
Strengthen our connectivity to the region and the world;
Grow strong enterprises through innovation;
Foster a pro-enterprise environment; and
Invest in our people.
Strengthening our Connectivity to the Region and the World
Deepening Integration with our Neighbours and ASEAN
I will start with connectivity. Mr Desmond Choo, Ms Tin Pei Ling and Mr Saktiandi Supaat asked how Singapore can strengthen regional trade relations. As a business hub, our success depends on staying well-connected to the region and to the world.
First, we have made progress in deepening integration and collaboration with our immediate neighbours.
This year, we signed the Agreement on the Johor-Singapore Special Economic Zone, or JS-SEZ, with Malaysia.
This will benefit our firms here by allowing them to tap on the resources available in Johor to expand and grow.
JS-SEZ will also allow Singapore and Malaysia to draw in investments, by offering a more compelling value proposition by combining our complementary strengths.
We have seen strong commercial interest in the SEZ. The Singapore Business Federation’s business mission to Johor Bahru last month drew 230 delegates from over 180 Singapore businesses.
We will also continue to build on our existing cooperation with Indonesia, particularly in Batam, Bintan and Karimun, or BBK, as well as explore new areas of cooperation.
Second, we will continue to enhance digital trade and improve market access for our companies operating in ASEAN.
We are making progress to substantially conclude our negotiations on the ASEAN Digital Economy Framework Agreement, or DEFA, this year. This will accelerate the growth of the digital economy within ASEAN.
We also plan to conclude negotiations and sign the upgrade to the ASEAN Trade in Goods Agreement (ATIGA) this year, which will boost intra-ASEAN trade flows and strengthen supply chain connectivity within our region, to tap on the growth of Asia’s economy.
Growing Strong Enterprises through Innovation
Strengthening our Innovation Ecosystem
Even as we deepen our connections, we want to nurture Singapore enterprises to become regional or global leaders. We also seek to anchor global industry leaders here to enhance our industry ecosystems, which will benefit local companies and provide good jobs.
As Ms Foo Mee Har and Mr Neil Parekh have noted, innovation is at the heart of economic growth.
For example, over the past decades, we have successfully built up a strong and competitive semiconductor ecosystem that has cemented Singapore as a critical node in the global semiconductor supply chain. But to remain a semiconductor powerhouse, we must invest in R&D to drive innovation within the industry – not just among the big players, but also among the SMEs.
Semiconductor manufacturing facilities typically involve substantial upfront investments. Companies, especially the smaller ones, may face challenges accessing semiconductor infrastructure and expertise in their R&D and pilot production. To support them, we established the National Semiconductor Translation and Innovation Centre, or NSTIC, last April, at A*STAR.
NSTIC provides companies and researchers in the fields of flat optics and silicon photonics, with access to semiconductor R&D infrastructure.
Companies may also tap on NSTIC’s capabilities for prototyping and small volume manufacturing, to accelerate the speed to market and scaling up.
To build on this, A*STAR will broaden NSTIC to cover more semiconductor technologies and increase the capacity. We will invest about $500 million to establish the NSTIC (R&D Fab), a new national semiconductor R&D fabrication facility at JTC nanoSpace @ Tampines.
The NSTIC (R&D Fab) will have an initial focus on advanced packaging, which is a key growth area in the semiconductor industry.
It will offer state-of-the-art cleanroom infrastructure and industry-grade tools, as well as translational research and fabrication expertise. This will support the scaling and translation of R&D.
Major global semiconductor players as well as SMEs and startups can tap on its capabilities, and even foster new partnerships.
One example is NexGen Wafer Systems, a local SME which supplies wet etching and cleaning equipment to chipmakers worldwide.
They had started their R&D efforts overseas to better access tools and facilities that were not available in Singapore then.
By leveraging A*STAR’s R&D capabilities and facilities, NexGen has developed new semiconductor equipment features and applications in Singapore to fabricate different types of chips. They have therefore found value in bringing a part of their R&D activities back to Singapore.
The NSTIC (R&D Fab) will scale up our capacity to enable similar SMEs and the broader semiconductor industry here to build new capabilities, develop and commercialise globally-competitive technologies, and create good jobs for Singaporeans.
Our R&D efforts have also enabled us to develop a strong pipeline of promising and innovative startups.
One example is Lucence, an A*STAR spin-off and homegrown startup. Lucence focuses on precision oncology, and partners the National Cancer Centre to develop the LiquidHALLMARK test to guide therapy selection for tumours.
With support from EnterpriseSG, Lucence automated its Singapore laboratory to serve customers in Singapore, Hong Kong and Southeast Asia. It partnered Mayo Clinic Laboratories this year, to drive adoption and commercialisation of its technology in the US.
Today, Singapore also hosts many Deep Tech companies.
Amongst them is Entropica Labs, a startup from the Centre for Quantum Technologies.
Entropica Labs has been working with global leaders in quantum computing hardware and infrastructure providers such as Amazon Web Services, Microsoft and Xanadu to bring quantum technologies to the market.
We want to do more. Through the Global Innovation Alliance (GIA) nodes in key innovation hubs, we help our companies tap into the innovation networks and market opportunities overseas.
Carecam, a digital health startup focusing on transitional care and advanced screening, participated in the GIA San Francisco Acceleration Programme, and connected with a US-based corporate to integrate their solutions into new business entities. This will support the company’s expansion in the US healthcare sector.
We want to support more startups like Carecam, to accelerate their speed to market and facilitate their product commercialisation. We will enhance the GIA to support startups in various growth stages.
The GIA Discovery will support startups to familiarise themselves with the market, and evaluate product-market fit, in order to shape their market strategy.
Thereafter, startups can pilot their technologies in these new markets, with support from the GIA Proof of Concept to validate their products and gain market credibility.
The GIA+ initiative will support startups participating in global acceleration programmes, such as those run by Y Combinator, MassRobotics and MassChallenge in the US, to gain access to mentorship, resources and networks to realise their overseas expansion plans.
To expand our startup ecosystem, we also want experienced founders to be anchored here and build their new ventures that have the potential to become globally leading businesses. To do this, EDB will launch a Global Founder Programme later this year. Let me give Members a preview.
This is a targeted programme, aimed at supporting the new ventures of experienced founders from around the world as well as in Singapore.
Founders are individuals who have built highly successful startups, or who have developed major new products and business lines in global companies, or who have made significant scientific or engineering achievements such as in AI or Deep Tech.
The GFP signals our belief in the power of openness. We want to bring the best from around the world to Singapore to add to the strength of our own.
We want to support firms which are able and willing to innovate and grow. We will foster a vibrant innovation ecosystem that will help our companies stay competitive, and create high-value job opportunities for Singaporeans.
Growing High-Performing Enterprises
Manufacturing is a key pillar of our economy, comprising about 20% of our GDP, and is one of the largest contributors to productivity growth. It also supports the growth of the financial and professional services sectors.
I would like to reassure Mr Liang Eng Hwa, Mr Mark Lee, Ms Jessica Tan, Ms Tin Pei Ling and Mr Saktiandi Supaat that we will continue to encourage leading manufacturers here to invest in innovation, and also attract new, high performing companies to grow in Singapore.
Last October, I attended KLA’s groundbreaking ceremony for a new manufacturing facility in Singapore, for some of their most advanced wafer geometry and defect inspection tools.
KLA’s new facility is expected to create at least 400 jobs, in areas such as mechanical design, materials and product testing.
It will also create opportunities for enterprises here to collaborate with KLA on niche areas such as precision cleaning and manufacturing of metal parts used in optics assemblies.
For example, local SME Alantac Industrial Services and KLA co-developed precision cleaning solutions for defect inspection tools that meet stringent cleaning requirements.
By supporting our high-performing firms in Singapore, we hope to uplift the capacity and capabilities of our entire industry ecosystem, including our local SMEs.
Fostering a Pro-Enterprise Environment
Increasing Access to Capital for Local Companies
Mr Mark Lee and Mr Edward Chia asked how MTI intends to support the financing needs of businesses as they expand globally. The Government had allocated over $1.8 billion in the past five years in equity investment funds to support enterprise growth; but there is room for us to enhance our equity and debt financing toolkit to better support our enterprises’ diverse growth strategies.
First, we will introduce the Long Term Investment Fund and deploy more than $200 million of Government capital over a longer time horizon, beyond the typical 3- to 7-year timeframe. This caters to enterprises with longer and more complex growth trajectories that require more time to fully realise their potential.
Second, we will launch a $1 billion Private Credit Growth Fund, or PCGF.
Unlike traditional debt, private credit has the flexibility to meet the specific needs of companies looking to scale up quickly. And unlike equity, private credit allows companies and founders to retain business ownership and control.
The PCGF is targeted at local enterprises with strong growth potential, to become leaders in their respective industry domains.
Some of them will require tailored financing solutions to support their unique growth strategy, such as international M&As or large overseas capital investments. These solutions may not be readily available in Asia through traditional financing today.
Beyond the $1 billion seeded by the Government, we hope to catalyse more commercial funding as more fund managers and investors gain familiarity and confidence in this space.
Enhancing Regulatory Efficiency
I spoke earlier about the importance of our pro-business environment. At last year’s National Day Rally, PM also spoke about the need for us to ensure a business-friendly environment and to keep regulatory burden to a minimum. We had set up the Inter-Ministerial Committee for Pro-Enterprise Rules Review last year that I chair to look into our rules and streamline our regulations, to enable our businesses to move fast to seize the opportunities that come our way.
Since then, my fellow Ministers and I have engaged more than 140 business leaders across 14 sectors. Let me thank all the stakeholders for their support and feedback. Business leaders have cited approval timelines, frequency of license renewals and duplicative processes as key areas for improvement. The Committee has studied the feedback carefully.
While we tackle specific feedback from the industry, and SMS Low will elaborate later, the Government will set three Statements of Commitment to guide our whole of Government efforts to increase regulatory agility and reduce compliance burden for businesses.
First, all relevant agencies will publish service standards for the processing of business regulatory applications to provide greater clarity for companies. We will endeavour to streamline service standards to 30 working days or less where feasible.
Second, we will increase the validity period of regular business licenses to a minimum of three years where possible and aim towards five years. This will provide greater certainty for businesses, especially those undertaking longer-term growth plans.
Third, the Government will continue to streamline regulatory processes to facilitate concurrent rather than sequential approvals where possible. We will also streamline information requests across agencies. We have made good progress in the Built Environment sector, by developing CORENET X as a one-stop digital platform for building works approvals across agencies. We should learn from this experience and apply the same approach in other domains.
Investing in our People
Lastly, we are investing more in our people. Ultimately, we pursue economic growth so that future generations of Singaporeans can continue to build better lives for themselves. So this growth must translate into real opportunities for Singaporeans to advance their careers and develop their potential to the fullest.
Lifelong learning is critical for workers to upgrade themselves and take up higher wage roles. For example, we have partnered the Singapore Institute of Technology on a Continuing Education and Training (CET) degree, to upskill in-employment diploma holders in Manufacturing.
This will also help businesses develop and retain their local manufacturing talent pipeline and enhance business continuity.
Minister Tan See Leng will share more.
We will also strengthen initiatives to groom more Singaporean Global Leaders.
Last year, we launched the Global Business Leaders Programme. We also launched the Singapore Leaders Network (SGLN) Fellowship to equip managers with the ambition to assume regional and global leadership roles.
One of 60 fellows from the pioneer batch is Ms Camy Loh. Camy joined Royal Vopak, a leading independent tank storage company, as a Sales Manager in Singapore in 2014.
Today, Camy is now the Deputy Managing Director of Royal Vopak’s Thai Tank Terminal, co-leading a team of over 120 employees at one of the largest maritime logistics terminals near Bangkok. It was a big step for her professionally as well as personally.
Through the SGLN, Camy gained skills and knowledge to allow her to thrive in this role in Bangkok.
We are proud that Camy is flying the Singapore flag high, and we are enhancing SGLN to better support more Singaporeans like Camy. MOM will elaborate further on this.
These education and training initiatives take time to bear fruit, and I encourage companies to start early and pro-actively plan to nurture Singaporean talent, and benefit from a strong pipeline of talent and leadership.
Conclusion
Chairman, we are indeed entering unchartered waters. In fact, I think I should say that we are already in uncharted waters. We will face economic uncertainties and disruptions in the months and years to come. There will be challenges, but there will also be opportunities. We can look ahead to the next bound of our economic development with confidence, by remaining open to trade, talent and investments, as well as maintaining a pro-business environment.
We must further strengthen our competitive edge through innovation, deepen our integration with the region and with the world, and investing in building strong enterprises and a skilled workforce. This is how we will earn our living and standing in an increasingly uncertain and unfavourable external environment.
By doing so, we will keep our economy strong, vibrant and resilient, and create better jobs and opportunities for Singaporeans, and a better future for Singapore for the next 60 years and beyond.