This year we will make 3% to 4% growth. We are creating many new jobs with high Foreign Direct Investments of over $9 billion. Most of them need skilled workers. So our unemployed cannot be too selective. They must take on whatever job is open for the time being, and also retrain and upgrade. The jobs they lost have gone. They will not come back, just as the old Indonesia will not come back.

The future is fraught with uncertainties. The international environment has changed dramatically. The outcome of the war against terrorism, Al-Qaeda in Afghanistan and in Pakistan, is not over. What will happen to the endless killings between Israelis and Palestinians? What will happen if and when the US attacks Iraq to remove Saddam Hussein? Will the price of oil spike to $40, or $60 per barrel if the war is not over in a few weeks? Is the US headed for another recession? The American economy is already showing signs of slower growth.

For the present, China is forging ahead. India may begin to grow faster. But Japan is in the doldrums.

The region has also changed. The Soeharto era is over; Indonesia is in transition to a future as yet undetermined. The ASEAN solidarity of the five original members was firm. An ASEAN of ten will take some time to become as cohesive.

In the midst of these uncertainties, the only certainty is that we in Singapore must prepare ourselves to meet these radically different international and regional conditions. We must get ourselves trim, and be ready to adapt to external events as they develop. We have to stay relevant, especially to the world’s big economies like the US, Japan, EU, and also work with our regional partners in ASEAN, including its new members.

1. Meeting global competition in our region

The old Singapore model is no longer adequate. We are moving into a phase of a more competitive, globalised market. PSA must compete against global players who have entered the region. It is like world class golfers joining the Southeast Asian circuit. This raises the standard of competition. To attract global players to base themselves in Singapore, the Prime Minister and his colleagues made Singapore more attractive to investors, both foreign and local, by reducing corporate and personal taxes. To make up for this reduction in revenue, we have to increase GST by 2%. People were unhappy with small bus fare increases. But the government will make up and balance this out by issuing Singapore ERC shares. We are increasing our trade and investments by forging bilateral free trade agreements with countries like New Zealand, Japan, US, Australia, Canada and Mexico.

Our leaders have to make decisions with incomplete knowledge. They select options that leave Singapore with the largest number of alternative routes if events turn out contrary to expectations. Leaders have to give clear-cut signals so that our people will not be confused or demoralised. We have been through more uncertain and threatening times in 1965 to 1973. Our very survival was at stake. The government took bold and firm action, changed labour laws with the support of the unions and built up industrial co-operation, not confrontation, between unions, management and government. The people put their doubts aside and worked united together. With determination, we pulled through and made it into the first world in 30 years. We can do this again. We will become a fully developed economy through higher levels of education and culture.

The new threat is no longer communism or the Soviet Union. The big divide is no longer between Communist and democratic countries, or between West and East. Now it is between Muslim terrorists versus the US, Israel, and their supporters. A secondary battle is between militant Islam versus non-militant modernist Islam.

In our region Malaysia and Indonesia have to face the challenge of militant Islamists, those who go for militant jihad and want to implement Syariah law so that Muslims will be strict in dress code, in food, in prayer, in punishment for crimes. Fortunately the majority of Muslims seek their way forward through trade, investments, knowledge, management, science and technology.

1. The age of large scale migrations

Because of the ease of travel, (buying a ticket on a jumbo jet is like buying a bus ticket), people can cross vast oceans, rivers and mountain ranges. If they cannot get through legally, they smuggle themselves in, and there are world-wide syndicates to arrange this for money. The poor seek a better life in a wealthier country, the educated in the less wealthy places can emigrate to the wealthier. Singapore has to face up to this. We have to keep most of our talent. We cannot pursue policies that redistribute wealth excessively as Britain did. Until PM Margaret Thatcher changed those punitive policies, thousands of British doctors, professionals, academics, writers, broadcasters and others emigrated to the US. However even today many talented British, German and other Europeans migrate to America for the higher rewards, lower taxes and more opportunities for advancement.

No developed country in this age is without a large foreign population. Even Japan has had to take in foreigners, not simply Koreans and Chinese but Filipinos, Iranians and others. Criminal gangs have also gone global. African scam specialists are operating all over the world. Pick-pocketing gangs, thieves and robbers fly into a prosperous city, survey the ground and commit their crime, then fly away.

In this age of mass travel and migration, Singapore will lose a part of its own talent, but we must retain a hard core of dedicated Singaporeans as the main pillar of our society. Then we can afford some attrition of our talent. And we must continue to attract as many able and talented men and women from China, India, the region and from developed countries, to add to our team. Without this input of foreign talent, even the USA could not have been so successful. Their atomic bomb owed much to European talent fleeing from Hitler in the 1930s and 40s. Albert Einstein was one. Edward Teller from Hungary was another. Even the American space programme owed its start to the German rocket scientist Von Braun who invented the V bomb in World War 2 and was captured by the US army as the war ended. He was taken to America. Since then every year thousands of talented professionals, academics, researchers, writers are drawn from UK and EU to US because they are made welcome in America and given the facilities for their research or become successful in their professions or business. This has enhanced America’s high performance. If America with 280 million people needs to top up with talent, Singapore with 3 million must do so or we will be relegated to the second or third division.

To attract to Singapore good sportsmen, artists, painters, dancers, musicians from abroad we need to make them feel they are a part of the Singapore team.