Economic conditions are favourable for good growth in Singapore in the next 5 years.  Japan is recovering; Korea, Taiwan, Hong Kong, Singapore are doing well, China and India are growing fastest and lifting up the whole region. 

But there are dangerous pitfalls:

(1)       price of oil that could spike to over $120/- if the dispute over Iran’s nuclear processing plants leads to sanctions and conflict;

(2)       or if the war in Lebanon reignites or triggers off unforeseen consequences that lead to further instability in the Middle East.

This situation can become a crisis.  But I believe this crisis is containable because all major powers, US, EU, Russia and China know that what is at stake is the world economy to which they all are interlinked in a globalised world.  They all share an interest in avoiding a crisis, as otherwise oil prices will go up sky-high and there will be a world recession.    

However, even if there is a world recession, after a while there will be a new world equilibrium.  And if Singapore remains nimble, adjusts and stays competitive, we can forge ahead.  Our society is based on excellence, with the most capable people in charge of the most important sectors of the economy and our government, and our system of government is flexible to respond quickly in a crisis. 

Singapore is now a brand name.  Singaporeans are sought after in the oil states of the Gulf because they are known to be capable, honest and can work out proper systems.  They like the Singapore system and want to adopt parts of it. 

Liaoning province wants Singapore to do a project in Changxin island, 250 sq km in area, to kick start the development over a 2,000 km coastline of the Liaoning peninsula. 

The Russians have invited Changi Airport consulting arm, Changi Airport International (CAI), to be their consultants to upgrade and administer their main airport, Sheremetyevo.  Russia wants us to do a Special Economic Zone (SEZ), so we are testing our ability to do the job in two SEZs for six months, one in Tatarstan and the other in Tomsk in Central Russia.  We do not know the language, culture or system, the distance from Singapore makes logistical support much more difficult than in Suzhou or Bangalore, and Russia has a severe climate.  The Gulf States want us as partners in many ventures to train and produce institutions of integrity and quality for their countries.  They want to attain what we have achieved for themselves, with our collaboration. 

We have to work out more ways to make a living in a small island of 700 sq kilometres with no natural resources.  We have to seek out new activities to increase the incomes of Singaporeans.    

From our earliest days we set out to create a more fair and equal society.  We knew we could never achieve complete equality.  Human beings are not born equal.  They are highly competitive.  Systems like Soviet and Chinese communism have failed, because they try to equalise benefits.  Then nobody works hard enough, but everyone wants to get as much as, if not more than, the other person.  Even welfare socialism has had negative effects on the economy of UK and EU as the workforce loses the incentives to excel and be better rewarded.

From 1960s to 1990s we created a more equal and fair society by giving equal opportunities in education, health and housing.  And we gave substantial assets to every citizen by selling HDB homes at heavily subsidised prices.  Over and above this, low income households buying HDB homes get an Additional CPF Housing Grant of up to $20,000, to help them become home owners.  Now we have 95% home ownership.  For the older flats, we add value by our Main Upgrading Programmes (MUP), the Interim Upgrading Programmes (IUP) and the Lift Upgrading Programmes (LUP).  The LUPs will be completed around 2014.  Beyond that, we will continue with programmes of regeneration to maintain and enhance the value of everyone’s HDB homes. 

With surpluses we will do more Progress Packages every now and again.  This will give to older Singa­poreans something for their Medisave CPF accounts and to lower income Singa­poreans more workfare bonuses to encourage them to work and improve their own lives.

We have to concentrate on 3 basic areas to develop our full potential – education, health and housing. The can-do spirit has got us where we are.  We can rise to the next stage by riding on the rise of China and India that is making East Asia the fastest growing region of the world. 

We have to educate our young to higher standards so that they can move up the added value chain, doing higher end and more difficult jobs.  We will retain the higher end of the manufacturing sector which we are doing by investing in R&D so that we remain competitive for the final stages of manufacturing high value products.  Investments in the bio-medical and pharmaceutical sectors, petrochemical industries have been good for GDP and jobs.  But we cannot stop the convergence of wages worldwide following globalisation.  Low end wages are kept down by large numbers of low-wage Chinese and Indians and high end wages go up because they are needed as China and India are in short supply.   This is a worldwide problem: the lower income group not getting as high increases as the high earners.   

We are investing in new schools, ITEs, Polys and universities to develop a wide range of talents in music, theatre and the arts, sports, and in technical skills.  The world market determines what a man or woman can earn.  We cannot raise protectionist walls, as some European countries are trying to do, to their disadvantage. 

Jobs in services cannot be migrated so easily as they cannot be outsourced.  We must increase the service sector.  To do this we need more buzz in our city.  We need a more lively night scene.  At Clarke Quay by the river, people wine, dine and drink till 4 or 5 in the morning at weekends.  Our streets are more lively.  Orchard Road and the Singapore River have improved.  In the next 10 years the Marina will blossom.  Entertainment outlets like the Ministry of Sound, are drawing thousands of Singaporeans and tourists every night.  When the Sands Integrated Resort at the Marina and another at Sentosa come up by 2009 and 2010, live shows like “Crazy Horse” from Paris, now at Clarke Quay, will get a boost. 

In the next few years there will be more jobs for our school leavers and retrained older workers in the IRs and tourism.  We will also increase our international customers for education and medical services.

Our system has continually adjusted to make possible Singapore’s economic progress accompanied by ever higher educational and cultural levels of our people. 

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