SPEECH BY MR LEE KUAN YEW,MINISTER MENTOR, AT THE TANJONG PAGAR CHINESE NEW YEAR DINNER, 11 FEBRUARY 2008, 8.45 PM AT FARRER PARK PRIMARY SCHOOL
The world economy is in a financial crisis. Stock markets everywhere have plummeted. The Federal Reserve Bank has lowered interest rate drastically and US President and Congress have agreed on a rescue package of US$168 billion to encourage Americans to spend and avoid a recession. World food prices have gone up because of bad harvests in agricultural countries like Australia, and also because corn and palm oil are now used not as food but are converted into energy for biogas and bio-diesel.
In spite of this gloom, economists of the Singapore government and also of banks and financial institutions have forecast that Singapore will still make growth of between 4 to 6%. This is quite remarkable for it will be the first time that when the American economy slows down and reduce imports from Asia, Asia will not go into recession. The reason is the dynamics of the domestic growth momentum in China and in India. Our neighbours are doing well. High oil, palm oil and other commodity prices are adding to growth of Malaysia, Brunei and Indonesia. Vietnam is on a high growth path for many years as they industrialise. Singapore is in the centre of the world’s highest growth region.
The rise in food and energy prices, and the widening income gap between high and low earners is cause for concern. We can mitigate these problems. But we must press ahead and maximise our chances to break through in the coming 5 to 10 years to reach a higher quality of development. Singapore is into a period of steady growth and transformation.
Massive investments in infrastructure will keep our construction industry busy for several years: S$20 billion in new MRT lines and another S$8 billion in a new North-South Expressway, mostly underground, two integrated resorts, each S$4 to 5 billion worth, and petrochemical projects by ExxonMobil and Shell costing well over S$10 billion combined. We are also attracting significant investments in new growth sectors: Finland's Neste Oil is investing S$1.2b to build the world's largest next generation biodiesel plant, a S$1 billion biotech plant from Novartis, its biggest-ever single manufacturing investment, and a S$6 billion investment by Norway's Renewable Energy Corporation in what is slated to be the world's largest integrated solar manufacturing complex.
Foreign investors are confident of Singapore’s future, our security, stability, safety, predictability, efficiency and industrial peace between labour and management, and the wide support of people for sound policies. These huge investments need decades, not the next few years, to make returns worthwhile.
Our tourist and hospitality industry is going to bloom. Formula One night racing will be held this September in our city centre. This will add to the liveliness of Singapore’s night life. We now have high arts and entertainment from Theatres by the Bay to al fresco dining along the Singapore River and Marina.
Singapore is undergoing a transformation. The Marina Barrage is completed. From next year 2009, saline water will be drained out and we will have a fresh water lake. PUB will make sure that the lake is free of debris and pollution. All streams, canals and monsoon drains will become the recreation waterways and be greened up and fitted with board water. This requires complex engineering task and also needs the cooperation of our people to keep our drains and waterways free of plastic and other waste.
By 2011, the Marina Bay Area will be splendid, especially a water plaza, surrounded by a promenade fronting financial centres, integrated resorts, residential condominiums, food and beverages outlets, an enchanting sight to behold. It will be a unique city centre. We will not leave our heartlands behind. All new towns will be upgraded and beautified. The massive new investments in infrastructure and beautification, plus a steadily growing economy, with higher incomes, will keep property values going up.
Our young can improve themselves through education, from kindergarten, primary school, secondary school, junior colleges, ITEs (institutes of education), polytechnics and universities. For those who missed the normal career path, there will be part-time degrees and diplomas.
Only through training and education can our people take up the high value-added jobs in a knowledge-based economy.
The financial crisis has cooled off the property/market for the time being. It is a blessing. We were in danger of property prices going through the roof again, as in the middle 1990s. Remember it then collapsed with the Asian financial crisis, and did not recover for a long time with the 2001 9/11 attack on the Twin Tower in New York and SARS in 2003. People who have upgraded and bought properties near or beyond their income levels were trapped with high mortgage instalments and lowered value of their properties. In a period of boom, never overreach yourselves. Boom and bust is in the nature of business cycles. You must be able to ride through a recession and emerge the better for it.
This is how Singapore’s GIC and Temasek have been able to increase its value of its assets. In a recession we hang on. As the boom gets too intoxicating, we sell part of our shares and other assets and keep cash. We did before this last crash in the stock markets. When international banks in Switzerland and America, UBS, Citi-Group, Merrill-Lynch, needed cash, we had the cash to invest S$22 billion in three of them. When the share prices of these banks recover that S$22 billion investments, it will be worth S$50 to S$70 billion. But never believe that assets will always go up. There will be downturns. And so we must have these reserves to see us through these troughs. Unlike other countries, we have no natural resources to fall back on when we go to the IMF or World Bank or other creditors for credit when we are in a bad patch. Singapore has got to this level through hard work and thrift. We must continue in this mode. Only then, can we make sure no citizen will be left without food, shelter and medical care.
Together we have made it. Together we will go forward to build a global city in the tropics.