SPEECH Report

I planted the first tree after I took office in June 1959. Many of the trees I planted in various circuses (roundabouts) did not thrive. So before the next time I was to pass the site, they would plant a new sapling. We then built up a team of people who know how to grow trees, how to treat infested and sick trees, what they require, what trees, palms, shrubs, bushes and ferns will do well in our climate and soil with minimum maintenance. We gave up on the flowers because they needed people with green fingers. We persisted in our greening of Singapore, not only in the city centre and better off areas, but throughout the whole island. Today, we have a clean and green Singapore.

Many countries now do tree-planting and greening. In August last year, at the 2008 Olympics, Beijing was a mass of green trees, palms, shrubs and bushes along the roads and open spaces, and flowers on roads around the Olympic stadium and airport.

We are now moving on to the next phase: the ABC Waters Programme. We have succeeded in solving our water shortage problems. We will now differentiate Singapore from other cities by clean water bodies in Marina Bay and reservoirs. Canals and drains, in bare concrete, will become water bodies with broad walks, trees and plants on the sides for people to enjoy. Our environment will be more pleasing. Prices of the properties fronting these water bodies will increase. We have allowed rowing and other watersports in the reservoirs.

Other countries will want to do likewise. It will take them time to achieve this. Singapore’s infrastructure took nearly 40 years before rainwater that runs into our drains and canals is free from sewage and sullage. We had to impose strict anti-pollution measures and sewer up the whole island.

China has polluted water and air in all its cities. They are doing a joint project with Singapore in Tianjin, an Eco-city, where the water will be cleaned and recycled. No industrial pollutants or sullage water will flow into the streams, rivers or reservoirs. We will replicate what we have done in Singapore – stop sewage and sullage from soiling the rainwater, and recycle waste water to become NEWater. Given the extent of the pollution, it will take years for China to treat and clean the discharges from factories and homes into the drains and rivers. China has many competent engineers and skilled workers. Given time, they can do this.

Next, the world economy is in recession. We expected an extremely bad year for Singapore in 2009. The first quarter was our worst period, there was a sudden drop in our exports and no one could tell when the crisis would bottom out. At that time, we had expected our GDP for 2009 to shrink by up to 9%. But we bounced back in the second and third quarters. The 4^th quarter looks healthy. MTI’s latest forecast is -2.5 to -2.0% growth for this year. For 2010, we may make +3% positive growth.

All countries in Asia have been badly hit by the financial crisis in the US when US banks and financial institutions were ruined by “toxic assets” that had been sold to banks in Britain and Europe. Fortunately, Singapore-owned banks and financial institutions were not directly involved. These derivatives that were “toxic” were too complicated for our banks and they wisely did not buy these derivatives. Branches of foreign banks have suffered because their headquarters in New York, London and Frankfurt had suffered heavy losses. Moreover, the financial systems of all the countries in East Asia are strong and sturdy. All have learnt from the last financial crisis in 1997/98 and have strong reserves and low debt.

We have the world’s highest international trade as a percentage of GDP: 360%. Hong Kong is next with 350%. However, Hong Kong has support from China as its hinterland. Our hinterland is the whole world, much more difficult to find support from. We will not resume high growth for several years until the major economies in the world have recovered. America, Europe, Britain and Japan appear to have pulled out of the present recession by injecting large stimulus packages to boost the economy and keep consumption up. Top economic officials I met in Washington – Treasury Secretary Tim Geithner, National Economic Council Director Larry Summers, and Federal Reserve Board Chairman Ben Bernanke – told me they expect that by the time their stimulus packages have worked themselves through, the private sector would pick up and carry on the growth. However, they warned that the US would experience a slow recovery and very low growth for years.

We must be prepared for slower growth. But slower growth in Singapore and other countries in Asia will still be higher than other regions of the world. We are placed at the junction of three big economies that are not export-dependent, in other words, exports are not a high proportion of their GDP. They have huge domestic markets: China with 1.3 billion people; India 1.1 billion; Indonesia 250 million. Their domestic consumption and investments have enabled their economies to continue achieving positive growth, despite a slowdown in exports. The rest of East and Southeast Asia have the benefit of the overflow effect from China, India and, to a lesser extent, Indonesia. Furthermore, we have free trade agreements with China and India that will give us an advantage over other regions.

However, the total consumption in China, India and Indonesia, compared to the US, is small. The US consumption is 72% of their GDP of US$14.3 trillion after adjusting for purchasing power parity (PPP) or US$14.4 trillion (nominal). China’s is 37% of a lower GDP of US$7.9 trillion (after adjusting for PPP) or US$4.3 trillion (nominal) with four times America’s population. Per capita, the purchasing power of China is about one-eighth of America’s, India’s is one-sixteenth of America’s and Indonesia’s is one-twelfth of America’s. We cannot expect China, India and Indonesia to make up for the decrease in exports to America, the EU and Japan.

The crisis has a negative psychological effect on America’s people. Many are depressed and have lost their homes, consumption is down. Unemployment in the US is rising and has reached above 10% in spite of a recovery in stock prices on Wall Street. Consumers are not spending because they are uncertain whether they will lose their jobs.

During my visit, I found that ordinary Americans were angry with their government. Through no fault of their own, their banks and financial houses have collapsed and the value of the US dollar has fallen more than 16% in the last few months. They feel that the Administration, Congress, Wall Street and the banking and financial sectors have let them down. Their credit card debts are high, the mortgages on their homes are still unpaid; and many have lost money on their pensions and retirement funds. Everyone feels poorer.

National Economic Council Director Larry Summers, a former Treasury Secretary, has warned countries that depend on exports to America for their growth, e.g. Germany, Japan and China, that they will no longer be able to do so. Americans have to cut down on their consumption and increase their savings to pay off their debts. So these big countries must increase their domestic consumption to generate growth. China, India and Indonesia have the population to do so.

We have a small population. We must find ways and means to fill up the drop in our exports. Fortunately, we have gone into industries like pharmaceuticals that have not been so badly affected by the slowdown. People still get sick and need medicines.

With continued tri-partite cooperation between government, employers and unions, we can get through this financial crisis together without too much pain and suffering, and emerge stronger as a nation. Going through this experience will toughen our resolve and prepare our people to face future challenges that Singapore will inevitably encounter.