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‘All hands on deck for S’pore to weather economic storm’

By Andrew Loh

As Singapore, and indeed the world, welcomes the new year, there is an underlying sense of foreboding globally. The dark clouds of an economic downturn are on the horizon and nations are preparing for more severe consequences than the last one in 2008/2009 when the financial crisis hit.

Singapore, which depends largely on its trade with the international community, is bracing itself to yet again rise above the gloom, or at least to avoid the eye of the storm.

"Everyone recognises that this is a situation which is not simply one of isolated crises in a few countries, but a global crisis. And complicated by the fact that it's not just a banking crisis but a sovereign crisis, and underpinned by weak economic growth," said Tharman Shanmugaratnam, Deputy Prime Minister and Finance and Manpower Minister of Singapore.

"So it's an unusual confluence of factors. In fact, a confluence of more factors than was the case in 2008 because we now have a sovereign crisis in addition to weak economic growth [and the] banking crisis," added Tharman, who is also chairman of the International Monetary and Financial Committee (IMFC).

Tharman is the man, besides the Prime Minister, who will be the key brains behind Singapore's strategy to overcome the impending slowdown. In 2009, he devised and introduced a whole slew of measures to not only cushion the impact of the crisis for Singapore but also to take advantage of the lull to encourage workers to upskill and be ready for when the economy picked up again.

The government's S$20.5 billion Resilience Package was designed to keep businesses running, save jobs and allow workers to upgrade their skills. It was the first time in Singapore's history that the government had had to dip its hands into the country's reserves to fund the programmes in the face of the country's worst economic crisis since independence.

What could be in the Budget

Tharman will once again need to try and foresee the fall-out from the current global situation and install the necessary measures to see Singaporeans through. It is by no means an easy or simple task but one which, if done right, will keep the impact to a minimum.

Singaporeans can expect another similar Resilience Package-style budget this year, with its focus on saving jobs and keeping businesses afloat. However, what may complicate matters are several issues: inflation which has hit more than 5 per cent; the stagnating income of those at the 20th percentile which has not seen any improvement in the past ten years; a reduction in the foreign workers numbers which could hit businesses, especially small and medium enterprises (SMEs); and a global economy which is more unstable now than ever before.

Singapore's unemployment in 2008 peaked at 6.6 per cent, a record in the island-state's history. More than 100,000 people were out of jobs, retrenched and had to rely on state welfare. This was also where the most unhappiness took place. While Singaporeans have one of the highest savings rate in the world, in a time of crisis they were not allowed to draw from their savings in the Central Provident Fund (CPF), which some have called for.

The government stuck to its guns and instead introduced SPUR — Skills Programme for Upgrading and Resilience — so workers can be sent for retraining and acquire new skills, to ready them for when the economy upturned, rather than have them dip into their savings which are meant for other necessities, such as housing and retirement, to tide them through. SPUR provided a "training allowance" for unemployed Singaporeans who take up retraining courses under the programme.

MCYS at the frontline

The upcoming crisis is projected to not only be more severe than the last one in 2008, it is also expected to last longer as well. It is thus imperative that the social safety nets are firmly in place and are effective in catching those who will fall. In this respect, the Ministry for Community Development, Youth and Sports (MCYS) will be at the frontline of providing this help.

The ministry has introduced and re-tweaked some areas to better cater to the needy, such as improving on its aid delivery system, the setting up of more satellite centres to deliver this aid, making sure that no one who needs help is turned off because of administrative shortcomings. It is also boosting manpower at the 38 Family Service Centres (FSCs), the so-called ground troops who handle individual cases of those in need, by tapping grassroots volunteers.

The FSCs have set up emergency funds for walk-in clients who may need assistance. MCYS has also turned its focus to the PMETs — professionals, managers, executives and technicians — who have often been overlooked as a group which also requires assistance in bad times.

In short, the battle plans have been drawn up and manpower are being assigned to the stations and in the field. It is all hands on deck once the storm arrives.

But will all these measures help or work? By most accounts, Singapore did well in handling the last crisis, coming off with just scratches and avoiding major injuries. 2012, however, will be a more severe test of the nation's resilience to withstand the forces of a global tide sweeping downstream. Still, the government and Singaporeans would have learnt valuable lessons from the last downturn and should be prepared for this one.

All eyes will be on Tharman and his budget this year, and MCYS Minister Chan Chun Sing, who is new to government, having been elected only in May this year in the General Election.

Singapore faces many challenges going forward — its low birth rate, ageing population, social changes in demographics, income disparity, higher expectations among its people, etc. But the immediate task for the government now is to shelter Singapore and Singaporeans from a head-on collision with the approaching storm.

While no one knows exactly how the slowdown will turn out, or what impact it will have, Singaporeans should brace themselves — and take advantage of whatever measures the government might introduce and see themselves through the tough times ahead.

Andrew helms publichouse.sg as Editor-in-Chief. His writings have been reproduced in other publications, including the Australian Housing Journal in 2010. He was nominated by Yahoo! Singapore as one of Singapore's most influential media persons in 2011.