Things are building up to a ‘perfect storm’: Dr Tony Tan

Dr Tony Tan spoke to reporters Thursday on the sidelines of an SICCI book launch event and networking session. (Yahoo! photo/Jeanette Tan)
Dr Tony Tan spoke to reporters Thursday on the sidelines of an SICCI book launch event and networking session. (Yahoo! photo/Jeanette Tan)

With regard to the global economy, Presidential hopeful Dr Tony Tan sees "dark clouds on the horizon", and that things are building up to a "perfect storm".

Any economic problems experienced in Europe or the U.S. would certainly have a negative spillover effect in Asia, and consequently Singapore, he said.

Dr Tan was speaking to reporters on the sidelines of a book launch and networking session organised by the Singapore Indian Chamber of Commerce and Industry on Thursday afternoon, as he interacted with members of the Indian community in Singapore to find out their interests and concerns.

The former Deputy Prime Minister said that recent economic indicators in America are showing signs of a slowdown and possible stagnation in U.S. economic growth, even voicing fears of a double-dip recession in the second half of this year.

"I think this is very serious because (you have) one set of problems (in Europe); now you are compounded by another set of problems in the U.S.," said Dr Tan.

"Things are building up to having what I might call a 'perfect storm' of economic problems which will affect the world economy," he added.

Dr Tan mentioned reports that the governor of the People's Bank of China, Zhou Xiaochuan, has expressed "very grave worries" about the implications of the problems in the U.S. and Europe, and their spillover effects into China and Asia.

He also explained that the most likely solution that the U.S. will take involves a change in monetary policy, and channelling more money into its economy will result in a corresponding spillover of money into "safe havens" such as Switzerland and Singapore, leading to inflated prices and higher currency values against the U.S. dollar.

"(Further appreciation of our currencies against the U.S. dollar) is serious because if that happens, the competitiveness of our economy is at stake," he continued, noting that even at the current level of 1 U.S. dollar to 1.20 Singapore dollars, analysts predict that the margin of value will decrease further.

"It is difficult for our countries to cope if this appreciation is rapid, because you can raise productivity, you can raise skills training but you can't do it so quickly, all of this takes time," he said, adding that Singapore's government is aware and is taking note of these concerns.

We are not currently in a crisis, although one could occur depending on the actions taken by the U.S. and European governments, as Singapore is more a "price-taker" than a "price-setter", added Dr Tan.

"We are too small to affect all these, but we are affected by the repercussions."

'I can help the government understand this better'

When asked how his concerns about the global economy and its repercussions on Singapore could relate to his potential future role as President, Dr Tan cited his 20 years of experience in the financial industry, and his accumulated knowledge and familiarity of the financial markets and global economy, as tools that he can use to provide advice to the government.

"With my background in these areas... I believe that I will be able to make a contribution to and help the government and ministers involved in this to understand the situation better," he said, adding that his experience as executive director of the Government of Singapore Investment Corporation (GIC) has given him "intimate knowledge" of the global financial market.

Acknowledging the limitations of the elected President's power, Dr Tan said that as elected President, he will be better able to share his knowledge of the field with government officials than he was able to in GIC.

"I know them very well, all the ministers, and maybe they will listen to me because I have worked in this field for many years," he said.

"I will hope that as president, I will be able to... convey the concerns of the people to the government, and perhaps to give my views on the global economy." He added, "It's up to the government to make the decisions."

Entrepreneurs and investors air their concerns

On Wednesday, Dr Tan also addressed a small group of about 30 entrepreneurs and investors in a closed-door discussion organised by online publisher SGEntrepreneurs, fielding questions about poor implementation of government funding for start-up businesses, as well as the difficulty of start-ups to attract quality employees.

During the session, Dr Tan agreed with participants that the labour shortage is an issue that needs to be resolved by the government in order for local start-ups to flourish.

"Agencies and ministries like MTI (Ministry of Trade and Industry) and EDB (Economic Development Board) who are responsible for bringing foreign investments here should keep in mind the limited pool of labour which is available," he said, although acknowledging that Singapore is already fortunate, given its low unemployment rate in comparison to countries such as Spain, where unemployment could range between 15 and 20 per cent.

Dr Tan went on to share his greatest regret -- which was when his father had passed away before being able to witness Singapore's growth and success over the years, reported SGEntrepreneurs.

"At the end of the day, the things that give you the greatest joy, the greatest regret, are always the personal things, nothing else can substitute for that," he said.