Singapore Government Press Release

Media Division, Ministry of Information, Communications and the Arts,

MITA Building, 140 Hill Street, 2nd Storey, Singapore 179369

Tel: 6837-9666

NATIONAL DAY RALLY ADDRESS BY PRIME MINISTER GOH CHOK TONG AT THE UNIVERSITY CULTURAL CENTRE, NUS, ON SUNDAY, 18 AUGUST 2002, AT 8.00 PM

REMAKING SINGAPORE - CHANGING MINDSETS

I know that many of you are anxious about our economic situation.

It is not just adult Singaporeans. Our young also seem to be worried. In May this year, The Straits Times reported on a dialogue session with junior college, polytechnic and university students. More than three-quarters of the students expressed pessimism about Singapore's future.

They were concerned how Singapore would fare against giant economies like China and Russia, and whether one day, Indonesia and Malaysia would overtake us. They wondered how many Singaporeans would run off to other countries to enjoy cheaper cars and bigger houses.

I too, worry about these things.

However, unlike the students, I am not pessimistic. The benign global climate of the early 90s may have turned less hospitable. But the future is what we make of it.

Our elders faced an even more dire situation in 1965 when we separated from Malaysia. Ask your parents about life in Singapore then. It was worrying and tough, and I say it from personal experience. I lived in a house without electricity or modern sanitation, until my family moved into a 3-room HDB flat. But our elders fought their way up, and built the life we now have.

Today, it is the turn of our young to be tested. This baptism of fire will temper your generation. From your performance in National Service and the workplace, and the way you take to sports, I am confident that you have what it takes to secure your place under the sun.

Remember, we now have more human resources. We have a better educated people, all working in the English language, with higher professional, management and organisational expertise, and technological skills. We also have more material assets, world-class infrastructure, and stronger foreign reserves. This means you have more to lose. But it also means you have more to fight with, and win.

If you do not doubt yourselves, you will prove those worried students wrong. You will overcome the challenges that come your way.

Growing Economic Competition

A key challenge will be to meet the growing economic competition. With globalisation, more players have entered the economic arena.

For instance, China has already joined the WTO. Russia will join soon.

Many former Soviet allies in Central and Eastern Europe have also joined the WTO. They have many skilled workers and engineers. Their wages are low, about a third of Singapore's. They are able to produce and sell their products at a fraction of our cost. In time, the quality of their products will also rival ours.

So you see, the highway to the market is getting congested. In the 90s, there were few cars on this highway. Singapore could speed along in our modest 1600cc car. Now, there are many vehicles on the highway - trucks, cars, vans, motorcycles, Volvos, Mercedes Benz, Toyotas, Hyundais. Even if you drive a Ferrari, you cannot zoom around anymore. Everyone is fighting for space. They should have introduced ERP!

The Regional Challenge

Nearer home, our neighbours are building up their airports and seaports, our traditional speciality. Malaysia, for example, has announced that it wants to be a transportation hub.

A foreign diplomat who knows the Malaysian leaders advised me that Malaysia was intent on poaching such business from Singapore. A Johor businessman told our High Commission in KL that Malaysia would build up Johor to compete head-on with Singapore. Money, he said, was no object.

PSA lost shipping line Maersk to Malaysia's Port of Tanjung Pelepas two years ago, because Pelepas made Maersk an offer it could not refuse. This year, PSA lost Evergreen. Evergreen was offered non-port incentives, in addition to very low container handling rates.

Lim Swee Say saw a silver lining in the loss of these two shipping lines to Pelepas. He said that grassroots leaders finally understood the meaning of competition.

We welcome competition.

And we will compete. We will create new strategies. We cannot be locked in old thinking, and continue frozen in the model of yester-year. However successful this old model was, in the changed world, it will not bring us to greater heights.

PSA understands this. It is not taking the loss of the two shipping lines lying down. It is fighting back. And it has the resources, skills and experience to develop new ways to anchor and attract shipping lines to Singapore. It will do whatever is needed to maintain its position as the premier transhipment hub of our region.

PSA will succeed. It has already achieved some results. Korean shipping line Hanjin has opted to stay in Singapore, although Pelepas made a determined bid for it. In the first half of this year, PSA's throughput grew by 9 percent, as compared to a decline of 9 percent last year. For a port the size of PSA, and one facing keen competition, this is a good performance.

Moreover, PSA's investments in the existing 37 berths are sunk costs. And the Government has set aside land for 20 additional berths at Pasir Panjang, for whoever can best run the berths, be it PSA, Jurong Port, other port operators or shipping lines. We are open to all options that will enhance the competitiveness of shipping lines hubbing in Singapore.

There is further good news: PSA is among several ports working with the US on its Container Security Initiative (CSI). Containers from CSI ports will enjoy quick, "green lane" clearance through US customs. Given America’s grave concern over the smuggling of terrorists and weapons in containers, the CSI will enhance the competitiveness of our transhipment port.

We have always been able to meet the competition from Hong Kong, Kaoshiung and other big and well-managed ports in the region. We will work smarter, and stay in the game.

Rising Dragon

Our bigger challenge is from the rising dragon.

It is not just Singapore which has to adjust to China's entry into the global marketplace. Hong Kong is even more worried. The Washington Post reported in June that five years after the return of Hong Kong to China, the main source of distress in Hong Kong was "not communism, but rather, too much capitalist competition (from China)".

In the 60s and 70s, thousands of Chinese crossed the border in search of a better life in Hong Kong. These days, Hong Kong's businessmen are headed in the opposite direction in search of profits. Even feng shui experts in Hong Kong are rearranging their furniture to improve their luck. They, too, have to ward off competition from China!

China's transformation has indeed been spectacular. Singapore moved from Third World to First in 30 years. The whole of China cannot make it in 30 years. It is a huge country with a large rural base.

But Beijing, Shanghai and the big coastal cities can become First World in 30 years. They have already changed beyond recognition. It is not just the miles and miles of highway, the tall office buildings and the modern factories, but also the people's mindset. I first went to China in 1971. When we left tips on the table, the waiters ran after us to return the tips. Today, every Chinese wants to get rich. They are eager to learn, and they learn fast.

Tan Kin Lian of NTUC Income went to Shanghai recently to sell them insurance know-how. He got a shock. Instead of buying from him, the Chinese offered him computer software for managing his insurance business! The product was good, and he bought it.

So how should we respond to the China challenge?

My response is: see China as an opportunity, not a threat. If we view China as a threat, we will be immobilised by fear. But if we see it as an opportunity, we will come up with creative ideas to ride on China's growth.

We have built up a good relationship with China. In the early years, we shared our developmental experience with China. Even today, hundreds of Chinese officials visit Singapore every year, on study or training visits. In turn, we hope to benefit from China's growth - not only Chinese Singaporeans, but also Malay, Indian and other Singaporeans.

For example, China's growing middle class, expected to reach 400 million by 2010, will travel widely. We now receive half a million Chinese tourists every year. We will make it easier for Chinese nationals to visit Singapore.

Also, China has stepped up its "Venturing Out Policy". The stock of China's outward investments is now more than US$27 billion, up from almost nothing just 25 years ago. We should try to get a fair share of these investments.

Some Chinese companies are using Singapore to reach out to our region. One company uses Singapore to re-export its sewing machines to India. Another uses Singapore to sell washing machines, air-conditioners and motorcycles to ASEAN. Singapore businessmen should position themselves to partner such Chinese companies as they go overseas.

But to be able to take full advantage of these opportunities, Singaporeans should be proficient in Chinese. Already, some 25 million people outside China are learning Chinese, motivated by the enormous economic opportunities.

Our bilingual policy has given us an advantage which we should not lose. If we neglect the Chinese language, while others are picking it up, very soon, we will have no edge over them in doing business with China. I have therefore asked Teo Chee Hean to re-examine how we can improve the teaching of Chinese, and develop a core group of bilingual Chinese elite who understand China's culture, history and contemporary developments. This will help Singaporeans when they do business with China.

Indeed, a Chinese tour guide expects more Singaporeans to work and live in China in future. One evening, he took a Singapore tour group to see the Suzhou Industrial Park. My brother-in-law was in the group. The tour guide told the Singapore tourists,

"This Park was built by your government. Look around you. Who knows? One day, your children and grandchildren may settle here!"

Whether they do or not, more of our students, especially scholarship holders, should be sent to study in the top universities in China. This will allow them to network with future Chinese leaders, officials and businessmen.

That is why Vice President Hu Jintao and I agreed on an exchange programme for bright university students. The first group of 50 Singapore students will visit China in June next year. The first group of 50 PRC students from top Chinese universities will come to Singapore two months later. This exchange programme could include dialogues with Ministers and senior civil servants, and visits to government agencies and industries.

If we are proficient in English and Chinese, if we understand China as well as we understand the West, we will be in a strong position to benefit from China’s growth.

Nimble Singapore

So a rising China is not gloom and doom for us. It offers abundant opportunities.

Furthermore, no matter how attractive China is, foreign investors will not put all their eggs in one basket. They will want to hedge their bets, in case things go wrong with China. Also, they will want to take advantage of the many opportunities in the rest of Asia, such as India and ASEAN. They will, therefore, want another place in Asia to base their factories and regional HQs.

Singapore can be this other place. We have many things going for us. For example, we have concluded four free trade agreements (FTAs) – with ASEAN, New Zealand, Japan and EFTA [European Free Trade Association: comprising Iceland, Liechtenstein, Norway and Switzerland.]. And we are negotiating several more. Now that the US Congress has passed the Trade Promotion Authority Bill, we should conclude our FTA with the US soon. An FTA with the EU is also possible, after the EU has settled other priorities.

Our FTA partners will give Singapore preferential treatment when we sell them our goods and services. For instance, we will not need to pay any import duties on many products we sell to their market. In contrast, countries without FTAs would have to pay import duties. These FTAs will therefore give Singapore a big advantage in exporting to our FTA partners. They will also help us attract more investments here.

Investors are also reassured by our political stability and social cohesion. They can see how our workers, employers and the Government are able to take hard decisions together to meet the changes in the world.

All these are important reasons why EDB has been able to attract investments into Singapore right through the Asian financial crisis and last year’s global economic downturn.

Our reputation for reliability is another major asset. In fact, Singapore is seen by many international businessmen as a safe and secure location for their disaster recovery centres. Today, many global companies like banks and airlines are very dependent on their IT systems. Their business will come to a halt if their IT systems stop functioning. They therefore have back-up IT facilities in disaster recovery centres in alternative sites, sometimes in a different country. These disaster recovery centres function as a parallel system, and will take over the IT operations in the event that a disaster hits the primary IT facilities.

Several MNCs, including American firms like IBM, have located their disaster recovery centres in Singapore.

And when Narayana Murthy called on George Yeo three weeks ago, he advised that Singapore can also serve as a major disaster recovery centre for Indian software companies. Narayana Murthy is the chairman and founder of Infosys, one of India's largest software companies. He said that Singapore is ideally positioned for such a role. We are only a few hours by air from India. Our telecommunications links are also excellent. If we can attract a few dozen Indian companies to set up disaster recovery centres in Singapore, we will be able to create a few thousand well-paying jobs for Singaporeans.

So you see, while our external environment today may be the toughest since independence, we have many strengths that will bring us through these difficult times.

Singaporeans can also take heart from our track record. At every critical point in our history, we have risen to the challenge. We have been nimble and bold enough to make tough adjustments. We have moved swiftly to seize the opportunities.

We can, once again, overcome the challenges, and continue to provide a high standard of living for our people.

Let me tell you how.

Remaking Singapore

We must remake the Singapore economy.

The Economic Review Committee has already announced important changes to our tax structure and the CPF.

The changes may bring some pain. But better for us to bear some pain now, than to suffer a terminal decline later. We will, of course, minimise the pain through measures like the Economic Restructuring Shares. However, you must also try to understand the rationale for the changes, and why it is essential for us to move now.

We need to bring down our tax rates to among the lowest in the world, in order to attract investments and talent to Singapore. With increasing competition among countries for MNCs, tax rates have become a key element of competitiveness.

We also need to cap the employer's CPF contribution for older workers, to enhance their employability.

This matter was vigorously debated in Cabinet. Not all the Ministers agreed at first that we should do so. They felt that the problem was not immediate, and that the proposed solution would cause unhappiness. We were making too many changes this year, they added.

But Lim Boon Heng argued for making the change now. He had discussed this with the union leaders. He was confident that workers would understand why it was necessary. I gave weight to Boon Heng’s judgement. He deals with unions and workers every day. He knows their concerns, and what is in their long-term interest.

These tax and CPF changes are by no means the last changes in the remaking of Singapore. We will have to make further changes over the next few years. But whatever changes we make, I give you my assurance that the Government will look after you, especially lower income Singaporeans.

Meanwhile, we will intensify our programmes to help workers upgrade their skills.

I announced the establishment of a $5 billion Lifelong Learning Endowment Fund two years ago. Currently, the Fund stands at $1 billion, with an annual income of $40 million. The Government will increase the Fund by $500 million over the next two years. This will provide another $20 million of income annually for skill upgrading and retraining, to tackle the rising structural unemployment.

The Economic Review Committee is also discussing ideas to improve the capabilities of our workforce. One recommendation is to expand Singapore’s infrastructure for adult training, and set up a Centre for Adult Learning. The Centre will bring together expertise in curriculum development, training approaches, and funding support for programmes.

The 2001 off-budget enhanced training support under the Skills Development Fund expires in October. However, since unemployment will take a while to come down, the Government will extend this enhanced support for another year. These enhanced measures pay for 100% of course fees for older workers, and 90% of course fees for certifiable training. The enhanced programme will generate 180,000 training places in the next one year.

When the economy picks up, those Singaporeans who have gone for upgrading will have an advantage over others in getting a job.

Feedback

I know that Singaporeans are unsettled by the many changes we are making, including the bus and MRT fare increases. Many have complained that the timing is bad. They felt that these changes have come too close, too soon.

I take a different view. Now is the right time to take the medicine we cannot avoid. Our economy is turning around, and recovery in the job market should follow.

But not all Singaporeans accept this rationale. NewsRadio 93.8 runs a programme in the morning - AM NewsTalk - where listeners are invited to give their views on issues of the day. One topic in July was about giving feedback to the Government.

For 20 minutes, caller after caller complained that the Government was not sincere in asking for feedback. They said that after the public had expressed negative opinions against the increase in bus and MRT fares, the Government had proceeded anyway. One caller felt that "this is not my country anymore". Another said that the Government should be worried if Singaporeans do not speak out anymore, because that could be the start of a "revolution".

The callers are wrong. The Government does listen to the people. When the going was bad, such as in 1998 and last year, we had deferred price increases, and doled out generous financial assistance. In good times too, we distribute surpluses, especially to help the weaker members of our society. CPF Top-Ups, New Singapore Shares, Economic Restructuring Shares, Economic Downturn Relief Scheme, off-budget measures, utilities rebates, S&C rebates, Edusave grants and awards, Medisave Top-Ups - have you forgotten them?

Singaporeans must also understand how feedback works. The Government factors many considerations into a decision. After listening to feedback, if we find new arguments that tip the balance of considerations, then we will revisit the matter.

Take the example of Chek Jawa. Chek Jawa is a natural beach on Pulau Ubin, with rare plants and marine life. The Government had earlier earmarked Pulau Ubin for land reclamation, which would have destroyed these ecosystems. Last year, many Singaporeans urged the Government to reconsider the matter, and preserve Chek Jawa. After listening to the appeals of the people and their reasons, the Government did a further evaluation. And eventually, Mah Bow Tan reversed the earlier decision, and put on hold plans to reclaim land at Pulau Ubin. Chek Jawa was saved.

Who says the Government does not listen to feedback from the people?

But we cannot run a country based just on feedback. On any one issue, there are a hundred and one opinions, and many involved parties. The Government must consider all views, the impact on every Singaporean, the balance between short and long-term interests, and then decide on one course of action that benefits the majority of Singaporeans. We will not satisfy everybody. But we will always act in the overall interest of Singapore.

In a sense, the Government works like a doctor.

Suppose your friends tell you that slimming pills have worked for them, and you give this feedback to your doctor. Your doctor disagrees. He advises you that slimming pills may have dangerous side effects, and instead, tells you to eat less and exercise more. Is he correct in not prescribing you slimming pills, or should he have listened to your feedback and not worried about your long-term health?

Surely the doctor must exercise his expert judgement, and not blindly follow feedback.

The Government, like a good doctor, must therefore apply its own knowledge and experience, consult experts, take in feedback, and then prescribe what, in its considered opinion, is the best treatment.

Singaporeans should continue to give feedback. Your views are important for policy formulation and implementation. However, please understand that the Government has to take into account many factors and considerations.

It would be so easy for the Government to simply follow the wishes of the public, and never do anything unpopular. But at the end of five years, if this results in failed policies and no growth, you are not going to re-elect the Government. So we must do what is necessary, even if it means some unhappiness. I trust, however, that when you go to the polls, you will understand that this Government has your interests at heart. I hope that you will vote on the basis of our overall track record, which is the result of policies that from time to time, cause unhappiness.

Changing Attitudes and Mindsets

For the remaking of Singapore to succeed, we have to go beyond feedback and the policy recommendations of the Economic Review Committee. We must change those attitudes and mindsets which are holding back progress.

Welcome International Talent

Last year, I spoke on the importance of attracting international talent to Singapore. This is crucial for our growth and development.

I was therefore disturbed by the negative comments over our medal haul in the Commonwealth Games. Some Singaporeans claimed that they felt no pride in those achievements, because they were by foreign imports.

These Singaporeans need to change their negative mindset. If we gripe, instead of honouring our foreign-born Singaporeans for their success, we are giving the wrong signal to other talent who want to make Singapore their home.

Our table-tennis and badminton stars may have been born outside Singapore. But they have now all become Singapore citizens. Some have their families here, and have sunk roots here. They trained hard and played their hearts out for Singapore. They did us proud - first medals in the Commonwealth Games after 16 years; first gold medals after 40 years. How can anyone now be so ungracious, small-minded, and mean, to deride their success?

Not so long ago, our parents and grandparents came from China, India and elsewhere. Did anyone question their contributions to Singapore?

Of course, we should develop our Singapore-born sportsmen and women. We are doing so, even to the extent of getting international coaches for them. And we will see what more we can do to develop them.

But we should also welcome any international talent who decides to sink roots in Singapore. If they feel enough for Singapore to want to make it their home, let us embrace them warmly. We need to send a clear signal to all those who can raise our standards whether in sports, music, dance, the theatre, literature, the economy or politics, that they are welcome. We have become what we are because we have attracted international talent.

Indeed, the strength of a country does not depend on the size of the population, but on its quality and organisation. The US has only 5 percent of the world’s population, much smaller than China and India. But the US is the world's undisputed superpower, not only in the political and economic arenas, but in many other fields. This is because the US has always warmly welcomed foreign talent to its shores. Albert Einstein was born in Germany. Andrew Grove, co-founder of the highly successful Intel Corporation, was born in Hungary. Investment guru George Soros was also born a Hungarian. Henry Kissinger, former US Secretary of State, was born in Germany. They all became US citizens later in life, and made remarkable contributions to US society and economy. In sports too, Monica Seles now plays tennis for the US, even though she was born in Yugoslavia.

Americans have accepted all these foreign imports as one of their own.

If a huge country like the US has embraced foreign talent, we, with only 3 million people, must be crazy not to do so. Because of the quality of our people, and our economic success and social progress, we are taken seriously by other countries. We enjoy an influence disproportionate to our size. But if we now shut our doors to talent, we will soon become like any other Third World city of 3 million people. Then we will find life quite different. We will become a small fish - a guppy - in a small pond.

To swim among the big fishes in the ocean, we have to top up our population with international talent.

Be Engaged

Let me now touch on worker attitude.

This year, Singapore workers topped yet again the annual labour force evaluation by the Business Environment Risk Intelligence, or BERI.

BERI assesses the competitiveness of the labour force in four areas - the legal framework of the economy, the productivity of the workers, the technical skills of the workers, and worker attitude.

We were ranked first among all the economies surveyed in the first three categories. For worker attitude, we came in third, behind Japan and Switzerland. Not bad, but there is room for improvement.

In June, our media reported the results of a survey of the Singapore workforce by the Gallup Organisation. Gallup found that 12 percent of the workers surveyed were "actively disengaged" from their jobs. In case you are wondering what "actively disengaged" means, it means "bo chap". These "bo chap" workers complain about virtually everything. They affect the productivity, growth and profitability of their companies.

Contrast this "bo chap" attitude with the positive, motivated attitude I hear of many workers in China.