SINGAPORE - Raising productivity, where firms transform in ways that bring workers along as they develop, is the only way to continually improve the the jobs and lives of Singaporeans - which is the ultimate goal of the country's economic growth, said Deputy Prime Minister Heng Swee Keat on Friday (Feb 26).

Responding to MPs' comments on the Budget statement, Mr Heng noted that the $24 billion set aside for business and worker transformation over the next three years is about pursuing Singapore's medium- to longer-term economic priorities even as the country tackles its immediate challenge.

The move also seeks to give Singapore's workers and companies a distinct advantage in the global marketplace, he added.

Several MPs, including Dr Koh Poh Koon (Ang Mo Kio GRC), had highlighted the synergies between firms and workers, he acknowledged, adding: "The fortunes of businesses and workers are inextricably linked, more so today than ever."

As Ms Jessica Tan (East Coast GRC) and others had pointed out, building a stronger Singapore core is at the heart of the Government's approach, Mr Heng added.

Highlighting points made by labour MPs about how the way forward for Singapore is as much about being stronger together as it is about emerging stronger, he said: "It is the strength of our collective capabilities and connectedness as an economy and as a society that will determine how far we will go."

While uncertainties and risks in the global economy remain given the Covid-19 pandemic and the emergence of new virus strains, the virus situation within Singapore remains under control. Singapore's economic recovery is expected to be gradual and uneven across sectors. GDP growth forecasts for 2021 is estimated at between 4 per cent and 6 per cent, said Mr Heng, who is also Finance Minister.

"Now is the time to chart our course, position ourselves to catch the winds of opportunity and sail boldly in the reshaped world," he said, adding that this is the focus of this year's Emerging Stronger Budget.

Decisive efforts have cushioned economic fallout

In his speech, the minister outlined the efforts in 2020 to support firms and businesses - some $27.4 billion in grants were committed to preserve jobs and help firms pivot to new growth areas. This was more than 18 times the amount disbursed in 2019, Mr Heng said.

The decisive response helped contain the economic impact of the Covid-19 pandemic to avoid deep scarring, which was also pointed out by Mr Liang Eng Hwa (Bukit Panjang SMC) and Mr Desmond Choo (Tampines GRC).

These efforts are estimated to have prevented a further 6.6 percentage points of GDP contraction in 2020 and mitigated the rise in resident unemployment rates by 2 percentage points.

Singapore's economy contracted 5.4 per cent in 2020 - its worst recession since independence - and its resident unemployment rate was 4.1 per cent. Globally, real GDP is estimated to have fallen 3.5 per cent in 2020, the worst global economic crisis since the Great Depression in the 1930s, Mr Heng noted.

The calibrated strategy Singapore has taken through the combined Budgets from 2020 and 2021 has also had positive outcomes for firms and workers, he said.

Some of the hardest-hit sectors are starting to see light at the end of the tunnel, Mr Heng pointed out, citing how consumer-facing sectors like retail and food services saw a gradual recovery by the fourth quarter in 2020.

Post Covid-19 economy

Responding to questions from MPs, including Mr Zhulkarnain Abdul Rahim (Chua Chu Kang GRC), about what the post Covid-19 world means for Singapore's economy, Mr Heng outlined three areas Singapore must work on to pave the way for its next lap of growth.

First, the country must remake itself as a global Asian node of technology, innovation and enterprise. This requires enhancing the country's connectivity and positioning its firms and workers at the intersection of key global chains growing out of Asia.

Second, as Mr Gan Thiam Poh (Ang Mo Kio GRC) had highlighted, the Republic must shift to a technologically advanced and innovation-driven economy where firms and workers are equipped with the skills to harness technology and intangible assets as a key differentiator.

Third, Singapore must invest in economic resilience and sustainability as a source of competitive advantage, Mr Heng said, noting how Mr Shawn Huang (Jurong GRC) had summarised it aptly - that is, for Singapore to survive, pivot and develop an edge to seize opportunities of the future.

"If we get this right, we can set our economy on the path of growth for the next five to 10 years."

Singapore will also build on its Alliances for Action to enable more industries to transform together, and invest in future engines of growth to create new opportunities for firms and workers, Mr Heng added.

This includes nurturing and harnessing the growth of the green economy, a key part of the future economy, which Dr Lim Wee Kiak (Sembawang GRC) and Ms Cheryl Chan (East Coast GRC) had highlighted.

"Making bold investments now will give us a head start and create many good jobs for Singaporeans in the future," he said.

Replying to Workers' Party MP Leon Perera's (Aljunied GRC) point about incentivising collaboration between multinational corporations (MNCs) and small and medium-sized enterprises (SMEs), Mr Heng said that synergy of firms working together applies to firms of all sizes and sectors.

The Ministry of Trade and Industry will elaborate on initiatives for knowledge transfers and skills training at the debate on their ministry's budget, he added.

Singapore takes an ecosystem approach to economic development, sustaining an ecosystem of innovative and competitive firms to support a vibrant economy, Mr Heng stressed.

"All these efforts serve to create opportunities for our people."