Question No 26 of Notice Paper No 5 of 2006 For Written Answer

Question :
To ask the Minister for Trade and Industry:

(i) whether there is a phenomenon of a two-speed 'dual economy' emerging in Singapore and

(ii) if so, whether this will lead to further structural shifts in our economy.

Answer :
By a “dual economy”, I believe the Member for Holland-Bukit Timah GRC is referring to one where export-oriented businesses enjoy faster growth than domestic-oriented businesses. In general, the external-oriented industries catering to the global market, such as electronics, biomedical sciences and chemicals, tend to have higher and more volatile growth.In comparison, the growth of industries like retail and restaurants which are more focused on our much smaller domestic market is slower.

That export-oriented industries often enjoy much faster growth than domestic industries is not a new phenomenon.Since independence, we have been attracting externally oriented industries to Singapore.Beyond the new activities and capabilities brought by these industries, we also benefit from their growth permeating to the rest of the economy.The pace at which the economic benefits of each export-oriented industry filter to other industries will vary from case to case. The more flexible our labour markets and versatile our manpower skills are, the faster the rate of transmission will be. For instance, the growth of our electronics sector generates activity in our supporting precision engineering sector, which employs over a quarter of all local workers in manufacturing.The jobs created in turn benefit our retail and restaurant sectors, among others.In the past few years, the strong performance of the export oriented industries has brought growth to the whole economy.The retail sector provides an illustration.Reflecting the health of the sector, retail sales have been growing strongly for the past three and a half years.

In any case, it is not meaningful to box up businesses in these 2 groups as they are not static.Businesses can start off serving the domestic market and later expand to cater to the global market. A recent example would be our businesses in water technologies which are beginning to take off and expand their business beyond Singapore.

Regardless of how one chooses to ‘slice and dice’ the economy, one certainty is that it will continue to undergo restructuring as we move up the value chain in a globalised economy.Currently, our economy is doing well.We now have a strong labour market with low unemployment.Last year, more than 110,000 (113,300) jobs were created, the strongest gain in 8 years.This year, within the first 9 months, more than 120,000 (123,100) jobs have already been generated.We are able to enjoy these because we have been prepared to undertake the necessary restructuring and allow the economy to ride the uplift in a favourable global economy.Going ahead, we will continue to help Singaporeans to acquire the skills required by new economic activities, with the ongoing retraining and job redesigning efforts.We will then remain in a strong position to take advantage of the tide of opportunities presented by globalisation. More Singaporeans, including those in more domestically-oriented industries, will be able to enjoy the fruits from these opportunities.