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30 Jun 2019
Movement for change
Suggestion View - 361
How can Singapore survive in the post-globalization world?

After attending the G20 meeting in Osaka, PM Lee said that the world leaders did not make much progress on the challenges facing the world - on climate change, trade, economic growth. 

My comment is - That's right. We are entering into a post-globalization world.

Where will that leave Singapore? We need a new strategy to survive. Can the PAP find the solution? I don't think so.  PM Lee should be open to ideas from the citizens.

Let me give my contribution.

a) The first step that I would take is to reduce our cost of living. We can abolish GST and reduce our cost of living by up to 10%. The actual GST is only 7% but I guess that the cost to business of administering GST is another 3%. 

b) If the workers have 10% more purchasing power, they can have more money to spend on the domestic economy. Our retail and other domestic businesses can have a boost. There will be a spinoff multiplier effect . It will create more jobs.

c) A lower cost of business will attract more tourists to visit Singapore and foreigners to use our medical, education and other services. 

How can Singapore cope with the potential loss of business in a less globalized world? 

It will not be a total loss. Maybe global trade will drop 20%. There is still 80% that can has to be done. 

We need to restructure our economy to rely more on local workers and less on foreign workers. There are many jobs now taken by foreign workers because the pay is too low for local workers. If we restructure these jobs to give higher pay, more locals can take up the jobs. 

The small businesses may not be able to afford the higher pay. They can be helped through a wage subsidy provided by the government.

We need to develop new sources of business to replace the loss of business? This is a bigger challenge. The easy answer  is - innovation and technology. But what exactly can be done?

I do not have the answer. But maybe other people in the private sector has the ideas. Let us listen to them.

We can also rejuvenate the business of providing education and health care for foreigners. These businesses were pushed out during the past ten years due to the high costs. When our cost of business drops by 10%, we may be able to attract some of the foreign customers who are willing to pay for better quality and reliability.

We need to address the big challenge of the high cost of property - for people to live in and premises to do business.  We cannot afford to bring down the cost drastically, as it will cause harm to the financial sector and has a damaging effect on the economy. We can however take measures to stop the further escalation of property prices. 

We can also introduce measures to protect tenants from unreasonable increases in rentals on renewal of leases. This has been done successfully in many countries.

Can we afford to abolish GST and suffer a loss of $11 billion in revenue. The answer is - yes. Our budget will continue to be in surplus after this loss of revenue. We may need to reduce the excessive expenditure on infrastructure and defense. These two items are still important, but we do not need to spend as much as we did in the past years.

The global economic system is making a drastic change away from the era of globalization and free trade. Singapore needs to adapt to the new economic order. We need to make changes to our economic strategy.

I hope that my suggestions are helpful in pointing out a different direction towards a possible solution.

Tan Kin Lian

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