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Grow economy, draw investments to fight inflation
Lee Siew Hua Tue, Feb 05, 2008 The Straits Times
DUBAI - SINGAPORE can tackle the rising cost of living with a clear focus on spurring economic growth and wooing foreign investments, said Senior Minister Goh Chok Tong. One front of this growth strategy is to open new doors in the Middle East and China, said Mr Goh on Sunday, at the end of his week-long visit to Qatar and Dubai. 'I would say concentrate on generating economic growth and bringing foreign investments into Singapore,' he said in an interview with Singapore journalists. 'When there's growth, people are employed, at least you can buy something. You have income, even though inflation is high.'

But the Government is also mindful that there will be cases of workers whose salaries will not rise faster than inflation, he said.

'Here's where the Workfare Income Supplement comes in. Maybe we could look at what we can do for them in the coming Budget.'

He added: 'We have always done it in the past - some special distribution to special groups.'

The big picture, he said, was that inflation in Singapore is low by most countries' standards.

Prime Minister Lee Hsien Loong said on Sunday that this year's inflation 'could be 5 per cent, maybe even more. Especially in the first half, it is going to be high'.

But, SM Goh said, Dubai and Vietnam are experiencing inflation rates of over 10 per cent. In China, it is easily over 7 or 8 per cent.

'All countries face this pressure because of high oil prices and because of the diversion of farm lands to grow biofuel,' he said.

So in Malaysia, there was the phenomenon of a cooking-oil shortage, as palm-oil plantations are being diverted for biofuels, he observed.

Member of Parliament Ahmad Magad, who was in SM Goh's delegation, said that Singaporeans need to know that the pressures of inflation are very much felt in the Middle East, too.

Another economic challenge facing Singapore this year is the possibility of the United States tipping into recession. In the short term, some industries may be affected, said SM Goh. 'But in the medium term, if you have a stream of investments coming in, you'll be all right.'

His forecast for Singapore is still bright: 'In my own view, this year we should be able to do fairly well. MTI (Ministry of Trade and Industry) still retains its forecast of 4.5 to 6.5 per cent growth for this year.'

His expectations of a fairly good year rest on a set of good performers in the economy. 'Construction is still very active in Singapore. There are signs that the electronic cluster may begin to pick up. Financial services are still doing well.'

But Singapore exports may be affected. This may happen if there is a US recession and, at the same time, China grows a little slower, he said. 'But on the whole, there are enough activities to give us the confidence that we should be able to grow within the range of 4.5 to 6.5 per cent for this year.'

siewhua@sph.com.sg

SM Goh on...

FIGHTING INFLATION

'I would say concentrate on generating economic growth and bringing foreign investments into Singapore. When there's growth, people are employed, at least you can buy something. You have income, even though inflation is high.'

HELPING THE AFFECTED

'Maybe we could look at what we can do for them in the coming Budget. We have always done it the past - some special distribution to special groups.'