Rising costs not deterring MNCs from Singapore, says SM Goh

July 7, 2007

Rising costs not deterring MNCs from Singapore, says SM Goh

Govt watching inflation closely; home prices remain affordable

By Bryan Lee


RISING costs have not deterred global corporations from setting up shop in Singapore but the Government will keep a close watch on inflation nonetheless, said Senior Minister Goh Chok Tong.

While rentals have risen amid a property boom, housing prices remain affordable for most Singaporeans, he added, in a recent television interview with CNBC.

'Costs are always important but we are not going to allow costs to prevent us from growing,' said Mr Goh. 'You do want the standard of living of Singaporeans to go up and a higher standard of living means more income in real terms.'

The way forward for Singapore, he said, is to move into higher value-added industries, such as biomedical, education and health care.

In the face of competition from China and India, Singapore cannot continue with the low-value, labour-

intensive manufacturing that it relied on to drive growth before the 1997 financial crisis, he said.

In any case, multinational companies have not shied away from Singapore because of costs although they have complained about it, Mr Goh said.

In fact, international financial institutions, particularly those in wealth management and hedge funds, have been opening regional head offices in Singapore.

On fears that a property bubble might be forming, Mr Goh said the Government is watching the situation closely but is currently not too worried about rising property prices, which are at 'the higher end'.

'Prices for the middle-income (group) and for the HDB heartlanders are still quite affordable...in general.

'My worry will be: Where do we go from here? It's a longer-term worry,' said Mr Goh.

He also downplayed concerns that Asia might be headed for a repeat of the 1997 financial crisis.

'I myself do not think a financial crisis is going to happen.

'The stock markets are very lively. Share prices are generally at an all-time high. But the banking structure is strong,' he said.

He added that in the past 10 years since the crisis, banks and their regulators - both in Singapore and in the region - have undergone much reform and are now more resilient.

'Just as we learnt a lesson, our neighbours learnt their lessons even more painfully,' said Mr Goh.

'So, they certainly are very much more acutely aware of the importance of bank supervision and good corporate governance.'

In Singapore, the Government went further and took the opportunity to liberalise the financial sector, moving to a more disclosure-based and risk-focused regulation from a one-size-fits-all approach.

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MORE RESILIENT

'I myself do not think a financial crisis is going to happen. The stock markets are very lively. Share prices are generally at an all-time high. But the banking structure is strong... Just as we learnt a lesson, our neighbours learnt their lessons even more painfully.'
SM GOH


GROWTH FOCUS

'Costs are always important but we are not going to allow costs to prevent us from growing. You do want the standard of living of Singaporeans to go up and a higher standard of living means more income in real terms.'
SM GOH