Daily Lessons from Lif 02 August 2014 - MTI refutes calls to slow the pace of restructuring

MH17 Updates - no more headlining the AsiaOne.com website. Just like MH370, GE2222 and the other airplane crash in Africa, these are no longer news except for the families of the victims. I will leave them alone too and let them find their own resolutions and closures in time.

"MTI refutes calls to slow the pace of restructuring - The Straits Times Aug 02, 2014

SINGAPORE - The Ministry of Trade and Industry (MTI) has strongly refuted economists who have warned in recent weeks that the ongoing restructuring of Singapore's economy is not working and needs to be put on hold.

MTI said these economists were being "too hasty" in making this claim based on gross domestic product (GDP) growth figures from just one quarter - namely the second quarter - which came in worse than expected.

It also disagreed that the restructuring pace is too fast for businesses to adapt to. On the contrary, it said, the pace is "balanced" and restructuring is taking place in phases to give firms time to adapt.

"We need to press on with restructuring at a steady, sustainable pace," it added. In a four-page response to questions from The Straits Times, MTI said of the second quarter's growth figures, which have been a matter of concern: "Weak GDP growth in the second quarter of 2014 is not reflective of the impact of economic restructuring." Fluctuations each quarter are to be expected given Singapore's export-oriented economy, it added. And the average growth of 3.4 per cent year-on-year for the first half of the year is "healthy" given the current stage of economic development.

Four years into a 10-year plan to boost productivity and median wages while tightening the inflow of foreign labour, several established economists have become concerned that the effort is hurting the economy. Bank of America Merrill Lynch economist Chua Hak Bin said in a report on Singapore to clients that economic restructuring is failing and Singapore is losing its ability to seize growth opportunities. Singapore Management University economist Augustine Tan raised similar concerns in a commentary in this newspaper. He drew parallels with the restructuring efforts of the early 1980s which contributed to Singapore falling into a recession.""

It is good to see strong debates between the MTI and the private sector economists on the direction and state of our economy restructuring efforts. 4-year into a 10-year plan is as good a time as any to look at the progress or lack of, if empirical evidence so suggest, and take necessary corrective actions boldly and decisively.

Lessons for me are:

1. something has been done. It is much better than not doing anything. It is clear that normal manufacturing jobs are dying or dead by and large. Specialised start-up or pilot manufacturing may still have a place in high tech high value-add and 'adequate value/cost ratio' Singapore. Non-manufacturing sector with heavy reliance on manpower like financial sector and the hospitality/tourism and gaming sector, still relatively higher value than just F&B and retailing, are also not doing too badly. So, bigger companies are doing not too badly;

2. as for the many SMEs who are suppliers to the bigger companies in the high value add sectors as well as those lower value sectors, they suffered the most due to the reliance on foreign workers who are lower waged and lower skills. Their source of such cheap manpower supply has been tightened. These jobs were shunt by Singaporeans. So, the government should really treat this category differently. This is especially so when so many construction projects for major national infrastructure are going on! The productivity and innovation incentives carrots had been dangled and thrown at the SMEs and bigger companies for the last few years. It seems only the bigger companies bite when one would thought the SMEs need the incentives the most!;

3. bigger companies have the bandwidth to take time to develop their people's capability for faster and better performance while the SMEs were still chasing their tails trying to fulfil whatever orders and works they had on their plates. There is simply no time to stop and think and strategize. Well, time is fair to all beings. Everyone has only 24-hour a day. No more. No less. It is about PRIORITY. Until and unless the SMEs' bosses wake up their ideas and stop and strategize and get their priorities right, they can forever complain about the lack of time and help to do the right thing. Too bad. Even the Creator only help those who helped themselves.

Who is right in this debate? MTI or the private sector economists? For me, it is about mutually pushing each other to examine and re-examine whatever are in front of us and measure the progress. From there, we can re-examine the assumptions made then vs. the latest 'forecast or educated guessed' and adjust the next 2-3 steps ahead. Nobody can foretell the future with any accuracy. Tracking if they unfold as planned is a good way to keep on track and adjust flexibly!

May the economy restructuring continued to be on track. It simply will impact too many people here in Singapore!