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(SINGAPORE) Singapore's small population means that it will remain export-reliant, Tony Tan, deputy chairman of the Government of Singapore Investment Corporation (GIC), said in response to a question posed at the Economic Society of Singapore Annual Dinner last night.
This means Singapore must increase its exports, Dr Tan said, by seeking new markets, launching new products and services, and - what he thinks holds 'the brightest potential' - developing an economy of new ideas.
Even though Asia as a region will reorientate its growth model from being export-driven to one balanced by domestic demand, domestic consumption can form only a small part of Singapore's economic growth, said Dr Tan, who is also GIC's executive director.
'We could, of course, leverage on our sophisticated demands domestically, but to contribute significantly to our economy, these must translate into exportable products and services to reach bigger markets,' he said. Hence, exports will remain Singapore's key driver. However, increasing exports will be more difficult in coming years, given weak economic growth in the OECD countries and dampened US consumer demand.
Discussing ways to raise exports, Dr Tan broached the possibility of developing Singapore into an 'economy of ideas'. Producing wholly new innovations would be very different from the cost-effective production Singapore's economy is currently based on.
He cited economist Paul Romer of Stanford University, who has suggested that 'the world is moving from an economy of products and services to an economy of ideas'.
This could be appealing to Singapore, as 'ideas are the result of technological progress, mixed with creative talent, but working under a consistent framework of rules to produce economically valuable innovations', and Singapore has the capability to provide that framework of intellectual property rules, for instance.
'New ideas could spawn new industries, producing more products and services with less physical resources,' Dr Tan said.
For such an 'economy of ideas' to thrive in Singapore, 'we need to encourage entrepreneurship, innovation, research and development, and higher education for as many people as possible in employable disciplines, and without lowering standards', he said.
Dr Tan added that Singapore should first seek out new markets beyond Europe and America. 'Large Asian countries with robust economic growth and rising affluent classes, particularly China and India, are an obvious priority', as are the South-east Asian economies, given their proximity. Further afield, Russia, South America, the Middle East and Africa should also be explored, he said.
'The products and services we export will also have to be more sophisticated, have a high technological content and higher value-added,' Dr Tan said.
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