3.3. Strategy setting bodies and economic strategy since 2010

- Industrial policy (i.e. attracting FDI); - Innovation policy (i.e. promoting R&D); - SME policy (i.e. policy support to SMEs); - Workforce policy (hiring incentives and wage policy); - Migration policy (i.e. foreigner quotas and levies); - Trade policy (i.e. trade agreements, trade barriers); - Internationalisation policy (i.e. support for internationalisation); - Entrepreneurship policy (i.e. support for start-up ecosystem); and - Education, Training and Skills policy (i.e. financing, incentives, pathways).

However, as a general starting point and based on the analysis above, the key perimeters as publicly discussed by political leaders are likely to be based on these core indicators: - GDP growth; - Capital investment; - Labour force; - Labour productivity; - Labour income.

To simplify the economic policy logic further, the key indicators seem to correspond well to the economic growth accounting conceptual framework, which in principle would state that:

Income = GDP = Investment + Employment + multifactor productivity (MFP)

Furthermore, given the recent policy intention to limit labour force growth, as well as almost zero unemployment in Singapore which can be administratively controlled through the supply of foreign labour, the updated economic logic could be presumed as: - Keeping the labour supply growth component low or zero; - Focusing investment towards capital intensive and higher value-added (productivity enhancing) activities; - And as policy outcome using labour productivity growth, i.e.

Income growth = GDP growth = Labour productivity growth

An explicit statement of such interpretation was indicated in ESC report (ESC, 2010) as well as stated in some of the government statements during Budget (Committee of Supply) debates in the Parliament (MTI COS, 2016) as well as stated in the 2017 budget speech.

3.3.Strategy setting bodies and economic strategy since 2010

Further to the analysis above deconstructing the long-term economic development logic, it can be assessed to what extent this logic is also represented (or changing) in the latest national initiatives to review Singapore’s long term economic development vision and strategy.

Since 2010, there were two notable efforts to set the direction and vision for economic development of Singapore – the Economic Strategies Committee and the Committee on the Future Economy.

3.3.1.Economic Strategies Committee 2009-2010

The first one, convened in 2009 and producing the final report in 2010, was the Economic Strategies Committee. It has set five notable quantitative outcome targets for the decade until 2020 (but did not provide precise definitions for those targets):

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- GDP growth is aimed to be on average between 3% and 5%, similar to the average growth of 5% during the previous decade; - Productivity growth is aimed to be on average between 2% and 3%; doubling or tripling it as compared to the 1% average growth during previous decade; - To raise total R&D expenditure to 3.5% as compared to nearly 3% in 2008; - To retain manufacturing share in the economy between 20% and 25% of GDP. - To reach the number of Singaporean enterprises with more than 100 million SGD turnover to over 1.000 from about 280 in 1998 and 530 in 2007.

Importantly, the ESC report explicitly links the expected growth in productivity to achieving GDP growth targets:

“17. Achieving this higher rate of productivity growth will, even with the slower growth in the labour force, allow us to grow our GDP by 3 to 5 percent per year. Productivity

improvements will therefore account for about two-thirds of our GDP growth,

compared to just one-fifth in the last decade.”

The focus on productivity is further noted from the international comparative perspective, arguing that Singapore can target the level of productivity achieved in most advanced economies like US or Japan as Singapore is still lagging in most sectors of the economy. For example, in Singapore the productivity level in manufacturing is at 63% and in services 58% if compared to the USA; while in construction only at 34% if compared to Japan. Analysis of these gaps and productivity targets indicate the ambition in Singapore at that time to reach comparable level of productivity to those seen in the leading countries Furthermore, the report provided a rather detailed list of some quantitative (like size of co-investment capital funds for SMEs), but mostly qualitative policy instrument to achieve the goals set in the report.

The success of this plan could be put into context by analysing the key statistical indicators achieved by 2017. It would seem that GDP growth was reaching its target. In the case of productivity measures, during the years 2012-2016 the older measure – productivity growth per worker was below the target fluctuating between 0% and 1%, whereas the more precise measure of productivity growth per actual hour worked was a bit higher between 1% and 1.5% but still below the targeted level of 2% to 3%.

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Chart 1: Capital, labour and MFP contribution to real GDP growth between 1999 and 2016 (SINGSTAT, accessed 03.08.2017)

3.3.2.The Committee on the Future Economy 2016-2017

The next (and currently the most recent) long-term strategic vision as regards the economic model of Singapore was presented in early 2017 as the report from the Committee on the Future Economy (CFE, 2017). The report has been much less specific about concrete targets to be achieved and rather took a more general approach by only setting the targeted level of annual GDP growth between 2% and 3% coupled with 7 strategies to achieve such growth.

While this report is much less explicit about the underlying economic development model as compared to the previous one, there seem to be two factors considered as the most important:

- Targeting specific geographic regions for cooperation (US/EU) or growth – Asia and emerging world); - Targeting specific industry sectors which are expected to grow more rapidly than the rest of the global economy.

The report also lists four main directions how government could support utilising those factors and enable the continued (even if less ambitious) economic growth:

- Internationalisation, deepening and diversifying international connections and ensuring (access to) open and free markets; - Acquisition and utilisation of deep skills by the workforce; - Strengthen enterprise capabilities for innovation and competitiveness; - Develop strong digital capabilities and adoption of digital technologies.

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