Economy — a fair mix of foreign and local companies

Seems like a discussion between broader minds this is…

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IN PARLIAMENT

TALK of Singapore's economy being dominated by foreign multinational corporations is "an old stereotype". Growth is driven in equal parts by foreign and local companies, as well as big corporations and their small and medium counterparts — and this shows that our economy is "as diversified as it can be", said Minister for Trade and Industry Lim Hng Kiang.

Citing 2007 data, Mr Lim said foreign and local MNCs contributed a quarter to value-add apiece, as did foreign and local SMEs.

Responding to calls by Members of Parliament (MPs) to give homegrown SMEs a leg-up, Mr Lim outlined several reasons why a "pragmatic" approach is needed in determining Singapore's economic drivers.

In adopting industries like renewable energy and digital media as emerging sectors to capture, Singapore lacks leading companies, and needs foreign MNCs to build its competitiveness. "If we are to wait for our own local companies to build up to size, then we may lose out on the opportunities of this sector over the next few years."

Many MPs are concerned protectionism by other countries could hurt Singapore's exports. But Mr Lim cautioned that in helping SMEs to grow, we should not "indulge in such protectionist policies ourselves". Singapore has to play by the rules of free trade pacts with others, and has to reciprocate the benefits given to our companies overseas.

Concerns also linger that the United States may tax its MNCs' offshore income and erode the MNC benefits Singapore offers. Mr Lim said it would monitor developments, work with the American business community, and convey that "changes like this would put the US companies at a great disadvantage".

As to criticism of Singapore's vulnerability to external demand, Mr Lim pointed out that an export strategy has enabled higher income growth in the last eight years: External demand grew by 10 per cent, twice that of domestic. "Our strategy has been to try to capture the growth opportunities when growth is good, so that we have enough resources to ride through more difficult times," he said. NEO CHAI CHIN

From TODAYOnline.com; see the source article here.

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