SINGAPORE - Singapore cannot be a First World economy with Third World costs, Trade and Industry Minister Lim Hng Kiang said yesterday, during a lunch dialogue with prominent European diplomats and business leaders based here.
But he also assured them that Singapore will stay competitive and business friendly, even as it restructures the economy to achieve quality growth.
He was speaking at the Shangri-La Hotel during a Europe Day lunch celebration organised by the European Chamber of Commerce in Singapore.
Responding to a question from the floor on rising business costs, Mr Lim said: "We have to acknowledge that, over time, Singapore cannot be a First World economy with Third World costs. There has to be some balance."
He explained that Singapore's strategy is to "make sure we create value commensurate with the costs". That is the way to ensure that it is sustainable in the long term, he added.
Singapore captured headlines at home and abroad in March, when it was named the world's most expensive city by the Economist Intelligence Unit.
The Budget debate in Parliament that month included intense discussions on rising costs for businesses here, with soaring rents and utilities, increased wages and worker shortages among the grouses.
Economists have argued that Singapore must continue on its economic restructuring journey to ensure its "value-add" or economic bang for the buck keeps up with the rising costs.
Mr Lim said: "Singapore will continue to move towards higher value-added activities and, at the same time, develop greater innovative capabilities."
He also highlighted the country's strong network of free-trade agreements (FTAs), which positions Singapore as a "nexus from which companies can control and coordinate their regional and global business activities".
A "much-welcomed addition", he added, is the landmark Singapore-European Union FTA signed in September, which could take effect as soon as later this year.
Mr Lim said: "It is in the interests of both the EU and Singapore to see the (agreement) come into force early, to allow businesses to reap benefits as soon as possible."
Once the deal kicks in, shoppers will find a greater variety of European goods in stores here, while businesses will find it easier to trade with Europe.
The EU is Singapore's third-largest trading partner and largest source of foreign direct investment, with more than 10,000 European companies here.
This article by The Straits Times was published in MyPaper, a free, bilingual newspaper published by Singapore Press Holdings.