Tharman's views on...

Tharman's views on...

Over the weekend, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam was named Finance Minister of the Year 2013 by Euromoney magazine, a global banking and finance publication.

Mr Tharman was lauded for his "overarching role" as a policymaker in spearheading Singapore's push towards greater productivity.

Here are excerpts from his interview with Euromoney magazine.

1 Singapore's economy

"We are no longer a developing economy. But we are not yet a truly advanced economy because on the basis of productivity and skill levels, we still have some way to go."

2 The government's productivity initiatives

"We want to force firms to innovate and change their methods by influencing their behaviour.

It is about injecting pain and gain in the system.

Businesses need to pay the Government a levy to employ foreign labour and we inject revenues back into the system to reward those industries that are investing in productivity."

3 Moody's recent downgrade of the outlook for Singapore's banking system

"We thought it was useful that it (Moody's) issued that warning, albeit from a high base since we are the highest-rated banking system in the world... It is useful to warn that no one will be immune from the effects of the normalisation of interest rates in the next few years. Nevertheless, we have moved to restrict loan growth and have imposed a total debt-servicing ratio (for home loans).

The banks are going to be OK because they have substantial capital and liquidity buffers. The advantage in Singapore is that the lower- and middle-income groups are insulated because they go through the Government in the form of housing board loans, which have strict prudential limits.

We don't have a US-style sub prime problem, and the value of real estate assets has risen faster (than loan growth) in recent years."

4 How he finds time to unwind

"Sometimes work can be quite relaxing."


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