Singapore vows to keep economy competitive despite global headwinds

Mr Gan said that during the budget debate, several MPs spoke about one of Singapore's persistent manpower constraints.

Singapore's population is ageing, slowing local workforce growth and increasing the need for foreign workers, he said.

Mr Gan said: “If we are to keep our economy vibrant, we must continue to deepen our skills and accommodate new arrivals to complement our local workforce and allow our companies to grow. This will require difficult trade-offs to be made, not just at the company-level, but also as a society.”

However, the minister said that even as these trends may seem daunting, Singapore's economy is moving forward from a strong position, given its robust fundamentals such as an efficient infrastructure, connectivity, a highly skilled workforce, and its nimble and enabling policy environment.

Eye on services sector

To further consolidate the economic fundamentals, Mr Gan announced the launch of the Services 2030 vision, to tap growth opportunities in digitalisation and sustainability.

He said the focus will be on the Modern Services cluster, which includes professional, financial and ICT and media services.

“Within this decade, we aim to grow the Value Added from the Modern Services cluster by at least 50 per cent, and create more than 100,000 additional jobs in the same period,” he said.

Mr Gan also launched the Professional Services Industry Transformation Map 2025, or ITM 2025, which he said will play an important role in strengthening Singapore's role as a leading business hub.

The professional services sector includes company headquarters, and professional services firms providing consulting, legal and accounting services, and the new ITM is among the 23 that support industry transformation.

“Even as we press on with the transformation of our industries, we cannot let up on our efforts to ensure Singapore remains a strong global hub for businesses, investors, innovation and talent,” Mr Gan said.

However, Singapore will have to work even harder to secure its hub status as the international tax landscape goes through a fundamental change with the introduction of Base Erosion and Profit Shifting 2.0, or BEPS 2.0 – a global scheme to discourage large multinational companies from evading tax due to their home countries.

To sustain Singapore as a competitive hub, Mr Gan said his ministry would use non-tax incentives such as the enhanced National Productivity Fund (NPF).

“We will continue to ensure that funds are used judiciously to enhance our productivity and deliver tangible benefits to our businesses and workers.”