Monday, November 10, 2008

Prepare for austerity

Sacrifices and cutbacks will be necessary until things improve: MM Lee
'We all have to accept some sacrifices and cutbacks,' Minister Mentor Lee said. -- LAU FOOK KONG/THE STRAITS TIMES
THE Government will not let any Singaporean fall below the poverty line as a result of the financial crisis - but it cannot restore people's living standards to what they were before the global crash.

Minister Mentor Lee Kuan Yew gave this assurance on Sunday evening, as he promised measures in next year's Budget to buffer lower-income earners and those without jobs from the impact of higher prices of food and other goods.

He did not provide details but said the Government would need to make a realistic assessment of how much it could afford to give out in additional utilities rebates, Workfare income supplements and other alleviating measures.

'Much depends on how long and how deep this recession will be,' he said.

Speaking to Tanjong Pagar GRC constituents during an event to mark Tree Planting Day, he also warned that everyone would have to put up with some austerity.

'To return to where we were before the crisis and enjoy the same standard of living, we have to wait until the recovery of the world economy,' he said.

'We all have to accept some sacrifices and cutbacks. But compared to our counterparts in neighbouring countries, Malaysia, Thailand, Philippines, Indonesia, Myanmar, Cambodia and Vietnam, our low income earners are much better off.'

He cited two reasons for confidence in Singapore's economy in the midst of the most severe world recession since the 1930s Great Depression.

First, its reserves accumulated over decades could see the country through the crisis without it going broke.

Second, jobs are still available at the two integrated resorts and from investments by high-end manufacturing companies.

These include solar cell producer Renewable Energy Corporation and maker of oil and gas equipment, Halliburton.

'There will be jobs, although different from the ones from factories that may close down,' he said.

Singapore was also fortunate in not having allowed speculation to drive up residential property prices to unrealistic levels, having learnt its lesson from the 1997/98 Asian Financial Crisis.

This round, although the prices of high-end condominiums and office properties have fallen, 'HDB flat prices have remained steady, going down only slightly'.

That is because there is real demand for HDB homes from Singaporeans, including new citizens and permanent residents.

'Property values are bound to go up because the government is continuously building more infrastructure, and attracting higher value investments that provide higher wages to employees,' he said.

Read the full story in Monday's edition of The Straits Times.

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