The changing global landscape, underpinned by protectionist politics and advances in technology, presents both challenges and opportunities for Singapore, and the city state's firms and workers must enhance capabilities to thrive, according to the country's finance minister.
Presenting the annual budget statement in Parliament on Monday, Finance Minister Heng Swee Keat said Singapore must take "decisive action" to position the country amid such "deep shifts" in the global economic environment.
Outlining the government's revenue and expenditure for the financial year 2017-2018, Heng said Singapore is expected to see an overall surplus of S$1.9 billion ($1.3 billion).
The city state, an economy that has long hung its hat on its openness, is particularly vulnerable to any slowdown in global trade. Its maturing economy and aging population also threaten to stall growth.
"Many developed economies going through this same experience have seen their annual GDP growth decelerate to 1 percent or lower. We can aim for quality growth of 2 to 3 percent, if we press on in our drive for higher productivity and work hard to help everyone who wishes to workfind a place in the labour force," Heng said.
The release of Singapore's budget statement came hot on the heels of better-than-expected growth figures that showed a 12.3 percent quarter-on-quarter economic expansion in the last quarter of 2016 on improved manufacturing performance. This was up from the government's initial estimate of 9.1 per cent.
Despite that, the government has kept official growth estimates for 2017 at between 1 and 3 percent.
To help businesses handle the current challenging climate, Heng said Singapore will extend assistance to troubled sectors such as marine, offshore energy and construction through targeted reliefs. Companies will also enjoy increased corporate tax rebates.
While experts welcomed the decision to increase those rebates, some said the government could do more to help companies manage rising costs.
"Whilst the government's decision to increase the corporate tax rebate will certainly be welcomed by corporates in Singapore, this gesture may not sufficiently help businesses, as many are currently still grappling with rising business costs on all fronts," Alan Lau, tax partner at KPMG in Singapore, said in a statement posted on Twitter.
The finance minister emphasized, however, the need to focus on the medium to long term and said the government will set aside S$2.4 billion ($1.7 billion) over the next four years to implement strategies such as helping businesses expand overseas, supporting entrepreneurship and encouraging more research and development work.
For workers, Heng said there will financial support and work attachment programs to help them gain new skills and stay nimble amid today's digital disruption that has altered the nature of many jobs.
Those are strategies were outlined by the Committee on the Future Economy (CFE) earlier this month in a report, which would help Singapore to achieve growth of 2 to 3 percent over the next decade. That committee was set up to come up with suggestions to prepare Singapore for social and economic challenges.
Heng also announced the introduction of a carbon tax rate between S$10 ($7.05) and S$20 ($14.10) per tonne of greenhouse gas emissions from 2019. Singapore joins an increasing number of countries such as Denmark, Finland and Japan that have enacted a similar tax in an attempt to reduce pollution.
The move to tax greenhouse gas emissions will help Singapore meet its commitments under the Paris
Soon after the Budget announcement, some questioned the economic impact of the carbon tax. PwC Singapore's tax markets leader Abhijit Ghosh, for example, tweeted: