Singapore's productivity level is in a woeful state. The last decade has seen our labour productivity languishing near the zero-percent mark even as the PAP throws money at the problem.
One of the major causes of our productivity lag is our inability to cultivate an entrepreneurial sector where creative minds lead the economy by coming up with new and better ways to do things.
And the reason why we are unable to develop innovative minds is our heavy dependence on multinational corporations (MNCs). Not only do MNCs crowd out local entrepreneurs, they are also heavily dependent on cheap foreign labour.
Even PAP MPs question Singapore's reliance on MNCs (see here).
On the domestic front, our economy is dominated by Government-linked companies (GLCs). Like MNCs, GLCs are also overly reliant on low-income foreign workers to keep wages down and boost profit margins.
The combination of MNCs and GLCs stifle the emergence of SMEs in Singapore, creating a situation where conglomerates and their mega-rich owners dominate our economic landscape. It is no surprise, therefore, that the Crony-Capitalist Index compiled by The Economist ranks Singapore 5th out of 23 economies.
The 'use-by' date of such a model has long passed. If we fail to rethink our economic strategy and stick with this outdated PAP approach, Singapore's economy will continue its downward drift.
The SDP has proposed in our alternative economic paper A New Economic Vision: Towards Innovation, Equal Opportunity and Compassion a set of comprehensive measures to address the problem
Our policy, as the name suggests, focuses on how to foster innovation and develop an entrepreneurial sector in Singapore. To achieve this, small- and medium-sized enterprises (SMEs) in the country must be allowed to flourish.
Below are ways that we can help local businesses boost productivity and innovation:
- Increase the credit supply for SMEs especially to fledgling businesses which have a hard time getting bank loans.
- Re-structure the tax regime to differentiate between MNCs and SMEs. Foreign multinationals should shoulder a bigger burden of taxes paid to offset a decreased tax rate for local SMEs.
- Being the biggest landlord in Singapore, the government needs to ensure that rental – one of the biggest costs for local businesses – is kept low for SMEs.
- To make the transition from a state-dominated economy to an economy in which private individuals take the lead, the government must also scale back the GLCs. (See here)
- We must cultivate the creative impulses of our children by reforming our education system which, currently, over-emphasises rote-learning (read our paper on education here).
- We must ensure that only qualified PMETs are allowed to work in Singapore so as to complement, not compete with, our workforce. This can be done through the SDP's Talent Track Scheme (see here).
- In order to establish a climate of enterprise where creative destruction flourishes, we must reform our political system to allow the free flow of information and encourage open debate and, even dissent, among the people. It is only a free and open society which values ideas that will bring about a innovative economy.