PM Lee Hsien Loong's New Year Message 2011

The Singapore economy recovered strongly in 2010. It grew 12.5% year-on-year in the 4th quarter, and 14.7% for 2010 as a whole. This is a dramatic rebound from the negative growth last year. We should rejoice in this exceptional performance, but please remember that it is also the result of special circumstances, and so is unlikely to be repeated soon.

The outlook for the world economy is mixed. There are significant concerns: the US economy is still weak. Europe faces serious debt crises in Greece, Ireland and a few other countries. The European Union also needs structural reforms to make the single Euro currency work, with no straightforward solutions. But in Asia growth momentum is strong. China and India are forging ahead, and countries in Southeast Asia are growing steadily. Hopefully Asia will continue to do well despite the weakness in developed countries, and create a favourable regional environment for Singapore.

Next year MTI projects 4-6% growth – much lower than this year, but still commendable. To sustain such growth over the next decade will not be easy. We will have to upgrade the knowledge and skills of our people, raise our productivity and competitiveness, and continually adapt ourselves and our society to the changing world. Then we can keep abreast of events, and progress and prosper even as countries around us raise their game.

With economic growth, we can improve the lives of our people across the board. We can create fulfilling and rewarding jobs, and train Singaporeans to fill them. We can build new HDB estates, better equipped schools and more comprehensive public transport systems. We can develop a more vibrant and beautiful city, with green spaces and blue waters, and make this the best home for all our people.

Through hard work, we have steadily improved our lives year by year. The recent Singapore Public Sector Outcomes Review, which assessed Singapore’s performance in the last five years, shows that we are achieving results. Home ownership rates remain high, educational attainments are rising, commuters are more satisfied with public transport, and Singaporeans are united and proud of our nation. We must keep up this effort to continue enjoying the fruits of growth.

Nevertheless, Singapore is not without challenges and problems. We have to manage the inflow of foreign workers and immigrants, keep home ownership affordable to all, and help low income Singaporeans cope with the cost of living. We have the means to tackle these problems, and make things better. But in doing so we must remember to keep Singapore open and welcoming to talent, preserve the value of the flats of 800,000 HDB homeowners, and strengthen the spirit of self-reliance among Singaporeans.

One broader issue is a widening income gap. This is affecting many countries, under the impact of globalisation, competition from emerging economies, and new technology. In the US, the annual incomes of the bottom 90 per cent of families have been essentially flat since the 1970s, having risen by only 10 per cent in real terms. Even in China and India, while hundreds of millions of people are improving their lives, incomes in the top and bottom tiers are diverging.

Singapore faces these pressures too. We are striving to ensure that the broad majority of Singaporeans benefit from growth, including lower-income, less-skilled workers, and the middle group who feel sandwiched in between. Many Government schemes give poorer Singaporeans a leg up. We have enhanced Public Assistance, introduced ComCare and Workfare, and implemented Additional Housing Grants for buying HDB flats. For middle income earners we have lowered income tax rates, and are building more executive condominiums to widen their housing choices.

However, the most important programmes are not financial transfers from the Government, but efforts to upgrade our people and workers. In the long run, our workers can only do better and earn more through acquiring higher skills and becoming more productive than workers elsewhere, especially those in Asia who are willing to accept lower pay and work longer hours than Singaporeans. This is why the NTUC, employers and the government have jointly embarked on a major effort to raise our workers’ productivity.

We are also investing heavily in education to prepare our students, who will be the workers of tomorrow. These investments have paid off. Results of the 2009 PISA (Program for International Student Assessment) just released show that among 65 countries tested, Singaporean students rank within the top five countries for reading, mathematics and science. But other Asian economies like South Korea, Hong Kong and Shanghai (representing China) had high scores too. This shows the quality of talent in Asia, and the competition we face. To hold our own, Singapore must continue to upgrade our schools, teachers and pedagogy, as well as attract and integrate talent into our society.

Beyond education, other important intangibles influence our performance as a nation, including the quality of our leadership and the spirit of our people.

Other countries may have more resources or bigger talent pools, but we can maintain an edge through superior teamwork and leadership. Our system has produced strong and effective government, fostered national consensus on key issues, and focussed our efforts to achieve national goals. It must continue doing this, so we can maximise our collective performance and stay ahead.

This calls for leaders who deliver good policies, create opportunities for the people, and rally citizens to work together for a better tomorrow. The team must lead Singapore competently today, while grooming potential successors for the future. Ensuring continuing capable leadership for Singapore is a vital priority for the nation.

Success also depends on Singaporeans having the right spirit – the daring to try new things, the confidence to face fierce competition, the willingness to always give our best.

We showed this spirit in the Youth Olympic Games (YOG). We came together to organise a successful YOG, despite our small size and the short preparation time. The result was an intense, enriching and memorable experience for all. Key to our success were the thousands of volunteers who gladly contributed their time and energies, performed tasks big and small, and worked tirelessly to put on our best for the world. We must nurture and strengthen this spirit which makes Singapore work, and Singaporeans special.

With high quality education, alert and dynamic leadership and the Singapore spirit, we can be confident of the future. We can overcome challenges that come our way, seize opportunities in a booming Asia and continue improving the lives of all our people. Let us strengthen these fundamentals that underpin our success, and commit ourselves to realise our dreams for our nation.

I wish all Singaporeans a Very Happy New Year.