Deputy Prime Minster Tharman Shanmugaratnam’s View On Singapore’s Economy

The economy of Singapore is slowing down. And if you need any confirmation, you can get it from Deputy Prime Minister Tharman Shanmugaratnam. On Wednesday, Mr Tharman mentioned that Singapore’s economy “is in for a tough period that will last for awhile.”

He mentioned that one reason is China’s economic restructuring. The world’s second largest economy is one of Singapore’s most important trading partners. While China’s latest economic growth numbers – at over 6% – are the envy of many developed nations, it still represents a slowdown from prior years. This is impacting Singapore.

Mr. Tharman believes that Singapore is in a new mode of growth and needs to get its productivity up. It cannot keep depending on an increase in manpower to drive growth.

He also mentioned that it is important for companies to embrace innovation and place more investment into research and development. The government is looking at ways it can help companies that are innovating. In particular, the government wants to help companies commercialize their innovative ideas and expand into regional markets.

As Mr Tharman has said, companies in Singapore would likely not be able to continue growing simply by increasing their headcount. Companies that focus merely on production volumes could find it hard to grow in the future. Instead, it would be companies that place high emphasis on research and development that stand a better chance of leading Singapore’s growth in the future.

A company such as Singapore Technologies Engineering Ltd (SGX: S63) could be a good example of one that values research and development highly. The engineering conglomerate has been very active in developing new products. Last year, ST Engineering had partnered Nanyang Technological University to launch a laboratory for advance robotics and autonomous systems.

If companies embrace innovation, it’s not just their shareholders that could benefit. Singapore could too.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.