Singapore to take on Indian challenge

Singapore, March 22 | Updated: Mar 23 2005, 05:30am hrs
Singapores biggest challenge is to overcome competition from India and China for investment by creating new industries and maintaining business friendly policies, Prime Minister Lee Hsien Loong said.

"The competition is very fierce," Mr Lee said. "If you look at the Chinese, the Indians and whats happening around us, unless we move very fast and very resolutely, we are going to be left behind."

Singapore has cut taxes in four of the past five years and offered incentives, including tax holidays, to lure companies in banks and tour operations as electronics makers shifted jobs to China and Malaysia.

Tax cuts and greater transparency in government rules have helped to boost productivity in manufacturing because companies such as disk-drive maker Seagate Technology upgraded their factories to make higher-value products, he said.

Mr Lee said Singapore and its nine fellow members of Asean, must speed up efforts to integrate their economies and boost trade with India, China and Japan to spur investment.

The region needs to remove trade barriers to reduce costs and spur exports after losing investment to India and China. "Asean countries know that the world is changing on them," he said. "They can see whats happening in China and India, they know theyre facing tougher competition and if they dont get their act together, theyll get a lot less attention from investors and do much less well."