Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Mr. Bhaskaran is a leading Asian economist based in Singapore with more than 30 years of experience in studying economic, political and security issues that shape the business environment in Asia. He co-ordinates the Asian business of Washington DC-based strategic advisory firm, Centennial Group, directing its Asian economic research practice which provides in-depth analysis of macro trends in Asia. He works extensively with investment institutions, government agencies and corporations. Mr. Bhaskaran regularly presents his views on the economic, political and business environment in Asia at business conferences and in-house briefings. He has conducted studies on a wide range of subjects including: consumer finance in Asia; Asian integration; regional and country-specific political and economic outlooks; the Impact of China on Asia; portfolio capital flows in emerging markets, amongst many others. He is as a member of the Regional Advisory Group for Asia and the Pacific of the International Monetary Fund. Mr. Bhaskaran is a regular columnist for The Edge (Singapore) and holds positions in think tanks including being Adjunct Senior Research Fellow at the Institute of Policy Studies (IPS); Vice President of the Economics Society of Singapore, and Council Member of the Singapore Institute of International Affairs (SIIA). Mr. Bhaskaran serves on the boards of CIMB Investment Bank and Japfa Limited.

Asia Economist and CEO

Singapore: ITMs Are a Step in the Right Direction if Shortcomings Can Be Surmounted

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

Macroeconomics

<ul><li>The CFE report outlines seven broad recommendations to chart Singapore's economic strategy for the next five to 10 years. Two key questions are raised by our assessment – what specific policy changes might emerge out of the CFE report and whether the CFE’s modest goals be achieved. On both these, we have a cautious take.</li><li>The Singapore economy is facing formidable headwinds as structural challenges mount. Without a fundamental rethink of our economic model, it will be a struggle for the economy to reach the 2-3% growth target, especially with tepid productivity growth and an ageing workforce.</li><li>The CFE's recommendation to maintain a robust manufacturing base consisting of 20% of GDP is admirable but without sufficient under-girders. We have not developed a strong core of local SMEs, <em>a la</em> the German <em>Mittelstand, </em>and remain heavily dependent on MNC-led growth. One concern is that in pursuit of this 20% goal, the Singapore Government may ramp up the sweeteners - incentives, tax breaks, etc - to attract MNCs to remain in or come to Singapore, potentially skewing the cost-benefit analysis against Singapore's favour.</li><li>Finally, overarching concerns remain unaddressed. Singapore's high cost structure is inhibiting entrepreneurship and the growth of SMEs. The local bourse is lacklustre after the penny stock crash in late 2013. Without a vibrant equity market offering an exit strategy, VCs and PE firms will be reluctant to provide the smart and patient capital that the CFE report sets out to attract. Fiscal and social policies are also in need of a deep rethink as Singapore sails into a more challenging global environment.</li></ul>

The CFE report outlines seven broad recommendations to chart Singapore's economic strategy for the next five to 10 years. Two key questions are raised by our assessment – what specific policy changes might emerge out of the CFE report and whether the CFE’s modest goals be achieved. On both these, we have a cautious take.The Singapore economy is facing formidable headwinds as structural challenges mount. Without a fundamental rethink of our economic model, it will be a struggle for the economy to reach the 2-3% growth target, especially with tepid productivity growth and an ageing workforce.The CFE's recommendation to maintain a robust manufacturing base consisting of 20% of GDP is admirable but without sufficient under-girders. We have not developed a strong core of local SMEs, a la the German Mittelstand, and remain heavily dependent on MNC-led growth. One concern is that in pursuit of this 20% goal, the Singapore Government may ramp up the sweeteners - incentives, tax breaks, etc - to attract MNCs to remain in or come to Singapore, potentially skewing the cost-benefit analysis against Singapore's favour.Finally, overarching concerns remain unaddressed. Singapore's high cost structure is inhibiting entrepreneurship and the growth of SMEs. The local bourse is lacklustre after the penny stock crash in late 2013. Without a vibrant equity market offering an exit strategy, VCs and PE firms will be reluctant to provide the smart and patient capital that the CFE report sets out to attract. Fiscal and social policies are also in need of a deep rethink as Singapore sails into a more challenging global environment.

Singapore's Committee for the Future Economy Report Abjures Bold Moves