Singapore ‘cannot afford to outbid the big boys’ to attract investments, says DPM Wong

SINGAPORE: As major economies mobilise large sums of money to build up their own strategic industries, Singapore “cannot afford to outbid the big boys” to attract investments from multinational corporations, said Deputy Prime Minister Lawrence Wong on Monday (May 1).

Singapore is already feeling the impact as competition for investments becomes tougher, said Mr Wong, as he laid out several challenges that Singapore faces in a world that is “in dire straits”.

“We won’t have enough money to match the competition but what we must have enough of are ingenuity and innovation, guts and gumption,” he said, addressing 1,400 labour movement leaders, workers and tripartite partners at the NTUC May Day Rally.

“That’s the only way we can and will prevail, even when the odds are stacked against us.”

This is the first time Mr Wong, who is expected to be Singapore’s next Prime Minister, is delivering the keynote speech at the annual May Day Rally in place of Prime Minister Lee Hsien Loong. He had spoken alongside Mr Lee in last year’s rally.

Mr Lee delivered his May Day message on Sunday, where he described how the external environment remains volatile and fraught with geopolitical tensions. But he said Singapore can be “cautiously optimistic” about its immediate economic prospects.

STIFFER COMPETITION FOR INVESTMENTS

In a wide-ranging speech lasting for about 40 minutes, Mr Wong noted that advanced economies are rolling out massive subsidies to build up their own domestic production capacities, especially in strategic industries like semiconductors and clean energy.

He cited Germany as an example, which is negotiating with Intel to establish a large semiconductor plant in Eastern Germany. The deal involves €10 billion (US$11 billion) in financing support.

“Ten billion dollars for just one project. That’s almost double what MTI (Ministry of Trade and Industry) will spend this year to grow our entire economy,” he said.

“Can we afford to outbid the big boys – not only the Germans, but also other Europeans, the Americans, the Chinese, the Japanese? Outbid all of them for the investments we want?”

Singapore is already feeling the impact, said Mr Wong, citing conversations with MNCs about raising Singapore’s effective corporate tax rates to 15 per cent in line with an overhaul of global tax rules.

“They tell us: Yes we understand this is happening worldwide. Singapore’s incentives used to be ‘best in class’. But if your tax rates go up, then Singapore will become less competitive compared to other places.

“Besides, my home jurisdiction is offering such large subsidies for my next investment. So please tell me what Singapore can offer to persuade my HQ to locate the next investment project here,” said Mr Wong.

“Some politicians go around telling Singaporeans: ‘Don’t worry, raise corporate tax to 15 per cent. You will have lots of revenue and anyway, we also have lots of reserves so we can merrily spend more’. Unfortunately, they don’t understand the magnitude of the challenges we face,” he added.

“So let me tell you plainly: We cannot afford to outbid the big boys just to get the MNCs to invest here.”