PM: Singapore will be 'a retirement home' without birthrate boost
Updated 09:02 AM Nov 28, 2012
SINGAPORE - Prime Minister Lee Hsien Loong said encouraging citizens to have more children is the biggest challenge confronting the Republic if it wishes to remain an economic juggernaut in the developed world.
The Government has not succeeded in impressing on citizens that "this is going to be a retirement home and not a vibrant city" if the population is unsustained, Mr Lee said in an interview on Monday.
"We'll be dealing with it over the next 10 years, and longer," he said of the legacy of a falling birthrate.
Mr Lee plans to unveil a package of measures in January aimed at boosting the fertility rate from 1.2 per woman to 2.1. At stake is maintaining the achievements of Singapore's economy.
"You have to be able to institutionalise what we have achieved," said the Prime Minister.
While many developed nations have struggled with falling birthrates, Singapore's size means it lacks the domestic demand that larger economies can stimulate to sustain growth. Non-oil domestic exports are equivalent to more than half of the country's gross domestic product.
"It's an issue which many countries are dealing with," Mr Lee said. "None of them have come to any very satisfactory solution because the trade-offs are difficult ones."
Women in Singapore are barely producing enough children to replace one parent, and policy-makers have tried and failed to reverse the declining trend since 1987. Handouts of as much as S$18,000 per child, extended maternity leave and tax breaks have done little to sway Singaporeans to have more babies.
The government will debate its population policy in Parliament in January. Areas being considered include priority housing for couples with young children, paternity or shared parental leave, the defraying of childhood medical expenses, better pre-school and improved cash benefits for having children, Mr Lee said in August.
'IT'S GOING TO BE TOUGH'
The median age of Singaporeans will rise to 43.1 in 2020 from 37.6 in 2010, Bank of America analysts estimated in an April report. That compares with 23.9 in the Philippines, 31 in Indonesia and 28.4 in Malaysia at the end of this decade.
"It's going to be tough and we may only see a marginal increase in the birthrate," said economist Chua Hak Bin. "Past attempts have met with little success. Without immigration and foreign workers, Singapore may suffer the same fate as Japan, which is a bleak outcome."
Immigration has filled the gap for employers, a pattern that has put strains on the housing market and public services. The Republic is host to 2 million foreign residents, compared with 3.3 million citizens.
Home prices climbed to a record in the third quarter, even after the Government introduced six rounds of measures since the beginning of 2010 to rein in demand.
"We have had a property boom, almost a bubble," said Mr Lee. "It's because liquidity is sloshing around worldwide and real interest rates are negative. That's a difficult problem for us on the overall property market."
Singapore, which uses the exchange rate to manage inflation, is unlikely to shift to an interest-rate regime to have more control over its borrowing costs, Mr Lee said. "It would be very difficult. Our economy is so open. We are a financial centre. For us to sustain high interest rates at a time where interest rates worldwide are at almost zero, I think is very hard. We'd be flooded with money."
LONG-TERM PERSPECTIVE
Mr Lee also addressed the decline in the ruling party's share of the vote in last year's General Election. "It's what you would expect to happen as we have a change of generations among the population - you are in a new age, much more open and interconnected.
"The question is, in that environment, can we still get governments which take a long-term perspective beyond the immediate election?"
With the next GE not due until 2016, Mr Lee declined to identify his most important contribution as a leader. "I don't think we should give ourselves report cards. You cannot come to a verdict yet because these are long-term issues - talking about population, talking about immigration, whether it works or not. You will only know after a generation but you have to think about them now." BLOOMBERG
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