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SPEECH BY MR , SECRETARY-GENERAL OF THE PAP CENTRAL EXECUTIVE COMMITTEE, AT THE ORDINARY PARTY CONFERENCE ON SUNDAY, 1 DECEMBER 2002, AT KALLANG THEATRE

ECONOMIC PROSPECTS

Since the last Party Conference, the world has changed ominously. Terrorists have attacked New York and Washington. They have killed many people too, in Bali, the Philippines and other parts of the world. They are waging battle against the US and the West, and the rest of the non-Muslim world as well. In turn, US President Bush has declared war on them. Like it or not, is involved in this war against terrorism.

2 You have also heard from both DPM Tan and DPM Lee about our dismal economic prospects in the coming months. And I know that many of you are anxious about your job. Indeed, the unemployment situation is going to get worse before it improves. I do not know when this turning point will be. But it is unlikely to be before the second half of next year.

3 It is natural for us to feel despondent in the face of these many uncertainties. But this must not lead to despair and inaction. We are like a ship sailing in the vast ocean. We cannot control the weather, the waves and the currents. However, we can still get to our destination if we remain calm and collected, keep a sharp lookout, and work the engines. We can then navigate our way to safety. The bad weather will not last forever. Nor will the currents always be against us.

4 But if we lose our confidence, we will drift and lose our bearing. Our ship may even run aground.

5 PAP members especially must show confidence. We cannot lose our fighting spirit. If we do, we will demoralise the population, and the battle will be lost.

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6 We have to show leadership in these adverse circumstances, to inspire investor confidence. For example, through our rational, but sometimes painful solutions to problems, we have retained the confidence of foreign investors. This year, we expect to attract some $9 billion worth of investment commitments in the manufacturing sector (Manufacturing Fixed Asset Investment commitment) and $2 billion in the services sector (Total Business Spending commitment). This is the same volume as last year. These investments will create 20,000 jobs. And these are only the jobs created directly by the investments. As those who are employed will have money to spend, they, in turn, will create more jobs.

7 Our neighbours may show better GDP growth than Singapore this year. This does not mean that their prospects are better than ours. C They have done better because they are less dependent on the external environment. They have a larger domestic sector. They have palm oil, oil, gas and other natural resources. But when the world economy picks up, we will do better. We are attracting more investments. On the other hand, foreign investments into neighbouring countries have fallen sharply this year. This will affect their economic growth and employment creation in the longer term.

8 Investors do not look just at the immediate economic situation. When they put up a factory, they expect it to be productive over many decades. So the fact that MNCs are still pumping large investments into Singapore is a very good sign. It means that they are confident about Singapore's long term economic prospects and competitive position. They appreciate our reliable and pro-business policies. We do not chop and change these policies at will. Our workers are skilled and disciplined. And we have enlarged our economic space through Free Trade Agreements with several trading partners.

9 So the economic outlook is not all gloom. Our difficulties are temporary. They will pass. Our medium term future remains bright. Moreover, we are not twiddling our thumbs, or in Singlish, "shaking legs". We are busy remaking our economy. The Economic Review Committee will publish its report early next year. It will show the way forward for Singapore to compete in the changed global environment.

10 The Government has shown sensitivity and flexibility in these difficult times. We cannot always hold back cost increases, like bus fares. But where we can, we have done so or will do so, like the rental of HDB shops. Another example of our sensitivity to Singaporeans' plight is GST. In May this year, we decided to increase the GST to 5 percent from next year. But the economic prospects for next year now look uncertain. So DPM Lee who is the Finance Minister is looking at two options: to increase the GST to 5 percent as planned and give additional cash relief to lower income Singaporeans, or to increase the GST to 4 percent next year and 5 percent a year later. It is not a straightforward decision. The Finance Minister has to balance the budget. He has lowered the income tax rates. He has to make up for this loss in revenue through the GST increase. He cannot easily forgo the GST increase. He has to find the money to meet the increasing needs of the Ministries, for example, health and education.

11 DPM Lee has made his recommendation to the Cabinet on which GST option to take. I know you are interested to know which option he has recommended. But it is only correct for the decision to be announced by the Minister for Finance at an appropriate time.

12 I revealed the options he was considering last week to prepare the ground. There was no disagreement in our view on the need to increase the GST, and the need for sensitivity in its implementation.

13 This immediate economic challenge is a big one for the Party and the Government. Creating economic growth and jobs remains a top priority for us. We fought the General Election on this platform. We are working hard to deliver on our promise. But there are strong currents against us. I ask you to be patient and keep faith with us.

ADJUSTING EXPECTATIONS

14 Another big challenge is to get Singaporeans to adjust their economic expectations.

15 The years of fast growth are now behind us. Our economy is more mature. The external environment is less conducive for growth. And competition is keener. What we have done in the past, others can do at cheaper cost. What we are doing now, others are copying. And what we are planning for the future, others are also trying to do. For example, garments and low-end assembly of electronic products have relocated to Batam, China and other low-cost countries. Johor is trying to overtake us as a shipping, air cargo and logistics hub. And many countries, like us, are developing their life sciences industry. 16 Singaporeans must get used to slower economic growth and lower wage increases. In the 90s before the 1997 financial crisis, the Singapore economy grew by an average of about 9 percent a year. For this decade, we will be lucky if we can make 4 to 5 percent. The main reason is the deflationary impact of China, which is a vast and highly cost competitive production house. Whether it is toys or textiles, shoes or semiconductors, China can make them cheaper and just as good as anybody else, if not better.

17 Singaporeans must also understand that with continuing globalisation and the openness of our economy, our economic growth will be more volatile from now on.

18 Overall, Singaporeans must learn to adjust their personal expectations to match this more difficult economic environment. They must be realistic. This will help them cope with future downturns. For instance, in good times, they should save for a rainy day. And when the rain comes, they must be prepared to take on different, and perhaps less well-paying jobs. They should not expect lifelong employment in the same company, or to do the same job with the same skills forever. This applies to managers and executives too, not just workers.

TERRORISM

19 Another worrying issue at the top of our minds is terrorism.

20 This is no ordinary terrorism. The people involved are religious fanatics who are prepared to use indiscriminate terror to achieve their objectives. Their aim is to overthrow legitimate governments and bring about an Islamic world. The Jemaah Islamiyah (Jl) wants to create an Islamic state stretching from southern Thailand, through , Singapore and Indonesia, to southern Philippines. Al Qaeda wants to get the US out of the Middle East so that they can overthrow the governments there and set up their Islamic world. Both terrorist organisations are helping one another. In fact, the Jl has become the Southeast Asian wing of Al Qaeda.

21 These terrorists are very dangerous because their plan is to kill large numbers of people in high profile attacks. They have no qualms taking innocent lives. Even if Muslims are killed in the process, they shrug it off as collateral damage. These terrorists are dangerous also because they believe in jihad and are prepared to die. They believe that they are serving Allah and will go to heaven as a reward.

22 Southeast Asian Muslims are generally moderate in the practice of their religion. They are not fanatical. Even then, the Arabs have somehow convinced a few Jl terrorists to become suicide bombers. This has raised significantly the level of the terrorist threat in our region.

23 The use of missiles by terrorists to shoot down an Israeli airplane in Kenya ratchets up the horror of terror. It is not difficult to get hold of surface to air missiles. The Taliban and Al Qaeda would have the Stinger missiles left over from the Afghan war against the Soviet Union.

24 Security is therefore our number one concern right now. We have to protect Singaporeans in Singapore, and also Singapore assets abroad. This is not easy, but we will make it difficult and costly for the terrorists to mount attacks against us. That is why you see security personnel at the airport and other strategic places. It is for deterrence purposes.

25 Let me warn you, however, that with governments more on guard against terrorism, the terrorists will become more opportunistic, and will go for soft targets. We must be vigilant, and not present them with easy opportunities to do us harm.

26 We do not have specific intelligence of any imminent attacks. But we are working on the assumption that we are being targeted. After all, we exposed the Jl, which led to the arrest of many operatives in Malaysia, the Philippines and now Indonesia.

27 The war against Al Qaeda-led terrorism will be drawn out over many years. Do not expect the security measures we have undertaken, for example, road and car park closures at Holland Village, to be dismantled anytime soon. We will just have to adjust to this new environment of heightened security, and get on with our lives.

28 But I am confident that the terrorists will be defeated in the end, even if they may succeed in causing harm every now and then. The governments of the world will not let the terrorists succeed. They will co­ operate to rip up the terrorist network. Moreover, US President Bush himself sees it as his mission in life to defeat the terrorists. He is a very determined man. He will not give up. He will go after the terrorists, no matter how difficult and how long it takes.

29 Until recently, Singapore was concerned whether Indonesia would act against the terrorists in the country. Terrorists from Indonesia or taking refuge there were involved in operations against Singapore and other ASEAN countries. Tragic as it was, after the Bali bombing, I am now more hopeful that Indonesia will move resolutely, albeit at their own pace, against the terrorists.

30 Malaysia, on the other hand, has always been resolute in its fight against terrorism, and has the situation under control. But it is the political battle against PAS that UMNO may find difficult. It is a fight between modernising, moderate Muslims, and conservative Muslims who want to practise a more rigid and austere form of Islam. Unless the global tide of Islamic resurgence recedes, Malaysia might become a more conservative Islamic society.

31 Indonesia is also seeing the same political battle between the secularists and the Islamic parties. There is no guarantee that secular parties like PDI-P and Golkar will win the next elections due in 2004.

32 This is the regional backdrop over the next few years. It is hardly encouraging, unlike the years before the 1997 financial crisis. But as Party members, we have to show courage and determination to lead Singapore forward.

WORK PLAN FOR THE PARTY

33 We have many domestic challenges to deal with too.

34 These include structural unemployment, an ageing population, a declining birth rate, rising medical demands and costs, and an internationally mobile younger generation, many of whom may migrate.

35 Given this changed external and internal environment, the PAP will also have to evolve to deal with the new challenges the changes bring. In particular, it is imperative that we win over the hearts and minds of younger Singaporeans. 36 Indeed, by 2007, those bom after 1965 will form about 60 percent of our population. This generation of Singaporeans has little direct knowledge of the poverty, pain and struggle of our initial years. They do not have the same understanding of Singapore's vulnerabilities as their parents, nor have the same bond with the PAP for what we have done together for Singapore.

37 Furthermore, we are revamping the education system to nurture a thinking and more entrepreneurial population. Young Singaporeans will hence be even less conformist. They are already more vocal and critical and will be even more so in future.

38 If the PAP is to maintain its dominance in politics, it is absolutely crucial that we reach out to these younger Singaporeans, even as we work to retain the support of older Singaporeans. The question is how. What inspiration can we give younger Singaporeans? What programmes will attract them to join the Party?

39 These are questions for the younger leaders to ponder and resolve.

40 I suggest they ponder these questions in the context of next year's work plan for the Party. Let me elaborate.

41 Twenty years ago, the Secretary-General asked a group of younger Ministers to revise the Party objectives and constitution. The exercise was to update the Party and make it relevant to the times. Otherwise, the Party risked becoming a dinosaur. I was a member of this group of younger Ministers. As the world, including Singapore, has changed significantly since then, it is time for us to take another look at the Party, to make ourselves young again. I shall set up a committee to refresh the PAP. It will be called the Refreshing PAP Committee. The PAP does not need remaking. But it can do with some refreshing. The Committee shall comprise the younger Ministers and MPs. I have asked to chair the Committee, and to be the Deputy Chairman. The other members will include:

a ;

b ; 8

c ;

d ;

e ;

f ;

g ;

h ; and

i .

Wong Kan Seng will be the Adviser to this Committee.

42 The Committee can co-opt others as it thinks fit. It can set up sub-committees as appropriate.

43 The general terms of reference will be to refresh and update the Party objectives, constitution, organisation, programmes and activities, so as to enable the Party to continue to win the support of the people and lead the country. This should include leadership-related changes. For example, we have asked Branch Secretaries to nominate candidates for the CEC. In future, we would like to give Branch Committee Members who are cadres a vote as well in this nomination process. We will work out a system such that the weight of the MPs' votes is not less than half the weight of the total votes.

44 The Refreshing PAP Committee should complete its work before next year’s Party Convention.

45 I offer here a few ideas for the Committee to work on.

REACHING OUT TO YOUNGER SINGAPOREANS

46 First, we have to improve the quality of Party membership. Quality is more important than quantity. We want members who are I 9 dedicated and committed. We want members with ideas. We want members who are able to explain to the people the Party’s philosophy and the Government’s policies. We want those who are able to reach out to and mobilise the people.

47 We also want members with the potential to become MPs and Ministers. It is especially difficult to recruit such talent because many employers discourage their senior employees from active membership in political parties.

48 For example, the Civil Service, the SAF and the Police do not allow their senior officers to be involved in politics. This reduces significantly the pool of talent the Party can tap, as the public sector -> employs a large proportion of the brightest graduates of each cohort. We cannot tap their services unless they resign from their employment.

49 In the private sector too, many companies do not want their employees to be politically active, especially if they are to stand for elections and become MPs. They do not want their employees to be distracted by outside activities. Many MNCs also do not want to take sides in domestic politics through politically active employees. Some may find it awkward to deal with an MP in their midst.

50 To reach out to those Singaporeans who cannot or do not want to join the Party, but want to contribute in some way to the development of Singapore, I suggest we widen our "Friends of the PAP" scheme. The "Friends of the PAP" scheme is run by the Party HQ. Most of the members are establishment figures from both the public and private sectors.

51 I suggest YP form a similar scheme - perhaps called "Young Friends of the PAP" - to target Singaporeans under 40 years of age who are interested in engaging the PAP in building a better Singapore. "Young Friends of the PAP" can be the Party’s critics, friends and supporters who for some reason cannot be members of the Party. "Young Friends of the PAP" is the younger version of "Friends of the PAP", with an important difference: we are not tapping them for funds for the Party. The primary purpose is to talent-scout and to engage these younger Singaporeans. Membership should be by invitation. You do not need a large number of members. Five hundred would be a good number. 10

52 In this same consideration of reaching out to a wider pool of Singaporeans, we should revamp Petir to make it a vehicle for Party members and friends to express their views. has already asked Irene Ng and a small group of MPs to look into this revamp.

53 I believe that many Singaporeans want to participate in building a better Singapore. At the very least, they want their ideas to be heard and considered. Petir should be the Party newspaper wherein there is an active exchange of views on matters of interest to Singaporeans. We want it to be an avenue for members and friends to put forward serious proposals and diverse views for debate. Petir should particularly welcome views from people who see issues differently from the Party or the Government. The Party is a big ship capable of accommodating a broad range of views. We are, in fact, always looking for new ideas, and new and better ways of serving Singapore. We do not want everyone to have the same view. We do not want clones. That will make the PAP a dull and narrow party.

ADDING VALUE TO PARTY MEMBERS

54 We should also see how we can add value to members of the Party, and to members of associate clubs like "Young Friends of the PAP".

55 Ong Seh Hong gave me this idea. He suggested we form specialist chapters in the Party. There could be a business chapter for those who are in business, to meet and network with one another. Or a health chapter for those working in the health industry, to build contacts and friendship. Each chapter can organise its own specialised activities. - "Young Friends of the PAP" can be invited to participate in these chapter activities.

56 The Party can also organise courses and talks which will benefit members and friends in a personal way. For example, we can organise talks on financial management and other interesting topics. In this way, the Party adds value to the members. Let us find ways to make members feel it worth their while to join the Party, apart from altruistic reasons. SYMBIOTIC RELATIONSHIPS

57 Another idea for the Party to reach out more effectively to Singaporeans is through symbiotic relationships.

58 The PAP has a symbiotic relationship with the NTUC. This has benefited both organisations tremendously. The NTUC supports the Party during and between elections, while the Party, in Government, looks after the interests of the workers. The Cabinet always consults and other Labour MPs before introducing policies that affect the interests of workers. The Cabinet values and gives weight to their views because of their close rapport with the workers.

59 I suggest we try and build similar symbiotic relationships with selected social organisations through the PAP Community Foundation (PCF). The PCF is the social arm of the PAP. Its activities are non­ political. Its main activity is the provision of pre-school education to children of HDB heartlanders. It also has a charity wing. The PAP shows its compassionate face and human touch through the PCF.

60 The PCF should partner a few major non-governmental social organisations to help needy Singaporeans. It could help them to raise funds as well as provide volunteers.

61 For example, raises money for financially needy students through its School Pocket Money Fund. This is a good project. But these students may need more than pocket money. Some may come from broken families and need emotional help as well. Or they may need to buy a computer. The PCF can complement the School Pocket Money Fund. For example, as the PCF has close rapport with social and grassroots organisations, it can reach out to the students and give them counselling. It can also raise more funds to provide bursaries or scholarships to supplement the pocket money the students receive from the School Pocket Money Fund.

62 I have not discussed the matter with the Straits Times, and I mention the School Pocket Money Fund only as an example.

63 These are some ideas for the Refreshing PAP Committee to study. Their recommendations must lead to a reinvigorated, revitalised and refreshed Party which all Singaporeans, particularly the young, will want to identify with. 2007 GENERAL ELECTION

64 After the recommendations of the Refreshing PAP Committee have been accepted by the CEC, I suggest the Party prepare annual work-plans to gear up for the 2007 General Election.

65 The 2007 election will be tougher than the last one. The next few years will be uncertain. No one can tell how the war against terrorism will go. If the US embarks on a war to disarm Iraq and bring down Sadaam Hussein, there will be a wave of anti-American sentiment. More Muslims may then join the terrorists to hit out at the US, the West and all those who side with the US. The Israeli-Palestinian conflict may get worse. The Middle East may be in turmoil. Oil prices may go up.

66 If this is the scenario, the world economy is likely to grow more slowly. Already, there is excess capacity in many industries, including the electronics industry on which we are heavily dependent. The world may experience deflation, with prices of goods dropping and consumers holding back consumption.

67 Meanwhile, China will continue to grow. In fact, it may be the only growth engine in the world in an Iraq war scenario. But at the same time, with China's continued economic ascendancy, it may become even harder for ASEAN to compete with China for investments.

68 We won the last elections decisively partly because of the recession and fear of job losses. Singaporeans wanted a strong and trusted government to take them through difficult times. But if the economic gloom lasts a number of years, the mood in 2007 may be different. We must expect the Opposition to exploit this uncertain mood of the people.

POLITICAL TRANSITION

69 Our key counter to the Opposition must be the quality of our team. We must produce more good candidates, to ensure that we have a better team than the Opposition can offer to deal with the difficult problems.

70 By 2007, there will be a new Prime Minister and several new Ministers. Several of the new MOSes have shown potential to be Ministers. I intend to test them out sometime next year. Several older Ministers, however, will stay on in 2007 to help the new team succeed.

71 2007 will be another watershed election. At that election, we have to field more young candidates with ministerial potential to take over from the older ones. It is a watershed because it will pave the way for a complete changeover in the political leadership by 2012. In other words, from 2012, Singapore will be completely in the hands of the Third Generation leaders.

72 This political transition will be smooth. We have a good team in place. The younger ones are picking up the political ropes. The next Prime Minister would have been well-tested by 2007. He would have a capable team of old and young Ministers to help him. Singaporeans would have a good measure of the new Prime Minister and his team by then.

73 And I would have discharged my duty to Singapore.