Asian Economies Need Higher Value-Added Economic Activities, Says S'pore Minister

By Tengku Noor Shamsiah Tengku Abdullah SINGAPORE, April 6 (Bernama) -- Asian economies need to be able to move on to higher value-added economic activities in order to sustain their economic growth, says Minister, Prime Minister’s Office and Second Minister for Home Affairs and Trade & Industry, S. Iswaran. "They will also need to leverage on design, technology and a skilled labour force to create products and services for their own domestic markets, as much as for the rest of the world. "Innovation is a key source of competitive advantage in a higher value-added economy," he said in his address at the Pan Indian Institute of Technology (PANIIT) Asia Pacific conference here Friday. While we remain sanguine about the prospects for Asian economic growth, Iswaran said, "we must equally remain vigilant towards the downside risks -- rising energy costs and price shocks from problems in the Middle East; the Eurozone sovereign debt crisis may escalate if fundamental fiscal challenges remain unresolved; China’s growth is moderating; and inflation continues to pose a significant threat to India and other parts of Asia." As manpower costs increase, energy prices rise and Western currencies weaken in relative terms, some Asian economies are losing their value proposition as a low-cost manufacturing centre for global markets, he said. Some suppliers in China, Vietnam, Malaysia and Thailand are starting to transfer traditional labour-intensive low-end manufacturing operations to less developed neighbouring countries, he noted. Asian economies have to move away from their dependence on the low-cost manufacturing business model, he said, adding more developing Asian economies are expected to place greater emphasis on R&D as well, citing Singapore's investment in R&D which has sown the seeds of success in several industry sectors. As part of its Research, Innovation and Enterprise 2015 (RIE2015) plan, the Singapore government will inject US$16 billion into R&D spending over the next five years, he said. As governments seek alternative sources of energy to meet industrial needs or for diversification purposes, companies in Asia must also actively source for innovative solutions to enhance energy efficiency, so that they can operate within energy and carbon constraints, he noted. The minister said access to talent and skilled labour is one key consideration for companies when deciding where to locate their higher value-added activities. He urged governments to encourage the establishment of avenues for continuing education and industry upgrading so that workers have the opportunity to acquire deeper skills and knowledge, and be well prepared to advance their career. -- BERNAMA