This will also contribute to stability in financial markets. The guidelines that were introduced last year stated: “Fiscal policy has the main responsibility for stabilising developments in the Norwegian economy”. If fiscal policy is to continue to contribute to smoothing fluctuations in the economy at the same time that the guidelines for the phasing in of petroleum revenues are to appear credible, the guidelines should be applied in such a way that they place a strict limit on the average use of petroleum revenues over time. This means that if we use more than the expected return in one period, we must use less than the expected return in other periods. The guidelines allow the use of petroleum revenues to be adapted to some extent to the cyclical situation. Fiscal policy will then ease the burden on monetary policy in the sense that the inflation target, and hence nominal stability, can be achieved with fewer changes in monetary policy. However, permitting a discretionary use of fiscal policy also involves temptations. It will probably always be easier to increase spending over government budgets during a downturn than it will be to reduce spending when the cyclical situation again improves. In that case, fiscal policy may prove to be more expansionary over time than implied by the guidelines. This will have to be countered by a tighter monetary policy, and there is also a risk that doubt arises as to whether the guidelines actually apply.
For instance, about 70 companies are located on our petrochemical complex in Jurong Island, where they plug into customised infrastructure facilities, specialised services and the supply of feedstock. We cooperate with the Indonesian islands of Batam and Bintan, each specialising in different parts of the manufacturing value-chain that it is strong in. In the services sector, we expect regional demand for health, education, tourism and financial services to grow rapidly as the middle-income group burgeons. Already, Singapore plays host to 50,000 foreign students in tertiary and commercial institutions, and 150,000 foreign patients per year from across the region. They are attracted to local universities and hospitals, as well as to the international arms of top schools and medical research institutes based in Singapore, like INSEAD, University of Chicago and Johns Hopkins. Fifth, Singapore is improving our corporate governance practices and standards. A globally oriented economy needs a robust framework for corporate governance. Singapore’s standards are high but we must continue to improve them, not only in the form of the rules but also in the spirit of their  4  BIS Review 61/2002  implementation. Our integrity premium is a precious competitive advantage which we guard zealously, and which will not be easy to replicate. The Company Legislation and Regulatory Framework Committee, a private sector-led body, has been reviewing our company law and regulatory framework. The Committee has made recommendations to simplify the process of incorporating a company, facilitate capital raising and reduce compliance costs for companies in Singapore. Let me highlight some key recommendations.