SINGAPORE — Holding up as an example the rapid expansion of Changi Airport over the decades — which went against experts' opinions — Transport Minister Khaw Boon Wan stressed on Friday (Aug 3) the need for the Republic to be ahead of the curve in infrastructure development, or risk being left behind economically.

"Building ahead of demand is indeed one of Singapore's economic success factors," said Mr Khaw at the official opening of Terminal 4. "We applied it, not only in aviation, but also in maritime and industrial development. For global business, if you don't have the capacity to serve, you lose business to your competitors. It's as simple as that."

Nevertheless, this requires "sound judgement". "It is not simply 'build and they will come'," Mr Khaw said. He noted the unpredictability of the aviation industry in particular, which is "subject to many disruptions, including oil prices and at times, unhelpful Governmental interventions".

He added: "Adhering to straight line projections may end up in tears. We must be sensitive to potential disruptions and be ready to make strategic changes promptly when warranted."

Mr Khaw cited the content of an internal memo which Changi Airport Group (CAG) chairman Liew Mun Leong wrote to his colleagues last year, after the soft opening of T4.

Mr Liew had sent him a copy, he said. In it, Mr Liew said that when Changi Airport opened in July 1981, both Changi and Paya Lebar Airport together handled only about 8 million passengers that year. Amid "severe scepticism from senior economists", a masterplan was crafted for the airport's future capacity to cater for "the maximum demand" of 30 million passengers per annum (mppa). "We were proven right," Mr Liew wrote. "Indeed Changi Airport hit that maximum plan of 30 mppa as early as 2004, much sooner than expected. And recently on Dec 18, 2017, Changi hit 60 mppa."

Mr Liew also pointed out that CAG adopted an "unconventional economic strategy" of supply driving demand, as it "did not want to be caught back footed with insufficient airport capacity". "As airport infrastructures require a lot of time to build, we started to plan and build early, comfortably ahead of capacity demands. An overcrowded airport cannot be an attractive airhub," Mr Liew wrote.

Citing the need to find new sources of revenue to fund ever-growing investments, the Government has previously flagged infrastructure expenditure, along with social and healthcare spending, as its big ticket items in the coming years.

During this year's Budget, Finance Minister Heng Swee Keat announced that the Goods and Services Tax will be raised from 7 to 9 per cent some time between 2021 and 2025.

Meanwhile, part of the budget surplus from the last financial year will be invested into future needs — S$5 billion will be put into a new rail infrastructure fund, while another S$2 billion will be set aside for ElderShield premium subsidies and other forms of support for Singaporeans.

In his speech on Friday, Mr Khaw noted that the Government is expanding Terminal 2, even as plans to build Terminal 5 are underway.

T5 will not be "just another terminal building", but will be Singapore's second airport, he added.

With the existing four terminals, Changi Airport can carry up to 82 million passengers per year. This is not enough to support future demand, he noted. "To manage the risk of disruptions, we are designing T5 in scalable modules and to build them in phases," he said. "This is a practical approach to avoid over-investment and being caught wrong-footed, should our projections turn awry."