Strong, safe, stable, sustainable: Singapore's competitiveness story

Did you know that Singapore is only two-thirds the size of Hong Kong and less than half the size of London?

And yet the city-state has punched above its weight - with one of the most remarkable development stories of the 20th century.

The republic often features in the top ten most competitive indices. In 2018, Singapore came in second at the World Economic Forum's competitiveness report. It was declared the most competitive Asian country at the Boao Asian Competitiveness Report the same year.

Nitin Pangarkar, an associate professor in the strategy and policy department of NUS Business School, credits Singapore's founder, Lee Kuan Yew for its extraordinary development.

“One of the key things that differentiate Singapore is the vision. It is very focused on economic development. In the first part of Singapore's history, the first 20-30 years that was the overriding theme.”

Strong government efficiency has been a key contributor to maintaining Singapore's competitive edge.

As Professor Pangargar puts it, “the government is adaptable, they keep changing policies and forming new ones to keep the economic development going.”

For the Economic Development Board's Chairperson, Dr. Beh Swan Gin, the advantages that Singapore has are wide-ranging and manifold. But the one thing that stands out is its stability, both political and economic.

“I think for Singapore, a big part of why we have been successful is really the fact that investors trust that the environment in Singapore will be pro-business, it will be stable."

Dr. Beh adds that a “strong rule of law, strong protection of intellectual property” also has a big role to play in maintaining the republic's attractiveness.

Key assets that keep Singapore on top. /CGTN Photo

A key component working in the nation's favor is connectivity, both geographical and cultural. Not only is it strategically located close to key markets in Southeast Asia, China and India, but its openness and multiculturalism has helped maintain its position as a preferred destination for foreign talent and businesses.

For expats, Singapore's attractiveness lies in its high quality of life. It is safe, has a strong rule of law, a robust infrastructure, a high standard of healthcare and, of course, Changi Airport.

As Dr. Beh adds, “just imagine, if you are an executive who has regional responsibilities, the ability to use Changi airport as your airport to travel to all these markets, the ability to have Singapore Airlines, I mean the livability of Singapore is something that we tend to underplay but actually it's a big attractiveness, big selling point for Singapore.”

Nilay Khandelwal, Managing Director of Michael Page Singapore believes that “robust infrastructure and openness to global trade are some of the key factors that have contributed to its competitive advantage.”

Singapore signed its first free trade agreement in 1993. Since then it has added 24 bilateral and regional FTAs. These agreements facilitate business and trading across borders and make it less costly for firms to expand their operations internationally.

The Competitiveness Challenges

The city-state is not without its challenges. Raising productivity as well as equipping the workforce with relevant skills are some of the tricky areas which require attention if Singapore has to maintain its top spot.

Mr. Khandelwal sees the solution in three keywords: resilience, innovation and agility.

“The Singapore government's strong focus on galvanising digitalisation and re-skilling the workforce will go a long way in maintaining the country's competitiveness amidst a rapidly evolving technological environment.”

He adds that “bringing in highly specialized foreign manpower to complement the local workforce is providing a temporary boost for the economy, but this is not a sustainable long-term solution. Sound strategies for training and re-skilling must be implemented at the grassroots level.”

Manu Bhaskaran, a leading economist and the founding Director and CEO of Centennial Asia Singapore says dependency on global economy could spell trouble not just for Singapore but for most of southeast Asia.

“The region depends on foreign inflows of capital both direct investment in factories and so on as well in terms of portfolio capital investing in equity and bond market. We are plugged into the global economy and this whole trend towards protectionism and deglobalization I think is going to be an immense challenge for the region.”

Nitin Pangarkar from NUS Business School warns that rising costs and lack of skilled labor are twin challenges to Singapore's competitiveness. /CGTN Photo

Professor Pangarkar sees the ever-increasing costs in the city-state as a cause for concern.

“When citizens get a higher and higher standard of living, the wage cost will go up, the real estate cost as it is are high. So, I think you have to keep the cost in check. Once the cost spirals out of control, that could be a problem.”

It's not all gloom and doom. Professor Pangarkar ends on a positive note by adding that “Singapore has good financial resources, a very strong government, so they can think in a far-sighted manner and form policies” to meet shortcomings that could cause problems for the city-state in the long run.

(Cover photo:Singapore remains among the most competitive economies in the world. /CGTN Photo)