S'pore needs to make fundamental changes to be globally competitive
By Ng Baoying, Channel NewsAsia | Posted: 25 November 2009 1911 hrs

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SINGAPORE: Singapore has experienced good growth in the past years but the country needs to make fundamental adjustments to remain globally competitive, according to the latest report by the Asia Competitiveness Institute.

It noted that while Singapore is not facing a fundamental threat to its economy in the near to medium term, threats do exist in the long term.

Singapore's economy has navigated the aftermath of the global financial crisis relatively well.

And according to the Asia Competitiveness Institute, it has strong fundamentals, like a good infrastructure, education system and public services. But these alone do not guarantee Singapore's competitiveness in the long run.

Neo Boon Siong, director, Asia Competitiveness Institute, said: "Our competitiveness position is strong. We don't need to make drastic changes. It's really more how do we build upon the strengths that Singapore has, to take advantage of emerging opportunities that have risen out of the crisis. And we have identified three of them."

These include capitalising on Singapore's global connectivity to stimulate regional integration and boost trade.

Mr Neo added: "One is, how do we capitalise on our global connectivity to encourage and stimulate regional integration? A lot of the trade and investment in last few years have already been tailored and geared towards Asian production system, Asian investment and Asian foreign direct investment.

"And coming out of the crisis, Asia is going to be the driver of world economic growth. If we connect even more strongly and be more integrated to the economy of the region, including ASEAN, India, China, then the opportunity space for Singapore will grow."

Another key area is to boost productivity. According to the institute, Singapore is adept at bringing in emerging sectors to create a higher level of value-addedness.

Mr Neo continued: "We have been good at targeting new, emerging areas to bring to Singapore to create higher value-added. But productivity improvements don't come from just going into new areas.

"They also require the application of knowledge and technologies in existing activities. We feel that has not been emphasised adequately and that's an area we should pay some attention to."

And one key medium term challenge, the report points out, is that Singapore needs to develop innovations not just in science but also in the creative and entrepreneurial spheres.

Private sector economists said that while Singapore will not face immediate problems if the country does not take steps to protect its competitiveness, issues will surface in the long run.

Song Seng Wun, CEO & regional economist, CIMB-GK Research, said: "It just means meandering off into mature status with boring, low level of growth rather than take so-called destiny into our hands and create a continued dynamic environment which create further opportunity for growth.

"Being in vibrant Asia, there's always the issue of other countries modelling after what Singapore has done and perhaps doing it better. They do have the advantage of land, space and a lot more people. It could marginalise Singapore in a longer run."

The Asia Competitiveness Institute focuses on enhancing the competitiveness of ASEAN countries through research, education and partnerships. - CNA/vm