According to a Bloomberg report, Singapore’s Gross Domestic Product (GDP) this year is expected hit US$210 billion on the back of a blistering 15 per cent annual growth, beating Malaysia’s projected US$205 billion GDP. Both countries will release their 2010 numbers by February next year.
Malaysia is 478 times larger than Singapore.
OSK Research head of research Chris Eng said Singapore’s edging out of Malaysia underlined the need for the country to have a greater “sense of urgency” if it wished to compete with regional rivals.
“A lot of times when we meet foreign investors, what they tend to say is that Malaysia, on the whole, is generally inward focused,” he said.
Eng said Malaysians were more preoccupied with how to divide the economic pie among themselves, while other nations in Southeast Asia were more concerned with how to gain an edge over their neighbours.
“They (other Asean countries) are looking outwards to see what they can attract to make them more competitive,” he said.
He added that there was a need for greater recognition that the “internal factors” Malaysians spent most of their time trying to address must be put aside if the country wanted things to improve.
“There needs to be a recognition that things could be even better... if we decide to pull together. Let’s view Malaysia as one country and let’s try to tackle problems together,” he said.
RAM Holdings chief economist Dr Yeah Kim Leng said Singapore could serve as an example to Malaysia on how to achieve its high-income, developed nation goal.
“They have shown us the way to chart our own path to advanced economy [status],” he said. “Their high productivity growth and their ability to upgrade their economy to the higher end... shows that we can also do it.”
Singapore has grown 189-fold in the 45 years since independence, and saw its GDP per capita rise dramatically from US$512 to US$36,537 last year along the way. During the same period, Malaysia’s economy expanded at one-third the pace, only managing to boost GDP per capita from US$335 in 1965 to US$6,975 in 2009.
The island-republic also beat 182 other countries to come out top in a recent World Bank survey of business conditions, which looks at property rights, taxes, access to credit, labor laws and regulations on customs and licenses. Malaysia climbed two steps to 21st spot.
Yeah explained that Malaysia could readily take advantage of the island-state’s economic success by tapping into its access to global markets.
“We can use that as a gateway... to expand our supply chain,” he said.
Singapore’s constant move to reinvent its economy created opportunities for Malaysia to offer itself up as a credible alternative for industries looking to move out of Singapore, Yeah added.
“As we see them move up and up the value chain, there are industries that find it’s more competitive to move to Malaysia,” he said.
“Given that they have successfully transformed themselves into a regional hub, not just for services but manufacturing, in a way they would have reached their full capacity. There will be opportunities.”
He agreed with former prime minister Dr Mahathir Mohamad’s “incisive” comment that Singapore’s rapid expansion was due to the fact that it only focused on growing the economy. Dr Mahathir told Bloomberg that Singapore will overtake Malaysia because it did not have any “social restructuring goal” such as equitable distribution of wealth between the races.
“Malaysia we have to contend with this distribution issue that has, in a way, there’s some trade off between equity and growth,” Yeah said.
Prime Minister Najib has set a goal of tripling gross national income (GNI) to US$550 billion by 2020. His administration unveiled the ambitious Economic Transformation Programme in September aimed at attracting investment to a slew of projects worth some US$444 billion.
However, Najib’s attempts at pushing through market-friendly reforms have been met with strong resistance from Malay rights groups which see such moves as an erosion of Bumiputera special rights, as well as skepticism from the general public.