Is Singapore losing its edge? — Alicia Wong
MAY 31 — Singapore has dropped a notch to fourth place in an annual world competitiveness ranking, with a weaker showing in areas like cost of living and immigration laws pertaining to employment of foreign labour.
In Swiss business school IMD’s annual World Competitiveness Yearbook ranking this year, Singapore fell out of the top three, coming in behind Hong Kong, the United States and Switzerland. Last year, the republic was third, with Hong Kong and the US tying in first place.
The report listed 40 factors that it considered were the republic’s strengths. These included the unemployment rate, social cohesion, transparency, higher education achievement and finance and banking regulation. In these 40 areas, Singapore was ranked between 1st and 6th place, out of 59 countries.
It also cited 24 areas of “weaknesses” — in these areas, the republic ranked between 34th and 57th place.
In particular, Singapore was ranked 57th out of 59 countries under the cost of living index, while the republic also ranked 41st for immigration laws and 48th in pupil-teacher ratio in primary education.
All these factors were part of four main categories — economic performance, government efficiency, business efficiency and infrastructure — used to score a country’s competitiveness.
The report used statistical indicators to measure quantifiable issues and drew from its annual Executive Opinion Survey for qualitative issues, such as labour relations. The survey had 4,210 respondents from 59 countries. The respondents — executives in top- and middle-management with global exposure — were nationals or expatriates in the country, representative of the economy, the report said.
The report also surveyed respondents on what they perceived were the “key attractiveness factors” of the economy: “Policy stability and predictability”. “competency of government”, and an “effective legal environment” were the top three factors cited.
“Effective labour relations” received among the least responses as being a key attractive factor.
CIMB regional economist Song Seng Wun felt labour relations ranked lowly as “it was never an issue” and, hence, was not considered by respondents as a key attractiveness factor.
However, other analysts said the low ranking could be indirectly linked to the government’s moves to tighten foreign labour policies. DBS economist Irvin Seah added: “Low-wage Singapore workers also continue to face a strain and the help given so far, to some extent, is rather limited.”
Apart from the IMD report, other globally recognised competitiveness rankings include the World Bank Doing Business report and the Political and Economic Risk Consultancy (PERC) survey. In this year’s World Bank report, Singapore ranked first, while in the PERC survey between November last year and March this year, Singapore and Australia generally received the most favourable assessments.
On the low rating for Singapore’s immigration laws, Song attributed it to the government’s recent moves to tighten the foreign worker policy, which has made it more expensive to bring in foreign workers. “Going forward, you probably find that wage cost will climb, and this is where businesses may have a bit more gripe in the next survey,” he added.
Ang Mo Kio Group Representation Constituency Member of Parliament Inderjit Singh said he was “surprised” that pupil-teacher ratio was considered a weakness in the economy. Still, he acknowledged the ratio in schools here is high compared to schools in Australia, the US and other Western countries.
Respondents in the survey were also asked to score their country’s attitude towards globalisation. In this regard, Singapore came in 7th, behind places such as Malaysia (4th), Hong Kong (5th) and Taiwan (6th).
Singh said: “In terms of venturing into a more diversified group of markets, the Malaysians seem to have done much more than Singaporeans.”
He noted that Malaysians have ventured to as far as Africa, while Singapore companies are “concentrated in a smaller base of countries overseas”.
The IMD report also identified challenges that Singapore has to tackle this year, including adjusting to a slower workforce growth and helping small and medium enterprises with productivity and innovation. The republic also needs to encourage internationalisation and develop new competitive strengths, while building a fair and inclusive society, said the report. — Today
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.