By Aaron Low, The Straits Times, 31 May 2012
SINGAPORE has dropped one place in an important global competitiveness study, coming in fourth, behind Hong Kong, the United States and Switzerland.
The Republic's ranking in the IMD World Competitiveness study was dragged down by fast-rising prices, a slowing economy and falling productivity.
This is the second year running that Singapore's ranking in the study has fallen. It grabbed the top spot in 2010 but slid to third place last year, in the annual study of 59 economies conducted by Swiss business school IMD.
Hong Kong topped the latest rankings, with high scores for being business-friendly and having an effective legal framework.
Singapore did well in government and business efficiency. It also came out tops in higher education, the credibility of its managers and environmental laws, among other factors.
But the Republic fared poorly in terms of the cost of living, where it was ranked 57th, falling from 54th last year.
It also did badly in exchange rate stability, where it was ranked 45th, and in total health expenditure, where it came in 55th.
It also did badly in exchange rate stability, where it was ranked 45th, and in total health expenditure, where it came in 55th.
The IMD survey is one of two global competitiveness surveys that are keenly watched by businesses and policymakers.
The other, the World Economic Forum Global Competitiveness Index, puts Singapore as the second most competitive economy after Switzerland.
Economists blamed recent moves to restructure the economy and to bring about more inclusive growth here as reasons for the fall in competitiveness.
Economists blamed recent moves to restructure the economy and to bring about more inclusive growth here as reasons for the fall in competitiveness.
The Government has begun to restrict the flow of foreign workers, capped the increase of the car population and allowed the Singapore dollar to strengthen.
All these have contributed to falling competitiveness, said Citigroup economist Kit Wei Zheng.
'The supply side constraints, partly exacerbated by policy measures under the inclusive growth strategy, have extracted a price in terms of cost competitiveness.'
But while cost competitiveness will be a worry in the short term, Mr Kit said it may not be wise to reverse recent policies as the long-term goal remains the same: to engineer a change in the way the economy functions.
DBS economist Irvin Seah said he was not surprised by the drop in the competitiveness ranking, adding that other countries were catching up.
He noted that apart from cost competitiveness, Singapore's drop in the productivity and efficiency category from second to 14th place was also glaring.
'The fall was probably directly related to the slowdown in productivity last year, which grew by just 1 per cent,' he said. 'But productivity is also directly linked to economic growth - it is basically calculated as GDP (gross domestic product) divided by the number of workers - and could see further slowdowns in the near term as the economy slows too.'
He also noted that Singapore's research and development culture as well as 'open and positive attitudes' ranked near the bottom among executives here.
They had been polled on what they thought were the most attractive parts of a country's economy.
Just 3.8 per cent of respondents said a strong R&D culture was a key attractive indicator in Singapore, and only 5.7 per cent cited open and positive attitudes.
Not being first isn't necessarily bad
ACCORDING to the International Institute for Management Development World Competitiveness Report, Singapore has become less competitive.
We are ranked fourth, down one place, but this may not be a bad thing.
ACCORDING to the International Institute for Management Development World Competitiveness Report, Singapore has become less competitive.
We are ranked fourth, down one place, but this may not be a bad thing.
- One, the ranking is based on a particular agenda, that of business. The prime motive for business is profit.
While the interest of business is important, a functioning society must also serve other overlapping and conflicting needs of workers, families and individuals.
- Two, if our drop in the ranking is an outcome of the Government's efforts to create inclusive growth, we should celebrate our ranking, rather than bemoan it.
Our economy remains strong even though we are not the world's most competitive nation. More importantly, a strong economy should serve society, rather than the other way round.
- Three, the competitiveness ranking is general in nature. In reality, few companies will invest in a country based on broad and sweeping general factors.
Exact policies, availability of specifically trained workers, accessibility to particular markets and other precise factors are more important for attracting desired investments and companies. We should continue to craft targeted policies to attract desired investments and businesses.
Many government bodies such as the Economic Development Board, IE Singapore and Singapore Tourism Board are actively seeking investments, trade links and to attract tourists to Singapore.
Their task of targeting specific companies and investments is much more important than getting Singapore to be ranked No. 1. We should not be obsessed by wanting to be No. 1 in the competitiveness ranking.
Being No. 4 is excellent by most counts.
If more inclusive growth means falling even further in the ranking, so be it. After all, Singapore is a country, not just a business concern.
Dr Ooi Can Seng
ST Forum, 2 Jun 2012
Their task of targeting specific companies and investments is much more important than getting Singapore to be ranked No. 1. We should not be obsessed by wanting to be No. 1 in the competitiveness ranking.
Being No. 4 is excellent by most counts.
If more inclusive growth means falling even further in the ranking, so be it. After all, Singapore is a country, not just a business concern.
Dr Ooi Can Seng
ST Forum, 2 Jun 2012
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