Singapore Must Continue Innovating To Stay Competitive In Tough Global Economy
In his May Day Rally speech today (1 May), Deputy Prime Minister (DPM) Lawrence Wong gave a glimpse into the outlook for the global economy and the challenges Singapore may face in trying to stay competitive.
He shared how the rules of trade are changing and investment flows are shifting, which may force us to change our strategies to remain an attractive hub for international business.
While he warned Singaporeans that the future may appear grim, he assured everyone that strategies will be in place to ensure that we pull through.
Competition in global economy getting tougher
Singapore has been fortunate enough to be far away from conflicts that have erupted between countries in recent years. But that doesn’t mean that we’re immune from the spillover effects.
Such effects include countries changing their approach to trade, no longer adopting a win-win cooperation.
DPM Wong explained their mindset as one that thinks, “I don’t want to become over-reliant on you, just in case our relations turn sour.” He noted that some go further by thinking, “I not only want to win, I want you to lose.
If countries were to become protectionist and flout trade rules, DPM Wong said that Singapore “will be hurt”.
Geopolitics have also influenced the flow of foreign direct investment (FDI), as countries “put their factories and critical supplies closer to them; or in friendly countries they trust.”
Therefore, FDI will flow within countries with geopolitical alignment. The global flow then slows down.
DPM Wong additionally noted that advanced economies are building up their domestic production capacity, “especially in strategic industries like semi-conductors and clean energy”.
Should Singapore raise our corporate taxes to 15%, it will only reduce our competitive edge, in a world where we’re already losing out on investments.
Singapore can’t outbid major players in global economy
Presenting the fact of the matter, DPM Wong plainly said that Singapore can’t afford to outbid the “big boys” like the Europeans, Americans, Chinese and Japanese for investments.
He gave the example of a deal that Germany is negotiating with Intel to establish a semi-conductor plant in their country, which involves S$10 billion in financing support.
The finances for that one project alone is apparently more than double what the Ministry of Trade and Innovation (MTI) will be spending in 2023 to grow Singapore’s economy.
Singapore simply doesn’t have such resources, as DPM Wong stated, “We won’t have enough money to match the competition.”
Innovation will help Singapore prevail against the odds
Be that as it may, there’s hope yet for Singapore to remain resilient despite the impending challenges.
Pointing out that we’ve overcome major economic hurdles before, DPM Wong paid tribute to Singaporeans who worked hard “to defy the odds, and bounced back stronger”.
In the current climate, what Singapore can do is continue investing in our connectivity infrastructure. Examples include Changi Airport Terminal 5 (T5) and Tuas Port, which will improve our capacity as a business and logistics hub.
With continued growth in this area, multinational companies (MNCs) are focusing their regional and even global supply chain operations here.
Besides investments, the Government is continuing to invest in research and development (R&D) and innovation, with leading global companies pursuing those efforts in Singapore.
DPM Wong shared that leaders of such companies are expanding their footprint from Singapore, creating more jobs and opportunities for locals.
Don’t take Singapore’s value to the world for granted
Keeping the above efforts going, DPM Wong expressed his confidence that businesses and investors will continue to come to Singapore.
As long as we focus on our strengths and “find ways to provide value to the world”, we can continue to thrive and prosper.
Nevertheless, he reminded us to not be complacent as the challenges ahead are grave. He said,
We must continue to work harder and smarter than others. We must always have that something special that convinces the world we are a better bet than most, and that Singapore can always be relied upon to deliver.
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Featured image adapted from Ng Chee Meng on Facebook.
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