The Economist Intelligence Unit’s (EIU) inaugural Global City Competitiveness Index announced this week placed Singapore as the third most competitive in the world, just behind New York and London. In financial maturity and physical capital, two of the eight categories, Singapore emerged as number one.
Khoo Teng Chye, executive director of Singapore’s Centre for Liveable Cities, called Singapore “a hub open to the flow of people, ideas, capital, goods and services.” One example from the list of firms making the decision to relocate to Singapore is BHP Billiton, one of the world’s largest mining firms, which recently announced the relocation of its marketing and trading hub from The Hague to Singapore.
As the managing director of Savvis Asia, which plans to build a second data center in Singapore, Mark Smith says Singapore is “fast becoming a springboard for businesses abroad to expand into and broaden their market reach.” On top of its geographical advantage as a natural port in the South China Sea, Singapore, unlike many of its Southeast Asian neighbors, offers robust government stability and tax incentives.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
But despite its stellar track record and a local market encouraging an optimistic outlook, Lim Hng Kiang, Singapore’s minister for trade and industry, expressed the urgent need for Singapore to restructure its economy. Naturally, with the rise of Asia as a whole, Singapore faces the threat of increasing competition from countries like China and India. There’s a belief, therefore, that the city state could lose its pre-eminent status as East Asia’s primary hub if it remains stagnant.
The plan for restructuring Singapore’s economy is based on building a foundation for opportunity-oriented and productivity-led growth. The government is diving into the restructuring head on, and is planning to spend 40 percent more annually toward this goal.
On top of its tax incentives and license approvals attracting foreign direct investment, Singapore is also strategically establishing itself as an international trading hub through securing high value-added trading clusters.
While taking full advantage of its historical lead in the maritime and offshore sector to anchor its plans, Singapore is also bolstering its reputation for regulated capitalism. Giving the example of seven industrial Real Estate Investment Trusts in the rental market, Lim says: “I’d like to assure members that we will not hesitate to intervene if we see evidence of collusion or abuse of market dominance.”
Despite Singapore lacking democratic legitimacy in the eyes of many, its market is one of the least susceptible to economic corruption due to its small size, booming and highly competitive industries, and close government surveillance.
What is more, Singapore’s regional and global diplomatic ties ensure it possesses greater global appeal than the 12 Chinese cities also ranked in the EIU Index’s top 20.
On March 13, Singaporean Prime Minister Lee Hsien Loong and Indonesian President Susilo Bambang Yudhoyono attended a retreat that promised a strengthening of economic ties between the two countries. Well-placed to capture growth opportunities in Asia, Singapore’s position as a global Asia hub has been in the making for years. But with its place in international trade apparently secure, and with its focus constantly on improvement, the main problem really appears to be one built into Singapore’s local culture. In the EIU’s index, Singapore falls down on internal indicators such as cultural vibrancy and openness and diversity. Indeed, the report indicated that, “Singapore the global city is increasingly different from Singapore of the heartlands.”
Despite Lim’s claims that the restructuring of the economy is taking place for sustained growth and to expand opportunities and good jobs for Singaporeans, the underlying problem is actually a domestic one.
One element of this problem is that approximately 1,200 Singaporeans have renounced their citizenship annually over the last five years. Although the renunciation rates are only around a low 0.1 percent, it’s still disconcerting for a country that sees itself on par with other major Asian cities like Hong Kong and Tokyo.
A recent online comment made by an anonymous Vietnamese student highlighted the view of many. The student referred to Singapore as “a middle checkpoint” in many overseas students’ journey, claiming that Singapore’s future is too reliant on global and regional markets “including Vietnam, Indonesia, and especially China” when it comes to long-term prospects.
Despite its success on paper, then, many still don’t see Singapore as a global hub in Asia. If the government wants to turn this around, it will need to redouble efforts to create a city that locals feel they can embrace, and encourage a sense of ownership that reflects its international standing as a leading global city.
Yingyue Han is an editorial assistant with The Diplomat.