English Feature Article

Singapore's plan for the future: Diversify or Stay Put?

Done by: Samuel Mak

As Singapore starts to climb out of the recession, what is the best plan for Singapore’s economic future? Would it be to stay put and continue to follow current practices, or to diversify our economy and adapt to the changing times? The simple answer is that Singapore must continue to reform its economic policies, just as it did in past downturns, so as to survive.

Singapore’s economic growth is greatly influenced by the world’s economy in general. The obvious drawback to this link is that when the world economy sinks into a recession, spending from major powerhouses decreases and exports are affected. Singapore, which is heavily reliant on exports, suffered the most in the current recession, with its total trade down by 24.8% in July 2009.

The first step would be to improve and review current business practices and develop innovative ways to combat future recessions. One area where the government will be looking into to stimulate the economy would be to boost infrastructure spending and increase the amount of public aid. However, this method can only be implemented to a certain extent as Singapore’s land size is limited. Dr Tony Tan, deputy chairman of the Government of Singapore Investment Corporation says that Singapore must “improve its current export model” to suit all times. In addition the government will make an effort to attract star players such as multinational companies to kick start the economy and make Singapore the best place for high quality investments, which will in turn spawn a cluster of local companies. For example, Rolls-Royce recently moved their marine division global headquarters to Singapore this year, creating the need for engine parts.

In a bid to prepare the workforce for future recessions, the government has introduced Skills Programme for Upgrading and Resilience (SPUR) as part of the Resilience Package to help retrain workers to allow them to learn new skills and adapt to changing times. Singapore should replace old manufacturing jobs with new ones that focus more on hi-tech products and services. PM Lee Hsien Loong cited the example of Seagate in his National Day Rally saying that although Seagate had shut its factory of 2000 workers, it still had six thousand workers working in the hi-tech manufacturing. “So instead of making the disk drive - the box, you are making the media, the material on which the recording is made, the high-tech part of the box.”

However, the most important plan for the future would be for Singapore to expand its markets, products and services. The government will have to discover new and emerging markets such as China, India, Russia and Africa that goods can be exported to and marketed successfully. These markets are likely to be the most stable markets in the future and have a lot of potential and should be explored. There is also the need to create new products and services and provide more complex financial and medical services to attract investments. Finally, we will have to boost investment in the IT industry and technology to create resource efficient products and services, for instance making more sophisticated oil rigs and the promotion of interactive and digital media.

In conclusion, Singapore had to adapt and refine its economic strategies to stay afloat in the downturn. Singaporeans have to stay resilient and continue to upgrade their skills while businesses have to reform their business models for the future. Finally, Singapore has to look into new markets and create new products and services to ensure that we can fare better in future downturns.