The world economy is increasingly connected. Crisis in one part of the world can create ripples of instability to distant nations. A recent example is the Syria unrest that had caused financial uncertainty in global equity markets as investors flock to safe havens such as the US treasury. Countries can no longer be fully insulated from events far from their shore.
Singapore being an open economy is highly integrated into the global economic landscape and thus cannot escape from waves of crisis flowing from foreign land. With a small domestic market, the country is highly dependent on trade to sustain growth.
Since it is the only developed country in Southeast Asia, it is often viewed as the economic barometer for the region- any financial woes around the world is likely to be first felt by Singapore’s economy in the region since it is highly dependent on international trade.
According to World Trade Organisation (WTO), Singapore’s trade to GDP ratio in the period of 2009 to 2011 is about 415.8, reflecting a heavy reliance on external trade for its economic success.
As the country marches towards its half-century independence, a common question is raised : Can past economic success be sustained into the future?
A poster boy for free trade
Singapore’s economic success is often attributed to its free trade policy. From its colonial past, a common theme revolved around the idea of “free” port. Its destiny appears to be pinned on the willingness to maintain an openness attitude towards trade from the rest of the world coupled with low barrier of trade in the form of tariffs.
At present, the country has maintained this philosophy and has without doubt benefited from such approach. PSA Corporation Ltd (PSA) aims to be “The World’s Port of Call” has been central to the nation’s survival, as the container volume has often been cited to be among the world’s top five.
In the latest National Day Rally (NDR) speech, the government effort to increase the capacity handling of containers by PSA is likely to further strengthen and enhance local competitiveness in the region.
Joined hand in hand with the recent call for productivity growth in labor, these strategies adopted should allow the nation to continue to be viewed as a cost-effective and reliable port of choice for international trading community.
No nation can prosper by being insulated from the rest of the world. In a popular read by Adam Smith’s “The Wealth of Nations”, the concept of comparative advantage can be viewed as a strong push by nations towards trade.
The idea was simple: trade can happen between two similar countries as long as the relative cost of producing the trading products are different.
There is little doubt that Singapore’s trading economy is a fundamental believer of this idea. The latest round of the EU-Singapore Free Trade Agreement (FTA), one of the many FTAs signed since its independence, was yet another strong testament of such thought.
Nevertheless, trade does not simply means the movement of goods. It should also be seen as a flow of ideas, people and goods. It is the combination of these factors that grow the human capital and leads to the flourishing of the local economy.
Such flow must be supported by a well-developed air travel capability so as to connect the country to key global city nodes and eventually becoming a node in the global economic space.
The recent NDR’s plan to expand Changi Airport passengers’ arrival capacity is a leap forward in our quest to become an air hub.
As noted in the speech, Asian cities in the region have embarked on grand projects to revitalize and power-up their airport services and quality since the expected flow of trade into Asia is expected to continue to grow as the world slowly crawls out of the recent past economic debris.
The effort to improve local airport’s capability will allow Singapore to wield off stiff competition in the air travel business and capture the possible growth potential in years to come.
Staying Relevant in an uncertain time
The list of what to do to remain successful is never ending. Central to all is to ensure that Singapore remains relevant to the world. Imagine if Singapore’s survival has no impact on the global arena, will there be interest for other nations to trade and assist Singapore to grow?
The answer is clear. Singapore has been relevant in several ways. The country is one of the world key foreign exchange trading centres.
Likewise, it is often used as a stepping-stone to explore Southeast Asia markets and to some extent the Asia’s market. Only when Singapore’s survival is relevant to external parties, these players will develop self-interest to invest in Singapore and participate in its success.
In short, staying relevant helps to build utility for others to tap on and ensure Singapore continuing success in becoming the destination of the numerous hubs it envisions to become.
The future of Singapore is uncertain. Today’s success cannot be guaranteed to project into the future. The wavering of global power relationships complicates our route to success. Nevertheless, as the nation inbuilt a forward-looking policy towards nation building, Singapore is well poised to become a glowing star.
As long as we retain our core values in the course of economic building, navigating towards future economic success is still possible.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
Do you know more about this story? Contact us anonymously through this link.
Raymond Foo is currently holding the position of Franchise Manager and Learning & Development at Evorich Holdings, assisting the organisation to develop new business model and overseas venture program. With a passion for business, he started his first education business at the age of 21. During the course of entrepreneurship, he has developed deep interest in writing. The topics of interest are economics, finance, business development, and education.