Singapore represents the only case of a nation that did gain independence against its will when it was expelled back in 1965 from the then Federation of Malaysia.
Fast forward by half a century and in 2015 Singapore celebrated its 50 years of independence, a landmark event to celebrate how the city-state did manage to upgrade from third to first world in a matter of just few decades thanks to the enlightened vision of its founding father, Mr. Lee Kuan Yew, who not only engineered the independence of the city-state from Malaysia, as he greatly contributed in designing, creating, and developing a magnificent example of nation growth to become what is known today as the Singapore model of economic development.
As Mr. Lee wrote in his autobiography From Third World to First: "We faced tremendous odds with an improbable chance of survival…we inherited an island without its hinterland, a heart without a body", and Singapore today stands as one of the most important financial centers of the world, ranking number 3 in the list of the richest countries of the world in terms of per capita income right after Luxembourg and Qatar.
And it's really the case of saying that size does not matter because the small city-state of Singapore, which is roughly two-thirds the size of the city of New York, and is a small island of just 27 kms/17 miles north to south, and 50 kms/31 miles east to west, portrays an outstanding Trade to GDP ratio of 359.3, and ranks as the 13th largest export market for the world's largest economy, the USA.
Among the many accomplishments, Singapore attracts 15 million international visitors (almost three times the size of the population, and the figure excludes the number of Malaysian visitors entering the Lion City by land), and attracts FDIs for a total amount of US$60 billion, equal to 50 percent of the total FDIs to China and almost the same amount of FDIs to Brazil.
Indeed Singapore emerged as the most attractive investment destination in Asia for US companies with US investments at S$114 billion in 2013, thus reconfirming the USA as the number 1 investor in the city-state, followed by the Netherlands at number 2 with FDI at S$84.3 billion, and Japan at number 3 with FDI at S$71.9 billion.
Yes, Singapore reconfirms its role as strategic business hub and leading gateway to the 10 ASEAN markets, the four Greater China markets and the vast APAC region, and the city-state proudly lists a series of "best-in-class" accolades that make international investors, corporations, expats, and buyers confident on considering investing and relocating to the Lion City thanks to its one-of-a-kind, unique model in the global business landscape, and which displays among the many features:
• its 21 effective FTAs, including the recently signed TPP (Trans-Pacific Partnership), the free trade agreement between 12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA, and Vietnam) representing 40 percent of global economy and 30 percent of world trade,
• its zero-bureaucracy and corruption-free business-friendly environment,
• the 3rd lowest corporate tax in the world,
• one of the most effective legal system,
• best IP protection,
• 2nd most competitive economy in the world,
• best country in the world to do business,
• only country in Asia to have the AAA credit rating
Singapore shows a passion for being the best in class at everything, and it shows. The race to use superlatives does not only apply to the business environment (with some of the accolades listed above) but it extends to the city itself, the daily life and lifestyle, from architecture to banking, from shopping to dining.
A quick look at some of these superlatives showcases:
• the world's largest observation wheel (Singapore Flyer),
• the world's biggest acquarium (S.E.A. Acquarium at Resorts World Sentosa),
• the world's best business class seat (Singapore Airlines),
• the world's best airport (Changi airport),
• the world's highest alfresco bar (Altitude at the 63rd floor of One Raffles Place),
• the world's highest swimming pool (on the 55th floor at Marina Bay Sands' skypark),
• the tallest building in town (One Raffles Place tied with UOB Plaza One and Republic Plaza, all three at 280 meters of height and not taller due to height restrictions in the CBD),
• the tallest residential condo in town (The Sail @ Marina Bay, at 245 meters of height),
• the world's most expensive building (the integrated resort of the Marina Bay Sands, at US$5.5 billion),
and the list can continue.
Granting that all these listed superlatives are real and effective, if we search a definition of best in class, the Cambridge dictionary says: "If something is best in class, it is the best of its kind." And a more comprehensive definition recites: "The highest current performance level in an industry, used as a standard or benchmark to be equaled or exceeded."
In brief if you want to be the best, you have to show you really are the best. And Singapore does its very best to show it. Period.
But getting back to the superlatives, and guess what, here's another first for Singapore, but this time instead of being a best in class it's a worst in class.
In its annual report on the world's most expensive cities published in March 2016, The Economist listed Singapore as the most expensive city in the world, and for the third year in a row!
By comparing the price of a weighted basket of goods across 133 cities and including items such as food and beverage, rent and utility bills, transportation, groceries, personal care items and clothing, household supplies, private schools, domestic help, buying and running a car, in order to measure the cost of living, Singapore gets a score of 116, the highest (a very negative superlative, especially for Western expats in town), and with New York benchmarked at 100, London gets 101, and Hong Kong 114.
In most categories Singapore costs more than elsewhere, and this means that Western companies, mainly multinational groups, relocating employees to Singapore to cover a wide array of middle to senior management positions will have to consider a much higher cost in terms of remuneration package.
At the same time for Western expats who relocated or moved to Singapore, this means having to afford paying much higher costs locally than compared to back home, say in the USA, UK, or France for instance, as the costs of services in Singapore are often not in line with the standard of service and customer service Western expats are accustomed back home and yet they are priced at a premium.
With residential rents in the CBD/Marina Bay, the areas most sought-after by Western expats in town, along with Sentosa, the Orchard/Scotts roads area, and the Keppel Bay area, in the high range (it's not difficult to be asked to pay more than S$10,000/month for an apartment), and the cost of living being quite high, Western expats are starting rethinking and reconsidering about the advantages of moving or relocating to Singapore, although for the majority of them today it's just a temporary experience for a semester up to a couple of years (and for the purpose of this column I'm not considering Western expats getting married to Singaporean/Asian significant others as this implies a different set of values and reasons for staying or leaving).
I recently read a Singaporean advising dining in the food courts because it is cheap, and indeed it is cheap, but Western expats do enjoy doing that, say at Lau Pa Sat, just once in a while, with not all being heavy fans of spicy hot Asian and ethnic food on a daily basis, and rather tending to dine according to a preferred or more familiar taste, being that French, Italian, Spanish, American, Mediterranean, or else.
Grocery shopping is amazingly expensive due to high prices on imported gourmet foods and specialty foods like cold cuts and cheeses, which are a commodity back home and a luxury in Singapore, and enjoying a good bottle of wine in Singapore means paying four to five times the price paid back home due to local taxation on alcohol and local retail costs which are really high when compared to elsewhere.
Also, it seems that in particular companies from four specific sectors, namely hospitality, retail, bank services, and phone services, pretend to promote themselves as best in class but deliver poor service to the point of getting more and more frustrated customers due to disappointing experiences.
There is an interesting survey made by Ipsos Singapore on bad customer service where the results show that two out of three residents in Singapore experienced at least one occasion of dissatisfactory service in the past six months, with a 42 percent likely to use less if not at all that specific brand where they experienced the negative service, and a 31 percent sharing the negative experience with family, friends, or colleagues.
So basically Western expats "pay more but get less," which is the opposite of "you get what you pay" or "value for money" and this is becoming a more and more common trend in Singapore.
On this aspect also Singaporean customers, mainly due to the high disposable income and ferocious appetite for luxury brands (Singapore is still a young market for luxury, generating a US$3 billion business, and luxury brands flock to Singapore because they can rely on a potential and substantial client base) "pay more but get less," but they seem less concerned about the price and more concerned about getting the latest or newest model of a specific product/service and the price becomes secondary to the point that no matter what the price is, it is more relevant, if not essential at all, to purchase the latest trendy or branded item.
And furthermore there's another negative result for Singapore as on top of being the most expensive city in the world, the city-state is experiencing a slowdown in the job market, with the oil and energy, banking and finance sectors being greatly affected and resulting in fewer jobs being created, a situation that will bring less Western expats to Singapore while those already affected by the shrinking job supply have already left the Lion City and moved elsewhere or back home, or they have been thinking about alternative solutions, whether in a different industry or different country.
So to answer the question that gives the title to this column, yes, Singapore still remains attractive for Western expats but to a different breed of Western expats, and let's see what is changing.
Until few years back the majority of Western expats in Singapore were in town on a short-term assignment and relocated by multinational groups that were offering generous salary and compensation packages inclusive of several perks ranging from full housing in prime locations, full schooling for family kids and teens, full leisure in the form of golf and country club membership or similar, full transportation with return air fare for the entire family, full coverage of moving-in costs inclusive of household goods shipping from home.
This solution was highly attractive for just three reasons:
• it was a very well paid job,
• it was a highly rewarding professional experience in one of the best developing cities in the world,
• it was clear to all expats, and since the beginning, that they would be leaving after ending the one- or two-year assignment, and no matter how far from home they were from a psychological perspective they knew that sooner or later they would be back home or moving to another destination with another similar tempting offer.
Today the situation is totally different as only a very limited number of Western expats in Singapore enjoy this kind of generous package mainly for two reasons:
• the global crisis brought even large multinational groups to reduce costs and cut most perks and the lavish benefits of the good old days, mainly granting them today only to a small number of C-suite seniors
• instead of sending Western expats half the globe away to open the new local HQ or office, train the local team and share corporate culture, a new breed of Western-educated Asian managers are taking their place with the advantage of bringing a better and blended cultural fluency.
Therefore the new breed of Western expats in Singapore is a mix of a much younger crowd, well educated at graduate schools, often already in Singapore attending an MBA program, with a growing presence from Europe where the economic slowdown does not provide great opportunities, and attracted by the new Asia that is driving global economic growth.
They are more keen in learning and understanding the local culture, plan to stay in Asia, not necessarily only in Singapore, and they are flexible to move to the next Asian destination, once the Singapore experience is completed.
Basically they are no longer offered the attractive compensation packages of the past, but especially multinational companies tend to look at them because they are globally-minded, they intend to build their career in Asia, they fit into a profile with the right balanced mix of skills, attitude, and expertise often not fully found locally.
And, with expat packages now in full decline, and salaries for foreign expats set at the same level as that of locals, yes, the new breed of Western expats is willing to compromise on the high cost of living in Singapore (but only for a limited time and for a shorter-term stay) preferring to share the accommodation in one of the Marina Bay condos to cut residential expenses (with few even considering venturing across the island in areas a Western expat would have never considered before, like Pasir Ris or Woodlands, where rents are cheaper than those in the CBD, but then have to factor the time-consuming travel time to the CBD by the local MRT or by the hard-to-find taxi at classic shift hours), and by eating in food courts to cut dining costs, all in the effort of saving money from the salary and get the most from the Singapore experience.
And, yes, for a young Western expat, Singapore is a great starting point for a great experience in Asia.
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.
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Antonio Acunzo is the CEO at MTW GROUP | Foreign Market Entry Advisors, a market-entry strategy and brand marketing advisory firm founded in Florida, and with Asia-Pacific office in Singapore. He brings with him over 15 years of experience in international business in the US and Asian markets focused on the Luxury and THL industries, and is a regular speaker at marketing and international business events.