Singapore trip notes (part 1)

One arm of my strategy was to make Singapore into an oasis in Southeast Asia, for if we had First World standards, then businessmen and tourists would make us a base for their business and tours in the region”            — Lee Kuan Yew

Last week I was in Singapore with a full week of meetings and discussions held with academia, universities and corporates. Singapore is widely known as a bellwether indicator for the global economy in view of the critical role that it plays in the regional and global logistics and economic ties via trade, value chains and investment. And while some may question the statistical relationships between Singapore and the global economy dynamics[1], it is clear that this country is a leading economic platform that tests, innovates and explores the cutting-edge technologies and economic practices that are to be taken on board subsequently in other parts of the global economy. The role of Singapore as a key entry point into ASEAN and Southeast Asia makes it the country of choice for the leading multinationals seeking to operate in one of the most dynamic parts of the global economy. There may be scope to increase the role of such successful economies as Singapore in global economic governance via creating platforms (possibly within the G20 framework) that bring together the leading regional integration blocs (including ASEAN) and/or the leading small open economies on the international arena.

My overall sense of what makes Singapore such an amazing success story is that the key role is played by human capital investment, most notably investment in education. Within a relatively short time-span Singapore created a number of universities that are renowned regionally and globally in various fields including in business education. Some of Singapore’s main universities – the National University of Singapore (NUS) and Nanyang Technological University (NTU) – rank among the top 30 globally in the QS World University Rankings[2]. These universities (like the Singaporean state with its regional and global partners) have developed an extensive network of alliances with educational institutions from advanced economies, including the likes of Switzerland and France, in building educational and scientific programs that are competitive at the international level. Leading western universities have set up R&D platforms in Singapore such as the Singapore-ETH Centre whose programs include Future Health Technologies and Future Resilient Systems as well as projects such as Cooling Singapore and Urban Microalgae-​Based Protein Production[3]. One area where I felt that such centers could raise the economic impact of their research was greater integration and partnership with the corporate sector, so that scientific innovations are evaluated and tested/applied from a business perspective at an early stage of development.

The meetings with Singapore’s companies (both local and multinational) revealed a corporate culture that appears to be in sync with the values espoused at the level of the state. Some of the business guiding principles that were mentioned by companies operating in Singapore included the principles of “follow the client” and “not fire, but educate”, relative tolerance to failure (on condition of “failing fast”), with priority given to innovation and learning. A number of companies mentioned using Singapore as a hub to expand into other fast growing markets of Southeast Asian region, such as Vietnam. There were also signs of spillover effects in economic activity from Singapore into the neighboring regions, whereby high costs in Singapore led corporates to carry some of their operations into the neighboring parts of Malaysia. Due to its high level of education Singapore was also chosen by corporates to undertake training their personnel to work in other parts of Southeast Asia. Multinational firms mentioned that Asia, including Singapore, was the preferred test platform for new business innovations as part of the “sandbox approach”.

There was also a sense of the importance of localization and local knowledge in order to succeed in Singapore and in the ASEAN region more generally. This was illustrated by cases of global platforms without sufficient local focus and regional/local knowledge being superseded by agile regional players – one of such cases in point being Grab taking over the ride-hailing market from Uber in Southeast Asia. The key to Grab’s success was the “hyper-local approach” in its regional focus on Southeast Asia with no ambition to expand elsewhere – the company exploited its advantages in the knowledge of local culture and business environment allowing it to customize the services to local clients’ needs to a greater degree than competitors[4]. This case of a successful regional platform beating a global competitor raised questions in my mind about whether this could be a trend indicative of a “global platform overstretch” that made global players vulnerable to encroachments from regional platforms, particularly in markets where localization and knowledge of local conditions are key.

Overall, Singapore’s business environment is one of the most favourable in the world for launching a business. Many Singaporeans have their own companies – as stated by one of the local business executives, “a lot of people in Singapore are CEOs”. While Singapore may hold the unofficial title of having one of the highest shares of CEOs in total population, in the sphere of promoting gender equality at the top echelons of corporations it is the official champion. Back in 2022 Singapore featured as an economy with the highest share of female CEOs in the world – at 13.6%[5] – and while in the following year there was a bit of a decline in that figure, there was also an increase in the proportion of women serving on Boards of Directors of Singapore’s companies. By end-2025, Singapore expects to witness a 25 per cent share of women on the boards of its top 100 listed companies[6].  

In terms of economic growth Singapore seems to rely on a diverse set of growth drivers, seeking to promote investment, consumption and exports. Consumer sentiment appeared to be in good shape if one were to judge this on the basis of how crowded the shopping malls, supermarkets and stores such as IKEA were last week. Indeed, macroeconomic data suggests that growth in services accelerated in Q1 (3,2% growth after 2% in Q4) on the back of stronger wholesale and retail trade[7]. Tourism also appeared to be doing quite well (based on how busy airports, hotels and restaurants were over the past week) and is seen by macro analysts as an important contributor to growth throughout this year. The overall sentiment that one gets from talking to people in Singapore was summed up well in one of the academic presentations during the trip – a feeling in Singapore that “tomorrow is better than today”.

The role of consumer spending and the services sector for Singapore was well on display earlier this year when Taylor Swift delivered six concerts in the city-state between March 2 and March 9. According to the estimates of the Development Bank of Singapore (DSB) the concerts could have added SG$300 million to SG$400 million to Singapore’s first-quarter GDP. The effects of these concerts took on a macro(economic) scale with palpable impact on the country’s GDP as well as this year’s growth projections – a phenomenon that has already been branded as Swiftonomics[8]. One of the tour guides in the city last week recounted the story of her daughter going to one of these Taylor Swift concerts and paying a hefty price for the tickets (I would never pay such a price if only because I am now in a bit of a different age category) and hardly seeing anything on the stage because of the extremely high attendance. As in the case of China, the young Gen Z is becoming the main driver in consumption growth with strong preference accorded to new experiences and new services.

Overall, Singapore’s GDP growth of 2.7% YoY in Q1 2024 accelerated compared to the 2.2% YoY growth reading recorded in the preceding quarter and reached its fastest pace of expansion since Q3 2022. On a seasonally adjusted quarter-on-quarter basis, economic growth reached 0.1% in Q1, compared to the previous quarter’s 1.2% increase[9]. Most projections in the market envisage a substantial acceleration in GDP growth in 2024, with some estimates being as high as 3% compared to 1.1% GDP increase registered in 2023.

On the external policy front, there was no mention of BRICS in any of the meetings, but what did come up was Singapore’s neutrality in the region in the context of the economic rivalry between China and the US in Southeast Asia. The principle of neutrality in international affairs is not enshrined in the country’s Constitution[10], but is increasingly mentioned in the statements by officials regarding Singapore’s policy stance and mediation efforts. This neutrality stance is further scaled up to the position taken by ASEAN as a regional bloc, in which Singapore is playing a crucial role. Together with partners in ASEAN Singapore is pursuing a diversified approach to economic alliances, being one of the world leaders in terms of the scale of the network of trade accords. Singapore also pioneered and actively expanded the network of digital economic agreements (DEAs). As stated by ASEAN, Singapore’s “15 bilateral, 12 regional FTAs and digital economy agreements (DEAs) include some of the largest combined trade agreements in the ASEAN-China, ASEAN-India, and ASEAN-Hong Kong trade blocs—providing Singapore-based businesses with access to preferential markets, free or reduced import tariffs, as well as enhanced intellectual property regulations”[11].

As regards the investment sphere, with China experiencing capital outflows throughout the past year Singapore seems to have further strengthened its credentials as the key regional financial hub in Southeast Asia. China’s companies as well as municipalities such as Shanghai have organized roadshows in Singapore in an effort to attract capital[12]. While some of the capital outflows from China were likely re-directed to Singapore, the latter also likely benefited from the West’s “friendshoring” initiatives, “China+1” strategies and the reconfiguration of supply chains and investment positioning amid concerns about China’s slowdown. At the same during the trip there was a sense of significant presence of China’s business in Singapore’s economy, with BYD not only very much visible in Singapore’s streets, but also according to local media seeking to further strengthen its position as the leader in Singapore’s EV market[13]. The development of bilateral economic ties between Singapore and China was well on display earlier this year when the two sides signed memoranda (MOUs) on trade and investment cooperation[14]. Singapore is clearly intent on positioning itself as a bridge rather than a division line in the ASEAN region.

(To be continued)


[1] https://www.capitaleconomics.com/clients/publications/emerging-asia-economics/emerging-asia-economics-weekly/singapore-is-not-a-global-bellwether

[2] https://www.qschina.cn/en/university-rankings/world-university-rankings/2024

[3] https://sec.ethz.ch/

[4] https://www.yelowsoft.com/blog/grab-defeat-uber-becomes-biggest-ride-hailing-company-in-southeast-asia/

[5] https://asia.nikkei.com/Business/Business-trends/Singapore-touts-top-share-of-women-CEOs-pushes-for-more

[6] https://cnalifestyle.channelnewsasia.com/women/female-representation-board-directorship-singapore-senior-leadership-gender-gap-diversity-380516

[7] https://www.cnbc.com

[8] https://www.cnbc.com/2024/03/13/singapore-bumps-up-2024-gdp-forecast-on-manufacturing-growth-lowers-headline-inflation-outlook-.html#:~:text=Singapore’s%20economy%20is%20expected%20to,previous%20survey’s%20forecast%20of%203.4%25.

[9] https://www.singstat.gov.sg/-/media/files/news/advgdp1q2024.ashx

[10] https://sso.agc.gov.sg/Act/CONS1963?ProvIds=P11-#P11-

[11] https://www.aseanbriefing.com/news/an-overview-of-singapores-free-trade-agreements/

[12] https://govt.chinadaily.com.cn/s/202401/30/WS65dbf86f498ed2d7b7ea8504/shanghais-investment-roadshow-in-singapore-highlights-latest-mutual-opportunities.html

[13] https://www.businesstimes.com.sg/companies-markets/transport-logistics/not-satisfied-pole-position-byd-aims-bigger-ev-market-share

[14] https://www.aseanbriefing.com/news/singapore-and-china-sign-three-mous-boost-business-ties/

Image by Walkerssk via Pixabay

Yaroslav Lissovolik, Founder, BRICS+ Analytics


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