Singapore must remain globally relevant or risk becoming a second- tier city, a prominent thinker and businessman said yesterday.
Banyan Tree Holdings executive chairman Ho Kwon Ping said the country must become a creator of new products and services instead of merely adding value.
Mr Ho told the Singapore Economic Policy Forum at the Conrad Centennial that the Republic has no “proprietary advantages”, noting that its success over the past 50 years has largely depended on “relative advantages” such as a strong geographical location and lower-cost labour.
However, “these advantages do not last forever”. Costs here are now on a par with or higher than costs in many developed countries, and Singapore’s geographical location does not give it as much of an edge as before, given that the rest of the region is also growing fast.
“We need to have a proprietary advantage which we actually own,” said Mr Ho.
RISK FOR THE REPUBLIC
The real, tangible, clear and present danger for us is… the possibility that we will descend to become a second-tier city.
MR HO KWON PING, executive chairman of Banyan Tree Holdings
The aviation and pharmaceutical industries are examples of how Singapore can go beyond locational and cost advantages to become globally competitive, and more can still be done to build up sectors such as clean technology and urban solutions, he added.
If Singapore does not constantly refine its competitive edge and remain a top-tier city, it risks “a gradual decline into inconsequentiality”, he noted. “The biggest challenge to Singapore is not our non- existence, it is our descent into irrelevance.”
This can happen even if Singapore remains relatively prosperous, said Mr Ho.
“The real, tangible, clear and present danger for us is not the overdramatic one of sinking into the sea, it’s the possibility that we will descend to become a second-tier city.”
He also outlined other key risks Singapore is facing, including flagging productivity coupled with rising business costs, and an uncompetitive domestic economy.
Earlier, Minister for Trade and Industry (Industry) S. Iswaran had said Singapore must shift from simply adding value to creating value in order to unlock future economic potential.
This is especially important as domestic constraints are tightening and technological trends are poised to disrupt existing business models, the minister said at the forum, which was organised by the Economic Society of Singapore.
Singapore is also facing a more challenging environment where slower growth is likely to be the norm, he added.
Other speakers also offered their views on what the future holds.
Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, pointed out a few factors of vital importance to Singapore’s continued success.
The first involves navigating the “biggest geopolitical contest in human history” between the United States and China.
“The country that is the most vulnerable to US-China competition is Singapore,” he said, noting that the Republic has close economic and cultural ties with both superpowers.
But there are also opportunities to be garnered from this, such as Singapore’s involvement in the Trans-Pacific Partnership, which includes the US, as well as China’s One Belt, One Road initiative.
Prof Mahbubani also pointed to the Asean economic grouping as being of strategic importance to Singapore’s long-term survival.
“Asean is like oxygen. You’ll notice it only when it’s not there,” he said.