What’s Challenging Singapore’s Successful Economy (2018 Update)
KEYWORD PHRASES – challenges facing Singapore
Singapore’s journey to development is an exceptional one. Starting as a small country-state with little to no resources and the lack of infrastructure and support from foreign nations, today Singapore has grown to be a developed nation, and is at par with the USA. There is no denying that Singapore enjoyed a rapid growth from being less economically advanced to one of the developed economies in the world during the past 50 years. Its progressive thinking leaders, open economy, and free trade acted as critical catalysts to its growth.
However, since the last couple of years, the Singaporean economy is under the weather. Reports stating the slow growth pace has been doing rounds. As Singapore marked its 50th anniversary in 2015, Prime Minister Lee Hsien Loong cited some critical challenges facing Singapore and how the nation can overcome them.
Although the country has shown great progress, the future is filled with challenges and constraints. As economic cycles are getting shorter, the developed economy has less room for catch-up growth and sharper constraints. Here are some key challenges facing Singapore, which may also lead to trends for the future:
The emergence of disruptive technologies is one of the biggest challenges faced by Singapore. The effect of technology on all industrial sectors is visible around the world. The emergence of technology has lowered costs and enabled more businesses to enter the global market. Whether it is in the manufacturing or retail sector, technology is taking over certain jobs. 3D printing and additive manufacturing are changing how factories are configured. Retailers are shifting online to serve their customers. Today, you don’t even have to go to a travel agent for your flight and travel bookings. You can do that through travel booking platforms.
Yes, jobs of routine-nature are being eliminated. But, they will be replaced by newer, skilled jobs. Since new types of jobs are being created, Singapore will need to match up with a talented workforce to prevent unemployment and slow digitisation. Initiatives like SkillsFuture are the way to prepare the workforce for new jobs.
Need for Local Innovation
Singapore’s growth has been exceptional since its inception. However, in the last few years, it is moving from a phase of rapid catch-up growth to trend growth, which is mark by a low GDP growth. To avoid an economic doom, Singapore must focus on local innovation along with using resources developed abroad. Promoting small and medium-sized enterprises (SMEs) can help the nation as they provide a continuous flow of business and employment opportunities, which rejuvenates the ecosystem. Although SMEs have a tough time competing with big players, those who survive the competition usually emerge to be a large fish themselves.
The surviving SMEs grow faster, drive productivity, and act as a supporting pillar to the overall economic growth. And, as they expand to international waters over the time, they become stalwarts for Singapore’s economic growth. Since SMEs also create more jobs, they act as a buffer for employees after a recession. While this is the need, Singapore must not overlook the importance of MNCs. MNCs provide abundant job opportunities and also expose employees to different facets of doing business. This exposure is important for entrepreneurship. The nation can also look at collaborations between MNCs and SMEs to boost economic growth.
Decline in Local Workforce
People create ideas and ideas lead to innovation. To maintain economic growth, Singapore needs more productive and skilled workforce. Yes, businesses in Singapore do have access to a pool of local and immigrant talent. But, the growth of local workforce is expected to slow until 2020. You can attribute this to low-birth rate and the growing ageing population. Churning out productive workforce and providing quality education are major challenges face by Singapore. Since Singapore plans to harness technology to create more opportunities, it must train its human resources to take over the new jobs created in a digitised world.
The education system needs to prepare children to think critically and out of the box. It must also promote undying motivation in students, so they live with a ‘never give up’ attitude. While SkillsFuture helps Singaporeans upgrade their skills, the nation also needs to remain open to skilled foreigners. Greater diversity brings in fresh ideas and helps in bettering the innovation.
The Problem of an Ageing Population
Singapore is one of the fastest graying populations in the world. In an event, Mr. Shanmugam shared a news article on how adult diapers will soon outsell baby nappies in Japan. While doing so, he noted that Singapore is ageing even faster than Japan. In his lecture on June 30, 2015, when the country-state celebrated its 50th anniversary, PM Lee spoke about the concerns of ageing population. Demography indicates the future of any country. Singapore’s population growth rate in 2014 was 1.3%, the slowest in a decade. He also stated that according to some statistics, two adults would support a senior citizen by 2030 as compared to 5:1 ratio in 2015.
Increasing fertility rate from 1.2 to 1.5 over 25 years is one of the solutions give by him. While he assured that the government would do its part to facilitate this, he also admitted that Singapore also required a cultural change to become a more family-friendly country.
So, here were some of the challenges facing Singapore currently. The way it tackles these challenges will tell us whether Singapore succeeds in retaining its successful economy and the strong pillars of virtue that it is based on.
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