22-6-2023 (SINGAPORE) Singapore has fallen one rank to fourth place in the International Institute for Management Development (IMD) World Competitiveness Center’s global competitiveness index of 64 economies this year. The city-state now ranks behind Denmark, Ireland and Switzerland in the annual report, but remains the most competitive in Asia, ahead of Taiwan and Hong Kong.
The ranking is based on 336 criteria that assess economic performance, government efficiency, business efficiency and infrastructure. Singapore’s slip in ranking was mainly due to a slight decline in components within the government efficiency factors, such as competition legislation, and the adaptability of government policy. However, the republic performed well across other indicators, including second place in employment, fourth in international investment, and sixth in productivity and efficiency.
While Singapore has done well in handling the COVID-19 pandemic, the nation’s late reopening, later than most European countries, shaved off some of its competitiveness. Nevertheless, the IMD’s director Professor Arturo Bris noted that the dip was “not significant”, adding that Singapore “remains a very strong competitive economy.”
The research highlighted that going forward, countries late to open up after the pandemic, including Thailand, Indonesia, and Malaysia, are starting to see improvements in their competitiveness. In contrast, those early to open up are beginning to see a decline in ranking.
Top-ranking economies, including Singapore, are small nations that make good use of access to markets and trading partners, the research found. Second-placed Ireland, for instance, rose sharply through the ranks as a result of robust achievements in its economic performance and significant progress in government and business efficiency.
While Switzerland also slipped a spot to third overall, it still measured strongly across competitive factors, reclaiming its top spot in both government efficiency and infrastructure. Prof Bris said that small countries allow for easier consensus between the private and public sectors. He added that Singapore is strong in both physical and intangible infrastructure, particularly in areas of education and healthcare.
While being small is a strength, the size is also a weakness for Singapore as smaller countries are more vulnerable to geopolitical issues, Prof Bris said, highlighting tensions in the South China Sea and impact from Russia’s invasion of Ukraine. Another weakness for Singapore’s competitiveness is its price tag, not unlike fellow small economies such as Hong Kong and Switzerland.
The report said economies will need to embrace agility and adaptability in order to navigate an increasingly fragmented world. Hence, Singapore should look at two additional areas of focus to stay competitive, on top of continuing to invest in health, education and digital infrastructure, Prof Bris said.
The first is to boost local produce and production for the domestic market in order to build resilience and work towards self-sufficiency, he said. Second, is to put a bigger focus on regional cooperation and trade. “Singapore needs to focus on Southeast Asia because that’s going to be the market that will make it profitable, efficient, and successful,” he said. “Gone are the times when globalisation meant that we can sell equally to (further places such as) Chile or Canada. Now, we will need to focus much more on markets closer to us.”
