Lagging behind in the ranking game
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Lagging behind in the ranking game
Star, Malaysia
July 3, 2005
Insight Down South By Seah Chiang Nee
IN a changed landscape, SingaporeÂ’s developed status has eroded, its global economic ranking overtaken by countries that had lagged behind it.
At its peak in 1997, the republic ranked among the worldÂ’s top eight in per capita GDP, but after several years of economic weakness, it has now dropped to 22nd.
The recently released IMF World Economic Outlook 2005 showed Singapore at US$26,481, behind even the poorer European countries like Italy (US$31,874) and Spain (US$27,074) that it had little problem beating previously.
Other nations that were behind but have surged ahead of Singapore include Australia (US$33,629), Britain (US$30,09
and Germany (US$35,075).
Its traditional rival Hong Kong, which was slightly behind, has shot up to a dozen places above the republic at US$32,292, helped by its link to the strong US dollar.
Between 1999 and 2003, SingaporeÂ’s per capita GDP at purchasing power parity fell from US$27,800 to US$23,700. At the peak, only three countries ranked higher on PPP terms; today itÂ’s 22nd.
(PPP takes into account price differences between countries for a more accurate measure of national wealth.)
To put things into perspective, SingaporeÂ’s global slide was not caused solely by its trade weakness, but also by currency movements. The GDP per capita, the value of a nationÂ’s goods and services divided by the population, is measured in US dollars. The dozen or so nations that overtook Singapore were Europeans whose rankings were boosted by the powerful euro, especially over the Sing dollar.
Another major cause was SingaporeÂ’s population jump due to immigration. It went from three million in 1996 to 4.18 million in 2003, the period of the ranking decline.
The island plans to push it to seven million by 2030 by immigration, which will make it hard to reclaim its former high per capita position.
The revelation couldnÂ’t have come at a less opportune time for the ruling PeopleÂ’s Action Party, which is preparing the ground for general elections.
The slide explains why Prime Minister Lee Hsien Loong is leaving the bulk of SingaporeÂ’s foreign affairs to his senior Cabinet colleagues to concentrate on the hard-hit economy.
However, there are bright spots. Firstly, it appears to be on the mend. In 1996, the per capita GDP stood at US$25,105 but it fell to US$20,775 in 2001. Last year, it recovered to US$26,481.
Singapore is in transition. Its economy is being restructured, which probably means that the future could be more hopeful than the present.
The state has signed a series of bilateral free trade agreements with major trading partners and invested billions to expand its life sciences, tourism, and hub activities in health, education and the performing arts.
The republic has also decided to build two mega casino resorts by 2009 after saying “no” to casinos for 40 years. When mature, all these new activities will move the economy.
But the most cheerful news has come from investments abroad.
While the domestic scene didnÂ’t measure up in recent years, its external pair of economic wings has done better.
In fact, Singapore has become quite a global investor. Between 1998 and 2003, as its GDP per capita weakened, smallish Singapore invested an incredible S$147bil abroad, doubling its total global investments to nearly S$300bil, the Department of Statistics announced last week.
More than half were in direct investments, mostly in Asia, topped by China with 37.2%, followed by Malaysia and Indonesia.
At the same time, the governmentÂ’s investment arm Temasek Holdings announced it had agreed to buy US$1bil of stock in China Construction BankÂ’s initial public offering.
A number of Singaporeans have greeted SingaporeÂ’s drop to 22nd position with pessimism.
One questioned if it could still be classified as a First World nation, saying itÂ’s best described as a League player dropping from Division One to Division Two.
“Forget the Swiss standard of living; Singapore doesn’t even have the Spanish standard of living!” declared another writer, throwing cold water on one of Goh Chok Tong’s pledges when he was prime minister.
Some blame the woes on the open-door immigration policy, pursued for more than 10 years.
“Instead of a stronger economy as promised, it has become weaker,” declared one.
Singaporeans take the ranking game seriously. They drool when told that theirs is the most globalised country or the second best airport in the world, but when the grades fall, the public pessimism could also be exaggerated.
This happened last month when Singapore Airlines, which was frequently named the best airline, managed only a fourth place.
Some attribute it to rising expectation among youths who are used to the good life and anything that falls short of it represents a mini crisis.
Some simply find it hard to accept that in this competitive world, others are improving all the time.
The world has changed and so will global ranking. They will likely change more regularly with new names popping up and old ones disappearing.
Speaking about the fortune of nations, one writer said Argentina was one of the worldÂ’s richest nations at the turn of the century because of its natural resources and cattle.
“Today they are nowhere near the top,” he said.
Being practical, the majority of Singaporeans are less bothered by world ranking than the living reality at home.
Many multinational corporations have pulled out and the government is frantically raising skills and reducing costs (including wages), cutting into SingaporeansÂ’ living standards.
The poor are hit the hardest and the rich-poor gap has widened. The Department of Statistics said the wages for the bottom one-fifth of Singaporeans had fallen by 3.2% between 1998 and 2003.
At the same time, another survey by Housing Development Board (HDB) confirmed that the household income for those living in smaller one-room and two-room flats had declined by 17% to 14.5%.
Singaporeans who have gone through worse times see the recent past as a passing cloud.
Lee Kuan Yew has told youths not to despair because their future will be brighter. Singapore 2030 will be a flourishing global city of six to seven million people, he adds.
Singaporeans who admire his vision are hopeful that in 25 years, their city may achieve the current living standards of Switzerland (per capita GDP US$52,879). -
in 25 years i will not be alive then or become so old to enjoy it. So what now am i to suffer for 25 years?
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Thx Lazerlordz. I think this is a great article
The arguments are very factual and balanced, and offer a 3rd party view at our economy and our people's mindset. Looks like the author is enjoying himself by subtlely taking a swipe at the Singaporeans mentality
.
While we restructure our economy to become hubs in bio-sciences, tourism, education, arts, and expand our investments abroad.. Global factors are also affecting us eg. currency movements, global competition, and larger population
It highlights that singaporean should be more aware of the macroscopic view of our place in the world, rather than being so myopic about our own problems all the time. It may sound cliche, but we should be asking ourselves what we can do for our country rather than pointing the finger at the government at every chance.
I particularly like these few paragraphs.Originally posted by LazerLordz:Singapore is in transition. Its economy is being restructured, which probably means that the future could be more hopeful than the present.
The state has signed a series of bilateral free trade agreements with major trading partners and invested billions to expand its life sciences, tourism, and hub activities in health, education and the performing arts.
The republic has also decided to build two mega casino resorts by 2009 after saying “no” to casinos for 40 years. When mature, all these new activities will move the economy.
But the most cheerful news has come from investments abroad.
...
Singaporeans take the ranking game seriously. They drool when told that theirs is the most globalised country or the second best airport in the world, but when the grades fall, the public pessimism could also be exaggerated.
Some attribute it to rising expectation among youths who are used to the good life and anything that falls short of it represents a mini crisis.
Some simply find it hard to accept that in this competitive world, others are improving all the time.
...
Being practical, the majority of Singaporeans are less bothered by world ranking than the living reality at home.
...
The world has changed and so will global ranking. Speaking about the fortune of nations, one writer said Argentina was one of the world’s richest nations at the turn of the century because of its natural resources and cattle. “Today they are nowhere near the top,” he said. -
7 million?
the future is bright?
i am glad i wont be alive at 2030 to witness it.
i would be 65 by then. -
"..One questioned if it could still be classified as a First World nation, saying itÂ’s best described as a League player dropping from Division One to Division Two.
“Forget the Swiss standard of living; Singapore doesn’t even have the Spanish standard of living!” declared another writer, throwing cold water on one of Goh Chok Tong’s pledges when he was prime minister.
Some blame the woes on the open-door immigration policy, pursued for more than 10 years.
“Instead of a stronger economy as promised, it has become weaker,” declared one....."
...and it is so frustrating to know that most Singapore-born citizens continue to support a treacherous PAP Government that is already showing signs of unconcern for the 'original' Singaporeans.
In 15-25 years time foreigners will outnumber us - a few times over. We will all loose our voice and priorities in this country. PAP is not going to worry about that - because they wont need our votes by then. This is a fact - most PRs turned citizens normally vote for PAP for fear of loosing their citizenships. -
I think the article highlights more of the fact that the government has dominated local and foreign economics too much and leaving too little of the money made for the ordinary people itself.
In my point of view, the govt has rewarded itself too much, enriching themselves with too much money while only leaving the scraps for the people on the ground. This is not "invest and grow" economics, this is "top down" or "trickle-down" economics.
As long as this sort of economic policy is in place, those at the near bottom and in the lower end of the middle class can never hope to get a chance in getting more money and having a more secure future for themselves. They will always be struggling for survival, day by day and month by month.
What S'pore needs is not "trickle down" economics, but "invest and grow" economics- economics that are not focused entirely on the rich ones, but for those who are on the lower end of the income bracket and that emphasises investments on the future like: education, healthcare, technology, crime, environment, future wages, job rates.
It's about enpowering people through education, technology and personal and economic freedom- not about enpowering the elite who already doesn't need more power than they already have. -
In one of the on-line articles, I came across some research papers that claimed the average family debt ratio for a Singapore is around 160+% in 2002-2003 period, comparatively US family is around 120%. I try to verify these data from National Statistic Board Database, but it is not available online to the public. Not sure if the data is really true or not.
But one thing I am sure, not much Foregin Direct Investment in Sg recently. Even in the traditional strong chemcial sector, BASF had recently hinted that the China is a much more preferred site as compare to SE Asia (according to The Straits Time sometimes back). Singapore, being a small country, is traditionally dependent on our neighbours (China, Malaysia, Indonesisa & Thailand) to generate strong economy growth.
This model no longer works out, as China experience exponential growth rate since 1990s. For some bros, who have visited China, you must have agreed that the Shanghai-Suzhou-Wuxi region will be approaching or exceeding our Singapore development level within next 2-3years. Mega malls packed with cash rich shoppers from around the world. Our orchard road really shy away when compare to the Nanking road in Shanghai.
There are some voices that say china system is corrupted, inefficient, no IP protection. While Singapore has a good effective government, good educated workforce and good corportate governeance here, Singapore also armed with a list of FTA with number of country as well! But all these factors are secondary. The hard fact is China is the intended market, that is where all the cash are. So naturally, all businessmen and CEOs would naturally make sure that their company would "camp" in China even that they dun see the profit now.
In the recent Chinese companies expansion bids, these actions would only strengthen the foreign investor confidence in China. Who would really care if there are big scandals in chinese banks, these happen everywhere even in US. Nobody would want to miss his chance to make some $$ out of China, since he or his competitors is already there. But be warned, making $$ out of china would be very hard, it would be like playing a game of musical chairs, nobody knows that who has the last laugh.