The ripple effect of economic recovery
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Just got back from a morning breakfast session with my ex-boss. He was mentioning about what SM Goh said in the papers. Like many garmen official, he commented that the economy is recovering. PM LHL also remarked that the economy is recovering. So why are we still not feeling it?
My ex-boss's answer to that is an analogy of the ripple effect. Our economy is centred around GLCs and really big MNCs, be it foreign or local. When you throw a stone in a calm pond, the point where the stone hits will have the biggest "current" and this same current will travel outwards. As it travel outwards, there is a resistance that is in the water that will soften the strength resulting in smaller "waves" and eventually subsiding into calm waters again.
So according to him, even if the economy is improving, the biggest gainers are these big corporations, aka GLCs. The effect on SMEs will be minimal. It will take a big "stone" to create any effect on SMEs, and the coffee shop owner (in his own words)
I think his theory is damn accurate. But the question still left unanswered is, are we really heading for recovery or is this just media stunt?
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Your boss is absolutely right. The mainstays of Singapore's economy are made up of GLCs and foreign MNEs/MNCs. This is in contrast to other nations whose economies are comprised mainly of local SMEs (e.g. in Australia > 80%).
The problem with the over-reliance on foreign MNCs is that these companies have little or no patriotic obligations to their host countries and therefore constantly seek to house themselves in the location that maximises their profit margins. Political and geographical stability is also a major factor.
Now this system has worked extremely well for Singapore in the last 40 years because of our geographic location giving us proximity to low-cost labour markets and our relative stability as compared to neighbouring countries. The question we now need to ask ourselves is how long more can Singapore sustain this competitive advantage given the increasing prosperity of neighbouring countries and the decreasing attractiveness of Singapore's labour conditions. -
The ripple effect will depend on how the stone is thrown, the angle of entry into the water, the weight and size of the stone also counts.
It depends on what kind of ripple effect that you want, as it also takes some skill to achieve that effect in the precise fashion that is initially desired.
It takes skill and experience in the 'Art of Stone Throwing'.
Have you tried throwing stone that skips on the surface of the water, and see how many skips-off-the-surface can be achieved, and how far that stone can travel across ?
With each skip, that stone will create a ripple each time it touches the surface of the water and move on, until the energy of the throw dissipate and force the stone to sink with a final and last ripple.
With the "I Know What is BEST" attitude, are the present Elite skilled enough to 'throw the stone' with the best and most effective ripple ?
The present group is riding on the reputation of a Political Party that was created by the First Generation, and developed further by the Second.
Surprisingly, the First Generation had the benefit of throwing the stone NOT in calm water, but during a storm, and it succeeded against all odds to have each stone skipping across the surface and causing many ripples with each stone. It created a tall reputation for that generation of Elite.
The Second Generation had cast its own stone during another period of less stormy times, and also caused its own ripples, although not as effectively as the First.
Will this Third Generation of Elite Rulers be like the stone itself that loses the energy of the first throw - as the stone travels further and with each skip off the surface, and causing less effect as it travels through time ?
Should we not be trying a New Stone Thrower, and give any others - who has newer and more enthusiastic energy - the opportunity to make better ripples ? -
got recover meh....
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Hmm interesting analysis on the percentage of SMEs. Never thought of it in that way.Originally posted by Weirdo80:Your boss is absolutely right. The mainstays of Singapore's economy are made up of GLCs and foreign MNEs/MNCs. This is in contrast to other nations whose economies are comprised mainly of local SMEs (e.g. in Australia > 80%).
The problem with the over-reliance on foreign MNCs is that these companies have little or no patriotic obligations to their host countries and therefore constantly seek to house themselves in the location that maximises their profit margins. Political and geographical stability is also a major factor.
Now this system has worked extremely well for Singapore in the last 40 years because of our geographic location giving us proximity to low-cost labour markets and our relative stability as compared to neighbouring countries. The question we now need to ask ourselves is how long more can Singapore sustain this competitive advantage given the increasing prosperity of neighbouring countries and the decreasing attractiveness of Singapore's labour conditions.
So your last paragraph basically sums it up why we are losing out to nations like China and India now!! But since we are developed or rather 90% developed, we should then decrease our reliance on MNCs investing in Singapore. Instead, I still find that our garmen is trying to attract foreign investors!! Shouldn't we give our local SMEs a chance to make it? So that we can become "Australia".
The problem here in Singapore is the over empahsis on results and on top of that good results. Failures are more often than not frown upon and the failures are never given a second chance! This is very unlike some countries where failures are given a second chance simply because of the fact that "one who has fallen will learn and not take the same route again!" -
Govt early days theory is that we only need MNC as they are the one who could create the most jobs to fulfil our population. SME is unable to produce the same effect as the MNC. However they forgot that drop by drop, an ocean is form. When the MNC started to leave we are left with the vacuum and the SME begin small does not have the muscle to help the economy.
Next, they began to toy with the idea of the 2nd wings where our local GLC company will become MNC in other country. However only the govt company are able to fly but the SME being weak were not able to compete with the govt company for business overseas. Worse, SME had to compete with them for business locally.
It will take a long long time before SME can recover.
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Imagine a local man/lady made good and successfully nurture a local SME into a MNC able to compete anywhere in the world. What's next ambition? Maybe run for Prime Minister?
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Elected President?Originally posted by 3Rabbits:Imagine a local man/lady made good and successfully nurture a local SME into a MNC able to compete anywhere in the world. What's next ambition? Maybe run for Prime Minister? -
Becoming a PM brings more satisfaction or personal achievement to the successful Industrialist. Unless he/she enjoys cutting ribbons..
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Can we have Ms President?Originally posted by 3Rabbits:Becoming a PM brings more satisfaction or personal achievement to the successful Industrialist. Unless he/she enjoys cutting ribbons.. -
Can ask Mr. Sim Wong Hoo or Mr. Ron Sim (OSIM) hmmm... why both also Sim?Originally posted by 3Rabbits:Imagine a local man/lady made good and successfully nurture a local SME into a MNC able to compete anywhere in the world. What's next ambition? Maybe run for Prime Minister?