Low costs cannot be the basis for a country's long-term sustainable competitiveness, Second Minister for Trade & Industry S. Iswaran said on Wednesday.
Instead, countries must focus on skills development, market scale through economic connectivity, and fiscal, economic and social policies that are sustainable, said Mr Iswaran, who is also Minister in the Prime Minister's Office and Second Minister for Home Affairs.
He was speaking at the 2014 Annual Asia Competitiveness Institute Conference held in Singapore.
Mr Isawarn said countries must enhance their competitiveness by investing in measure to raise the skills of their workforce, and the productivity of their economy. This can be done through continual education and training, encouraging innovation among companies, and helping them to be integrated into global supply chains to exploit economies of scale.
But such efforts must be accompanied by sound environmental, social and fiscal policies to ensure that the growth generated is sustainable, he added. If countries succeed in doing so, they will be able to anchor vibrant companies, create good jobs and raise the living standards of their people, he said.
The minister said the Asia Competitiveness Institute (ACI) can play an important role in helping Asian countries better understand the factors driving competitiveness, and what they can do to raise competitiveness. The conference and ACI's broader research agenda can inform the discussions and exchange of views among policymakers, academics and business leaders, he said.
Mr Iswaran also noted that the ACI has embarked on initiatives to help policymakers better understand how to encourage firms to be more efficient, citing as example the SME productivity benchmarking exercise that ACI is working on with SPRING Singapore, in consultation with the European Central Bank.
Benchmarking Singapore SMEs to regional SMEs will help to shed light on the areas that need further attention, and enable policymakers to formulate better policies and more targeted programmes, he said.