S'pore needs new niches to stay ahead

While the article "What ails Singapore's economy?" (Oct 30) presented a number of compelling reasons for the Republic's recent lacklustre economic performance, there are also other factors at play.

First, the article discussed slowing global growth and shifting trade flows at length, but stopped short of identifying the systemic cause behind these closely related factors - that is, Singapore's economy has become over-exposed to, and over-reliant on, a few select markets.

While interdependence is inevitable for an entrepot nation in this globalised age, Singapore's fortunes are disproportionately affected by the performance of its largest trading partners.

For instance, Europe alone accounts for approximately 20 per cent of Singapore's service exports. Singapore is also the single largest source of foreign investment in China.

A slowdown in any of these economies would be especially damaging.

The solution, therefore, is diversification, venturing into untapped or under-served markets, and broadening the scope so as to minimise risk. We cannot afford to put too many eggs into too few baskets.

Second, Singapore's comparative advantage over our international rivals has been seriously eroded in recent years.

Other nations can now boast of having similarly educated, skilled and disciplined workforces, as well as highly developed infrastructure.

Where Singapore used to function as a gateway to the rest of the region, we are increasingly being bypassed.

There is an urgent need to restore the unique edge that the Singapore brand once possessed, perhaps in terms of additional differentiation, and specialisation in niche growth sectors.

A third factor to consider is political uncertainty.

Territorial disputes in the South China Sea have tested investors' nerves.

Moreover, due to recent events, there has also been rampant speculation over the future of the China-Singapore special relationship; some on the mainland have called for "punishing" Singapore by scaling back economic ties ("A bid for eyeballs or a move to pressure S'pore?"; Oct 5).

Guarantees of regional stability and a rehabilitation of bilateral ties would do much to assuage concerns and facilitate economic recovery.

Paul Chan Poh Hoi

A version of this article appeared in the print edition of The Straits Times on November 07, 2016, with the headline 'S'pore needs new niches to stay ahead'. Print Edition | Subscribe