Singapore retained its position as the world's second-most competitive economy this year despite concerns about business costs and tightening labour policies, according to the World Economic Forum (WEF) yesterday.
This is the fourth year running that Singapore has come in second behind Switzerland, which maintained its pole position in the annual Global Competitiveness Report, a ranking of 144 economies that is seen as the most comprehensive assessment of its kind.
The WEF said Singapore fared well across all 12 factors assessed in the study, such as infrastructure, health and education, and technological readiness.
The country scored especially well in terms of goods and labour market efficiency and financial market development, it added.
"Singapore possesses world- class infrastructure, with excellent roads, ports and air transport facilities," the WEF said.
"Its economy can also rely on a sound macroeconomic environment and fiscal management - its budget surplus amounted to 6.9 per cent of GDP (gross domestic product) in 2013."
The WEF said Singapore's competitiveness is enhanced by its strong focus on education, which has translated into a steady improvement in higher education and training. Singapore's private sector is also becoming increasingly sophisticated and more innovative, the WEF added, "although room for improvement exists in both areas, which are the keys to Singapore's future prosperity".
These are also the two areas in which top-ranked Switzerland does particularly well.
"Switzerland's top-notch scientific research institutions, along with other factors, make the country a top innovator," said the WEF.
"Productivity is further enhanced by a business sector that offers excellent on-the-job training opportunities, both citizens and private companies that are proactive at adapting the latest technologies, and labour markets that balance employee protection with business efficiency."
The report comes as the global economy seems to be finally leaving behind the worst crisis of the past 80 years. But the WEF said the resurgence is moving at a less decisive pace than it has after previous downturns.
The report also noted that both the United States and Japan had made significant progress.
It said that as the US, ranked No. 3, recovers from the crisis, it can build on strengths such as its highly sophisticated and innovative companies. Japan, which was in sixth place, posted the largest improvement of the top 10 economies, thanks to small improvements across the board.
Mizuho economist Vishnu Varathan said the Swiss approach shows that the Singapore Government's productivity push is necessary. Efforts to narrow the income gap and improve social mobility could also help Singapore score better in such international studies, he added.
CIMB economist Song Seng Wun, however, said that Singapore should be more concerned about the possibility of slipping in the rankings.
"Giving businesses access to the resources that they need will still be the main challenge going forward," he said. "The risk of a policy misstep from a further tightening of labour policy could cause businesses to change their minds about Singapore. That, to me, is the higher possibility than for us to move up to No. 1."