Singapore will thrive if it continues to build bridges where other countries are building walls, economist Chua Hak Bin told a forum yesterday.
Dr Chua, a senior economist at Maybank Kim Eng Research, noted that after 50 years of globalisation, much of the developed world was now increasingly "walled up", with countries closing borders to migrants, putting up trade barriers and setting investment-stifling capital controls.
If such protectionism persisted, he told the ISEAS -Yusof Ishak Institute's Regional Outlook Forum, growth in global trade, which has already plateaued, would weaken and hit Singapore "severely".
He projects Singapore's economy will grow between 2 and 2.5 per cent this year, on the back of a recovering United States economy.
A glimmer of hope amid US President-elect Donald Trump's protectionist rhetoric is that Singapore, like Thailand, is a net service exporter and services are, for now, impervious to protectionism, he added.
Dr Chua pointed to how well Singapore outperformed its neighbours, which hid behind trade barriers and capital controls, when it introduced the Asian Dollar Market in 1968. By the early 1990s, its gutsiness made it the third-largest stock market in the world simply because North-east Asian markets were still "walled up".
Turning to Singapore's struggles with boosting productivity in the past seven years after slowing down the rate of growth of foreigners allowed to work here, Dr Chua said it might be time for the Government to "recalibrate" its manpower controls.
Not only had the productivity rate flatlined at near zero between 2011 and the third quarter of 2016, but current tighter manpower policies had actually raised business costs so much that demand for Singaporean workers had weakened in spite of the Government's generous $3 billion-plus Productivity and Innovation Credit Scheme, he said.
Coupled with an ageing population, layoffs were at their highest since the 2009 global financial crisis.
Dr Chua also noted that some studies showed every high-tech job created generated 4.3 other jobs for the local economy, saying that if Mr Trump acted on his threat to close the US borders to foreign workers, including some 85,000 yearly working in Silicon Valley, Singapore should welcome such high-tech talent.
China, which had the world's fastest-growing Internet market, was already "luring" them with million-dollar lump sum allowances and free housing, he said. "Even China, a country with such a big pool of people, is choosing to go forward in that direction," he added.