Singapore still 3rd in world competitiveness ranking: Study

Despite weaknesses in areas such as cost of living and immigration laws pertaining to employment of foreign labour, Singapore maintained its third position in an annual world competitiveness ranking by Swiss business school IMD.

The Republic was leapfrogged by Hong Kong, who ranked second after coming in fourth last year. Switzerland went the opposite direction, falling two places from second. The United States continued to head the rankings.

Studying a total of 61 countries, the rankings were based on indicators under four aspects: Economic performance, government efficiency, business efficiency and infrastructure.

With the Republic’s productivity under the spotlight – labour productivity fell for the fourth straight quarter in the first three months of the year – Singapore was ranked 12th for the “productivity and efficiency” indicator, for example.

Singapore was ranked 50th for the “prices” indicator, which looked at consumer price inflation, food and gas costs, as well as rents, among others. Compared to previous rankings, there was less emphasis on inflation this year, IMD said.

Consumer prices have been falling here, although prices for food, consumer durables and services were still rising. Last month, consumer prices fell for the sixth straight month to their biggest drop in five years, helped by the plunge in pricing for oil-related items and a moderation in services inflation.

Singapore was ranked 58th and 57th for cost of living and immigration law, respectively. Nevertheless, it was ranked as the top country for several indicators of government efficiency, including government decisions, ease of doing business and adaptability of government policy.

POLITICAL STABILITY, ONE OF SINGAPORE’S TOP ATTRACTIONS

The rankings also incorporated a survey of 6,234 international executives who were asked to select the most attractive factors of countries. International executives cited policy stability and predictability, reliable infrastructure and government competency as Singapore’s top three attractions.

The bottom three were a strong research and development culture, cost competitiveness, and open and positive attitudes towards foreigners.

Professor Arturo Bris, director of the IMD World Competitiveness Center, said: “The new Government policy is towards trying to protect Singaporeans, their jobs and Singapore businesses.”

Nevertheless, Barclays economist Leong Wai Ho said the policy “reflects the push to reduce the economy’s over reliance on foreign unskilled labour”.

Mr Leong said he was concerned about Singapore’s eroding cost competitiveness. “This again may reflect the growing perception of Singapore being the London of Asia in terms of its costs,” he said. “We are expensive. But we should always ensure that we continue to offer value. We need to remain vigilant that we are not more expensive than necessary.”

Several other major Asia economies also fared worse in the rankings compared to last year: Malaysia fell from 12th to 14th, Japan from 21st to 27th, Thailand from 29th to 30th, and Indonesia from 37th to 42nd.

Prof Bris said: “The low oil prices have taken a toll on the economies of Malaysia and Indonesia, while Japan’s economy still has not done well.”

He added that a common factor among the top-ranked countries was business efficiency. “Simply put, business efficiency requires greater productivity and the competitiveness of countries is greatly linked to the ability of enterprises to remain profitable over time,” he said. “Increasing productivity remains a fundamental challenge for all countries.”

Source : Channel NewsAsia – 28 May 2015

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