GSK-EDB Top Prize (Sir Paul Girolami Book Prize) - Value of Book Prize - $1200

Wee Liang En. Ian 06S7D

Q1 EDB has been at the forefront of developing Singapore's economy for the last 45 years.
In the next 10-20 years, Singapore's economy could be a roaring success or a spectacular
failure. What could make it one way or the other?

Despite her small physical size, Singapore's economy is nothing to be sniffed at: around $120
billion, and growing at a steady clip of 6%. Indeed, Singapore's performance has been remarkable,
given that the past decade has seen the economy sail through some pretty choppy waters. But is
this merely a deceptive calm before the storm? Do hidden shoals exist upon which Singapore's
economy can run aground? Indeed, challenges await, and Singapore must trim her sails in order
to take advantage of the winds of change that blow her way.

In crisis lies opportunity; indeed, the very challenges that Singapore faces can turn out to be
unique opportunities. The solution, then, is twofold: to recognise the challenges; and to understand
how these challenges can be transformed into chances for success and growth.

Singapore faces two main challenges: globalisation and a fast-paced rate of technological
progress. These two challenges affect Singapore's strengths directly: as a hub at the crossroads of
Southeast Asia, and an export-oriented economy centred on high value-added products. If left
unaddressed, Singapore will certainly be swept away by the swift currents of change.

Firstly, globalisation. The rate at which the world is shrinking threatens to make Singapore's
strategic location irrelevant, and also allows other countries to compete more effectively with us.
Singapore's connectivity makes it a suitable choice for investors to set up shop, especially in an
age when supply chains can make or break a business. But as technological advancement makes
distance frictionless, Singapore's advantage in terms of location is slowly whittled away. With ships
and planes that can sail faster and fly further, a stopover in Singapore is no longer necessary.
Coupled with investments in transport infrastructure by surrounding countries, from Tanjung
Pelepas and Dubai to Bangkok's new airport, Singapore's status as a hub is under threat.
Globalisation, too, has given Singapore a whole new list of competitors in entirely new sectors. As
jobs become more fungible and once-closed economies open up, competition for investments
heats up. Looming on the horizon, especially, are the twin giants China and India; as they move up
the value chain, Singapore's niche areas are coming under threat.

Secondly, the swift speed of technological progress. In today's world, today's technology becomes
irrelevant tomorrow. Singapore has made the right bets so far: especially in electronics and
pharmaceuticals. However, will Singapore continue to make the right decisions in the future? For
example, given the rising popularity of flash memory, will Singapore's hard disk exports be
sidelined? The exponential rate of progress today makes Singapore like the proverbial gazelle in
the jungle- in order to avoid being someone's lunch, we have to start running once the sun comes
up.

These challenges, though, present Singapore with opportunities. While globalisation allows others
to compete, it also allows Singapore to create new synergies. For example, the rise of China and
India presents Singapore with a chance to bridge the two by providing a conduit for trade; it also
opens up new markets and allows us to move up the value chain (eg. financial services). The swift
speed of technological progress also gives Singapore an advantage, as neighbours must wait for
their R&D initiatives to gather steam. Singapore, by contrast, already has a significant headstart, a
rigourous intellectual property scheme, and an emerging research community. By having first-
mover advantage, Singapore is poised to leap ahead.

Success and failure for Singapore, then, can be said to be two sides of the same coin. What
measures can we then take to ensure that Singapore rides the wind but not the storm?

To take full advantage of globalisation, Singapore will have to focus on removing both tangible and
intangible barriers that obstruct free trade. Where tangibles are concerned, Singapore must invest
in keeping its transport infrastructure up-to-date and efficient. Barriers on paper, too, need to be
removed- the pursuit of a free-trade environment will be key to Singapore's success. Progressing
to a pan-ASEAN FTA, as well as the pursuit of bilateral pacts, will boost Singapore's chances;
however, effort must be made to ensure that these agreements do not end up as a tangled “noodle
bowl”. Eventual pursuit, in the long run, of a common Asian currency would also serve to stimulate
trade by reducing transaction costs.

Apart from looking without, we must also look within. Encouraging R&D is the only way to keep
abreast in this rapidly changing world. Given Singapore's limited resources, we must focus on
niche areas like nanotechnology, and train up a pool of skilled researchers to pursue careers in
these fields. The quality of education, then, is what will make or break Singapore's future, given
that her only resource is her people.

Finally, Singapore must hedge against potential risks, to ensure that unforeseen events do not
derail her economic progress. Three types of shocks are possible: a regional financial meltdown,
shocks brought about by rising oil prices, and a sudden downturn in the global economy. A
regional financial crisis could be avoided by encouraging better surveillance and strengthening
bilateral swap agreements. To avoid the problems brought about by rising oil prices, energy
efficiency should be encouraged; whereas greater diversification of the economy away from
manufacturing (eg. tourism) will make Singapore's economy more robust.
In conclusion, Singapore stands at a crossroads of change and opportunity. Success or failure- it
really depends on what we make of it.