INDUSTRIAL COMPETITIVENESS OF SINGAPORE PROBLEM AND SOLUTIONS

Abstract

During the National Day Rally 2003, it was mentioned by PM Goh Chok Tong that to succeed on a sustained basis, Singapore must adapt to the reality of stronger competition as our standard of living and our business costs are reaching developed country levels. This is happening at a time when many lower-cost competitors are emerging. In the 1970's to 1990's, Singapore leamt to do what the US, Japan and Europe had been doing, equally well but at lower cost. But now, China, India and other countries are following the same strategy. No country should assume that it can hold on to its current share of the global pie as MNCs were "deconstructing" their supply chains by re-distributing their production and jobs across the globe, to wherever they can be done most cheaply. This leaves the industrial sector of Singapore at its most vulnerable. Singapore not only commands a higher wage per unit of worker, the land cost is relatively significantly higher than neighbouring countries. When corporations and industrialists leave or choose to locate elsewhere, the real estate left vacant can be staggering, as exhibited in local statistics. Forecasted industrial demand that is put into construction schedules will contribute to an excessive glut of industrial land. This study examines the dynamics of the macro and micro economy from various perspectives as well as government intervention with respect to one of the immovable factors of production, land, can give us a clearer picture on why and how the industrial sector is facing increasing vacancy and decreasing demand. The findings show that Singapore's industrial sector has been losing competitiveness due to a myriad of factors, both internally and externally.