Singapore economy – not all doom and gloom after all?

By February 28, 2017Current

TL;DR – How bad is bad exactly?

The manufacturing output in December 2016 grew a whooping 21.3% from December 2015. That might have given hope to some that our economy has turned a corner and we are out of the woods, heading to brighter days. Then came the manufacturing data for January this year. Manufacturing output in January grew a lacklustre 2.2% from a year ago. So it looks like we still have to face the spectre of a weak economy.

Naturally, Singaporeans are concerned. Budget 2017 didn’t seem to allay those concerns. Most people focussed on the 30% hike in water prices for households. Never mind that the U-Save rebates for those staying in HDB flats will be permanently increased. Singaporeans are still concerned about how much tighter their belts must become.

Singaporean businesses are also unimpressed with Budget 2017. The Singapore Business Federation (SBF) had this to say about Budget 2017:

“The Singapore Business Federation is disappointed with Budget 2017’s short-term measures, mainly with the inadequate short-term support to lower business and compliance cost. The business community has repeatedly conveyed their concerns on rising business costs through various platforms.”

But is it all doom and gloom? No. It’s not. There are bright spots. Micron Technology, one of the world’s largest producer of semiconductors, announced in September last year that it would pump S$5.4 billion over the next few years into one of its facilities here in Singapore. Along with that investment, Micron is going on an aggressive recruitment drive.

Then there is Google. It’s Asia-Pacific Headquarters is in Singapore. It moved to a new sprawling office in November last year. That was to accommodate its rapidly growing team in Singapore.

And even though it’s only the start of the year, we already had some good news. Zendesk, a US$2.73 billion New York-listed customer service software firm, has upsized its Singapore office to accommodate over 120 employees. Zendesk currently has close to 100 employees here.The Trendlines Group, an Israel-based medtech and agritech incubator, has opened its new incubator – Trendlines Medical Singapore – in Singapore.

The moves by those two companies would significantly bolster Singapore’s name as a launchpad for global innovation.

These examples show that Singapore is still able to attract good companies to set up and expand their offices. This translates to jobs, inflow of talent and capital. All vital for Singapore’s continued prosperity and for Singaporeans to continue to enjoy the quality of life that we have now.

What we need to do to stay attractive to great global companies

Yes, it’s for Singapore’s future that it’s important that we continue to be able to attract good companies to come to our shores to set up shop. To do that, we need be able keep doing the following three things.

First, we need to continue to be a safe and stable society. No one in their right mind will spend billions of dollars (as Micron did) to build a manufacturing facility unless they are very confident that the facility can be economically productive for years if not decades. So companies will only be willing to make that kind of investment if they are confident that there weren’t be major disruptions in the country they are building their facility in.

Second, we need to continue being able to attract top talent from all over the world. Why is Silicon Valley so successful? Because it is able to attract the best and brightest minds.

Sergey Brin, one of the two co-founders of Google, is a Jew born in Russia. His father is a mathematics professor, his mother is a researcher in NASA. For Singapore to be successful, we must be just as able to attract bright and capable talent.

Third, Singaporeans need to continue to have the relevant skills. According to Mikkel Svane, founder and chief of Zendesk, one reason why Zendesk moved to Singapore is because Singapore is home to a highly-skilled workforce that understands tech and embraces innovation. That’s why the measures in Budget 2017 that help people acquire and use skills to adapt to the changing environment are so important.

It’s a collective effort

The list above is by no means exhaustive. There are definitely more things that need to go into the secret sauce to keep Singapore attractive to great global companies. There are also things like tax incentives and other governmental support. But beyond specific things that need to be done, one thing is for certain. The government alone can’t do it. All Singaporeans must do our part too.

The government can enhance training and make it more accessible to workers by offering more short, modular courses and expanding the use of e-learning. The government can continue to provide funds for Singaporeans to deepen our skills through SkillsFuture.  The Government can and in fact, has already set aside S$150 million to match dollar-for -dollar the NTUC-Education and Training Fund (NETF), which union members can tap into.

But all of that would mean nothing if Singaporeans aren’t motivated to go for continual job and skills training so that we keep abreast with technological and market changes. On the other hand, if we do embrace the reality that we need to keep learning and deepening our skills, then we will be able to solve retraining paradox – that many of us need jobs or want better jobs, while employers have good jobs they can’t fill.

And if you think that it’s only Singaporean politicians who are talking about this retraining paradox, you would be wrong. The idea is also growing in USA, where people are also encouraged to go for job training. An article in the New York Times put it very well:

“It can take enormous intellectual and emotional efforts to pursue retraining, especially for people who have been rattled by sudden job loss or depressed by declining career prospects. For all his grandiosity, Donald Trump’s approach to working-class voters was characterized by relentless pessimism: dark visions of “poverty and heartache,” warnings about Mexicans “taking our manufacturing jobs.” Nostalgia, with its disdain for the present and mistrust of the future, is actually quite a gloomy sentiment. Job training, by contrast, makes the smaller-but-sunnier assurance that starting over is possible with help and time. It takes optimism on the part of both policy makers and workers.”

Our policy makers (i.e. the Government) has been as optimistic as they can be despite of the gloomy economic outlook. We too need to be undaunted by the headwinds and maintain our optimism too. Then take action, tap on the support provided by the government, and develop and deepen skills relevant for jobs of today and the future. If we can do that, we’ll emerge from this storm far stronger and more prosperous.


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Jake Koh

Author Jake Koh

Recovering sushi addict, I'm a man of mystery and power, whose power is exceeded only by his mystery.

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