Has the Regionalization Strategy Succeeded in Sustaining Singapore’s Competitiveness in Asia for the Period from 1995 to 2010

Topics: Investment, Economics, Singapore Pages: 6 (1640 words) Published: October 7, 2011
Has the regionalization strategy succeeded in sustaining Singapore’s competitiveness in Asia for the Period from 1995 to 2010| AAG 104 – Singapore in Asia essay Assignment|
Programme: BSc (EDU)Semester 2, AY2010/2011Lim Soon WeiU1060143D8th March 2011| |

Singapore has been one of the most competitive countries in the world for the past 15 years. This can be attributed to the strong interventionist state strategies implemented to ensure that Singapore was able to compete on the international stage as well as with its competitive Asian neighbors such as Malaysia, Indonesia, India, China and Vietnam. This essay would firstly identify the challenges to Singapore’s competiveness and the rationalization of the 1993 Regionalization strategy. Secondly, this essay would examine the different aims of sub-programmes implemented and evaluate their intended impacts to Singapore’s drive to sustain economic competitiveness. Lastly, there would be an overall evaluation of the successfulness of Singapore’s Regionalization strategy by examining some Key Performance Indicators such as GDP, GNI to gauge the Regionalization Strategy contribution in sustaining the competitiveness of Singapore.

Challenges to the competitiveness of Singapore in the 1990’s Singapore’s competitiveness is described by Toh and Tan as (1998, p. 9) “the ability of [Singapore] to achieve sustained high rates of growth in the GDP per capita on the basis of suitable policies, institutions and other economical characteristics”. In order to sustain Singapore’s GDP growth, Singapore had in her early stages of development, embarked on policies which emphasized on the liberation of Singapore’s economy, attraction of Foreign Direct Investments(FDI), political stability, labour regulations and infrastructure (Toh & Tan, 1998, p. 20). This had helped Singapore to be one of the most attractive countries in the world for MNCs. However, since the early 1990’s, Singapore’s steadily rising labour costs have been eroding Singapore’s cost effectiveness against the other NIEs as shown in Figure 1.1. As a result, Singapore has lost her share in the attracting FDI as shown in Figure 1.2. as compared to a fast growing China. This is also a result of the liberalization of the Asian economies which wanted to emulate Singapore’s Success in attracting foreign capital. This has prompted the Singaporean Government to launch a national economic development strategy known as the “Regionalization Strategy” to build an “External” economy to “encourage local businessmen to undertake more economic activity outside of Singapore” so as to fuel the future growth of Singapore’s national economy and reduce its vulnerability to the volatility of foreign capital movement.

Figure 1 Singapore’s Relative Unit Labour Cost (RULC) In Manufacturing against the other NIEs (in US$ Terms), Source: (MTI, 1998)

Fig 2 FDI inflows of East Asia, China, Latin America and Singapore, Source: (MTI, 1998) The Regionalization Strategy
The Regionalization strategy in this paper consists of the a few sub-programmes which aimed to sustain Singapore’s economy: Regional Industrialization Programme, Regionalization of Singaporean Enterprises Programme and the Business Headquarters (BHQ) Programme. Regional Industrialization Programme

The aim of regional Industrialization programme was to “generate an external income… [to] supplement Singapore’s national economy…” (Pereira, 2001, p. 7). This is done by the creation of “self-contained industrial estates –Industrial parks across Asia” which used the Jurong Industrial Estate as its blueprint. (Pereira, 2001, p. 7). This would leverage on Singapore’s credibility and trust amongst Trans-National Companies (TNCs) to provide an attractive relocation alternative as well as to provide a familiar environment for local enterprises to expand and eventually evolves into MNCs. Examples of such flagship projects include the Suzhou-Industrial...
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