Singapore tops in world competitiveness ranking

Singapore

SINGAPORE emerged tops in an annual world competitiveness ranking of 63 economies for the first time since 2010, moving up two spots to trump the US.

According to the IMD World Economic Rankings, Singapore's win came on the back of its advanced technological infrastructure, the availability of skilled labour, favourable immigration laws, and the ease of setting up new businesses.

Rival Hong Kong remains second place, supported by its tax and business policy environment and access to business finance.

The US fell to third place from last year's pole position, as the initial boost of confidence from President Trump's tax policies seemed to have faded, according to the IMD report. The world's biggest economy was hit by higher fuel prices, weaker high-tech exports, and fluctuations in the US dollar, even as it still set the pace globally for infrastructure and economic performance.

Switzerland inched up one spot to come in fourth place, boosted by economic growth, the stability of the franc and its infrastructure. The United Arab Emirates (UAE) rounded off the top five for the first time, beating other economies in business efficiency, productivity, digital transformation and entrepreneurship.

Professor Arturo Bris, director of IMD World Competitiveness Center at IMD Business School, noted that Singapore has consistently been among the five most competitive economies worldwide in the last decade.

This year, Singapore saw "marked advancements" in business efficiency and infrastructure, he told The Business Times.

"In the first case, improvements are driven by sustained growth in overall productivity and an increase in labour force," he explained.

"In the second case, progress is explained by the enhancement of the technological infrastructure - specifically an increase in internet bandwidth speed - and improvements in environmental conditions, such as a reduction in the exposure to particle pollution."

Even as Singapore comes in first place, he said that sustainability and environment are areas where the city-state can improve upon, especially with regards to the production of energy from renewable sources. Another area for improvement includes the high cost of living mostly due to the high level of rents and real estate prices, he added.

While Singapore and Hong Kong have consistently led Asia-Pacific in the rankings, the rest of the region is fast catching up with 11 out of 14 economies either improving or holding steady.

Indonesia showed the biggest improvement, jumping 11 places to 32nd, powered by increased efficiency in the government sector as well as progress in infrastructure and business conditions. It also has the lowest cost for labour among the 63 economies.

Thailand also moved up five spots to 25th position, driven by an increase in foreign direct investments and productivity.

Prof Bris pointed out that greater competitiveness in the region will also benefit Singapore, given its openness to international trade and investments.

"Traditional key sectors for the Singaporean economy such as the financial and logistics sectors could benefit by increasingly acting as a gateway for these economies," he said.

"Furthermore, exports could also grow as a result of the increase in the demand for imported goods from the regional peers experiencing these competitiveness gains."

The rest of the world, however, showed mixed performances. European economies struggled, with most either declining or standing still, on the back of economic uncertainty. Developments over Brexit saw the UK fall from 20th to 23rd place.

In the Middle East, fossil fuel producers such as the UAE, Qatar and Saudi Arabia climbed in the rankings, with Saudi Arabia jumping 13 spots to 26th place.

Latin America countries continued to fare poorly, with Venezuela cementing its position at the bottom for yet another year as the political and economic crisis continues.

According to Prof Bris, the outlook for Singapore and Asia-Pacific is positive, as most of the countries in the region are experiencing an uplift thanks to sustained GDP growth and to the general dynamism of their economies.

While global markets have been roiled by uncertainties and talk of an impending slowdown, he observed that Singapore has "reacted positively" so far to these adjustments.

"Government efficiency paired with a business-friendly legislation, investments in technology, infrastructure, research and development, and education provided a solid base to overcome and smooth the ups and downs of the business cycle," he said.

"This means that the Singaporean economy proved to be resilient enough to navigate the important changes that affected global markets in the past and therefore it's in a good position to face the important technological and economic challenges of the next years."