According to the Institute for Management Development (IMD) World Competitiveness Rankings, Singapore has gone up from fifth to third in the world, behind Denmark and Switzerland, receiving a score of 98.11. The result shows that the Singapore business landscape is operating at a high level regionally, ranking first in the Asia-Pacific (APAC) region ahead of China—Hong Kong SAR, Taiwan, and Mainland China.
The World Competitiveness Rankings analyse how a country manages its competencies— from political, cultural, social, environmental, and others—to create sustainable value for its economy. The rankings are based on four factors: government efficiency, infrastructure, business efficiency, and economic performance. These and many other sub-factors are making the market in Singapore most competitive in APAC.
Counting the numbers
Singapore’s population is approximately 5.45 million, with a Gross Domestic Product (GDP) of USD 397 billion. Real GDP growth stands at 7.6%. Meanwhile, the nation-state’s direct investment flows represent 21.65% of GDP. IMD uses 333 competitiveness criteria, research in multiple fields, and numerous sources and feedback from governments, academia, and the business community to generate the report.
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According to the rankings, Singapore recovered faster than many other nations after the COVID-19 pandemic damaged economies worldwide. Regarding the key analysis factors, the nation-state ranked second on economic performance with 81.09 points and fourth on government performance with 87.63 points. Singapore ranked ninth in terms of business efficiency, with 84.28 points, and twelfth in terms of infrastructure, with 76.31 points.
The country improved its domestic economy, employment, public finance, business legislation, efficiency and productivity, international trade, infrastructure, and education. According to IMD’s report, a few areas needed improvement, including management practices, health, environment, labour market, societal framework, and scientific infrastructure.
Challenges moving forward
IMD’s report highlights several challenges plaguing Singapore in 2022. For one, there are global supply chain disruptions, geopolitical tensions in APAC, high-interest rates, and steep energy and commodity prices. Protectionist economic measures adopted by regional countries may also hinder free trade, leading to higher prices, lower demand for goods, and reduced cross-border transactions.
According to the Monetary Authority of Singapore (MAS), the financial sector and technology (fintech) are essential to the country’s ambition to build a dynamic economy. They could prove key to uplifting the nation.
The COVID-19 pandemic continues to have an impact on many sectors, diminishing their impact, potential, and productivity. The COVID variants have also caused considerable damage, with APAC leaders like China adopting zero-COVID policies that have been detrimental to the entire region. China is APAC’s largest market, and its COVID strategy has made it challenging for nations like Singapore to trade with it since many citizens are not earning enough money during lockdowns to buy new products.
Denmark secured the top spot in the World Competitiveness Rankings because it was able to deliver on sustainability. Singapore needs to promote sustainable development, make good use of its limited land space, and target net-zero transformation. According to the United Nations (UN), net zero refers to the reduction of greenhouse gases to almost zero, with the remaining emissions absorbed by nature. The goal of the Singaporean government is to help businesses transition from high energy use and pollution to a low-carbon future.
Fourth, similar to other nations in APAC, Singapore is facing a tech talent shortage, especially as the region continues its digital transformation policies. Many sectors require experienced workers who understand how to use or implement technology to deliver solutions. However, there is a limited supply. Thus, there is a need to ensure the upskilling of employees to take on new responsibilities. With innovation and technology changing constantly, employees must stay updated on the latest tech.
A bright future?
As the government is digitising and urging businesses to follow suit, Singapore will have to maintain its approach to recruiting talent overseas. Singapore is ranked third as one of the top relocation destinations for tech employees in APAC. Nevertheless, foreign workers may be prevented from entering the country by COVID-19 border restrictions. Even so, there is an alternative, with remote working becoming prevalent.
The Singapore business landscape currently looks strong; however, it faces many local, regional, and global challenges. The country’s record on the World Competitiveness Rankings shows that the nation-state has remained in the top five for many years. It needs to support the booming tech ecosystem in the country to continue thriving. The government must adopt new legislation to make the business environment hospitable to investors.
Furthermore, Singaporean leaders should consult with stakeholders to develop solutions for the country as the nation faces inflation, recession, high-interest rates, geopolitical tensions, and other issues. Singaporeans must learn to live with the COVID-19 pandemic to continue operating their businesses. If they follow this advice, they will be able to keep Singapore most competitive in APAC.