Singapore: Asia's Little Red Dot and Economic Powerhouse

• Since its independence in 1965, Singapore has become a global economic powerhouse.
• With its 'entrepot' history, Singapore is a regional trading hub ranked as the 2nd most competitive country in the world.
• Recently, Singapore has moved up the economic ladder into higher value added sectors, e.g. biotechnology and the biomedical industry.
• Singapore's fiscal conservatism, ample FX reserves and solid legal infrastructure underscore the country's relative attractiveness within a fast growing region.

Read the full article, first published on Seeking Alpha on August 4, 2014, via this link: http://seekingalpha.com/article/2377295-singapore-asias-little-red-dot-and-economic-powerhouse 

Singapore: Monaco of the East!

Cities reinvent and regenerate themselves constantly. At least, cities which thrive and beat the ravages of time to stay relevant are no strangers to change.

Singapore is no exception. During the last ten years, the city explicitly decided to shirk its 'Fine City' image, moving from being a sterile, gum free environment to a hip, happening urban setting. As is often the case, Singapore's policymakers succeeded ... perhaps too well for the city's own good.

The casino, nightlife and incremental lifting of social restrictions worked its magic. From being the fortress 'Gibraltar of the East,' Singapore reinvented itself in the image of Monaco, i.e. the 'Monaco of the East.'

Monaco, of course, is a playground for the world's wealthy. Singapore too has become a playground for the worlds wealthy, particularly China's nouveau riche looking for a 'safer' place to park themselves and their cash. And, the annual haze notwithstanding, breathe fresh air.

Education is a key component of Singapore's drive to retain economic competitiveness in the coming years

To some extent, the 'New Singapore' means accepting larger income gaps between the wealthy and the not so wealthy. According to one widely accepted measure of income inequality, the Gini coefficient, Singapore's income inequality has risen during the last year – even taking into account all government subsidies and other redistribution measures.

However, all is not well in the PAP's (Singapore's ruling People's Action Party) domain.

Singaporeans are pushing back in an unprecedented manner. Locals are unhappy with Chinese immigrants driving Ferraris while subway trains get more crowded; or having to fight with foreigners for places in the local school system.

Nonetheless, there is no turning back for Singapore. The city's 5.3 million people will become 6 or even 6.9 million, maybe not at the PAP's proposed timetable but perhaps sometime within the next decade. (Seats on subway trains will remain a scarcity for commuters, forevermore!)

In the midst of all the changes in Singapore, one change becomes ever more obvious with time: Singapore's price competitiveness is eroding.

According to the latest Mercer cost of living survey, Singapore is the world's fifth most expensive city for expatriates. Hong Kong, Geneva, Zurich and Shanghai are all cheaper cities. The change may not be explicitly policy driven but it is a consequence of multiple factors, including growing Singapore's population by 66 percent in two decades.

To be sure, Singapore has moved beyond the stage of relying simply upon cost to retain economic competitiveness. Nonetheless, can Singapore afford to be the fifth most expensive city in the world and still preserve its 'regional hub' status – or will the Little Red Dot be relegated to being a hub exclusively for knowledge intensive 'Research and Development' areas such as biotechnology?'

Relying on knowledge intensive industries is no bad thing really ... if Singaporeans don't mind the income gap between rich and poor widening further in the coming years.

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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com. 

Singapore’s future social mix and today's immigration policies

Until recently, population growth through immigration was a major part of the Singapore government's economic growth model. During the last two decades, the island's population has grown by over 60 percent. From a population of approximately three million in 1990, Singapore entered the 2010s with a population of five million.

Prima facie, the population growth policy appears to have worked and generated economic growth on the island. From 1990-2010 (inclusive), the Singapore economy grew at an average GDP growth rate of 6.6 percent. During the same period, the economy contracted only twice: 2001 and 2009.

Nonetheless, there have been some unintended consequences of the government's 'open door policy.' Politically, the People's Action Party (PAP) has seen support amongst Singaporean voters plummet from historically high levels. The last general elections saw several senior PAP personalities lose 'safe' constituencies. While not yet a threat to the PAP's ability to form a government, the opposition has significantly increased its parliamentary representation, including controlling a Group Representation Constituency (GRC).

Another effect of Singapore's liberal immigration policies has been the skyrocketing of domestic real estate prices. Not only have prices of high-end properties in premium districts risen to record highs but resale prices of public housing built by the Housing Development Board (HDB Singapore) has soared.

There has also been a general outpouring of discontent about the impact of 'extra' people on Singapore's limited land mass. The Republic's resources and infrastructure is groaning under the weight of additional persons – literally in the case of the city's subway system. From being unheard of a few years ago, train breakdowns and system delays are now considered 'normal.' Much of the blame lies with the increased load factor and poor maintenance.

There is another side to immigration which Singaporeans have yet to fully experience: the osmosis of new and different cultures into the mainstream of the city's daily culture. The mass of new immigrants from mainland China and India – along with the odd few from 'out of the ordinary' countries like Pakistan – bring with them a different way of seeing the world.

'Mainland' Indians have different dietary habits. Their experience of the caste system's role in society is distinct from the locally born Indian. Likewise, for non-Malay Muslims, the different lens with which they view the world often provides a different interpretation regarding the traditions of Islamic faith and practice.

To be sure, contemporary Singaporeans have every right to express displeasure with any number of government policies. It is their island – they have successfully moved from Third World to First World within one generation. However, from a historical perspective, the recent wave of immigration into Singapore is just a part of the island's centuries old tradition of welcoming economic migrants onto its shores. In the process, the newcomers help transform and rejuvenate Singapore, often in ways which cannot be easily anticipated. At the very least, future Singaporeans can look forward to some interesting fusion food dishes as the most recent mass of migrants build a home for themselves.

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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com.