Singapore is now clearly ensconced as one of the top ten wealthiest nations on planet earth.
This has not been achieved easily.
Lots of sweat and thinking has gone on into making a marshy land one of the world’s top financial centres today. Earlier, it was one of the top electronics manufacturing centres as well, which it has ceded to Malaysia and some other countries. Singapore still has the world’s busiest container seaport, the best airport, and a crime-free city which is still to be rivalled anywhere in the world. There are many other firsts for this tiny “red-dot” of a city state, but the purpose of this post is not to list all of them.
The challenge facing the country today is cost competitiveness.
While larger developed countries have the sustainability due to their larger population and long-standing core country competencies which have been in-built into their economies, Singapore has always been a small city state with core trading skills. As countries around develop their systems and people, Singapore needs to find its feet, while competing on costs.
Which is not entirely possible, with a population aspiring for the best things in life.
Costs have been on the rise over the past four years in Singapore, despite multiple measures taken by the Government to check the rise. Real estate and car prices have risen at breakneck speeds, and are still rising. This has frustrated the local people, who often tend to blame the foreigners for the price rise.
While that may be partially true, there is no substantive rationale for the real estate prices more than doubling in less than four years. Lack of land space is not the reason, as there are probably more than 30,000 apartments lying vacant even now.
I can understand the rise in car prices, but these have again become just untenable. Cars are not really needed to go around the city, but then people have aspirations which cannot be controlled purely by policy-making.
There are other price rises in retail – while food seems to be still OK, clothing and other stuff have become pricier. One of my European friends mentioned to me that he now gets his clothing and suits from Germany (!), which is some 30% cheaper than the same quality commands in Singapore – and he still felt that even the European materials when purchased in Germany are of better quality.
Goes to show that profit-making seems to be the motive rather than catering to a wider population in retail business. While that is fine, Singaporeans also travel all over the world, and so are not immune from learning of prices elsewhere. A high-quality suit can be ordered in Bangkok for USD 500 or in Hong Kong for USD 800, while that would cost not less than USD 1,200 in Singapore. How do you explain that – we are talking of same textile material here, and one cannot explain it saying that the Hong Kong tailors are more efficient with less turnaround time, or that the Bangkok tailors use fake material.
Many examples can be given. In my opinion, Singapore is at least some 25 to 30% more expensive than the neighbouring countries, and some 10 to 15% more expensive than the developed countries.
A strategy to contain inflationary trends in retail does not work due to the variability of the market, but it does work for major elements such as real estate and automotives, etc. It only takes longer – some six to nine months, to take full effect.
It is critical for Singapore not to make it to the list of the top 10 most expensive destinations in the world. Or, to the top 10 most expensive real estate locations in the world. That ranking is not needed to be successful.
15th February 2014