I have always held the view that Singapore’s comparative advantage vis-a-vis our neighbors is a confluence of many factors — stable government, long-term consistent policies, strong and corruption-free legal frameworks, good infrastructure, reliable workforce, connectivity, and our pool of global talents to name a few. Hence, while Singapore is not the cheapest place to do business, businesses are prepared to pay a premium for these benefits.
Unfortunately, this premium is not infinite. There is a point where cost multiples will erode Singapore’s comparative advantage and it will simply make business sense for businesses to relocate to countries like Malaysia.
A recent business sentiment survey by the Singaporean-German Chamber of Industry and Commerce confirms this. The survey showed that 43% of German firms polled would relocate business functions out of Singapore due to increasing costs and difficulty in recruiting talent. Once these functions relocate, they are unlikely ever return and Singapore will be worse off.
Singaporeans would be wise to recognize the precarious position Singapore is in and start thinking more about what they can do for Singapore, and not what Singapore can do for them.
