Singapore’s bold economic vision

The Covid-19 pandemic has forced governments and businesses globally to rethink their strategies in terms of supply chains, manpower and overall resilience. The Singapore government, known for its long-term planning, recently updated its Economy 2030 Plan with some ‘bold’ initiatives it wants to achieve by the end of the decade.

While partly prompted by the Covid-19 pandemic, Singapore revised its economic roadmap by updating its targets for growing its local talent pool and increasing its exports and offshore trade to become more self-sufficient. So how significant is this revision to the Singapore Economy 2030 Plan?

‘The new plan represents a bold vision of Singapore developing new capabilities and increasing opportunities for international trade to flourish,’ says Greg Unsworth, digital business and risk assurance leader at PwC Singapore.

‘It will be important to develop these opportunities for local businesses to access, trade and thrive in larger international markets for longer-term growth prospects.’

The updated plan has been described as forward looking as it addresses several key challenges. ‘If executed well, it will increase Singapore’s economic resilience – the ability to absorb future shocks and to bounce back faster – amid structural shifts in the global economy,’ adds Goh Jia Yong, partner, people advisory services at EY Singapore.

‘The plan also has a good balance between existing and emerging industries and business models.’

The new plan includes initiatives to double re-exports, aimed at revitalising offshore trading companies, and reinforcing Singapore’s position as a trading hub amid competition.

It has set a target to increase manufacturing by 50% – focusing on Singapore’s competitive advantages, such as skills, technology and capital, rather than on costs.

‘The continued shift up the value chain into new niche products and markets will be needed,’ Goh adds.

Digitalisation drive

A major tenet of the economic plan is digitalisation, a global theme being adopted by companies big and small. The Singapore government has already invested huge resources into becoming more digitally-focused, while encouraging companies, particularly small and medium-sized enterprises (SMEs), to do the same.

For this reason, experts feel the city-state is ahead of the curve on its digitalisation roadmap.

‘For Singapore, digitalisation began in 2014 with its Smart Nation initiative, which has given it an early-mover advantage,’ says Dr Woo Jun Jie, senior research fellow, at the Lee Kuan Yew School of Public Policy, National University of Singapore.

‘But it is also important to note that digitalisation will also depend heavily on Singapore’s well-developed financial sector, which provides the capitalisation and funding that is needed by tech start-ups.’

The Singapore Economy 2030 Plan is seen as a continuing, longer-term commitment by the Singapore government to help all businesses develop their digital presence and capabilities for the future.

‘It provides confidence for businesses to continue to transform and invest for the future knowing there is support available,’ says PwC’s Unsworth.

Productivity push

Singapore has been aware of its declining economic productivity for several years and launched a number of initiatives aimed at improving it through IT, automation and upskilling. This continued push for productivity gains is a centrepiece of its plan.

The adoption of enhanced digital technologies and automation is expected to be a big driver in increasing productivity gains over the next three-to-five years for the economy, which is why digitalisation is so important.

But is there a limit to the productivity gains that can be made in Singapore, even with new technologies?

‘With digitalisation, there are potential productivity gains that can be reaped from the application of advanced digital technologies to work processes,’ explains Dr Woo.

‘And certainly these gains will taper off in the longer-term as the playing field equalises. However, we can expect an initial bump in productivity among countries that digitalise early and successfully.’

Challenges ahead

Having a plan is one thing; executing it is a whole other issue. While observers reacted positively to Singapore’s decision to revise its economic roadmap, there is an element of caution as to how it will be achieved.

EY’s Goh says there are three key challenges that Singapore faces – what he calls the 3 Ps: ‘People – to find the right talent and upskill existing human capital. Partnerships – to provide smaller enterprises with an ecosystem of partners, including collaborations with larger companies, to scale up and internationalise.

‘And process and technology – to change employer mindsets on digital ways of working, and address employer concerns about risks of adoption of technology.’

Talent is an ongoing concern for Singapore, especially when it comes to technology talent, as it is in high demand across developed economies. This was already factored into its economic plan, which is why upskilling staff is a priority.

But what wasn’t factored into the 2030 plan was the global health pandemic that Covid brought, catching the world’s economies by surprise and forcing a major rethink. But while the plan has been tested, experts say these latest revisions show that Singapore is robust enough to get back on track quickly.

‘Covid has highlighted the need to be flexible and agile in responding to external shocks, and in addressing opportunities in overseas markets,’ concludes Unsworth.