Singapore struggling to find niche amid fierce competition<\/p>\n
Agence France-Presse, Singapore<\/p>\n
After achieving First World status in just one generation, tiny
\nSingapore finds itself squeezed between western rivals and
\nemerging Asian players as it seeks to find a niche in a
\nglobalized economy.<\/p>\n
Boasting one of Asia's most modern infrastructures, top notch
\neducation and health care systems and a highly regarded
\nbureaucracy, the 38-year-old nation appears capable of easily
\nwithstanding increasing competition.<\/p>\n
But pitted against emerging giants China and India and some
\nSoutheast Asian rivals, the city-state is now hobbled by high
\nlabor costs, a limited domestic market, an ageing population and
\nheavy reliance on foreign labor.<\/p>\n
A regional economist here compared Singapore to a corporate
\nexecutive who has risen too fast and priced himself out of the
\nmarket.<\/p>\n
\"On the one hand, he faces competition from his contemporaries
\nand on the other, there are equally qualified younger executives
\nrising up the corporate ladder willing to take the job at a lower
\nsalary,\" he said.<\/p>\n
From the 1970s until the 1997 Asian financial crisis, business
\nboomed as Singapore transformed itself into a hub for the world's
\ntop companies which took advantage of cheaper labor and an
\nexcellent business environment.<\/p>\n
Village huts gave way to gleaming skyscrapers and modern
\nfactories replaced small stores. Singapore-made computer chips
\nand disk drives were in demand worldwide, and the island's
\nreputation as a manufacturing center grew.<\/p>\n
But along with wealth came higher wages for engineers,
\naccountants, designers and other professionals as well as
\nproduction-line workers.<\/p>\n
Land prices, home and office rentals and taxes rose.<\/p>\n
In short, living standards and costs became more expensive, in
\nsome areas approaching levels in the developed world. Meanwhile,
\nSingapore's neighbors began to boom as market reforms took root.<\/p>\n
As countries like China and India started producing the same
\ngoods and services at lower costs, they began siphoning off
\nforeign investments.<\/p>\n
Companies migrated in droves, including some from Singapore.<\/p>\n
For example, computer disk drive manufacturer Maxtor will
\nreduce its work force here once its plant in China is completed
\nin 2005. Its China plant will make entry-level disk drives, while
\nhigh-end production stays in Singapore.<\/p>\n
Seagate has cut its Singapore work force from 25,000 to 9,000
\nin the last five years as it shifted lower-end disk drive
\nmanufacturing also to China.<\/p>\n
Competition in the top-end market has also sharpened as Asian
\neconomic tigers like Taiwan and South Korea continue to innovate,
\nproducing smaller and more powerful computer chips and other
\nhigh-value products.<\/p>\n
Prime Minister Goh Chok Tong said Singapore is now at a
\n\"crossroads\" and must make a choice: remain burdened by labor
\ncosts, or implement such reforms as bringing down wages and
\nsocial security benefits to stay in the race.<\/p>\n
While globalization has benefited Singapore immensely, it can
\nalso work against any country.<\/p>\n
He said that when lower-cost players emerge, and Singapore is
\nnot competitive, investments will flow to these places.<\/p>\n
For every manufacturing worker in Singapore, a company can
\nhire 13 in China and 18 in India. For every accountant here, a
\nfirm can employ two in Malaysia and six in Thailand, Goh said.<\/p>\n
Deputy Prime Minister Tony Tan cited a survey showing that
\nlabor costs in Singapore were already higher than those in the
\nUnited States and Australia.<\/p>\n
If that is indeed the case, \"we have a major economic
\nproblem,\" Tan said.<\/p>\n
Labor chief Lim Boon Heng said annual wages for Singapore
\nengineers, at US$80,854, are higher than in many developed
\ncountries like Australia, France, the Netherlands and Britain
\nwhere salaries range from $55,500 to $77,429 a year.<\/p>",
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