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Singapore’s enduring competitive advantage

When Singapore Foreign Minister K Shanmugam spoke recently of the vision of Singapore as the New York of an integrated ASEAN (Association of South-east Asian Nations), that reminded me of past calls for Singapore to become the Geneva of the East or the Switzerland of Asia.

Singapore’s enduring competitive advantage

Project Jewel — the plan to transform a car park into an architecturally iconic global attraction — is an example of the continuous effort to build up Singapore’s soft assets. Photo: Changi Airport Group

When Singapore Foreign Minister K Shanmugam spoke recently of the vision of Singapore as the New York of an integrated ASEAN (Association of South-east Asian Nations), that reminded me of past calls for Singapore to become the Geneva of the East or the Switzerland of Asia.

In the recently released 2013 World Economic Forum (WEF) Annual Global Competitiveness Report, Switzerland retained its ranking as the world’s most competitive economy; Singapore was No 2.

Based on “hard metrics”, the WEF assessed that Singapore boasts one of the world’s best institutional frameworks, a world-class framework, and sound macroeconomic environment and fiscal management.

But what these metrics do not measure are the “soft” metrics of what makes a nation competitive. Like all things qualitative, this is more difficult to pin down in hard numbers.

THE ‘SOFT METRICS’ THAT MATTER

More than two decades ago, the Singapore Government set its sights on becoming the Geneva of the East with a Swiss standard of living. Today, the Geneva-based World Intellectual Property Organization has its Asian office in Singapore. According to WEF data, Switzerland’s per capita income (at purchasing power parity) was US$81,161 (S$101,023) as of last year, while Singapore was at US$49,271. So, is Singapore on the way? Not really — it all depends on what you perceive as the “Swiss standard of living”.

Still, when you look at how Singapore has evolved as an economy and as a society, you will see that the soft metrics that define the quality of national leadership, as well as the strategic ability to respond to a more fluid and complex world, are actually the more enduring source of our competitive advantage.

Nassim Taleb, in his seminal book on antifragility, talks about the critical importance of agility and flexibility to survive unpredictable change. “Fragility is the quality of things that are vulnerable to volatility,” he says. “Deprive your bones of stress and they become brittle,” he adds. For societies to become more antifragile, Taleb argues, we should embrace unpredictable change rather than chase after the illusion of stability.

The WEF report states: “Singapore has world-class infrastructure, with excellent roads, ports, and air transport facilities.” If the drivers of competitiveness were merely the fact of having more runways and better capacity, or integrated services which are efficient with high productivity, all that can be replicated.

The stronger driver, though, is our nimbleness and our ability to act on foresight and create new value. When Prime Minister Lee Hsien Loong unveiled Project Jewel in last month’s National Day Rally — the plan to transform a car park into an architecturally iconic global attraction — that was an example of the continuous effort to build up Singapore’s soft assets.

NEVER STOP PEDALLING

We have to constantly revitalise, rejuvenate and strengthen the Singapore country brand. We do not really have a choice. Managing the Singapore economy is like riding a bicycle: Stop pedalling, and you cannot move forward.

The way we manage the challenges in the next phase of growth must be two-tracked: First, maintain the “hard” aspect of economic development and stay the course in the race of nations.

Second, continue to invest in the “soft” side of the national asset balance sheet — which includes trust and integrity, strong financial institutions and a country brand. More importantly, we must sharpen and refresh our strategic ability to read weak signals; understand the bigger forces that shape economies and societies; and respond quickly to ensure strategic impact and secure returns on investment.

If we are to take Taleb’s advice, we must love “the random chances of life and embrace small pieces of adversity as opportunities for improvement”. This “soft” but strategic skill is more difficult for others to replicate, and herein lies our enduring competitive advantage which we must nurture in future generations.

GOING AHEAD, IT’S ABOUT BRANDING

In the new growth order, where innovation and a productivity-led economic growth will increasingly become the base for a higher quality of life in our maturing economy, we will have to sharpen the soft side of our competitive abilities — such as our education ecosystem, which is strategic to a more knowledge-based economy of the future.

We have attracted global elite schools to our shores to add intellectual depth and breadth; we have positioned ourselves as the leading educational hub in Asia. We now have world-class institutions such as the Yale-NUS College for liberal arts. Leading global business school INSEAD has long been here. Now, the Singapore University of Technology and Design is pressing ahead to become the MIT of the East.

Coming up with “hard” infrastructure for education is not difficult; almost any country can do that. But securing the buy-in of an elite foreign school to establish its offshoot on one’s shores is a far more complex feat, for they will not come unless they trust your brand.

At 48 years old, Singapore has managed the transformation of its economy quite well; it is now time to push its brand forward in the global contest, be it in the field of education, economic management or social innovation.

For example, given the uniquely Singapore experience in dealing with the challenges of water security, we could become a global brand in water technology education. I am not just talking about the technical dimension, but also the strategic mindset and analytical framework needed to detect shifts in undercurrents and turn adversity into opportunity.

The Swiss focus on a few things and they do these very well. So, just as Switzerland has built a strong country brand around a few high-value sectors, such as its watch, banking and pharmaceutical industries, Singapore can find its own niches.

After all, historical circumstances had led Singapore to find its own unique pathways for growth in the past.

To endure, Singapore must be antifragile. To be antifragile, we will have to maintain our edge, which is our capacity to embrace difficulties and constantly seek to turn adversity into opportunity. Let this be the brand identity that history will recognise Singapore for.

ABOUT THE AUTHOR:

Zaid Hamzah is an author, intellectual capital practitioner and Director of Intellectual Futures Private Limited, a company that specialises in intellectual capital management.

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