I had the sense that Singapore is changing very rapidly, especially after SG50. It is not as if there weren’t challenges, but it’s as if after Ah Gong is gone, we’ve woken up from a slumber, mainly because we have been taken care of so well.
And there have been so many things that we’ve taken for granted.
We have a legacy that’s been left to us by our forebears. In 1965, we had nothing. And we came up from nothing.
We aren’t strawberries, but much stronger and malleable than we think we are.
Challenge No. 1: Our port is one BIG reason why Singapore is who she is today, but we are under tremendous pressure: http://www.wallstreetdaily.com/2016/01/27/thailand-kra-canal-china-silk-road/
Both the Chinese and Thai governments are saying they aren’t behind it.
If this canal gets built, the ships can skip the Straits of Malacca, which is a narrow strip, that comes down the side of Malaysia, before they arrive at Singapore, and go on again to the other parts of Asia.
And as I was reading up about shipbuilding, and the Kra Canal, I also just (shockingly) realised that the Straits of Malacca is known to be the most active piracy site in the world currently (http://www.economist.com/news/asia/21656237-step-aside-somalia-south-east-asia-new-piracy-capital-world-malacca-buccaneers), replacing Somalia.
And lots of money are being lost:
“Southeast Asia was the location of 41% of the world’s pirate attacks between 1995 and 2013… (and a)ccording to a 2010 study by the One Earth Future Foundation, piracy drains between $7 billion and $12 billion dollars from the international economy each year.
… The West Indian Ocean, which includes Somalia, accounted for just 28%, and the West African coast only 18%.”
And about a quarter of the world’s seaborne oil passes through the Straits of Malacca.
“Stretching from the westernmost corner of Malaysia to the tip of Indonesia’s Bintan Island, the Malacca and Singapore straits serve as global shipping superhighways. Each year, more than 120,000 ships traverse these waterways, accounting for a third of the world’s marine commerce. Between 70% and 80% of all the oil imported by China and Japan transits the straits.” From http://time.com/piracy-southeast-asia-malacca-strait/
But it may never be built: http://www.straitstimes.com/asia/se-asia/renewed-hype-over-china-thai-canal-project-5-things-about-the-kra-canal
On top of this, we also have another challenge, the shipping route from the West to the East can also be shortened (it’s a route that’s about 40% shorter if the ships decide to bypass us) and traverse the waters over North Pole instead. And it has become more possible due to climate change, which all (or most) of us contribute to; the ice is thinning and thus easier to get through them: http://intpolicydigest.org/2016/01/18/arctic-trade-route-presents-opportunity-for-russia-west-cooperation/ Russia has also built 40 icebreaker vessels – “powerful ships able to carve routes straight through solid sea ice”.
So we may lose what we have built over the last many years. We were/are so prized because of our strategic location.
But we have other areas which we are strong in. Some other opportunities or pillars of our GDP: Shipbuilding, bunkering, logistics, trade and finance, construction, tourism…
Challenge No. 2: Our economy is dependent on people, whether we like it or not. We do not have a hinterland, nor do we have any other raw resources. And there are two avenues of supply of people, they either come in through ports or by birth.
And we just landed last on CIA’s Total Fertility Rate (TFR) count: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2127rank.html
Yes, we are no. 224 out of 224.
Are there solutions? Or ways to mitigate these challenges? I don’t know, but I certainly hope to be able to think about solutions through masterminds, when there are enough of us to give a f**king damn.
(#) To be updated, there is still much in my head, as well as research to get through.
To counter our Challenge No. 1: Singapore has gotten ourselves PERMANENTLY on Arctic Council as observers. The Arctic Council is a high-level intergovernmental forum that addresses issues faced by the Arctic governments and the indigenous people of the Arctic. (From Wikipedia)
Twelve non-arctic countries have been admitted as observers to the Arctic Council:
- The Netherlands
- United Kingdom
- People’s Republic of China
- Italian Republic
- Republic of Korea
- Republic of Singapore
- Republic of India
So we’ve suddenly become environment advocates… to at least be able to know first-hand what’s happening (and hopefully be able to manage any challenges to our trade routes a bit faster than others, e.g. trade routes using the North Pole instead).
Challenge No. 3: Planes used to fly just 13-15 hours. Now there are “ultra-long-haul” flights which are helped by current low oil prices, not that they didn’t use to exist.
“A new generation of aircraft is helping to make longer flights more efficient, and both Boeing and Airbus are working on extended-range models — the Airbus A350-900ULR and Boeing 777-8 — that will enter service in the next five years. The latter features extra long wings to improve performance which must be folded up on landing so the plane will fit airport taxiways.
Last month Qantas revealed it was considering launching nonstop flights between Australia and Europe by 2017, including a Perth-to-London route, using the eight new Boeing 787-9 aircraft it has ordered to replace its 747s. At the same time, Singapore Airlines announced plans to fly direct from Singapore to New York, starting in 2018. The flight would take around 19 hours, cover 9,522 miles — and snatch the record for the longest nonstop flight.”
From Financial Times: A new era of ‘ultra-long-haul’ aviation (http://www.ft.com/cms/s/2/689a1618-814d-11e5-8095-ed1a37d1e096.html)
Thus someone could fly straight to Australia to Europe without having to do a stopover at Singapore.
And SIA’s airfares don’t seem to be very competitive as I’m guessing that we had bought our oil way back when prices are still relatively high, and we hedged to lock fuel costs then in advance in anticipation of a further rise in prices. But they are now a hindrance compared to airlines which might not have done hedging, since the oil prices have dropped.
Wins No. 1: There is something else to be noted in terms of competitiveness. We had usually been compared with Hong Kong, but perhaps our kiasu-ness have kept our standards high:
Hong Kong now ranks No. 7 in terms of most competitive economy:
Singapore’s No. 2! We may be also winning out in terms of transparency, ease of operations and stability.
However, another Swiss-based business school has ranked Singapore (No. 3) behind Hong Kong. From: http://www.scmp.com/news/hong-kong/economy/article/1810884/hong-kong-ranks-second-world-competitiveness-annual-imd-study
I’ve also charted the annual value of certain industries tracked by the Department of Statistics Singapore with regard to our GDP:
Gross Nominal Value (by share):
It’s very interesting as it tells of which industries have been adding value to our GDP, i.e. our pillars of the economy. Obviously, the Goods Producing Industries are on a downtrend, and the Services Producing Industries are trending up.
And highest is manufacturing. (!!!)
(To be continued…)