To develop Singapore’s economy in its early years, Singapore relied heavily on multinational corporations which invested millions to produce goods and services in the country. However, the onset of globalisation, coupled with the rapid emergence of bigger economic players like India and china, could threaten to erode Singapore’s competitive advantage in the manufacturing industry, particularly for the low-end market.
Given India and china’s vast population, the two countries abound with human capital, and what’s more, it is available at a cheaper rate. This is one of the major pull factors which encourages many labour-intensive manufacturing firms to set up there instead of Singapore, where labour costs are comparatively higher.
Long considered an overpopulated, repressive, backward country, China has in the last decade entered the small circle of advanced industrial nations. The rising trend of such occurrences would mean that fewer companies are willing to invest in Singapore, all this despite her world-class infrastructure, cutting edge technology and human expertise. It could prove to be one challenge which Singapore may find hard to overcome in order to uphold her reputation as an international, investor-friendly, business hub.
To tackle this burgeoning problem, Singapore can focus more on cultivating a highly skilled and competent workforce by providing training for the future workforce, and also train our existing workforce. This constant renewal of skills and abilities must become part of the work culture. This is one way in which Singapore can hold her own in the world, and minimize the impact which cheap labour in other countries has on the employment opportunities and economic advancement in Singapore.
Globalisation could worsen income distribution in Singapore. Companies can shift their manufacturing operations to less developed countries like china and Indonesia in order to take advantage of the lower labour and land costs there. This makes unskilled workers in Singapore easily substitutable. This would also mean that lower-skilled Singaporeans could be faced with job losses and fewer job opportunities when these companies start shifting their operations to less developed countries where labour costs are much lower. They may also have to accept lower wages in order to keep their jobs in the company.
On the other hand, the wages of skilled personnel in Singapore will remain relatively stable as most of them would be working in knowledge-based industries, where human expertise and a high level of education are valued greatly. These individuals will be considered as more valuable assets to the company and are less likely to be retrenched should the company decide to outsource or shift operations. This leads to the gradually widening income gap between the higher and lower income groups in Singapore and the difference in income between the wealthy and the less well off becomes more marked. Income distribution is worsened. This could lead to an inaccurate representation of GNP per capita, as the bulk of the national income would be generated mainly by the rich.
A less equal income distribution could also lead to segregation between the rich and the poor in the country, giving rise to social problems such as decreased understanding and unity between all the citizens. This would pose a great problem to Singapore as unity and harmony among the residents are of utmost importance to this miniscule nation. Singapore must be wary not to allow the rich-poor divide to disrupt unity and togetherness in the nation.
Globalisation can pose a number of challenges, especially to small open economies like Singapore. The Asian crisis is one incident which has shown that financial integration acts like a magnifying glass on the domestic economy-multiplying the benefits of good policies but also increasing the costs of bas ones. We need to recognise that the forces driving globsalisation are irreversible and Singapore cannot afford to turn away from global market integration. The challenge for Singapore is therefore to maximise the benefits and minimize the costs of globalisation.
Globalisation blurs national boundaries and may potentially dilute our sense of identity. The dilution of our sense of national identity cannot be left unchecked, as it is the glue that holds the jigsaw of Singapore together. We have to ensure that Singaporeans remain engaged and interested in national issues. Singapore also needs to cultivate a core group of active citizens, young and old, passionate about making a difference to our community, whether through volunteer work or causes that excite them and bring social benefit.
