Q: What is your reaction to Singapore being ranked as the top city again in fDi’s rankings? How do you view the importance of such benchmarking? And in your opinion, what accounts for Singapore’s strong performance?
A: First of all, I’m very pleased that we are number one in your ranking. But nonetheless we always ensure we can continue to do what has made us successful in the past. We look at the rankings from fDi and other organisations, and they provide us with evidence, data and feedback, which are useful for our promotion purposes, and inform us about our strengths and weaknesses, and how we can continue to strengthen our competitiveness. It’s information and data that we find most valuable.
In terms of our strategy, the key message is that in the last five years, the interest of international companies and global companies in Asia has changed. Asia used to be the choice for offshore production and R&D, but now, for many it has become the growth engine. Although some are still looking to Asia for a more cost-competitive manufacturing footprint, because they can access a lot more engineers and R&D scientists, but for the most part the shift we are seeing is international companies investing in Asia to win in Asia, to compete in Asia. And the sort of functions they are putting in place in Asia by world decision-makers has changed significantly.
For EDB, around about 2007 or so, we basically repositioned our marketing strategy into one where we talk about having a home in Asia, the second home for international companies. [We highlight] what it is that Singapore can do to help them win in Asia for Asia, how they can manage their supply chain in Asia for Asia, how we can help them produce in Asia for Asia. We call this shift in positioning “from host to home”, meaning for past four to five decades we strived to be the best host possible for offshore investments, and now whilst we continue to be attractive for those types of investments, we also want to be a place where international companies have their home in Asia, their second home.
I think we have been quite successful, and hopefully being ranked number one in your survey helps us to affirm that.
As for why Singapore has been doing well, obviously there are very interesting and very exciting cities in China and exciting cities emerging in all parts of Asia. Why Singapore has continued to do well, in our mind at least, lies in its ability to provide a pan-Asian outlook and to help companies and executives discern what is similar across Asia, and what it is that’s different. Because every firms needs to determine what it is they want to centralise, and what it is they want to localise. We are a small city-state, we need to consistently to look outwards to provide that objectivity and that sort of very pro-business environment that facilitates that and enables that.
Q: How do you view the strengths of Singapore versus those of Hong Kong and Shanghai?
A: Asia will have a number of major global cities; we believe Singapore will be one of them. We believe in China there’s room for Hong Kong and Shanghai and perhaps others, just simply because of the opportunities in Asia. The role each of these different cities will play will be quite different.
Shanghai explicitly positions itself as Asia’s global city with a Chinese orientation. If you are a decision-maker in Hong Kong, you would do the same thing. There’s a lot you can make a good living on, providing services and playing a key role to support China’s growth. In our mind that’s increasingly the role Hong Kong plays. Shanghai will compete for that, and Shanghai by itself is a huge powerful economic engine, it represents the impact of a tier-one city on the coast of China.
Singapore’s role, as I described earlier, is quite different. We don’t pretend to know more about China than if you’re based in China, but certainly [we do have a competitive advantage] if you’re talking about what it is you should do in China that’s different from what you need to do in India, or what it is you need to do [in China] that’s similar to what you need to do to in Asean, for instance. I think Singapore’s location and neutrality, and the fact that because we have such a small domestic market we just have to continue to look outward, all hint that Singapore’s role will be quite different [from Shanghai’s and Hong Kong’s]. It can complement whatever it is you need to do in China or India.
Hong Kong, in our view, will do very well as a gateway to China. Singapore will complement what Hong Kong is doing, and vice versa. Because companies are no longer choosing China or India, or China or Southeast Asia: you have to do China and India and Southeast Asia, and Middle East and Australia as well.
Q: What is your outlook for the coming year? What will be the impact of any major slowdowns in Europe and the rest of the world?
A: In 2012 everyone will be quite cautious, and everyone is anticipating slower growth, as we’ve already seen in the fourth quarter and more generally in the second half of 2011.
Slowdown in Europe has led to a decline in exports from Asia. But Asia’s rise and its economic vibrancy has helped to cushion the impact, this is why you still see positive growth in the region.
The government’s early projection for Singapore is 1-3% GDP growth next year. In a very uncertain and volatile global environment, it is a quite positive growth.
I think 2012 will be slower than 2011, but how bad will depend on whether there are any shock events, potentially arising from the sovereign debt crisis in the euro zone.
The US shows signs of positive growth and it seems to have bottomed up and is on track for recovery. If politics leading up to the presidential election do not get in the way, then it may prove a positive spot in the global economy.
In China we are seeing some signs of slowdown, but all indications point to a soft landing, which is helpful for the region as a whole. For a big part of 2011 and 2012 the concern is of asset inflation not asset bubble, and this concern is actually greater than over the slowdown.
Singapore retained its position at the top of fDi's Asia-Pacific Cities of the Future ranking, ahead of Shanghai and Seoul, see the full results here.