Fuelled by its advanced technological infrastructure and favourable immigration laws, Singapore has ranked as the world's most competitive economy, knocking off previous leader the United States. The availability of skilled labour and efficient ways to set up new businesses in the Asian economic giant also play a key role in driving Singapore to pole position, its first time since 2010.
The US, on the other hand, saw weaker hi-tech exports, fluctuations in the value of the dollar, and higher fuel prices, which dragged down its position down to third, which was held by Singapore last year, according to the IMD World Competitiveness Rankings. And while the Trump administration's first wave of tax policies triggered an initial boost to confidence, this appeared to have dimmed, added IMD World Competitiveness Center, which compiled the rankings.
Hong Kong retained its second placing, supported by a "benign" tax and business policy environment and access to business finance, the research centre said.
The IMD Rankings was established in 1989 and assessed 235 indicators across 63 ranked economies, taking into account "hard" statistics such as unemployment, GDP, and government spending on health and education, as well as "soft" data from an Executive Opinion Survey covering topics such as social cohesion, globalisation, and corruption.
The Asia-Pacific region came up strong on the index, with 11 of 14 economies either improving or retaining their rankings. Indonesia led the pack in most improved placing, climbing 11 notches to 32nd position, which the IMD attributed to improvement in infrastructure and business conditions as well as increased efficiency in the government sector. The Asian market also had the lowest labour cost amongst the 63 economies evaluated.
Thailand stepped up five places to 25th, fuelled by an increase in foreign direct investments and productivity. Japan and Mainland China, however, fell in their rankings with the former dropping five places to 30th, dragged down by a sluggish economy, weaker business environment, and government debt. The Chinese economy dropped one step to 14th position.
Competitiveness across Europe also struggled to gain ground with most economies on the decline or stagnant, according to IMD, which noted that the ongoing uncertainty over Brexit pushed the United Kingdom down to 23rd, from 20th. Ireland, though, climbed five notches to 7th, propelled by improved business conditions and a strengthening economy. It also led its global peers in terms of investment incentives, the handling of public sector contracts, and areas such as image, branding, and talent management.
Director of IMD World Competitiveness Center, Arturo Bris, said: "In a year of high uncertainty in global markets due to rapid changes in the international political landscape as well as trade relations, the quality of institutions seem to be the unifying element for increasing prosperity. A strong institutional framework provides the stability for business to invest and innovate, ensuring a higher quality of life for citizens."
Singapore refutes US allegations of currency manipulation
Meanwhile, Singapore has rejected allegations from the US Treasury that it manipulated its currency for export advantage.
In a statement released Wednesday, the Monetary Authority of Singapore (MAS) said the country's monetary policy framework was centred on the exchange rate and aimed to ensure medium-term price stability. The industry regulator said it manages the Singapore dollar nominal effective exchange rate within a policy band, not unlike how other central banks conducted their monetary policies by targeting interest rates.
MAS explained: "Whether they target the exchange rate or the interest rate, central banks aim to keep consumer price inflation low and stable as their primary mandate. MAS does not, and cannot, use the exchange rate to gain an export advantage or achieve a current account surplus. A deliberate weakening of the Singapore dollar would cause inflation to spike and compromise MAS' price stability objective."
It further called for Singapore's current account balance to be viewed in context, noting that the country ran persistently large current account deficits in its early years of development, at close to 10 percent of GDP between 1965 and 1984 when its investment needs were greater than available saving.
The nation's investment needs tapered off, as its economy matured, while national saving rose--turning the current account into a surplus position.
MAS added that it expected rising affluence to fuel consumption and Singapore's current account surplus would be reduced when public and private savings were drawn down to support the needs of an ageing population.
The central bank's comments were in response to a report by the US Department of the Treasury that added nine trading partners on its monitoring list for their currency practices, including six Asian markets: Singapore, China, Japan, South Korea, Malaysia, and Vietnam. Germany, Ireland, and Italy also made the list.
The US government agency said it aimed to ensure trade expanded in a way that helped US workers and companies as well as protected them from unfair foreign trade practices. US Treasury Secretary Steven T. Mnuchin said: "Treasury takes seriously any potentially unfair currency practices and Treasury is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent."
Country's government has introduced initiatives to train 12,000 people in artificial intelligence skillsets, including industry professionals and secondary school students.
First announced earlier this year as part of the country's 2017 budget, Singapore's IT office says it will put out S$2.4 billion in ICT tenders encompassing data analytics and Internet of Things sensors.
Singapore government has inked partnership agreements with both countries that encompass data sharing as well as joint technical certification programmes and capacity building initiatives.
Singapore government has earmarked S$14 million (US$10.19 million) over three years to fund the development of smart estates and modern technology, such as energy efficient applications.
Government unveils a new scheme, investing up to S$150 million over five years, to use artificial intelligence to resolve challenges affecting society and sets up data science consortium to drive the sector.