Can Singapore Remain Competitive in a Globalising World Economy?
Everyone in Singapore has a role
to play in at least maintaining the country’s competitiveness. Households must participate to influence decisions, make
use of the decisions released by the government and businesses and match their ability with actions. Firms must raise their
standards of corporate governance, curb corruption, focus on raising both productivity and quality and establish informal
norms. The Singapore government can further improve the country’s corruption ranking, establish better relations with
other countries, retain its ownership of core government-linked companies and fine-tune its CPF-related policies to increase
Microeconomics is a branch of Economics that tries
to explain human behaviour at the individual level. Economics is a science of choice. Individuals are literally compelled
to make hard choices because of scarcity. A relative concept, scarcity exists when the amount of resources that one possesses
is not sufficient to satisfy all of his/her wants. Accordingly, the person has to rank the various choices that he/she has
and choose the one which yields the highest net benefit.
The three main economic agents in the microeconomic
system are households, firms and government. This paper suggests specific roles for the economic agents to (at least) maintain
Singapore’s competitiveness in a more globalise world. The fact that competition
exists implies that the ‘winners’ in the race have not been determined. Can Singapore emerge as one of the winners?
Households can play different roles. As shareholders, householders are theoretically powerful
persons in public listed companies. The retirees can be powerful individuals in dictating how the aged society is to be managed.
The young can make their voices heard to indicate how the leisure industry is to be handled. Every householder has a role
is important if households want their views to be heard. Individuals are generally rational thinkers. Both speakers and listeners
are. When rational individuals are confronted with a problem, they assess all the alternatives that are available to them,
compute their benefits and costs, and then choose the alternative which yields the highest net benefit. As rational individuals,
they prefer to have more and not less. To me, rationality represents a valid concept to predict an individual’s thinking
process. It tells us what goes into the person’s mind when he/she makes a decision without going into the extreme in
giving the answer as to what the actual decision is. Let me put this in another way. Rationality tells us that ultimately
an individual wants to choose the option that yields the higher net benefit but it does not go into the extreme in telling
us for whom the benefits were accrued to. A person can be rational egoist (in which the benefits are accrued to the person
and no one else); rational altruistic (in which the benefits are accrued to others) and rational communitarian (in which the
benefits are accrued to the community).
To influence one to make a certain decision, the
listener must be convinced that the decision will bring forth more desirable benefits than its alternatives. If households
are not convinced about certain decisions made by the government, their views must be made known to the policy makers (the
listeners). Likewise, shareholders can make their voices heard by informing the board members. The objective is to make the
other parties (government and board members) aware of views from the ground. With help from legislations, they, the rational
listeners, are likely to incorporate these views. It can be said that households have won at least half the ‘battle’
if they participate. A recent battle partially won by households in Singapore was the revision of GST rate from five percent
to four percent in late 2002. This took place after the public voiced their unhappiness over the initial proposal to raise
the rate to five percent from the previous three percent. The government responded and increased the GST rate to four percent
Households need information to make rational and informed choices. The problem arises when
households make decisions without seeking the necessary information even if the information is available at a reasonable cost.
Of course, there can be instances where information is not available and costly to obtain. These problems are getting less
serious here. Singapore incorporated companies are moving towards greater transparency. They are slowly adapting to the disclose-based
philosophy as recommended by the Disclosure and Accounting Standards committee (headed by Singapore Technologies
group consultant Ng Boon Yew). So is the government. Households must do their part. They should make use of the information
released so that better decisions are made. Ultimately, the households, the companies and the country will be better off.
For example, the country’s resources can be better allocated as issues are thought over more thoroughly before decisions
Despite having the information, households may not necessarily be successful
in initiating changes. The possibility of not making use of the information can be significant particularly if the thought
of being a free rider prevails. Also, a single voice from minority shareholders may not be sufficient. They can be easily
outvoted particularly in smaller family owned businesses. Collective bargaining cannot be underrated in this respect. Roles
currently played by organizations like Consumers Association of Singapore, Securities Investors Association (Singapore) and
National Trade Union Congress in Singapore must be retained and possibly strengthened to provide the necessary support.
act in different roles: as consumers, savers, investors and suppliers of labor services. Rationality directs their thinking
process. Wanting more and not less, they choose the alternative which will yield the highest net benefit although only they
themselves can tell what their respective utility functions are made up of. Outsiders cannot predict a person’s personality
in an accurate manner. Typically, a person’s tastes or preferences towards certain issues can influence the alternatives’
benefits and costs. They can tell us the person’s willingness to consume, save, invest and work. The issue on ’ability’
however is given lesser attention. This should not be the case because households’ decisions can be influenced by their
ability to choose among various alternatives. Do decision makers have the purchasing power to carry out the necessary tasks
in relation to their decisions? Do they have the necessary talent or ‘fitness’? These questions need to be addressed.
The key is to match ability with actions. Resources are better allocated if the actions conform to ability. Utility can also
increase because the probability of failure is effectively lowered. Failure to consider the issue on ability may lead to rejections
and individuals’ unwillingness to proceed with their initial choices. They create wastages of resources. The society’s
resources could have been used more productively elsewhere.
the following example: A student has recently completed his ‘O’ level examinations. He needs to make a decision
as to whether he should take up the science stream or arts stream at the college. He has a strong ability to pursue arts related
subjects. His peers however, seem to be very interested in choosing the science stream. He also perceives that the science
stream will give him a better career prospect in the future. There is also a higher prestige of being a science student. He
fears that he will lose out to others if he chooses the arts stream.
the issue of ability is insufficiently addressed, a rational individual is likely to choose the science stream. The perceived
net benefit of making that choice appears higher than its alternative. But, he fails to ask himself, ‘Do I have the
ability to pursue a science-related career? Will I be able to cope with the science
subjects?’. Past events must be taken into consideration. Did he enjoy studying science when he was in the secondary
school? Did he understand the contents of the subject or did he pass his science subject based on ‘memory’? Considering
past events reminds him of his strengths and weaknesses so that present opportunities can be better addressed. It helps him
to make better decisions. Addressing the ‘ability’ issue is essential. The ultimate decision chosen must conform
to the ability to study, not merely to one’s willingness to study. The society benefits because the resources allocated
to the decisions can be better utilized. The boy for example may be able to contribute more to the society by pursuing the
arts stream. His insistence to pursue the science stream will create external cost to the society. Not only is he contributing
lesser to society, his place in the science stream can actually be given to someone else who perhaps deserves the place more
idea presented above can be applied to other instances involving households. For example, the Singapore government’s
call to encourage more elder workers to take up computer skills may create social losses if the workers do not have the necessary
ability to take them up. Merely looking at the more objective issues like getting well paying jobs is insufficient. Lack of
ability to take up the computer courses may lead to individuals ceasing to continue with the courses halfway. This creates
wastages of society’s resources in training the persons in the first place. While opportunities may be available, households
should be reminded to consider their abilities to better tap the opportunities and contribute to the country. Only they themselves
will be able tell how able they are.
It is useful to note that firms are business
entities. They do not function like human beings. Unlike human beings, firms are without a brain, a heart and other parts
of a human body. ‘Firms’ do not make decisions. The persons-in-charge of the firms do. In small private corporations,
the founders, their family members and close friends are the main persons making decisions. In public listed companies, professional
manager are engaged by the board of directors (on behalf of the shareholders) to run the companies. They have the discretionary
power to see how the companies’ resources are allocated.
Since the outbreak of the Asian financial crisis,
calls have been made to reform the corporate sector in Singapore. Constructive steps were undertaken to raise the standards
of corporate governance. One of the initiatives calls for separation of power between the Chief Executive Officer (CEO) and
Chairman of the Board. The founder of the company can assume the role of the board chairman while a professional manager can
be engaged as its CEO. The latter implements the board’s decisions. However, such an arrangement is justified only if
the professional manager can add value to the existing system. It should be noted that it is not mandatory for the companies
to have a separate CEO and chairman of the board. The initiative is merely a guideline as stated in the Singapore Code of
Corporate Governance. It can be said that having separate persons to hold the two top positions is not very much desired by
first generation of businessmen particularly in smaller family-owned businesses. The major shareholders in these businesses
still want strong control of their companies. Their control over the businesses will be diluted when outsiders (professional
managers) are engaged. Many do not want this to happen to their organizations. The professional managers may also dislike
working in an environment where families and close friends are still very much in control. Their freedom to act and making
decisions are limited. Lack of freedom demotivates the managers from working more productively. They may not work very long
for the companies.
The progress to raise the standards of corporate
governance may also be hindered to some extent because the present culture considers acts of non-compliance to leaders and
elders as something that is not generally acceptable. There were but infrequent cases (in relatively larger listed companies)
where shareholders voiced their concerns at annual general meetings (AGMs). It is generally more difficult for first generation
businessmen to accept changes which can result in them losing their dominant power at AGMs.
Because of the above constraints, it may perhaps
be more constructive for the founders and their family members to have full control of the small and medium sized family owned
businesses, rather than using their resources to engage professional managers, if the latter were not given the autonomy to
make independent judgments in the first place. This should be the case at least until the founders’ mindsets are changed
which include more willingness to trust ‘outsiders’. My view is that it will take several years to see a complete
transition. This is when the second and third generation businessmen take over the businesses from their fathers. I do not
see this as a serious problem. The pace to raise the standards of corporate governance must be comfortable to the companies.
It should not be done too hastily.
An emerging problem relating to the financial aspect
of the firm is manipulation of accounting information. There are increasingly more of such cases around the world. Managers
hide liabilities from balance sheets and inflate profits to expropriate shareholders funds. Creative accounting is a form
of corporate corruption. Singapore companies are also susceptible to this problem. Availability of incentives and opportunities
motivates managers to carry out the illegal and unethical acts. Lax corporate governance standards for example provide opportunities
for managers to manipulate accounting information. There are also high rewards awaiting successful expropriation. Some companies
offer share options plan to their managers to entice them to work harder. The problem arises when the managers resort to illegal
means to raise the company’s share price. They can manipulate accounting information to give investors the impression
that the company is doing well. The managers hope that with such ‘false’ information, the share prices will rise.
Accordingly, they will be able to reap higher returns when the share options are exercised. It should be noted that managers
are often offered large lots of shares, which means that they can be eligible to millions of dollars in rewards from the share
options plan. The incentive to act improperly is thus very large.
Greed remains the main motivation which explains why
individuals commit illegal acts like those mentioned above. There is nothing wrong with being greedy but individuals’
acts must be ethical. From the firm’s perspective, it calls for higher standards of corporate governance. Proper checks
must be present to see that illegal and unethical acts are not easily committed. The board members must assume the responsibility
to spot irregularities or wrong entries in the financial statements. Expand their roles to include nominating board members
and determining the members’ remunerations. These were
noted in Singapore’s Code of Corporate Governance. The companies must translate these words into actions. The company should not discount the role
of its staff. Because of their intimacy with things happening on the ground, employees are more able to spot ethics-related
problems in the company. They should be encouraged to voice out their concerns to the board members so that the problems can
be looked at and rectified. The company must assure the staff that their interests will be protected after blowing the whistle.
Private corporations in Singapore can learn from
the government’s experience in curbing illegal acts. The Singapore government for example strengthened the anti-corruption
legislations to reduce opportunities for corruption. More power was given to the anti-corruption agency. Probability of catching
the offenders and penalty costs imposed on offenders were raised. Public sector officers were paid salaries that were comparable
to the salaries of their counterparts in the private sector. The objective was to reduce the incentive for corruption. There
was also a strong political will among the politicians to contain the problem. They constantly appealed to the moral consciousness
of public servants and reminded them of the benefits of doing good and the negative implications of corruption to the country.
These lessons are worth learning by private corporations although they should modify the lessons accordingly to suit their
Competitiveness can be treated very crudely as a
combination of productivity and quality. To raise firms’ competitiveness, firms must attempt to raise both productivity
and quality. The problem arises when the former is improved but only at the expense of lowering the latter. This problem is
particularly acute in services. Efforts to raise productivity like leveraging on information technology and lowering costs
may be done without paying adequate attention to their impact on quality. For example, customers may find it frustrating for
having to wait long to get their queries answered on the phone because of the need to get through the long-winded automated
telephone operator. Worse, the problem may not be resolved after the long wait. Or efforts to lower training cost and bonuses
may create unhappy service providers who may vent their anger and frustrations on the customers. While productivity may have
increased in the short-term, loss of customers due to poorer quality of services can cost the company in the longer-term.
Managers must recognize the potential trade-off between productivity and quality, and see that they do not happen in their
organizations. It is unfortunate that many companies in Singapore are caught in this predicament. In one service organization
I know, training costs and bonuses were cut to boost productivity (to qualify for SPRING’s Singapore Quality Class Award)
while bad practices like unnecessary bureaucracy and time consuming administrative routines remain. Frustrated staff could
vent their anger at the customers. It is not impossible to resolve this issue. In an excellent book ‘Service Management
and Marketing: A Customer Relationship Management Approach’, its author Christian Gronroos discusses how productivity
and quality in services can be increased without sacrificing one or the other. This book should be consulted by all organizations
(Gronroos, 2001, pp. 205-223).
It is generally agreed that the professional managers
and their workers are the ones who run the organizations. While the shareholders are the rightful owners of public listed
companies, the professional managers have the discretionary power to determine how the companies’ resources are used.
Even in non-public listed companies, owners have to rely on their workers. Knowing whether the agents are doing their jobs
diligently or not is often difficult. They have hidden knowledge and actions that are unknowable to the owners. Even if contracts
are signed with the agents, problems like shirking and expropriation of funds can still occur. The contracts cannot dictate
exactly how agents are to spend their time in the working place nor can they specify exactly how the organizations’
resources are to be allocated at all times. Even if they are specified, the cost of monitoring the agents to ensure that they
are properly complied with is high.
It is the challenge to the principals (owners or
shareholders) to see that the agents make choices for the benefit of the principals and not for their private benefit. In
other words, efforts must be put in to align the interests of agents with that of the principals.
The usual recommendations to solve this problem
include the use of incentive contracts like offering stock options plan and ‘pay for performance’ remuneration
system. But there are problems with these approaches. Stock options plan for example requires the managers to wait for several
years before allowing them to exercise their options. Those who are short sighted are less responsive to the plan. Some may
perceive that they have lesser ‘control’ of the share prices. This can reduce the effectiveness of the plan to
entice workers to work harder. Those who are more powerful in the companies may resort to manipulation of accounting information
so that they can be rewarded more than what they deserve when the share options are exercised. For the pay for performance
principle to work well, the companies must have in place a very good staff appraisal system which can assess their staff objectively
and fairly. An appraisal system that is not so sophisticated may fail to entice the agents to work toward maximizing the principals’
In a recent article, I have suggested the establishment
of informal norms to supplement the strategies (Sam, 2003). Workers are mostly followers of group norms. Setting norms is
thus useful in organizations to provide the necessary guidance in decision-making. What I have proposed is not to set formal
rules which some may not conform particularly those who dislike rigidity and formality. Accordingly, they will not be able
to see how the formal rules can bring benefits to the companies in general and themselves in particular. Instead, workers
generally prefer a more pleasant working environment where trust, cooperation, caring, sharing, flexibility and responsibility
are present. These informal norms can be in written or unwritten forms. The managers must walk the talk and remind the worker
about these intangible values in corporate functions. The key thing is for a majority of the workers to inculcate such virtues
for they can bring significant benefits to the organization.
A good discussion on the role of government to at least maintain a country’s competitiveness
can be found in Michael Porter’s article on ‘The Competitive Advantage of Nations’ initially published in
the Harvard Business Review (March-April 1990). In Porter’s world, government matters. The government’s role is
to act as a catalyst to aspire companies to gain competitive advantage through means defined in Porter’s diamond model.
The diamond model defines four determinants of national competitiveness namely factor conditions, related and supporting industries,
demand conditions and firm strategy, structure and rivalry. Singapore can definitely learn from Porter. In fact, Porter advises
the Singapore government on matters regarding competitiveness. Thus, it does not make sense for me here to further use his
model and suggest how his model can be applied to the Singapore case. Porter has already done this himself.
Like firms, the government is
a non-human entity. ‘Governments’ do not make decisions. It is the people in charge of the government who make
the decisions. How the country is shaped thus depends strongly on the persons’ values. In a democratic society, the
key decisions makers (or executives) are appointed by the country’s electorates to run the country on their behalf.
The cabinet ministers in Singapore are part of the executives. They define the public’s interest. They come out with
strategic and long-term plans for the country. They have the responsibility in seeing that the government officers working
in ministries, statutory boards and government-linked companies (GLCs) implement these plans in an effective and efficient
It is thus useful to discuss the principal-agent
problem in the context of public sector management. The principal-agent problem is normally described in the context of private
sector management. However, because of a number of commonalities, it is also
useful to discuss the problem in the context of public sector management. In public corporations, the state (ministers in
the cabinet and members of parliament) acts as the agent working on behalf of the public. The public (like the voters) is
the principal. The state has the authority to regulate production and consumption, impose taxes, and redistribute income.
In the ideal case, its choices are motivated by the well being of citizens. The state, as the principals, must ensure that
their subordinates (like the civil servants) make the best use of available resources. The principal-agent problem arises
when the interests of civil servants conflict with those of the state. It is
possible for the public servants to shirk in their jobs and expropriate funds from the taxpayers. The public servants may
deliberately slow down the way things are done to compel individuals in the public to bribe them with ‘gifts’,
monetary or non-monetary (or both). These unethical acts can be treated as a form of corruption.
Singapore has been ranked highly as one of the least
corrupt nations in the world. In the IMD World Competitiveness Report 2003 for example, Singapore was ranked the fifth least
corrupt economy among 29 countries with population less than 20 million (after Finland, Denmark, New Zealand and Iceland)
up from the ninth position in 1998. There’s certainly room for improvement. Why not strive to become the least corrupt
nation in the world? Moreover, the rankings represent past achievements. Because individuals are marginal thinkers, excelling
in the past cannot guarantee that the government will remain almost corrupt-free in the future. To maintain Singapore’s
competitiveness, the government must continuously improve to maintain its clean and honest administration. Good rules must
be enacted so that people are encouraged to comply with them on a voluntary basis. If people perceive the rules to be bad,
they will be encouraged to participate in the underground economy (UGE) to bypass the government. Acts of corruption will
become more common then. Government officers will be bribed to get things done for businessmen such as allowing them to under
declare their earned income. Because some businessmen are not willing to pay the bribes, countries with rampant corruption
are likely to suffer from lower investments. The country’s economy will be adversely affected. The Singapore government
must see that this does not happen.
As countries become more integrated, a country’s
competitiveness in the global economy relies very much on its ability to relate with other countries. Foreign business and
political culture must be understood. This is one area in which the government of Singapore can improve on. There were evidences
suggesting that government officials in Singapore were arrogant and uncaring towards others. For example, one of the reasons
why the Suzhou Industrial Park project failed was that the Singapore government officials did not pay sufficient respect to
the Suzhou Municipal authority. Any matters or problems that Singapore encountered during the venture did not pass through
the Suzhou officers. Instead, Singapore dealt directly with Beijing without considering the negative feelings that Suzhou
officials might have. Basically, Singapore did not give sufficient ‘face’ to their counterpart in Suzhou (see
Pereira, 2003, pp. 134-139). Such incidents must not be repeated.
My view is that there is no urgent need for the
government to diversify the GLCs. The government does not need the funds. It can well afford to incur expenses in running
the companies. While some are losing money, others are generating profits. Proper
mechanisms are in place to see that the GLCs are properly run. High standards of corporate governance are adopted as insisted
by the Temasek Holdings Private Limited (THL). To an average consumer, it does not really matter who owns the GLCs as long
as the goods and services are of high quality and reasonably priced. So far, the GLCs do not seem to have failed in meeting
these criteria. To the private sector businessmen, divesting the GLCs may not give them the level playing field they had wanted.
The divested GLCs can still win business orders if they provide value for money to their clients with or without government’s
ownership. It is also useful to recognize that diversification efforts cannot be done hastily. The government must do it at
a pace which it finds comfortable.
is generally not true that the Singapore GLCs are less effectively managed as compared to those that are not linked to the
government. GLCs can be effectively managed provided that right mechanisms are in placed. The tasks in seeing that the GLCs
in Singapore are properly run are handed over to the Temasek Holdings Private Limited (THL), a wholly government-owned institution.
The THL ensures that the GLCs are properly managed in its attempt to protect the interest of shareholders, the citizens of
Singapore. The THL exercises its right as a shareholder to; first, vote on decisions to establish employee compensation schemes
(including stock options), and to vote on succession and development plans in the GLCs; second, scrutinize material transactions
(for example, the THL votes on mergers and acquisitions propositions involving the GLCs); and third, institutionalise corporate
governance and disclosure practices. These were noted in the keynote speech delivered by S. Dhanabalan, Chairman of the Temasek
Holdings Limited. The speech was read in the Asian Business Dialogue on Corporate Governance 2002 on 31 October 2002. The
performance of the GLCs in Singapore has been impressive. For instance, several of the companies are listed on the main board.
These include Singapore Airlines, Singapore Telecommunications, SMRT Corporation, Neptune Orient Lines, Keppel Corp, SembCorp
Industries and others. Many have also won prestigious corporate awards.
If the purpose of divesting is to develop Singapore’s
equity market, the Asian financial crisis reminded us that investors’ herd instinct could lead to massive capital outflows.
A country’s economic fundamentals appeared to be of secondary importance. If the purpose of divesting is to diminish
government control, then it is logical that the government’s resources gained in the process are transferred back to
the public. Is the Singapore government willing to do so? Many observers may be reluctant to answer yes. These considerations
essentially diminish the urgency of divesting the GLCs.
Let me turn to the issue on savings. Because of liberalization of the CPF,
many observers feel that the CPF balances are not sufficient for the retirees to use during their retirement years. Low private
and voluntary savings among Singapore residents worsen the situation. Some of the households are less willing to increase
their savings because doing so will involve a change in their lifestyles from one with more consumption to one that involves
less. It will take a ‘shock’ or perhaps a strong influencer to alter the household’s mindset. Some of the
households also blame the government for the predicament that they are in – the constant reminder that their current
savings are not sufficient to meet retirement needs despite their monthly contributions to the CPF accounts.
One of the problems pertains to the low
CPF deposit returns. It is known that CPF cash reserves (contributions less withdrawals for purchase of housings, stocks and
others) are tied to the returns equivalent to deposit rates in local banks. Mukul Asher estimated that the real rate of return
on CPF balances and insurance funds for the 1987- 2000 period averaged 0.82 and 2.74 percent respectively which were substantially
lower than real GDP growth (8.26 percent) and growth in average monthly nominal earnings (7.49 percent) (Asher, 2002). The
government’s call for higher voluntary savings therefore will fall on deaf ears if the government does not rectify the
situation and improve the CPF deposit returns accrued to CPF account holders. Asher (2002) suggests setting up the Provident
and Pension Funds Authority (PPFA) to manage the retirement funds with its governance and practices internationally benchmarked.
Manu Bhaskaran suggests allowing the external private sector fund managers to manage the CPF cash reserves (Bhaskaran, 2003).
The current proposal to allow for a privately managed pension fund for CPF members is, in my view, a right approach to adopt.
It at least gives the investors an additional investment choice to deliver higher returns over the long term.
The other problem relates to the payment
of implicit tax by the CPF holders. The implicit tax is equivalent to the difference between interest earnings from CPF cash
balances accrued to the holders and returns which the government received from investing the CPF cash. Because the latter
is not repaid back to the CPF account holders, the households are literally paying an implicit tax to the government. The
actual size of the tax is unknown. Bhaskaran believes that the GIC is doing reasonably good which assures us that the implicit
tax is very much in the positive region. He urges the government to return the implicit tax back to CPF account holders ‘so
at least partially overcome the problem of inadequately funded requirement’ (Bhaskaran, 2003, p. 55). Mukul Asher considers
the elimination of the implicit tax an urgent matter to consider (Asher, 2002). He suggests ‘crediting the weighted
average of returns of government investment companies, which are actually making decisions on the deployment of the CPF funds…..full
returns must be credited to the Government Pension Fund, and other provident and pension funds’ (ibid, p. 32).
It is imperative that the government fine-tunes its CPF-related policies to increase voluntary savings. When
savings for retirement years are corrected, desire to save voluntarily for emergency and retirement purposes may correspondingly
increase because the households will have a large disposable income by then (for example, cash top-ups to pay for housing
loans may no longer be necessary). The ability to some to set up their own businesses will also be strengthened. Correcting
the CPF-related policies can also reduce the incentives for households to participate in the UGE.
It is generally perceived that the government is not very willing
to reveal how effectively (or badly) the CPF funds have been utilized. This may unwittingly increase one’s desirability
to engage in underground activities to avoid contributing any further to the government’s pocket. This should be avoided.
A thriving underground economy (UGE) brings problems to the country. Let me highlight three of them. First, taxes are usually
not paid in the UGE. The quality and quantity of government services will be negatively affected thus lowering the overall
standards of living. Second, the government may try to recoup the loss revenue through higher tax rates. Further problems
arise when those who are currently abiding to the regulations find that they are being unfairly treated. Some taxpayers may
try to evade taxes in the next and subsequent fiscal years. Third, because knowing what is going on in the UGE is generally
difficult, economic statistics like national income, unemployment and balance of payments are distorted. Government policies
introduced base on the recorded statistics will not be effective in addressing their concerns.
This paper documents the challenges facing the households,
firms and government to at least maintain Singapore’s competitiveness in a more globalise world. Every individual in
the society plays a role to bring about a more competitive nation. The government can act as the facilitator to encourage
voluntary participation from the households and firms in running the country. Good rules must be enacted so that people voluntarily
comply with them. The households must accept policies directed to them. Likewise, firms must accept those policies that affect
them. Together, they can push the Singapore’s economy forward.
Asher, Mukul (2002) The Role
of the Global Economy in Financing Old Age: The Case of Singapore. Research Report Number 2-2002, International Center for
Pension Research (downloaded from http://www.icpr.itam.mx).
Bhaskaran, Manu (2003) Reinventing
the Asian Model: The Case of Singapore. Eastern Universities Press (Singapore).
Gronroos, Christian (2001) Service
Management and Marketing: A Customer Relationship Management Approach. Second Edition.
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and Value. The Free Press (United States).
Pereira, Alexius (2003) State
Collaboration and Development Strategies in China: The Case of the China-Singapore Suzhou Industrial Park (1992-2002). RoutledgeCurzon
Sam, Choon Yin (2003) ‘Productivity and Informal Norms’,
in Productivity Digest (December 2003 issue), SPRING (Singapore).