Singapore must sharpen its distinctiveness to secure future in ‘a very different world'
There has been considerable success. Foreign direct investment into Singapore reached S$192 billion in 2024, an increase of 5.6 per cent year on year. Notably, global multinational corporations have been using Singapore as a hub for research and development and regional HQs, while deploying operations across neighbouring Asean countries.
Yet, amid the 'Navi' (nonlinear, accelerated, volatile and interconnected) state of affairs today, this proven approach could be challenged for its long-term relevance.
Shifting equilibrium in global geopolitics, uncertainty in trade and tariffs and the rapid rise of emerging technologies and climate risks are bringing swift impacts at all levels – from the country's economy to business ecosystems and right down to individuals. The intersection of these trends, such as the weaponisation of trade and technology, creates further far-reaching complexities.
How can we refresh what has worked, or reimagine the possibilities, as comfort zones narrow, competition widens, and socioeconomic pressures intensify?
As Prime Minister Lawrence Wong pointed out at the National Day Rally , a 'new economic blueprint' is needed to 'secure Singapore's future in a very different world'. The recently unveiled Economic Strategy Review , with new committees to address global competitiveness, technology and innovation, entrepreneurship, human capital, and impact of restructuring, is expected to help chart the path forward.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
Competitiveness today is no longer just about efficiency or cost. It is about value creation. To continue to shine and secure its position as a key node in global value chains, Singapore must double down on its strategic capabilities.
Three key aspects have distinguished Singapore – and must be honed to make it even more distinctive.
Investment in deep tech
First, in the digital-led and artificial intelligence (AI)-powered future, it pays to lead in developing deep tech infrastructure. If deep tech is to be the engine of the new value chains, Singapore must vie to be one of the high-performance hubs.
Investments in deep tech infrastructure are fundamental to supporting and catalysing the economic opportunities in AI, biotechnology and advanced manufacturing. Singapore is currently home to global R&D centres and a vibrant semiconductor ecosystem. We have also been actively growing capabilities in AI and quantum technology.
To entrench our position in deep tech, it is crucial to scale up our national compute capacity, effectiveness and governance. Core to this is nurturing the talent pool and pipeline in this fast-evolving field.
The potential lag in talent development is a real and present risk. Past experience in implementing Industry Transformation Maps (ITMs), which provides clear frameworks for local enterprises embarking on digitalisation, green transition and upskilling, shows that moving enterprises and workforce up the curve can take time and significant change management.
These ITMs will now need to evolve for next-generation capabilities in AI and sustainability, to enable every firm, big and small, to not just digitalise but transform at its core – sustainably and with AI. Equally important is to invest in nurturing bold, homegrown deep-tech ventures. Public-private capital must go further upstream to fund these ventures before they turn bankable.
Agile policies and regulations
Singapore is known for its transparent, stable regulatory environment – but what sets it apart is the ability to regulate responsively and anticipatively. Today, rules cannot just keep up; they must lean in. Keeping regulatory and intellectual property (IP) frameworks robust and agile will be important enablers.
Public-private testbeds and regulatory sandboxes in fintech, health tech and AI have allowed innovation to be tested safely in Singapore. This latitude for innovation must continue for technology diffusion to happen – and quicker – across our business ecosystems. Regulatory frameworks must enable innovation, manage risks early and evolve fast.
In addition, the country's data protection trust mark, cross-border data agreements and IP protection regime are already among the strongest globally.
In the AI age, Singapore can aspire to be the place where digital trust frameworks are tested and regional data governance models are pioneered. In other words, be the trusted hub where innovations of the future can be safely prototyped, funded and scaled across borders.
A critical node
To create enduring value, Singapore must be more than a hub for goods and capital. It must be the critical node where goods, capital, data, people and ideas converge, amplifying the power and upsides of their intersection.
Our strong connectivity – both physical and digital – with the world is an enduring attribute. The country's world-class ports and airports, as well as well-established institutional and digital connectivity enabled by free trade arrangements and digital economy agreements, underpin this advantage. It continues to be highly relevant for Singapore to expand more digital corridors beyond Asean to India, Japan, Middle East and Africa.
At the same time, the country should press on with its dual-pronged strategy of attracting multinational companies, hyperscalers and startups to anchor their regional and high-value activities locally, while serving as a springboard for them to internationalise and tap into regional neighbours for cost advantages.
Towards inclusive growth
Beyond that, can Singapore be the hub that forges future-ready talent and champions the diffusion of knowledge and skills across the region to help uplift extended business ecosystems?
I believe we can. Our inimitable value lies in combining in-demand technical expertise with qualities like critical thinking, ethics, acumen and entrepreneurial courage.
With sharpened focus in these areas, Singapore can set itself up to confidently punch above its weight and secure success in its next chapter of growth. This pursuit will arguably be no less challenging than the first 60 years of nation-building. But if Singapore and its people can commit to a 'we-first' and inclusive growth mindset, then success will be sweeter when shared.
The writer is EY Asia East deputy regional managing partner, Asean managing partner and Singapore and Brunei country managing partner at Ernst & Young. The views here belong to the author and do not necessarily reflect the views of the global EY organisation or its member firms.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
2 hours ago
- Business Times
Thailand GDP growth most affected by increased effective tariff rate among Asean-5
[SINGAPORE] The effective tariff rate on Asean-5 and India exports to the US has risen sharply, with Thailand the most affected, an OCBC report indicated on Tuesday (Aug 19). The impact on gross domestic product will still be felt despite semiconductor and pharmaceutical exemptions, noted OCBC, adding that the higher effective rates will hurt export growth to the US. Due to the front-loading of exports largely occurring in the first quarter of 2025, the tariffs will impact growth until the end of 2026, said the report. Thailand was considered the most exposed to a sharper slowdown on account of 'a triple whammy from perceived domestic political risks, structural constraints and exposure' to the US. From the greatest to the least GDP impact faced, Vietnam, Malaysia, India, the Philippines and Indonesia follow Thailand. The level of 'pain' felt by the Asean-5 countries and India will differ depending on the openness of the economy, the importance of the US as an export market, and the knock-on impact of slower external demand on domestic demand conditions, added the report. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Cyclical factors, such as the extent of payback from the front-loading of exports, could also exert an influence. The slower growth in Vietnam and Malaysia in the second half of 2025 will mainly be due to weaker external demand conditions and the front-loading payback, explained the report. This is even as domestic demand conditions remain resilient. The report noted that the new levies, which went into effect on Aug 7, have effective rates lower than those previously announced on Apr 2 or Jul 9. However, they 'remain punitive enough to impact trade and growth prospects'. Exports from Indonesia, Malaysia, Cambodia, the Philippines and Thailand face a 19 per cent levy, while those from Vietnam are subject to a slightly higher rate of 20 per cent. The Vietnamese rate can rise to 40 per cent if an export is deemed to be a 'transhipment'. Brunei faces a 25 per cent rate, while Laos and Myanmar were hit with the highest rate in South-east Asia, at 40 per cent. The tariff rate for US imports from Singapore remained at 10 per cent, which Prime Minister Lawrence Wong said offers 'little comfort' . India was hit with a prohibitive 50 per cent rate, despite a long charm offensive from Prime Minister Narendra Modi. Reciprocal tariffs on India are currently at 25 per cent, with the remaining 25 per cent levy for reliance on Russian oil imports set to take effect on Aug 27. ' Still, hope is not entirely dim for India, with OCBC stating that the tariffs will likely not derail broader economic growth momentum even as they prove painful in pockets. ' OCBC stated that it expects authorities to 'remain nimble in their response', estimating that they will rely more on monetary than fiscal policies in the near term. Over the medium term, they are expected to build economic resilience through reforms and diversify trading partners. The bank also added that regional central banks are expected to continue with rate cuts. It pencilled in a cumulative 50 basis points (bps) in rate cuts from Bank Indonesia and Bangko Sentral ng Pilipinas for the remainder of 2025. The Bank of Thailand is expected to deliver one more 25 bps cut in 2025, while the State Bank of Vietnam will likely trim its policy rate by a cumulative 50 bps in 2026. The Reserve Bank of India is anticipated to slash its rate by 50 bps in total by March 2026. India is still hoping to negotiate down the 50 per cent levy, but OCBC reiterated its stance that 'trade negotiations with India are unlikely to yield quick outcomes, as were some expectations at the start of 2025'. Still, hope is not entirely dim for India, with OCBC stating that the tariffs will likely not derail broader economic growth momentum even as they prove painful in pockets. It added that there is still a lack of clarity around the definition of 'transhipments', the timing and rate of impending tariffs on semiconductors and pharmaceuticals, as well as potential ad hoc tariff changes stemming from the US administration. OCBC's calculations also indicated that sector-specific tariffs on copper, steel, aluminium, cars and parts are not significant for the Asean-5 countries, Singapore and India. The report also pointed out that 'tariff calculations are complicated', and are 'usually undertaken at the most granular trade codes available'. It explained: 'The effective tariff rate has been raised significantly – reciprocal tariffs are stacked on top of already applied (most-favoured nation) tariff rates, while the sector-specific tariffs are not stacked and assumed to be stand-alone.'
Business Times
5 hours ago
- Business Times
Singapore, Hong Kong want a slice of the US$250 billion stablecoin pie
[SINGAPORE] Regional financial centres Singapore and Hong Kong are both aiming to capture a piece of the US$250 billion stablecoin market. On Aug 1, Hong Kong launched a regulatory regime for stablecoin issuers . Some industry watchers noted that the territory might be positioning itself as a regulated gateway into mainland China. Singapore, on the other hand, finalised its Single Currency Stablecoin framework back in 2023 – a move that pundits viewed as a boost to its role as a hub for South-east Asia and the West. A stablecoin is a type of cryptocurrency that is pegged to a fiat currency, such as the US dollar, and backed by reserve assets. Popular stablecoins include USDT and USDC, which are both pegged to the greenback. In a report last month, investment firm BlackRock noted that although stablecoins are small relative to the size of the overall crypto universe, their adoption has been growing quickly since 2020. Stablecoins now make up about 7 per cent of the crypto market share, the report indicated, noting: 'We see stablecoins as a new part of the future of finance.' A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Tale of two cities Industry players noted largely similar crypto regulation in Hong Kong and Singapore. Angela Ang, head of policy and strategic partnerships for the Asia-Pacific at blockchain intelligence company TRM Labs, said that Singapore's opt-in approach gives issuers based there more flexibility in general. Describing the city-state's approach as a 'golden sticker', Samson Leo, chief legal officer of StraitsX, emphasised that unregulated stablecoins will be treated like any other cryptocurrency – traded at the user's own risk. StraitsX, aigital payment infrastructure provider, began issuing Singapore dollar-backed stablecoin XSGD in 2020. In 2024, StraitsX received full major payment institution licences from the Monetary Authority of Singapore (MAS). 'Every market has its own niche,' Leo said, adding that he does not think Singapore and Hong Kong are competing with each other. Singapore caters to companies in South-east Asia and acts as a bridge between the East and West, whereas Hong Kong is more of a launch pad into mainland China and Northern Asia. ' We see stablecoins as a new part of the future of finance. ' — BlackRock Ang noted that issuers are much more selective about where they issue their stablecoin tokens, adding that it is costly and unnecessary to do this in several jurisdictions. 'Whether it makes sense to do so in Singapore, Hong Kong or another jurisdiction depends on whether it offers unique advantages for a particular business model,' she said. Hassan Ahmed, Singapore country director for crypto exchange Coinbase, suggests that a potential Chinese renminbi-backed stablecoin would be a 'big catalyst' for firms to set up in Hong Kong. Fragmentation risk looms If each country around the world required its own specific stablecoin licence alongside strict licensing regulations, it would lead to 'islands' being formed, Leo said. In other words, there is a fragmentation risk. In July, US President Donald Trump unveiled the Genius Act , which regulates the use of stablecoins in the United States. It also marks the first federal framework for payment stablecoins. In addition, the Act prohibits issuers from paying interest, and limits issuance to federally regulated banks, some registered non-banks and state-chartered firms. Ahmed said that the new regulations will create some form of 'geographic interoperability issues', with which the industry will have to contend. Both he and Leo believe that despite the fragmentation of the stablecoin industry, there is still a need to regulate the tokens. 'It inspires more confidence, and it unlocks more capital to be able to participate,' Ahmed said. To prevent the risk of fragmentation, Leo cites the need for discussions at the regulator-to-regulator level. He suggested stablecoins that are recognised in one market to be recognised in another where the regulations are similar. In response to queries from The Business Times, a MAS spokesperson said that the regulator is working on legislative amendments to formalise its stablecoin framework. 'Key requirements of the stablecoin framework relate to reserve assets, capital, redemption and disclosures,' the spokesperson added. Genius Act is a tailwind Despite the looming risk of fragmentation, the market remains optimistic about the direction of the stablecoins, especially following the passing of the Genius Act. Describing the United States as a juggernaut in the digital assets ecosystem from both adoption and business standpoints, Ang of TRM Labs said that the Genius Act has created major tailwinds for stablecoin adoption worldwide. 'The stars are really aligned for the industry,' Ahmed added. Analysts from BlackRock said that new US legislation, notably the Genius Act, is set to cement the role of stablecoins as mainstream digital payment methods. They added: 'This regulation could reinforce dollar dominance by enabling a tokenised US dollar-based ecosystem for international payments.' At the financial institution level, there is also growing interest in stablecoins. 'Bank interest in stablecoin issuance has accelerated,' noted Ang. She added that greater participation from large financial institutions will drive mainstream adoption of stablecoins as a means of payment and value transfer. ' Whether it makes sense to (issue a stablecoin token) in Singapore, Hong Kong or another jurisdiction depends on whether it offers unique advantages for a particular business model. ' — Angela Ang, head of policy and strategic partnerships for the Asia-Pacific at TRM Labs StraitsX, meanwhile, has partnered Standard Chartered and DBS. The banks hold XSGD stablecoin reserves. Ahmed believes that the Genius Act will also encourage major banks and Big Tech platforms to leverage the stablecoin technology. Besides governments and lenders, payment gateways are also seeking to tap the stablecoin market. Visa, for example, is using stablecoins to improve the efficiency and utility of back-end financial and money movement infrastructure, it said on its website. Rubail Birwadker, Visa's global head of growth products and strategic partnerships, said in a Jul 31 press release: 'We believe that when stablecoins are trusted, scalable and interoperable, they can fundamentally transform how money moves around the world.' Similarly, Mastercard has also adopted stablecoins for various purposes, such as on-chain remittances. Citing the fast and cost-effective nature of stablecoins, the company said that these tokens are ideal for these uses.
Business Times
10 hours ago
- Business Times
US tariffs: Thailand GDP growth most impacted by increased effective tariff rate among Asean-5
[SINGAPORE] The effective tariff rate on Asean-5 and India exports to the United States has risen sharply, with Thailand most affected, said an OCBC report on Tuesday (Aug 19). The impact on gross domestic product (GDP) will still be felt despite semiconductor and pharmaceutical exemptions, noted OCBC, adding that the higher effective rates will hurt export growth to the US. Due to the front-loading of exports largely occurring in the first quarter of 2025, the tariffs will impact growth through 2026, according to the report. Thailand was considered the most exposed to a sharper slowdown on account of 'a triple whammy from perceived domestic political risks, structural constraints and exposure to the US'. Vietnam, Malaysia, India, the Philippines and Indonesia follow Thailand from the greatest to least GDP impact. The slower growth in Vietnam and Malaysia in the second half of 2025 will mainly be due to weaker external demand conditions and a payback from frontloading of exports to the US, explained the report. This is even as domestic demand conditions remain resilient. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The report noted that the new levies, which went into effect on Aug 7, have effective rates lower than previously announced on Apr 2 or Jul 9. However, they 'remain punitive enough to impact trade and growth prospects'. Exports from Indonesia, Malaysia, Cambodia, the Philippines and Thailand face a 19 per cent levy, while those from Vietnam are slightly higher at 20 per cent. The Vietnamese rate can rise to 40 per cent if an export is deemed to be a 'transshipment'. Brunei faces a higher rate at 25 per cent, while Laos and Myanmar were hit with the highest rate in South-east Asia at 40 per cent. The tariff rate for US imports from Singapore remained at 10 per cent, which Prime Minister Lawrence Wong said offers 'little comfort' . India was hit with an incredibly high 50 per cent rate, despite a long charm offensive from Prime Minister Narendra Modi. Reciprocal tariffs on India are at 25 per cent, with the remaining 25 per cent levy for reliance on Russian oil imports set to take effect on Aug 27. OCBC stated that it expects authorities to 'remain nimble in their response', estimating that they will rely more on monetary than fiscal policies in the near term. Over the medium term, they are expected to build economic resilience through reforms and diversify trading partners. The bank also added that regional central banks are expected to continue with rate cuts. It pencilled in a cumulative 50 basis points (bp) in rate cuts from Bank Indonesia and Bangko Sentral ng Pilipinas for the remainder of 2025. The Bank of Thailand is expected to deliver one more 25bp cut in 2025, while the State Bank of Vietnam will likely trim its policy rate by a cumulative 50bp in 2026 and the Reserve Bank of India is expected to slash its by a cumulative 50bp by March 2026. India is still hoping to negotiate the 50 per cent levy down, but OCBC reiterated its stance that 'trade negotiations with India are unlikely to yield quick outcomes as were some expectations at the start of 2025'. Still, hope is not entirely dim for India. 'We believe that these tariffs will not derail broader economic growth momentum but prove painful in pockets,' said the report. It added that there is still a lack of clarity around the definition of 'transshipments', the timing and rate of impending tariffs on semiconductors and pharmaceuticals, as well as potential ad-hoc tariff changes stemming from the US administration. OCBC's calculations also indicated that sector-specific tariffs on copper, steel and aluminium, automobiles and parts are not significant for the Asean-6 countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam) and India. The report also pointed out that 'tariff calculations are complicated' and are 'usually undertaken at the most granular trade codes available'. It explained: 'The effective tariff rate has been raised significantly – reciprocal tariffs are stacked on top of already applied (most favoured nation) tariff rates, while the sector-specific tariffs are not stacked and assumed to be standalone.'
