Singapore has 5.5 million people, a tiny if not negligible domestic market. Other economies are significantly bigger: China has 1.36 billion people; Indonesia has 253 million.
Some argue that our purchasing power is higher. But it is mathematically impossible, in dollar terms, to consume as much as China or most of the rapidly growing nations in the region.
We will never be the natural top choice of operations for top firms, no matter how rich we become.
Some of us think the Association of Southeast Asian Nations (ASEAN) will be Singaporeans’ hope. They believe ASEAN countries can form a common market as the European Union did. Unfortunately, ASEAN nations have very different characteristics and political interests.
While I believe ASEAN nations will be more cohesive with the ASEAN Economic Community 2015, Singapore will not be the Frankfurt equivalent in the EU. In fact, in the long run, it may be more palatable for each member to bypass ASEAN’s complex interests and deal with larger economies such as China and the United States individually.
This means Singapore has no alternative but to open our financial markets to the international community. We must also be the trading hub for this part of the world for as long as we are relevant.
Today, we are integrated with the world. Based on World Trade Organization data, our trade to gross domestic product ratio from 2011 to 2013 was 366.2. To put it simply, our economy will always be volatile and linked to global markets.
Notably, we were among the first to enter a recession in 2008 and among the first to enjoy great growth rates in later years.
Our interconnectedness requires us to select the smartest leaders of the lot to govern Singapore and help us survive on the rough economic seas. Many believe that the global economy will become more cyclical.
This implies that changes will happen quickly. In future, more Singaporeans will lose their jobs overnight. Industries may be wiped out by disruptive technologies.
We need ministers with the uncompromising courage to identify and make policy changes. Singapore has no buffer against failure. If we were Malaysians, we could fail and return home from Kuala Lumpur. We would still own some land and go on with life.
If Singapore fails, investors would exit; they are not beholden to Singaporeans. And we have no hinterland. Some argue that we should focus largely on supporting local firms, but we do not innovate as Israeli entrepreneurs do.
Our local firms complain about the tighter quota on lower wage foreign workers, who have lower wage bills, but Singaporean employees want higher wages. These are tough questions. It is no wonder that almost 70 per cent of the electorate voted for the proven party with an economic track record.