The importing of other natural resources comes in the form of water. While this recognizably has reduced in demand with the new desalination plants and Newater plants in Singapore, this is still a booster to the Malaysian economy. The pipelines ensure political peace between the two nations and as a clause of the water agreement, this has resulted in improved infrastructure in Malaysia, through the construction of the Second Link and a third Causeway in the near future. This promotes high accessibility between the two nations and good transportation links would promote increased Malaysian exports.
With regards to Malaysia, other forms of trading also help to promote the Malaysian economy. No doubt despite Singapore’s limited domestic demand, the import demand is relatively low but still substantial. More importantly, Singapore’s flexible exchange rates act as an automatic stabilizer for Malaysia, who works on a fixed exchange rate packed to the US exchange rate. Therefore in recent times when the Malaysian ringgit has depreciated with the devaluation of the US dollar, exports to Singapore have risen as a result and served to improve Malaysia’s balance of payments. Similarly during the Asian Financial Crisis of 1997, the strength of the Singapore economy acted as a booster to ASEAN countries through their export markets. However this is rather limited as highlighted by Singapore’s relatively small demand.
A third role of Singapore in aiding development within the region is through imports of agricultural produce from her ASEAN neighbours where agriculture remains important. The near total absence of agricultural produce in Singapore pushes it to rely on the ASEAN neighbours, providing a stable demand for their produce. Moreover with the AFTA and goodwill among ASEAN countries, these exports are paid higher prices than if they were exported to other countries or competing in the global market. This hence is a viable avenue of foreign exchange earner for these ASEAN neighbours, backed up by the stability of and the confidence in the SGD.
The push for entrepreneurship by the Singapore government, backed by financial incentives, hence seen the growth in outsourcing to ASEAN neighbours. This will lead to the transfer of knowledge and expertise, and investments that will greatly help the development of her neighbours. This is seen by the increasing rate of investments channeled to countries like Vietnam, Indonesia, Malaysia and Thailand. Such linkages have tapped the economic potential of these countries, providing employment as well as government revenue. More importantly, the transfer of knowledge and expertise is a catalyst to boost their economies. Singapore entrepreneurs pump in much needed funds to these countries to jump start their economies. Singapore has also spearheaded the initiative to develop a regional e-hub and promote information technology assimilation. Hence this would increase the economies of scale within the region and provide the base for economic growth.
Finally one other major role that Singapore has undertaken is the Tourism Unlimited aspect in the Tourism21 blueprint. This highlights the strategic placement of Singapore in a “borderless” Southeast Asia which offers great opportunity in the region. The World Trade Organisation statistics have shown the ASEAN region to be the fastest growing in the world, in terms of international tourist arrivals for the past decade (WTO2000). Hence establishing Singapore as the “hub” or “gateway” for ASEAN region travel is a win-win situation for the region. This is particularly since Singapore is a world renown city and therefore a very apt “advertisement” or representative of the region, encompassing the “sun, sand and sea” appeal that is consistent with the region, as well as promoting world class attractions full of heritage, cultural and historical flavour, with a tinge of post-colonial touch to it. With the remarkable reputation of Singapore and the efficient and world-class transport infrastructure, characterized by the Changi Airport with 3 terminals, long haul tourists would flock to the region, using Singapore as the “base of operations”. The linkages in the region hence become a enticing factor as a multi-dimensional experience, resulting in overall increased inbound tourists to the ASEAN region. Collaboration to achieve this goal is highlighted by the linkages present in the Expert Group on Tourism (ASEAN), Indonesia-Malaysia-Singapore Growth Triangle, etc.
In addition, in 1997 Singapore signed ‘open air’ agreements with countries that included Brunei, allowing largely unregulated access in the development of airline linkages with these countries. Through such linkages, economic developments in ASEAN neighbours is built upon the potential complementarity of regional attractions, with the intention of creating added value and new businesses through the combined synergy of different destinations, rather than through competition. This collaboration helps to consolidate tourism or the service sector as a driving force of economic growth in the ASEAN countries, with Singapore at the confluence of linkages.
Therefore it can be concluded that Singapore plays a highly important and crucial role in helping her ASEAN neighbours develop their economies, though not so much dependent on herself, but more so as a catalyst to tap the global market. In doing so, Singapore stands to benefit as the strengthening of the ASEAN members will consolidate our position in an increasingly globalized world.
Should the other ASEAN economies become more developed, Singapore, who is highly dependant on its exports and imports will benefit from cheaper imports that could arise from the cost savings derived from the use of technology to reduce cost of production in the less developed economies. One possibility is that of Brunei’s oil industry which could become more sustainable if technology makes the process of oil extraction more efficient, extending the ‘lifespan’ of its oil fields. For Singapore, this would mean a longer supply of oil and the possibility of lower oil prices from the record high prices of today. However, this is only possible if Brunei has the resources to invest in developing new technologies and the technical know-how required.
Secondly, the development of these economies will also mean that the average citizen will now be more affluent as incomes rise, giving them stronger purchasing power and an explosion in their demand for goods and services. One example would be that of the demand for tourism. With higher incomes, demand for tourism is likely to increase and this creates new markets to promote Singapore as a tourist destination to other ASEAN members since close proximity means affordability as well. This would greatly benefit Singapore’s external demand and boost our economy greatly since a substantial percentage of our GDP, strengthening our existing trade relations with Malaysia and Thailand and establishing new trade relations with the rest of the ASEAN members. Trade is also facilitated by the existing AFTA which guarantees that our exports will be competitive in the global economy.
The overall effect will probably help to improve Singapore’s balance of trade and a multiplied increase in national income. A strong economy at a regional level gives a very important mindset as it instills positive consumer sentiments and business confidence in Singapore as a leader of its ASEAN members in terms of economic development. Through the multiplier and accelerator effect, Singapore can expect to garner more investment both local and foreign as the better business prospects. Singaporean entrepreneurs can also consider outsourcing their operations to ASEAN neighbours since close proximity would mean convenience and shorter traveling time and better connectivity with the rest of the world as a result of infrastructural development that Singapore has a lot of expertise with, being well known for its efficient and reliable telecommunications network. The construction and telecommunication industry can regionalize and profit from helping these ASEAN countries develop their infrastructure.
Singapore will then be able to take advantage of the lower labour costs in these countries, combined with the expertise that our businesses have, cooperations and partnerships with its other ASEAN members. This would be beneficial to Singapore especially with an ageing population and a shrinking workforce, the problem of labour shortage can be solved with the creation of businesses in these countries. This reduces the threat of competition but rather encourages growth of both economies, creating jobs for the host country and also business opportunities for Singaporeans at home. One example is the joint venture between Singapore, Johor and Riau Island—the SIJORI resorts which allowed Singapore to bring in their expertise to complement the other two parties. More of such partnerships will be possible and profitable due to the removal of restrictions between ASEAN member countries.
In the long run, such developments between countries are also desirable because they help strengthen political relationships as well since the countries are now binded by economic ties. Thus, we can expect political stability within the region since it would not do any party any good if there were to be any political upheavals that might threaten to disrupt our development.
In conclusion, the development of the other ASEAN economies benefits Singapore greatly as it creates endless opportunities and opens up new markets and generates employment that tap on the managerial and administrative expertise of Singapore. Strong regional economic performance is definitely desirable for Singapore as it promises a vibrant economy and prevents our economy from stagnating. It also gives foreign investors greater confidence in Singapore and gives us brighter economic prospects. Singapore will also prosper in helping these economies develop because of the business opportunities that they present.