Foreign-labour restrictions ‘may be hurting S’pore’s competitiveness’

June 13, 20169:49 am331 views

SINGAPORE — The Republic’s restrictions on foreign labour may be hurting its competitiveness, and pushing it lower in global rankings.

The latest results from IMD, a Swiss business school, show Singapore has dropped from third to fourth place on its list of world rankings for competitiveness. It puts Hong Kong on top, knocking the United States from the No 1 spot.

Both Hong Kong and Singapore boast low taxes, good infrastructure and easy procedures to open a business, so why the divergence in competitiveness? One reason is Singapore’s weakening economy, as exports in the trade-reliant nation have come under pressure. But another key factor may be Singapore’s stricter rules on hiring foreign labour.

“The key difference between the two territories is Singapore’s restrictions on importing foreign labour, and its policy of boosting labour costs to discourage companies from being dependent on foreign labour,” said Mr Brian Tan, an economist at Nomura Plc in Singapore. “When you push ­labour costs, that’s going to have an effect on competitiveness.”

The index flags Hong Kong’s labour market as more competitive than in Singapore, with the China-controlled territory improving on scores such as working hours, skill levels, unemployment legislation and immigration levels. It also leads Singapore on business efficiency,­ according to IMD.

A leading banking and financial centre, Hong Kong encourages innovation through low and simple taxation and imposes no restrictions on capital flows in or out of the territory, said IMD, adding it also offers a gateway for foreign direct investment in China — the world’s newest economic superpower — and enables businesses there to access global capital markets.

Making the top five is still an achievement, though. Singapore was third last year, its highest level in the past five years. “It’s not that Singapore did something wrong, or that they must do things differently,” said Mr Christos Cabolis, the Lausanne, Switzerland-based chief economist at the IMD World Competitiveness Center. “It’s simply that it’s really hard to be on top of the list.”

The IMD defines competitiveness as a country’s ability to create an ­environment in which businesses can generate sustainable value. Rankings come from hard data and opinion surveys of more than 5,400 executives on four main areas: Economic performance, government and business ­efficiency, and infrastructure. BLOOMBERG

news source: todayonline.com

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