By: 永久浪客/Forever Vagabond
According to a Credit Suisse report, Singapore is losing its export competitiveness in the region due to rising costs.
Also, Singapore’s economy is found to be losing market share in the global goods trade. This means that its export growth will likely remain weak in the coming years.
The top 3 performers in Asia are Vietnam, the Philippines and China in terms of export competitiveness. They have been gaining global market share, thanks to improving competitiveness and having the right product mix.
In terms of export rankings, Singapore has dropped to 8th position:
1. Vietnam
2. Philippines
3. China
4. India
5. Malaysia
6. Thailand
7 South Korea
8 Singapore
9 Taiwan
10 Indonesia
Wages rise in spite of low productivity growth
Credit Suisse said, “Wages (in Singapore) have continued to rise in spite of low productivity growth, depressing corporate profits and pushing up unit labour costs, driven in part by the foreign-labour curbs imposed since 2010.”
Indeed, starting from 1 January next year, new foreign Employment Pass applicants will need to earn a minimum fixed monthly salary of $3,600 or more, depending on their qualifications and experience. This figure is up from the current $3,300.
For the lower S-Pass, its qualifying salary criteria was raised from $2,000 to $2,200 and higher 3 years ago (1 Jul 2013).
As a result, investment growth has slowed and various surveys have indicated that businesses in Singapore intend to invest less, said Credit Suisse.
“All these bode ill for the prospect of goods exports moving forward,” it added.
Credit Suisse thinks that MAS will likely ease its monetary policy at its next meeting in October.