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Q&A | March 30, 2022

Ensuring Singapore’s future growth

Noted Singaporean economist and finance CEO Manu Bhaskaran shares his outlook on how the city-state will keep flourishing in the years ahead

What does a rise in global volatility and uncertainty mean for Singapore’s place as leading economic power in the Asia-Pacific region? And what does it mean for those looking for new opportunities? Manu Bhaskaran, Centennial Advisors Asia CEO and a leading economist in the country, deciphers the future for Singapore, Southeast Asia, and organisational leadership in the region.

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I see three big forces shaping Singapore’s future: two global, one closer to home. The first is technological, and not just AI and robotics, which are very powerful but already quite well-covered. There’s the energy revolution underway with renewables. There’s a biomedical revolution with new therapies, such as the use of mRNA during this pandemic, as well as a materials revolution such as composite materials for ultra-long-distance aircraft. Singapore is well-positioned to benefit from these revolutions because despite being a tiny economy, we’re present in all these activities.

The second big force affecting us is a new growth run for Southeast Asia. I think we’ll see Indonesia, Vietnam, and even the Philippines do quite well alongside Singapore. We’re the hub of this as the region’s financial services centre, the entrepot–exports and imports come through us–with a lot of business operations and multinational corporate investment.

The third force is domestic. We are facing structural issues like an aging population and growing inequality. We can expect to see a changing relationship in the future between state and citizens to provide more social-safety nets. Changes in taxation and the introduction of greater social spending in the 2022 budget are clear indicators of this policy direction. I think that will change the texture of Singapore. It may not change the economic direction massively, but I suspect it’ll improve the relationship between economics and the quality of life for our citizens.

We often hear about Singapore ranking very highly on global innovation indices. We’re especially effective in our capacity to attract global research and engineering talent and increase investment. However, when you compare that investment to outcomes, we’re still relatively far down the ranks. Neighbours like Malaysia, Thailand, and Indonesia have launched some very large and influential companies. When I ask myself which new companies in Singapore are similarly influential, I struggle to name one.

There are many causes. Some have to do with the incentives we give to our companies to go up the value chain; others to do with the structure of our corporate sector that is still dominated by multinational companies, which focus on innovation in their home countries. My advice to leaders would be to focus on solving local problems. One example is water. We’ve historically struggled with scarce water resources, and so we ended up inventing NEWater, which is not just innovative but groundbreaking at a global scale. I really believe that encouraging local companies to respond to local needs is what best drives innovation.

My advice to leaders would be to focus on solving local problems.

A big one is climate change. This is a tropical country sitting astride the equator, so we are probably going to be big losers from climate change. The question is, how can we make this place livable in the future and attractive to the talent we need from all around the world, at a cost that is acceptable? Are there ways to leverage renewable energy to cool the place? We should try to find out.

Those who take a broader, longer-term view and look at the community as a whole, not just shareholder returns, will do better. We’re already seeing a readjustment so that even in the West, the models are moving away from the economics of Milton Friedman, where companies could do anything as long as it didn’t hurt customers, towards more balanced approaches.

My personal hope is that we can work with Malaysia and Indonesia in particular, to create small-scale integrations. Such as the Iskandar Economic Region, which would leverage and even compete with Singapore in a very complementary fashion so that the combination would do extremely well. The winners in the next phase of world growth will be those countries that remain open, that don’t cut themselves off, that welcome competition–including some uncomfortable competition–so that you get that flow of talent and trade.

Here’s one example: A couple of decades ago, a farsighted Malaysian entrepreneur built a port. It ended up attracting two of Singapore’s biggest maritime customers. That was a shock! But within a couple of years, we reorganised ourselves and the Port of Singapore Authority reclaimed its reputation as a highly competitive port. My takeaway was that you should never fear competition; in fact, you should fear the lack of competition. That’s what makes us complacent.

People often talk about finance or trade, but I don’t think it’s that specific. The question is, why did these industries grow here? Over the years, Singapore has developed a great capacity to organise itself. Take for example the finance sector. It didn’t just grow organically; it came about out of this ability to organise. We identified this opportunity in the late 1960s and we went for it. We mobilised government resources, we utilised our relationships with big financial corporations and got them to come in. We started the Asian dollar market.

At the root of it was Singapore’s capacity to organise itself to identify opportunities and confront problems. We must never allow that capacity to weaken. Financial flows or trade routes may change. You need something that goes beyond individual points of competitive advantage.


I believe the next 10 years will be a period of dislocation, which is not necessarily a bad thing. Geopolitically and environmentally, it’s going to get turbulent. My generation benefited from what I would describe as escalator-like growth. You just had to climb on the escalator and you went up; or if you had a bit more energy, you sprinted up the escalator and did better! But now, it’s more like a horizontal travelator. The good thing is it’s still moving, but it’s not ascending.

What will leaders need to do well? They must watch the horizon to anticipate problems and to be ahead of the curve. When markets are booming, it’s very easy to get carried away. When they crash to the ground, the people who survive and do well are those who cold-bloodedly assess the situation, understand where real value is being created, and then react.

To react, leaders need to be nimble. They need to have the ability to move fast, to shut down what isn’t working, and to shift to other activities quickly. Leaders need to be aligned with management and staff, but most of all they need their trust. If leaders have trust, it’s much easier to get things done. Vigilance, nimbleness, and trust. Leaders who can cultivate these will be in a good place, no matter what happens.

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