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Kept the economy broad-based.
Singapore always planned on a strong presence
in manufacturing. It remains a major oil-refining
and petrochemical-manufacturing center and a strong
player in electronics, especially semiconductor
foundry products and contract manufacturing of
telecommunications equipment. Singapore is now
positioning as a regional hub for pharmaceuticals
and life sciences.
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Deregulated financial services.
During the Asian Crisis, Singapore moved swiftly
to ease rules in a bid to woo more foreign banks,
insurance companies, asset-management corporations
and venture-capital firms. A number of foreign
banks were allowed a bigger retail presence. Singapore
also reformed its securities industry, including
the relaxation of listing rules for Internet and
other technology start-ups.
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Accelerated telecommunications liberalization.
When Hong Kong and Australia began to attract
more regional telecom business, Singapore moved
up its deregulation schedule. "We had set
2002 as [the starting] date, but we realized it
was unrealistic so we decided to dismantle all
the barriers from April 1 this year," says
Yong Ying I, head of the Info-Communications Development
Authority. "We needed to react quickly to
the new environment and take advantage of the
changes."
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Opened up other parts of the economy.
Last week, Singapore said private companies
can generate power and sell electricity to end
users as early as April 2001. Foreign law firms
have been granted virtually free rein. Health-services
deregulation is allowing foreign medical practitioners
to come and work in Singapore despite initial
grumbles from the local medical association.
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Welcomed foreign talent.
Two of the four top local banks, including
industry leader DBS Bank, are now run by foreigners.
So are the state-owned shipping company, NOL,
and the biggest local electronics manufacturer,
Chartered Semiconductor. "Most of my local
and multinational clients tell me to find the
best talent I can irrespective of nationality,"
says a headhunter. "In Hong Kong, many of
our clients normally prefer a local person."
...And What Else It
Needs To Do
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Fast-track the privatization of government-linked
corporations.
Singapore needs to sell down stakes in companies
like DBS Bank, Singapore Telecom and Singapore
Power. State entities tend to be overcautious
and complacent. Government ownership can also
hold back regional expansion. Singapore Telecom
failed to buy Hong Kong's Cable & Wireless
HKT in part because of the political implications
of the Singapore government owning a Hong Kong
utility.
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Dismantle laws that restrict entrepreneurship.
Business people still find Singapore's environment
stifling. Only recently has the government amended
laws that allow homes to be legally used for business
purposes. Regulations on land use and building
controls are not as friendly as in Hong Kong and
other business centers.
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Deregulate the media.
There is only one major newspaper company,
one TV network, one pay-TV operator and one radio
network. Foreign shareholding in local media companies
is limited to no more than 3%. Liberalization
will help attract the foreign money and know-how
Singapore must acquire if it is to become a serious
player in the New Economy that is being built
on the back of the Internet and other technological
advances.
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Tackle other sacred cows.
On average, Singaporeans put in the equivalent
of 20% of their salary (and their employer 15%)
into the state-managed Central Provident Fund.
That is a lot of money tied up in an investment
that yields below-market returns. And the government's
easy access to this cheap money encourages misallocation
of resources. The Housing Development Board is
another institution in need of a shake-up. It
builds cheap houses in a country where 95% of
families already own homes. A more commercial
approach to public housing, such as opening the
sector to competition, is needed.
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Build a critical mass of research know-how.
Singapore needs to do more to develop home-grown
creativity. Strong funding for research centers
help, but fostering academic freedom and the spirit
of inquiry is equally important.
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