Why Malaysia will lose out (to Singapore)?

- related to Porter's research on the Competitive Advantage of Nations

-related to my letter to (Future Prime Minister, you can see cyrstal clear why Malaysia is losing its competitiveness to a tiny island? The only matter for all ACCA graduates is go where the 'cheese' is, in this case, its not hard to guess...

Excerpts interview with Senior Minister I, Lee Kuan Yew:

Singaporeans need not despair or be depressed. We will have to endure some hardship but nobody will be destitute, depending on soup kitchens or begging in the streets,” he said.
His words were largely directed at the younger generation, the ones who would be charged with taking the country forward. As daunting though current circumstances may appear, he said they could take heart from the experience of their predecessors.

He told them of the 1960s and 1970s, when there was only S$100 million (RM240 million) in reserves, the country faced separation from Malaysia and had to deal with “Konfrontasi” from Indonesia. In contrast, he said there is more than S$100 billion in the reserves now.

“Your parents' and grandparents' generations had hard lives in shanty huts with no running water or modern WC, not knowing what the future could bring. They simply concentrated on hard work and built the foundation for the Singapore of the 21st century,” he said.
“Your generation can take Singapore forward to become one of Asia's most vibrant and beautiful cities.”

He added: “The success of Singapore came from the hard work, resourcefulness and ingenuity of your forefathers and their leaders. You are the descendants of these lion-hearted pioneers.
“You have it in you to succeed. Joining you are hard-working and talented new emigrants from Asean (Where would S'pore has high talent grades of labour supply?! Of course its Malaysia, primarily. ), India and China. Together we can make the grade.” (bold and italics added.)

Excerpts interview with Senior Minister II,Goh Chok Tong

Singapore ‘a speedboat in a storm’, says Chok Tong

SINGAPORE, Feb 2 — Senior Minister Goh Chok Tong gave the answer to a question on the minds of many: Why is Singapore prone to recessions despite being economically sound? The reason lies in Singapore's small but open economy, which is heavily reliant on global trade.
“Our total trade is 3.5 times our gross domestic product, one of the highest in the world,” Goh said yesterday at a Chinese New Year lunch in his Marine Parade constituency.
So the fall is faster and steeper when the global economy collapses, which explains why Singapore was the first in the region to slip into recession last year. It is also the reason for Singapore's bleak outlook this year, with the economy set to contract between 2 per cent and 5 per cent, while some other regional countries are forecasting growth, he added.
Likening Singapore to a small speedboat in an open sea, he said: “When the sky is clear and the sea is calm, we can easily outrun the larger ships and tankers.
“But when the winds rise and the waves are high, we have to slow down or seek shelter in the nearest harbour.”

While docked in the harbour, it is critical to have the right attitude. “We must not idle and wait for the storm to pass,” he noted.

“Instead, we should use the time wisely to maintain our vessel, upgrade our engines, go for training, keep ourselves fit, and conduct drills to prepare for the next race.”

This is what the Resilience Package in the S$20.5 billion (RM49 billion) Budget seeks to do — by saving jobs, building new infrastructure and investing in education (italics added), he said.
In dealing with the downturn, Goh described Finance Minister Tharman Shanmugaratnam and his officials as a team of doctors that has prescribed the right medication — Budget measures — for the ailing economy.

They were also fortunate to have the collective experience of older ministers to draw on, many of whom have steered Singapore through previous recessions, including Goh.

Delving into history, he sought to show how the Government successfully dealt with previous economic fallouts.
In 1964, Singapore's trade fell sharply owing to political turbulence in the region and the failure to form a common market with Malaysia.

The solution: Leapfrog the region and make the world Singapore's market in an export-led industrialisation strategy, which brought strong economic growth for the next 20 years.

But the economy ran into trouble in 1985 when exports became too costly, owing to a deliberate high-wage policy to move Singapore up the value chain(italics added), so that workers can earn more.

The solution: Wages were slashed, so were taxes and fees — and growth resumed.
After a decade of strong growth came a succession of economic crises, starting with the Asian financial crisis in 1997, followed by the dot.com bust, the Sept 11 terrorist attacks in 2001, and SARS in 2003.

The solution: Singapore reformed the economy by opening up the financial sector(italics added), and diversifying the manufacturing base to more value-added productions(italics added), .
As in the past, Singapore can survive this recession, Goh said. “If we work together and support each other, we will emerge from this stronger than before.”

For now, the Government is also looking at the United States. “In six to nine months' time, we will know whether President Obama can turn the US economy around. When the US economy recovers, we will bounce right back... And we will bounce back to a very different Singapore.” — The Straits Times