S’pore ‘most politically and socially stable in region’

Source : Straits Times - 29 Oct 2008

SINGAPORE is well-positioned to weather the economic slowdown because of its political and social stability, said Hong Kong-based Political & Economic Risk Consultancy.

Its analysts ranked Singapore as having the least political and social risks next year among 16 territories in Asia-Pacific, according to a summary of its 87-page report released to the media yesterday.

The unlikelihood of sudden political changes, stable labour relations and sound policies, including measures to help the poor, were among the factors in Singapore’s favour, said Perc’s managing director, Mr Robert Broadfoot.

He told The Straits Times: ‘Singapore’s fiscal situation is strong enough for the fiscal incentives that are going to help the country get over the crisis and spread the pain of recession.’

Politically, he noted, Singapore has no election coming up and the Government would stay in power.

In addition to crafting good policies to take Singapore through a recession, the Government’s ability to implement them is a plus point.

Social stability is also expected, he said, because Singapore has ‘no insurrection movements, the labour situation is stable and more harmonious than most countries, and you don’t have religious fundamentalist movements.’

The report also concluded that despite external shocks, Singapore and Hong Kong will emerge stronger in their credibility as regional and international business centres.

Singapore’s Government-backed institutions such as Temasek Holdings and the Government Investment Corporation (GIC) remain well-positioned to capitalise on opportunities that emerge in the region and globally in these times.

Mr Broadfoot said: ‘GIC and Temasek have assets and are liquid. Their brands are still quite good: Temasek has an image of a stable company and will be viewed as a preferred partner.’

Hong Kong’s ace in its pack is The Hongkong and Shanghai Banking Corporation (HSBC) coming through the crisis intact as one of the large remaining private banks in the world.

The report found that while Singapore, Hong Kong and Australia could be hurt the most by the crisis, they were the most stable politically and socially.

On a scale of zero for the least risky to 10 for the most, Singapore scored 2.76, followed by Australia (2.9) and Hong Kong (3.23). Most risky are India (6.87), Thailand (6.28) and Malaysia (6.07). They are vulnerable not so much to the financial fallout but due to internal developments, the report added.

So, while India and China have been seen as engines of growth that will lift Asia out of a slowdown, the report warned of the external and internal troubles these countries will face.

China will have to contend with a drop in exports to the US, and deal with social instability arising from a widening income gap and a surge in unemployment.

India faces uncertainties over a general election due by May next year, rising communal violence and acts of terrorism.

The report predicted that a weakened US is likely to be less aggressive in pushing its views on other countries.

This will put more responsibility on US allies like Singapore, Japan and Australia to take the lead in issues the US has previously fronted, such as countering terrorism.

Singapore Management University law professor Eugene Tan warned that Singapore still faces terrorist threats.

It is also uncertain how long the slowdown will last, he said, adding: ‘Race, language and religion are still fairly strong faultlines and the slowdown will make those faultlines more significant.’