But the question of what to do from hereon remains. The plan for the future involves continuing to build up a strong infrastructure and a solid reputation – but now the “apples” of Singapore’s eye are not only the large MNCs but the small-to-mid-sized corporations (SMEs) as well.

“As we look forward we need to create the conditions and environment for big and small companies to become more interactive and innovative. We want to see an enterprise ecosystem emerge,” comments Teo Ming Kian, chairman of Singapore’s Economic Development Board. “This ecosystem will allow big and small companies – foreign and local companies – to interact and feed off of one another. By reacting off each other, I feel more vibrancy and innovation will occur.”

This latest shift in focus has inspired the government to coin the word entropolis or a city of entrepreneurs."

Evolutionary anomalies

Singapore’s push to keep its economy strong and its shores inviting to new investment has hit some snags. On top of the globally-felt fallout from the war in Iraq and continued concerns about terrorism, Singapore found itself on the shortlist of nations hardest hit by the outbreak of Severe Acute Respiratory Syndrome (SARS).

SARS is behind Singapore now – as behind it as any non-curable disease can be – but the effects of the epidemic still linger – both good and bad.

The negative effects were significant. The disease claimed the lives of 33 people out of a recorded 238 infections – and the economic effects were nothing short of severe. Singapore’s economy shrank sharply during the second quarter of the year, making the eighth consecutive quarter of contraction a particularly severe one. Almost all business sectors felt the impact, particularly tourism and transportation.

According to an emergency survey conducted in May by the Japan External Trade Relations Organization (JETRO), 84.3 percent of Japanese firms operating in Singapore felt the effects of SARS on their businesses. But signs of recovery are already apparent. “Much of the effect of SARS was caused by travel restrictions,” explains Sumihito Hirai, managing director of JETRO Singapore. “Since travel restrictions were lifted at the end of May, we have all become very optimistic about the future.” And while the bad effects were indeed bad, the good effects may actually end up outweighing them. Unlike the other regions hit by SARS, Singapore’s decisive action, the openness of the government concerning the scope of the crisis and the rapid dissemination of information turned out to be quite a series of feathers in this country’s cap.

Brigadier General George Yeo, minister of trade and industry

“If you look at the long-term effect of SARS, it has strengthened us as a people and developed a deep sense of bonding between the government and the citizens,” says Yeo. “The end result is a governing sense of solidarity among Singaporeans.”

It also further established the credibility of the government in the eyes of the international business and investment community.

“Throughout the SARS crisis, the government remained very transparent in terms of providing information, and it introduced very strict measure to fight the disease,” says Kunihiko Makita, Japan’s ambassador to Singapore. “Their actions proved to be very effective and the business community certainly noticed.”

A Japanese-Singaporean future

Singapore-Japanese relations go back well before World War II when the two nations were the absolute opposite of trade partners. But history, while not forgotten, doesn’t seem to dampen the prospect of future prosperity one bit.

“Japan has been a long-term, faithful partner for us. They have been here for a long time and they are continuing to grow with us,” says Teo. “Singapore has one of the largest Japanese populations outside of Japan. We have deep-rooted relationships and want them to continue to grow.”

Teo Ming Kian, chairman of the Singapore Economic Development Board

One of the more recent catalysts for growing those relationships came last November with the signing of the Japan-Singapore Economic Partnership Agreement (JSEPA) – an extensive free trade agreement (FTA) which, among other positive impacts, will increase merchandise trade and increase the levels of investment in both countries. “JSEPA is not just a free trade agreement. It is a comprehensive agreement that covers investment promotion, SME promotion, intellectual property rights and tourism,” explains Hirai of JETRO. “It took effect on November 2, 2002, so it is too early to measure its affects so for – but expectations are both positive and high.” Many are looking at JSEPA as an important tool that will not only improve the economies of Japan and Singapore – but the entire ASEAN region as well.

“At the end of the day, it is most important to look at the entire picture – not just JSEPA,” said Makita. “One of the most serious issues in the region is the gap between the more advanced and less advanced countries in the ASEAN region. Both Singapore and Japan have important roles to play in helping to fill this gap – and the two countries will continue to work together to strengthen the entire region.”

Ensuring the “entropolis”

In order to keep the cutting-edge companies coming, Singapore knows it needs a plan. And the government has one. It’s a plan to ensure that the key elements, particularly the protection of intellectual property, to create an environment where entrepreneurial enterprises can thrive and multiply are present.

“We are creating areas to incubate new ideas, and for those who want to start up businesses easily. The government has also revised tax laws to reward and to share some of the risk of our entrepreneurs. We are also continuing to develop our infrastructure to enable businesses to work from anywhere in the country with IT, broadband and public transport,” adds Teo. “Singapore has always been very pro-business, and we must continue to be very pro-enterprise.”

The “plan” is a four-pronged concept the EDB calls “C.O.R.E.” As Teo describes it:

“Connectivity- In this global environment it becomes crucial that no one can be an island, even Singapore. We need to be totally connected to the world. Singapore is fortunate because of our ideal geographic location at the crossroads of international trade, but this is not enough. Within a seven hour flight radius from Singapore, one can reach China, ASEAN, India or Australia, this makes up 2.8 billion people in the marketplace. Openness: This is very important. If you want to be a major hub then others must trust you, so we need to be open and transparent. Our financial services and rules and regulations are very open.

Sumihito Hirai, managing director of JETRO

Reliability: What you say is what you must do. You have to be consistent and trusted. You need to be sure that things will work in terms of your infrastructure and policies. If people invest money here, there can not be any capital control so people can get their money back when they are ready to pull out. If people want to develop intellectual property here they need a guaranty that it will be protected. If people are told that their assets and data are secure, then it has to be that way.

Enterprise- It is not easy to manage all of these conflicting demands. As an intermediary, we need the enterprise to pull and bring things together. I see this as fundamental for Singapore.”

In many respects, the elements of C.O.R.E. have been in place for quite a while. They are simply going to be improved and built up into the future – a future that already promises to be brighter, economically, then in the recent past.

Despite the intense impact of SARS and the range of events that have shaken global economies for most of this year, economists are optimistic that Singapore will stage a strong recovery by the close of 2003. The government has estimated its growth targets for the second half of the year at between 1.3 and 3.3 percent. And that growth is expected to continue – especially as the country continues to reinvent itself as a safe, convenient value-added location for international investment.

“For a long time to come Singapore will be the most efficient and comfortable base operations for the international business community,” says Yeo. “Singapore is like the base camp on Mount Everest, where the risks are low, supplies are available and in an emergency, people can recoup before they set out again.”

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