Photo: iStock
Zsófia Gulyás
15/08/2024 07:00
Foreign direct investment (FDI) into Singapore plays an important role in boosting the city-state's economy. Although the World Investment Report 2023 found that global FDI fell by 12 per cent to around US$1.3 trillion in 2022, following a strong rebound in 2021, Singapore managed to achieve growth in FDI to the city-state. In addition to capital, the Lion City has been effective in attracting new businesses, skilled labour and talent, contributing to the city-state's world-class competitiveness. The attractive business environment that underpins the '"Singapore Miracle" is the result of a complex combination of factors. The country's economic strategy and unwavering political stability, which creates a predictable climate, is complemented by an advanced digital ecosystem, world-class education, healthcare, transport and low crime rates, all of which contribute to Singapore's economic advantage as one of the top ten countries with the strongest national brands in the Global Soft Power Index 2024.
An important element of Singapore's positive national brand is its neutral, balanced yet active foreign policy stance, which, combined with its favourable geographical location, makes it an indispensable diplomatic player on major global issues. In 2015, the city-state hosted the first face-to-face talks between the Chinese and Taiwanese leaders, and in 2018, it hosted the historic summit between US President Donald Trump and North Korean leader Kim Jong-un. Singapore is not a member of the G20, but as a member of the Association of Southeast Asian Nations (ASEAN), it has been invited to the summit and related meetings for more than a decade. It has been active in global initiatives and has become a global centre for private international dispute resolution.
The geopolitical importance of this city-state, known as the "Washington of the East", makes it a key partner of both the US and China. Strategically located in a key position through the Strait of Malacca, the city-state has strong economic and military ties with both powers. Singapore can be a key player in bridging the growing divide between the West and China, but balancing the two is an increasing challenge for the city-state. In the shadow of the growing US-China stand-off and clashing Singaporean and Chinese interests over the South China Sea, Singapore continues to deepen its defence ties with the US despite increasing Chinese capital inflows. A key priority for the city-state's future is to strengthen its image as a regional leader by building on a narrative that highlights its contribution to solving global challenges. In support of this objective, Singapore, renowned as a clean and green city, must step up its efforts to ensure that its rich cultural heritage and creative and innovative achievements, alongside its business-friendly atmosphere, are more visible on a global stage. Singapore is a young nation with high growth potential in terms of soft power, but it needs a long-term sustainable vision and strategy to achieve its goals and deliver significant results.
The author is an international expert at the Magyar Nemzeti Bank, the central bank of Hungary
