Business to Vote for Singapore, Election No Issue

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Business to Vote for Singapore, Election No Issue
By REUTERS
Published: April 24, 2006

SINGAPORE (Reuters) - A Southeast Asia country, an election, a period of transition -- normally that's a recipe for risk.

Not in Singapore, where companies and investors can look forward to a ballot on May 6 with supreme confidence that the country's pro-business policies will remain intact.

After all, why would Prime Minister Lee Hsien Loong's People's Action Party (PAP) want to change the policies that led to economic success and allowed the party to dominate parliament since the city-state's independence in 1965?

The PAP currently has 82 out of 84 seats in parliament.

``Even if there were more opposition members of parliament, no one would say we're about to witness a revolution,'' said Markus Rosgen, Hong Kong-based equity strategist at Citigroup.

For Singaporeans, the key election issues are jobs, medical care and living costs. The PAP has shunned a welfare system, preferring discretionary handouts such as those due to be paid to elderly and low-income workers just days before the poll.

For foreign investors such as Hewlett-Packard Co, Motorola Inc, and Morgan Stanley, what matters is political stability and pro-business policies.

``Singapore is run like a modern corporation,'' said Hans Hoefer, publisher of Insight Guides, a glossy travel series. ''It's a very good place to do business.''

International investors value Singapore's efficient ports and airports, well-educated workforce, docile unions and generous tax policies.

``Motorola is attracted to Singapore for its stability, world-class business environment and infocomm infrastructures, and strong talent pool,'' said E.L. Tay, president of Motorola Singapore, in an email.

OBSESSED WITH COMPETITION

In a region where political uncertainty, policy flip-flops, corruption and poor infrastructure are common, Singapore stands out. What is more, the country's brisk growth -- 6.4 percent in 2005 -- is accompanied by low inflation and low unemployment.

Yet the island-state of 4.4 million people is obsessed with remaining competitive, and fears an exodus of jobs in services and manufacturing to low-cost rivals such as India and China.

With no natural resources, Singapore at first relied on multinationals to provide jobs.

The government later set up its own companies, grouped under state firm Temasek Holdings, in telecommunications, banking and infrastructure.

Today, manufacturing -- mostly in chemicals, oil-refining, drugs, electronics, and oil rig construction -- accounts for 25 percent of the $118 billion economy. But already international companies such as hard disk drive maker Maxtor Corp are shifting production to cheaper countries.

Lee, who is also finance minister, is focusing on areas such as tourism, finance, medical and education services and the biomedical sector in order to create jobs and curb the widening income gap that many Singaporeans fear has led to a polarization in society between the haves and the have-nots.

More controversially, Lee lifted a ban on casinos last year and plans to build two multi-billion-dollar gambling resorts to attract tourists and create new service-sector jobs. The decision was classic Singapore, with the economic rationale counting for more than a public outcry over the social consequences.

``Singapore's government facilitates economic development,'' said Scott Price, Asia Pacific chief executive of logistics firm DHL, which moved its regional base to Singapore from Hong Kong in 2002.