Singapore turned 61 last weekend. Approaching this milestone has led to some existential discussions: the world around Singapore is changing, what worked before has been plunged into question, and its identity and strengths are being re-examined.
That the global economy is witnessing a confluence of geopolitical risks, unprecedented technological advancement and a rewiring of the global order prompted Prime Minister Lawrence Wong to convene an Economic Strategy Review (ESR) exercise earlier in the year helmed by some of his younger and newer political colleagues.
However, that did not stop Singapore’s Parliament from holding a marathon robust debate on its economic strategies in the same week as its National Day celebrations, prompted by a motion proposed by the opposition Workers’ Party. By and large, it was a healthy and positive exercise, especially when the premise of the debate was to evaluate if the country’s economic growth has benefited, and will continue to benefit, Singaporeans.
The ESR itself had noted the structural changes that the global and domestic economies were facing: geopolitical fragmentation, AI and automation, slower workforce growth, ageing, intensifying competition for investment, changing employment patterns, and concerns over inequality and mobility – and suggested strategies to address them. Further, Singapore’s Ministry of Trade and Industry also expects the nation’s annual growth to slow down to 2-3 percent over the next decade, noting that sustaining growth and creating good jobs will become more difficult as time goes by.
Singapore Should Not Apologize For Being an Open Economy
Hence, it was entirely appropriate and fitting for the country’s legislative body to question and debate if and how Singapore’s economic model should evolve. Unfortunately, a large portion of the debate, prompted perhaps by the filed motion, focused on the centrality that multinational companies (MNCs) should play in the new model compared to local small and medium enterprises (SMEs).
While the eventual debate sensibly landed on the common ground that both MNCs and SMEs matter, the danger is how that discussion may be interpreted outside of Parliament and shape public sentiment going forward. Political arguments often tend to be simplified and, in this case, the argument about MNCs versus SMEs could easily be turned into foreigners versus locals, and foreign companies against Singaporeans and Singapore enterprises.
This could be damaging for the future of a small and open economy like Singapore’s which has and continues to benefit from the presence of foreign direct investment and foreign companies.
MNCs continue to bring capital, technology, markets, global networks, management capabilities, research and development, and high-value jobs into Singapore. In doing so, they help create an ecosystem in which local companies can gain access to higher value factors of production while creating good jobs for Singaporeans.
By investing into Singapore, a semiconductor company creates business opportunities and networks for logistics, engineering, legal, accounting and audit, professional services, facilities, real estate, technology, universities and research institutes, many of which will be SMEs. Such investments create thousands of jobs, as numerous research and data have shown.
Hence, Singapore should not be apologetic about being an open economy. Its openness is not incidental to the Singapore economic model; it is one of its foundations.
Moving Away from a False Choice
In addition, while it may be seductive to reduce any deliberation on the future of Singapore’s economy to a false choice between MNCs and SMEs, this takes the nation away from a more important debate on how it could track and ensure its growth is participative and beneficial to a vast proportion of its citizens and enterprises.
As of now, the current economic model has generally served Singaporeans well.
Despite headline grabbing retrenchments and job cuts, Singapore’s resident unemployment rate and resident long-term unemployment rate remained low, at 2.9 percent and 0.9 percent respectively at the end of the first quarter of 2026. Real incomes have also grown across the board in the last five years, with lower-income workers in particular seeing the fastest wage growth. Due to this, government transfers and taxes, income inequality has also fallen over the same period.
That Singapore achieved all of these goals is commendable and points to its successful economic strategies, especially since many other advanced economies are unable to achieve all of these outcomes at the same time.
However, as we have seen in recent examples in other countries – and most recently in the state elections in Malaysia – many governments are facing a growing macro-micro disconnect. This means that despite countries doing well in macroeconomic indicators, the sentiments and perceptions on the ground are very different. In this vein, Singaporeans could be anxious by all the structural changes happening around them and ask: “What does all this growth mean for me?” “Will my children have attractive opportunities and afford a good standard of living?” Local enterprises may question where they fit into the Singapore success story and if they can also grow to be global companies.
These are legitimate concerns because even though Singapore might have strong GDP numbers, record investment commitments, low unemployment numbers, and strong exports, some Singaporeans may feel economically insecure and companies struggle to remain profitable and scale.
The Singapore government therefore must redefine the way it measures and communicates economic performance. It should no longer be simply about headline GDP growth and investment numbers but how that has translated into jobs, as well as the types and levels of jobs, the impact on wage growth, and the business value-add created by such growth and investment.
Instead of arguing over whether growth should come from MNCs or SMEs, the more pertinent question to ask is how successfully the nation can convert economic growth – regardless of wherever it originates – into economic value-add, opportunities, capabilities, and prosperity for Singaporeans and Singapore companies.
A global company investing into the healthcare or semiconductor sectors in Singapore could bring a more sophisticated supply-chain and capabilities, creating a stronger ecosystem than a local company using cheaper, low-skilled labour with stagnant productivity. At the same time, a stronger regional focused local company could be manufacturing in other ASEAN countries with only a skeletal headquarter presence in Singapore, which does little to contribute to national capabilities and economic growth.
Therefore, the question of nationality of ownership of businesses is too crude a measure.
A New Economic Scorecard
As far as advanced economies go, Singapore can leverage its small size and sophisticated administrative and governance capabilities to pioneer an innovative way of tracking economic progress.
A new economic scorecard should maintain traditional indicators like GDP, FDI, employment, inflation, and export numbers. In addition, it should include indicators that respond to four big questions: Are Singaporean advancing? Are Singaporean enterprises becoming increasing their capabilities? Are MNCs embedding more value into the Singapore economy? Is the Singapore business ecosystem becoming more productive and resilient?
On the first question of Singaporeans progressing, continuous tracking of wage growth should be combined with indicators of career mobility and advancement, underemployment, percentage of Singaporeans in higher-value jobs or leadership roles and retirement and household financial resilience. Such metrics will provide a more holistic, accurate and useful depiction of how Singaporeans are advancing and benefiting from growth.
In terms of Singaporean companies being more capable, measuring SME productivity, Singapore companies’ overseas scale and revenue, locally-owned intellectual property, contribution of Singapore companies to R&D, and their participation in global supply chains can also track the health and growth of local enterprises.
As far as the contributions of MNCs go, there will be a need to go beyond their value-add to FDI, not least because of some of the negative perceptions this dichotomous debate has produced. For Singapore to continue to be an open economy that can attract strong investments, MNCs will assess its friendliness to external investments. This will include traditional elements like political and policy stability and consistency but also hinge on how welcoming the ground or society is to foreign enterprises.
To ease the concerns Singaporeans may have over the role of MNCs in its economic structure, the government should track and demonstrate indicators like how many Singaporeans there are in senior regional and global roles, the levels of local procurement, R&D and innovation, intellectual property, jobs, and knowledge transfer MNCs generate. This will give a more confidence-boosting measurement of how rooted every additional investment dollar is in the Singapore economy.
The scorecard could also track other indicators like productivity growth, diversification, regionalization, and transformation of local enterprises, along with employee mobility and career adaptability to ascertain if the entire economic ecosystem is strengthening.
As trends of multilateralism and global trade networks reversed in recent years, Singapore has been one of the advocates and proponents of an open, global economy.
With pressures of protectionism and inward-looking economic models increasing, Singapore could help the rest of the world buck this trend by having a broader economic conversation at home. The way it measures and tracks its own economic success could ultimately strengthen its decades-old love affair with MNCs while strengthening its own economic resilience. This could help other countries bridge the growing macro-micro divide.