Feb 27, 2007

Singapore rated least risky country in Asia

By Zakir Hussain

SINGAPORE is the least risky country in Asia, retaining its top spot in a survey of Asian economies.

It scored well in several areas, including domestic political risks, the quality of government policies and its institutions like the civil service, judiciary and police.

Singapore's banking and financial system, as well as its medical system, were also top-rated. And corruption here is the lowest among the countries surveyed.

A total of 12 Asian countries, Australia and the United States were surveyed between September and November last year by the Hong Kong-based Political and Economic Risk Consultancy (Perc).

Various risks were measured on a scale of zero to 10 - 10 being the worst - based on the responses of corporate managers and bankers.

They gave Singapore an overall score of 2.74, just behind Australia's 2.69.

Malaysia scored 4.66, while Thailand scored 5.49 and Indonesia, 6.79.

However, beyond its borders, the Republic faces a big increase in external risks, doing better only against the US, Taiwan, India and South Korea.

'Singapore's biggest companies are investing heavily in other Asian countries where risks are much higher than in Singapore,' Perc said in a report published this month.

'Because the risks are external, they are more difficult for the Singapore Government to manage,' it added.

It highlighted the case of Singapore investment company Temasek's investment in Thai telecommunications conglomerate Shin Corp.

'These investments potentially expose Singapore to new economic and diplomatic problems,' Perc said.

Temasek's purchase of a controlling stake in Shin Corp from the family of former Thai premier Thaksin Shinawatra in January last year set off massive protests in Thailand. They culminated in Mr Thaksin's ouster in a military coup last September.

However, Singapore was managing its relations with its neighbours 'quite well', Perc said.

It has also made itself a very difficult target for foreign terrorists. As a result, military risks are 'low and steady'.

Others strengths of Singapore include: the physical infrastructure, which is 'one of the best' in the world; a highly skilled and productive labour force, with strong managerial talent; a low crime rate; a low risk of social unrest; and the protection of intellectual property rights.

Among the areas where Singapore did less well are: the quality of political opposition, the lack of channels for people to express their views and air grievances, and the high overall cost of labour.

The threat of religious extremism figured higher than five years ago, Perc noted.

'The biggest threat Singapore faces from religious extremists today is from the outside, namely, from Al-Qaeda and related operatives who would very much like to carry out a major terrorist act in Singapore but are finding the island too hard a target.''

Indonesia, it noted, was still the frontline for the fight against extremists in South-east Asia.

As for growth in the region, Perc warned that shortcomings in areas like infrastructure and pollution were restricting growth in countries like Indonesia and Vietnam.

Singapore was also concerned with the preservation of social stability in neighbouring countries like Malaysia and Indonesia, Perc added.

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