While the Trump-Kim Singapore Summit reportedly cost the island-state a cool SG$20m to host, there’s little doubt the Red Dot’s profile received many, many times that amount in free tier one media coverage and exposure across acres of newsprint and global new TV coverage.
Lots of speculation of what this figure might be has been talked about endlessly in The Straits Times and other places. All highly speculative and nigh impossible to quantify, yet local journalists seemed fixated by the idea of what “earned media” figure could be placed on the encounter between Marshall Kim and President Trump.
The real impact is far more nuanced and could have a far greater effect on Singapore’s future economic outlook.
Trying to understand the price overlooks the real value
All those “finger in the air” media value estimates punted about by commentators (including myself), mean nothing because they are not equivalent to any economic impact metric. They are simply quite blunt “tools” for businesses (and governments) to gauge the return on investment from any public relations activities undertaken.
And while many Singaporeans have taken to social media platforms lamenting the $20m cost, others have adopted a more sanguine perspective and realise that the true impact of the summit, over time, will be worth far more than the government paid to host.
Look deeper and further ahead
Most political and economic analysts agree there is a lot of potential upside for Singapore and the significant political-economic benefits will be reaped further down the road.
Most people around the world have heard of Singapore – it’s always had connotations of an exotic far east trading post, a key part of the old British Empire, brutally occupied by the Japanese in WW2, formerly part of Malaysia etc – but not may people understand its unique political and independent nation-statehood now and how it has emerged as one of the most successful economies in the world over the last 30-40 years.
“Singapore” was the most heavily Googled search term in the US on the eve of the summit. The event has put Singapore on the world map, fuelling awareness and curiosity from all sectors.
Taking a leading role on the world stage
History was made, and Singapore, as the host, has been praised for its not insignificant contribution to a global drive to improve regional and global security. The island state’s role in the event was testament to the effectiveness of its foreign policy: Singapore is one of the few countries that has successfully developed deep and wide-ranging bilateral relationships with both Washington and Beijing, while simultaneously keeping lines of communication open with Pyongyang amidst tight international sanctions.
This is no mean feat to achieve in today’s world. A tough balancing act for Singapore which has continued to pursue an even-handed brand of foreign policy in which its strategic geo-political interest is to be a friend to all and an enemy to no one. And it is a strategy that has paid off time and time again.
This success cannot simply (and crudely) be measured in terms of media value. Singapore enjoys a hard-earned reputation as an honest power broker, punching well above its weight, willing to speak hard truths and be a valued counsel to larger powers.
The SG$20m cost to Singapore’s government of hosting the summit was a strategic bet that may well yield substantial economic dividends in the future, if the government can demonstrate this value to its citizens and assume a similar role from an economic and business point of view in the coming “Asian Century”.
What exactly is the “Asian Century”?
According to Asian Tech Podcast host, analyst and founder of the Asia Matters Institute Graham Brown, Asia is awakening and Asian economies, start-up businesses and consumer demand are set for phenomenal growth over the next 25-40 years. Brown recently published The Asia Matters Report which is packed with amazing insights and statistics about the key drivers of The Asian Century: People, Capital and Innovation, New insights for 2018 on The Asian Middle Classes, A2A (Asia to Asia) Trade and Asian Start-up Funding.
It’s freely available here and I thoroughly encourage anyone with an interest in Asia to download and read the slides.
Some random stats:
- Only one economy *outside* of Asia will make up the “Big five” in 2050
- China will be world’s largest economy by 2020
- Revenue of ride-hailing apps in South East Asia = US$5 billion (2017)
- 30% of Vietnamese company board members are female.
- 66% of the world’s middle classes will be living inside Asia by 2030
- 117% growth in financing for start-ups in Asia YoY 2017
- Infrastructure spending on China’s One Road, One Belt project estimated to be US$5,000 bn
- In 2016, 1bn people in Asia flew on a commercial airline for the first time in their lives.
The Asia Matters report states that, as of 2018, we are witnessing a seismic shift, that to future generations and their historians, will seem obvious…It’s no longer the US that stands out as a beacon for the world’s entrepreneurs, but the legacy of a 100-year-old hegemony has us still believing in the “West is the best narrative”.
A shift has happened
The report suggests we unpack what’s really going on here: Asia is becoming increasingly a more attractive offer to global entrepreneurs. Add to that a new generation of local Asian talent who are turning their back on safe careers and now this shift is changing cultural narratives. No longer is Asia a land of copycats and cheap factories but has instead become both a source of jobs for the West and an attractive proposition for location independent entrepreneurs.
Asians are also the most optimistic about globalisation and the impact of immigration - two key catalysts for tech start-up ecosystems. Also, women are positively regarded as “agents of change” in Asia. There are more female billionaires in Asia than anywhere else in the world and this is fuelling a change of fortunes for all working women who see career advancement opportunities as their right.
So how does all this affect Singapore? And how can it leverage its status to take advantage of the vast opportunities in the wider SEA region?
New opportunities for growth
Singapore has been a major business and trading hub in terms of oil & gas, financial services and shipping for the last 25-30 years and has done very well from it. However, many jobs have left Singapore now either because of the oil price crash or the fact that a lot of back office jobs in finance and shipping are now relocating to places like Kuala Lumpur, Manila, Jakarta and Bangkok – because the infrastructure in these places has improved and costs of staff, office/housing etc are far lower than Singapore.
Singapore faces a challenge in the future. Traditional foreign investment in the key sectors outlined above is falling. That means less tax revenue for the government to fund the subsidized standard of living enjoyed by Singaporeans.
As more and more regional economic development takes places throughout Southeast Asia – China’s huge One Belt, One Road initiative, the rise of emerging economies in TH, MY, VIET, INDO and PH etc. a lot of western (and Chinese) companies will want to invest in Asia, not only to build key infrastructure but also to meet demand from rising number of “middle class” consumers. Consumer brands, advertisers, construction & engineering, travel, ecommerce, technology and media will boom.
Due to its geographical location – smack in the middle of Southeast Asia - together with its first world infrastructure, safety and security, and a quality lifestyle enjoyed by expats, Singapore is well placed to attract the regional HQs for much of this inward investment. In addition, it’s a beautiful and safe city to live and work in.
Public debate needed
Nevertheless, the Singapore public regularly grumble about the number of expats coming here, even though the foreign individuals and businesses contribute lots of tax revenue and spend in the local economy. The government knows this but there is very little space for public debate about these issues so how does Singapore move forward? There are competing cities in the vicinity such as Hong Kong, Seoul and Shanghai, so Singapore must press its advantage or lose out.
The first question is do Singaporeans want the country to become a global business hub for the Asian century with all that entails? More urban development, more foreign investment, more expats, rising productivity, increasing employment and economic opportunities, higher revenues for the government and, consequently, a continuing rise in both GDP and living standards for Singaporeans?
The supplementary question is: how and where can this public debate take place in an informed way so that locals are able to calibrate their attitude to change, risk and reward?
If you're thinking of exploring business opportunities across Asia and would like advice or counsel, please get in touch with us via the website for an informal discussion.