Singapore the 'Sick Man' of Southeast Asia: Credit Suisse

Singapore's Economic Development Board has acknowledged the impact of tighter immigration measures on industry and has taken steps including helping companies to boost productivity, the board's managing director Yeoh Keat Chuan said.

Some companies will be reluctant to move completely out of Singapore, which offers a strong record in safety, regulation and transparency, although their expansion efforts will likely focus on neighboring countries with faster growth.

That expansion can help them to weather some of the pressures at home.

Electronics and furniture retailer Courts Asia, which has 72 stores in Singapore and Malaysia, is setting up a 140,000 square-foot (13,000 square-meter) megastore in eastern Jakarta, which will be the group's largest when it opens in 2014.

"We don't want to discount Singapore in terms of growth potential," said Courts Asia Chief Executive Terry O'Connor. "But of course Indonesia and Malaysia have more greenfield territories, there are more options. We go to Indonesia, we can be 'big box' from day one."

Singapore bakery and restaurant chain BreadTalk>, which aims to boost revenue to S$1 billion in the next few years, is expanding regionally - particularly in China and Thailand - to balance out cost pressures at home.

"In Singapore's retail environment, rising costs are largely attributed to rent and labor," said BreadTalk Chief Financial Officer Lawrence Yeo. "In response, we've had to fine tune our business model."

Income disparity in Singapore, as measured by the Gini coefficient, has been on the rise, increasing to 0.487 in 2012 from 0.473 in 2011. The index ranges from 0 to 1, where 0 represents perfect equality and 1 indicates perfect inequality.

Growth is expected to be supported by a rebound in the manufacturing and financial services sectors.

For the first quarter of this year, the economy is expected to grow 0.8 percent, slightly lower than an earlier forecast of 1.2 percent, according to a poll of 26 economists and analysts by the Monetary Authority of Singapore.

Growth outlook for 2014 is more bullish, with respondents of the survey expecting the country's GDP growth at 4 percent year on year.

The wealthy island state narrowly averted recession twice last year, due to a slump in its key electronics sector amid uncertainty over Europe's debt crisis.

The Singapore government maintains its 2013 growth forecast for the economy at 1-3 percent.

The cost of COEs for cars has corrected from the high in early 2013 following the tightening of financing restrictions on motor vehicle loans, it added, referring to the certificates of entitlement required by Singapore motorists wishing to buy a new car.

Credit Suisse economist Michael Wan said the Singapore dollar's fall was partly due to the fact that it had been near the top of its trading band. The Bank of Japan's aggressive monetary expansion campaign, which has sent the yen plunging against other major currencies, will also put a floor on the Singapore dollar as the yen formed part of the currency basket.

Singapore manages monetary policy by letting its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band.

Is this the kind of government that the people voted for?