Low skilled workforce
The government, through the economic strategies committee report, has noted a lot of concern. Many companies in Singapore are recruiting low skill labor force from foreign nations. Consequently, more restrictions have been reinforced on the hiring of foreign workers. This is because of their unsustainability as well as low productivity growth. This has stalled the growth of Singapore economy. That has render many businesses to have a shortage of human capital which is critical to a growing economy. Unfortunately, in some instances, some businesses such as industries which require a large workforce have been force to shut down their companies. Furthermore, they relocate to countries where they can hire as many people as they need.
There is still low intake of technology in Singapore due to lack of investment and commitment by the government. The government has spent a lot of funds investing in other sectors of the economy. However, they have been very discriminative on technology. Technology creates employment to people who are highly skill in it. This means they can earn more revenue for the government thus growing the GDP of Singapore economy. Which consequently will accelerate economic growth.
Factors of production
A crucial factor of production is land. Due to the high number of foreigners investing in Singapore, land seems to be scarce. Such that every company that sets up a plant in the country has to be offered a huge chunk of land. Which is also not enough because the country does not have a large track of land. To resolve this issue, the government ought to come up with appropriate solutions to deal with the issue of land. Other factors such as capital are a major challenge to the local government which the government needs to sort out.
Due to the high entry of multinationals into Singapore, local companies have been force to heavily compete with them. This means that they have to increase their levels and quality of production. They have been overburden because of limited resources. That has been a major hindrance for them to grow and expand the Singapore economy. The government has the principle responsibility of creating a conducive business climate where all companies both foreign and local industries can compete on a level playing ground.
Singapore economy is facing all these factors. Despite the country being favorable to conduct business it has also had some numerous challenges which it has to tackle. Otherwise it will cause the economy to crumble.