S'pore is 'fifth most competitive economy'It moves up 2 places in WEF survey; Hong Kong up one place to 11th by Dennis Chan Deputy Money Editor Singapore has climbed two notches to fifth place in the World Economic Forum's (WEF) latest global competitiveness index, distancing itself from the other Asian economies. The annual survey, released last night, showed that the next most competitive Asian economy -- Japan -- had dropped to ninth from eighth spot. It was only last year that Singapore overtook Japan in the annual ranking, which polled a record 12,297 business leaders in 134 economies this year. Perennial business rival Hong Kong improved one place to 11th. In the survey, economies were assessed according to 12 "pillars" of competitiveness, ranging from infrastructure and macroeconomic stability, to business sophistication and innovation. These are weighted for each economy to reflect their stage of development. Singapore's improved ranking was reflected by its strong institutional environment that came about as a result of a strengthening across all aspects of the institutional framework. It has the best ranking of all economies in terms of public trust of politicians, wastefulness of government spending, burden of government regulation and transparency of government policymaking. It was also ranked among the top two countries for the efficiency of all of its markets -- goods, labour and financial -- ensuring proper allocation of these factors to their best use, the survey said. "Singapore also has world-class infrastructure, leading the world in the quality of its port and transport facilities." It scored high in other indicators as well, such as higher education and training, and technological readiness. On the flipside, its overall ranking is constrained by its small domestic market and mixed performance in the macroeconomic stability pillar, where it ranks 59th and 121st respectively for its interest rate spread and government debt. Respondents also cited inflation as their biggest bugbear for doing business in Singapore. Notwithstanding the current financial crisis, the US retained its position as the world's most competitive economy. The survey was conducted between January and May this year, which means that the index does not reflect the worsening global crisis. But Ms Jennifer Blanke, senior economist of the forum, said the index aimed to take a longer-term view, and on that basis, the US ranking was fully justified, Reuters reported. The US scored highly as it is endowed with many structural features that make its economy extremely productive. This places it on a strong footing to ride out business cycle shifts and economic shocks. Despite rising concerns about the soundness of the banking sector and macroeconomic weaknesses, the country's many other strengths continue to make it a very productive environment, the survey noted. On the other hand, the business costs of terrorism, crime and violence are points of concerns. But the country's greatest weakness is its macroeconomic stability, where it ranks a lowly 67th overall. Its burgeoning levels of public indebtedness -- at more than 60 per cent of gross domestic product -- suggest that the US is not preparing financially for its future liabilities. Interest payments will increasingly restrict its fiscal policy freedom going into the future, the survey warned. In second, third and fourth places were the Northern European countries of Switzerland, Denmark and Sweden, rounding off an unchanged top four. China continued to climb up the charts -- up four places to 30 -- helped by its large market and strong economic performance. Ninth-ranked Japan has a major competitive edge in the areas of business sophistication and innovation. Its overall performance, however, is dragged down by its macroeconomic weaknesses, with an extremely high budget deficit (ranked 110th), which have led to the build-up of one the highest public debt levels in the world (ranked 129th). As for Hong Kong, it is ranked first for its legal rights, capital flows and access to financing via the local equity market. But its small domestic market size and mixed performance in the areas of health and primary education, as well as higher education and training, were a drag on tis overall ranking.