Asian Nation's Economy Zips Along

SINGAPORE is hardly complacent as it faces challenges of the 1990s. The city-state, with its 2.6 million population (mostly ethnic Chinese), achieved prosperity through its Confucian-styled capitalist model. By the mid-1980s, it achieved a per capita income level of $8,000, the second highest in Asia (after Japan). In that period, the relatively tiny nation (240 square miles, about 10 percent of which is reclaimed land) emerged as one of East Asia's celebrated ``Four Tigers'' - the increasingly affluent newly industrialized countries.

Yet ``the Lion City'' differs from Hong Kong, Taiwan, and Korea in that all these fellow ``tigers'' have abundant labor.

This is one reason that value-added economic development has been emphasized. Government leaders portray Singapore as offering the 3,500 multinational companies based there a chance at achieving globalization. By using Singapore as a Southeast Asian regional operations center, those multinationals can tap what David Lim, a director of the Singapore Economic Development Board, terms ``sensible alliances.'' Joint ventures will be arranged within the city-state and outside her borders. Complementary production and manufacturing can occur with neighboring Malaysia. The state of Johore - where low-cost labor is available - is already active in such partnerships.

Singapore will promote what Mr. Lim describes as ``cross-channel relationships'' that harness its strengths in infrastructure. Widespread use of digital technologies, videotext, and telecommunications enables multinationals to enhance networks for marketing and distribution. Lim insists ``total service capability'' will be possible.

After a downturn in 1984-85, Singapore sought new ways of keeping high levels of gross national product growth. The government launched a costly $500 million tourism program. Since 1986, Singapore has ranked as the world's leading producer of disk drives. Today, two-thirds of the disk drives used in the United States are of Singaporean origin. Serious efforts were made to evaluate niche markets, in fields ranging from aerospace to biotechnology, in which the prosperous republic could maintain its competitive edge.

These efforts worked: Last year Singapore's output of goods and services grew 11 percent, the fastest gain in the world.

The national leadership senses that value-added products and technology-based industry are essential to keep momentum. For example, no longer could Singapore thrive on production of chips designed in the West or Japan. She must begin to design homegrown, application-specific integrated circuits.

Strides have been made in relations between business and the sciences. The National University keeps close ties with technology-based industries. Steps to foster entrepreneurialism - ranging from providing seed grants to paying for trips to overseas trade shows - have spawned businesses. Efforts to introduce automation to manufacturers have generally met with success. That is important in a nation with labor shortages.

Trade has declined slightly earlier this year, but most agree with Kernial Sandhu, director of the Institute for Southeast Asian Studies. The city-state ``will react more positively'' with ``main'' and ``emerging markets.'' The country lost special tariff concessions given developing countries by the US when Washington decided Singapore had ``graduated'' from that status. A fifth of $42 billion in exports reach American markets.