Thailand has advanced five places in the IMD World Competitiveness Ranking, driven by an increase in foreign direct investment and productivity.

In the Lausanne based IMD ranking, announced on Tuesday, Singapore toppled the United States as the world’s most competitive economy, rising from third. Hong Kong remained in second place.

Elsewhere, economic uncertainty took its toll on conditions in Europe, while the UAE entered the top five for the first time.

Thosaporn Sirisamphand, Secretary-General of the National Economic and Social Development Council (NESDC), said that Thailand performed better in economic performance, government efficiency and international investment as well as business legislation, which has been improved to facilitate doing business. He said the rise in Thailand’s competitive ranking was a result of the effort to streamline comparative advantage for businesses through the improvement of rules and regulations and promotion of digitization to speed up business services.

Wanweera Rachdawong, Chief Executive Officer of the Thailand Management Association, said that the ranking marked Thailand’s highest place in 10 years. She added that, in addition to economic performance, Thailand performed well in scientific infrastructure. The private sector’s investment in research and development accounts for 0.8% of GDP.

Nonetheless, she added that Thailand still faces challenges over how to incorporate technology and innovation to increase product values and productivity, especially among SMEs and in the agricultural sector. Moreover, Thailand has to develop human capacity to catch up with technological changes.

The IMD reported that, this year, the Asia-Pacific region emerged as a beacon of competitiveness, with 11 out of 14 economies either improving or holding their ground.

Indonesia leapt eleven places to 32nd, enjoying the region’s biggest improvement, thanks to increased efficiency in the government sector as well as improvement in infrastructure and business conditions.

Japan fell five places to 30th, hampered by a sluggish economy, government debt and a weakening business environment. Hong Kong held on to second place, helped by a benign tax and business policy environment and access to business finance.

Meanwhile, the initial confidence boost from President Donald Trump’s first wave of tax policies appears to have faded in the US. While still setting the pace globally for levels of infrastructure and economic performance, the competitiveness of the world’s largest economy was hit by higher fuel prices, weaker hi-tech exports and fluctuations in the value of the dollar, according to IMD.