The Republic of Singapore is celebrating its 50th year as an independent nation-state on 9th August this year. People flock to the streets to witness the National Day Parade, a series of fly-bys and other festivities. This is a time for to look back at astounding achievements and revisit history. This uptight, yet peacefully involved, island nation has certainly profited from its inadvertent exclusion from the Malaysian Federation, quickly establishing itself as a politically stable, efficient community as well as one of the world’s most prominent financial centres.
Modern Singapore, as it is now recognised, was founded in 1819 by Sir Thomas Stanford Raffles as a trading post of the East India Company. Seemingly against the odds, Singapore has fashioned an incredible development paradigm based on globalised trade and communication services, leading the way for other Asian and Middle-Eastern regions (including the Emirate of Dubai). It now stands as the only Asian nation with AAA credit ratings from all major agencies and has one of the highest levels of GDP per capita in the world. As Singapore approaches a crucial juncture in its development and progress, many analysts are reviewing the key attributes and factors that have contributed to its success over the last half-century.
The Lee Kuan Yew Years
Despite controversy surrounding him, the man informally known as “LKY” has undoubtedly been the driving force behind Singapore. During his 31-year tenure as Prime Minister, he adopted chief governing principles of multiculturalism (or multiracialism) and meritocracy, implementing a series of disciplinary measures to transform the “swampy island with 1.6 million inhabitants and virtually no natural resources” into the ‘Tour de Force’ it is today.
Lee’s main target was the economy, and he was immediately tasked with providing stable jobs for his people. After experimenting with tourism and other temporary industries, he and his cabinet looked to attract Foreign Direct Investment (FDI) from Western economies and multinational corporations. A huge emphasis was placed on the quality of infrastructure that would need to be provided. Even after the British forces left the island in 1971, Lee ensured the naval dockyards were preserved and put to good use, he oversaw the development of over 400 shipping lines and, more recently, well-maintained rail and road networks.
Singapore’s Changi Airport has won over 470 “Best Airport” Awards since 1981, serving well over 50 million customers each year, and expansion is set to continue into 2016 and beyond. In 1971, Lee helped establish the Monetary Authority of Singapore (MAS) as the region’s Central Bank to manage exchange rates, foreign reserves and liquidity in the banking sector. The Government of Singapore made itself accountable for a host of sovereign investment vehicles to further promote regional development, including giants Temasek Holdings and GIC Corporation. They also pursued, and continue to pursue, “sound macroeconomic policies with budget surplus aims” to convince investors and foreign bankers of the reliability of their infrastructure and social conditions. Singapore has fared well in the exports markets, with oil pricing and trading account for 5% of its GDP – in 2007, the nation exported a record 68.1 million tonnes of oil. GDP per capita leapt from $5,000 to over $55,000 between 1963 and 2014, unemployment has plummeted down close to the 2% mark and the Global Education League ranks the country No. 3
Politics and National Security
Lee was simultaneously confronted political corruption challenges. He responded swiftly by giving the Corrupt Practices Investigation Bureau (CPIB) greater powers to uncover malpractices, carry out searches, make arrests, call up witnesses, investigate banks and customer accounts and potentially seize assets. Transparency International’s Corruption Perceptions Index now ranks Singapore as the 7th least corrupt country in the world. Lee provided yet more proof that a hard-lined approach can indeed work wonders by expanding the scope of corporal and capital punishment, namely through caning and execution via hanging. Over 45 offences are now listed under both punishment categories including personal violence, mutiny and drug trafficking. By making these reforms, Lee ensured that Singapore cemented its status as the country with the second-lowest crime rate in the world – he would often cite “judicial lenience” and “welfarism” as the forces which sapped economic energy from former powerhouses such as the UK and even the USA. Lee also took pride in reshaping national security by building up the Singapore Armed Forces. In 1967, automatic conscription was integrated into Singaporean society, whereby all able-bodied male citizens aged 18 and above would be required to undergo National Service in the Army, the Police Force or the Civil Defence Force. Besides the overwhelming sense of duty and accomplishment it gave to countless citizens, it was a statement to the other nations of Southeast Asia (especially the outspoken Indonesia) which eradicated any doubts over the nation’s vulnerability.
Singapore’s 5.5 million-strong population currently comprises majority Chinese-Singaporeans (74%), with substantial Malay (13.2%) and Indian (9.3%) ethnic minorities. Consequently, English, Mandarin, Malay and Tamil form the 4 main languages, with English kept as the national language and medium of professional communication, and this was a key contributor for the “ease of doing business” during the LKY Years. Lee sparked what would later become known as the Great Marriage Debate by actively encouraging the pairing of Singapore men and highly educated graduate women, going as far as to set up the Social Development Unit as a match-maker. He later provided tax rebates for larger families to help boost flagging local birth rates and secure long-term generational prospects.
With the sad passing of the revered founding leader in March, decisive shifts in socio-economic and political landscapes are now inevitabilities. Daniel Martin, a Senior Economist from Capital Economics, believes change is already happening. He says:
“Last year’s (2014) GDP was 2.9%. The average for the past 50 years was 7.5%. In fact, it’s been more than 5% for the past decade, so it’s been quite a slow down.”
Analysts such as Martin continue to stress that Singapore has exited the “catch-up” phase and is now entering a period of convergence growth, where expectations resemble that of its European and American counterparts. The real challenge will be to see how the population deals with living standards rising at lower rates, and how the government addresses problems that could be caused by future immigration channels. Foreign residents now account for 38% of the total population, which conflicts with the increasing pressure being placed on financial institutions to harness and develop more local talent. Furthermore, since 1959, the People’s Action Party (PAP) has dominated politics – but the prevalence of social media, the adaptation of new economic and social constructs, based on shared ideas, is providing a new perspective for political thought.
The LKY School of Public Policy believes that Singapore is experiencing a “Quiet Revolution”. The nation’s leadership is still in excellently capable hands, but one key question needs to be answered:
“Will policies continue to be judged on how effectively they contribute to growth and development or will they be judged on more emotive grounds?”
The country maintains its status as a cultural and financial bridge between East and West. There are opportunities aplenty in the fields of Wealth Management and Investment Banking, for instance. MNCs continue to source future deals and investments, bearing in mind the shifts in global economic drivers.
These issues will have to be addressed by Lee Hsien Loong and his cabinet in due course. But right now for the people of Singapore, it is a time of celebration.