Sunday, 29 January, 2023
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Exceptional Economic Rise of Singapore

Waseef Hussain

Exceptional Economic Rise of Singapore
Waseef Hussain

In 1965, the Republic of Singapore emerged as an independent sovereign nation after its expulsion from the Malaysian federation. With a land area of a mere 283 square miles and virtually no natural resources, Singapore was left with a daunting task of development as it embarked on its journey as a nation. Singapore had a multi-religious, multi-ethnic, multi-linguistic, and multi-racial social makeup, and this was another major challenge for the country as a unified and inclusive society needed to be established. Today, six decades after independence, Singapore stands as an economic powerhouse with outstanding achievements in business and commerce, education, health, housing provisions, banking and poverty alleviation. The country has ensured very high living standards for its citizens. It was labelled as one of the four “Asian Tigers” along with South Korea, Taiwan, and Hong Kong due to its outstanding rapid economic success. It is worth exploring how such a small, impoverished and poorly developed country after suffering centuries of ruthless colonial rule managed to establish itself as a highly developed economy in such a short span of time.

At the time of Singapore’s independence in 1965, the majority of the country’s population was unemployed and two-thirds of its people were living in slums and squatter settlements. Substandard sanitation, poor infrastructure and an insufficient supply of water were problems plaguing the nascent state. According to the World Bank, the GDP per capita income was a lowly $515.6 in 1965. Singapore lay between Malaysia and Indonesia, two large and non-friendly countries at the time. Lee Kuan Yew took over as prime minister as Singapore gained independence and his policies would go on to changes the nation completely. With neighbouring states unwilling to trade with Singapore, the country sought to establish trade links with developed countries which were situated far beyond their borders. Low taxes and few capital restrictions were what characterized the Singaporean economy in the years to come, and these factors led to massive sustained economic growth. To attract investors in their country, Singapore had to make sure that their domestic environment was safe and free from corruption, and had a low level of taxation. For this to be possible and feasible, major freedoms and fundamental human rights had to be sacrificed. Individuals involved with heavy corruption and trade in narcotics were ruthlessly executed by the state. The People’s Action Party (PAP), led by Lee Kuan Yew, dealt with all labour unions very harshly and this gradually destroyed most of them. The PAP-led government brought what was left under a single group known as “National Trade Union Congress” (NTUC) and maintained direct control over it. Such a political system ensured smooth operations of trade and commerce with little political freedom, attracting foreign investors who sought to pursue business activities in a stable and non-restrictive environment. This made Singapore very appealing to corporations and business enterprises compared to other countries in the same region which had unstable climates for trade and business. Singapore possessed an established port system and an advantageous geographical location which allowed them to transform into a manufacturing hub. Today, Singapore has very low tariff and non-tariff barriers, making trade extremely free.

By 1980, Singapore’s GDP per capita income had risen to $4,928.1. Major industries of Singapore included shipbuilding, electronics, and banking and they grew as a result of Lee Kuan Yew’s direct state-funding. While Singapore pursued market-friendly economic policies, the government still played a major role in regulating the economy. Even today, the Singaporean government’s operations make up 22 percent of the total GDP of the country. A similar economic model was used by countries such as China and South Korea where state-regulated market economies led to massive economic growth and development. With many foreign businesses investing substantially inside Singapore, large amounts of funds entered the country. The government used this money to develop both its human resources and infrastructure. Many technical educational institutions were established by the state while international corporations were paid to provide training to unskilled Singaporeans in information technology, petrochemicals, and electronics. This led to the complete transformation of the national economy as Singapore was mainly exporting textiles, garments, and basic electronics in the 1970s, but by the 1990s, the Southeast Asian country’s economy consisted of wafer fabrication, logistics, biotechnology research, pharmaceuticals, integrated circuit design, and aerospace engineering. Heavy investments in education also created a highly skilled and educated workforce which has played a major role in ensuring economic success. Singapore also put strong emphasis on developing proficiency in English and this gave Singaporeans a significant advantage in global trade as foreign enterprises could recruit skilled workers who were competent in the English language. Today, English is a lingua franca in Singapore and this makes it very easy for foreign visitors to conduct their affairs there and serves as an effective means of communication for the diverse local communities which include Chinese, Malay, Tamil, and English-speaking Singaporeans. The Singaporean government provided subsidized housing and healthcare to its citizens, ensuring their basic rights and liberating a large number of people from the shackles of poverty.

Singapore has successfully established itself as a highly popular tourist destination in the world. Around 10 million people visit the island nation every year and enjoy its modernity, popular hotels and resorts, glamorous shopping malls, warm and pleasant weather, wonderful amusement parks, and rich cultural heritage and diversity. Medical tourism is also a major part of the tourism industry as a large number of individuals from various countries seek medical treatment at world class Singaporean hospitals. Singapore’s excellent educational institutions have made it a popular destination for higher studies for students from the South Asian and Southeast Asian region. Some Singaporean universities are well-known across the globe for their outstanding scientific and academic research.

As of 2021, Singapore is 9th on the Human Development Index (HDI) and it is classified as having, “very high human development.” In the same year, the per capita income (PPP) stood at $102,450, the second highest in the world. Singapore is thriving in the sectors of education and healthcare, which are very important social indicators. Acute poverty remains very low as the government takes necessary steps to ensure basic income, health provisions, education, and housing, and also provides assistance to needy citizens for public transportation costs, utility bills, and so on. While all these achievements are commendable and deserve a lot of admiration, it must be acknowledged that Singapore has been unable to establish itself as a strong and functioning democracy. Political freedom in the country remains low compared to the world’s developed nations. Political and civil rights remain limited in Singapore. Press freedom is also low, indicating that Singapore has not established adequate freedom of speech for its citizens.

Singapore stands as an example for the world as it has transformed itself from a struggling, impoverished nation to a highly developed one in three decades. Presently, high income levels, excellent living standards, quality education, nearly full literacy, sound health provisions and so on define life in Singapore. It is a global commercial hub and a world leader in technology, innovation and trade dynamism. Different religious and ethnic communities live in relative harmony and this is indicative of an inclusive and integrated society. The Singaporean development model has opened up the debate of whether a developing country should pursue a state-planned economic system with limited political freedom for a limited period of time to ensure sustained growth and development. South Korea and Taiwan are other examples where this model has worked. Nevertheless, authoritarian practices such as repression over political dissent, suspension of basic fundamental rights, and restrictions on freedom of speech must be condemned and every effort for democratization must always be made. Singapore will achieve its full potential only when it establishes itself as a full democracy. For now, we can praise the country for its remarkable economic achievements.

 

The writer is a Development professional. He can be

contacted at [email protected]