Our Singapore managing director has seen a lot happen in the tiny city-state; here he shares his thoughts on the direction of the country in a world without its founding father, Lee Kuan Yew.
Half a century ago,
Singapore was still a colony of the British Crown. It had a
busy port and a naval base for the Royal Navy, but otherwise it was
an island without any natural resources, not very different from
similar or larger cities in the region. The population was rather
poor, nearly as poor as in neighbouring, recently-independent
countries.
Today, 50 busy years onwards, the central business district of
Singapore is crowded with skyscrapers that rival neighbouring Hong
Kong and Shanghai. Singapore is a highly developed, trade-oriented
market economy that has been ranked as the most open in the world,
among the least corrupt, most pro-business, with low tax rates, and
the third highest per-capita GDP in the world in terms of
Purchasing Power Parity (PPP).
Much of the city-state's success can be attributed to the
vision of its first prime minister Lee Kuan Yew, who passed away
last month aged 91. Mr Lee was in office from 1959 to 1990, a
tenure that made him the world's longest-serving prime
minister.
After Singapore broke away from neighbouring
Malaysia and gained independence in 1965, Mr Lee developed a
highly technocratic government which applied competitive,
meritocratic and results-based economic policies. Key decisions
included the development of Changi Airport as a regional transport
hub and the promotion of Singapore as a shipping hub, as well as
the foundations of stability, transparency and good governance, all
of which contributed to Singapore's position as a natural
regional headquarters for multinational businesses in Asia. Other
key positive economic policies included the Central Provident Fund,
Housing Development Board flat ownership, and integrated education,
which all helped Singapore transform over several decades into the
sophisticated cosmopolitan global city that we have today.
In the days that followed the announcement of Mr. Lee's passing
away, there wasmuch praise for the outstanding achievements of his
rule, together with some criticisms for his style of government.
But of most immediate relevance are the doubts expressed by some
about the endurance of Mr. Lee's legacy. How will Singapore
fare in its second half-century without its creator and mentor to
guide its steps?
Nobody can deny that the city-state faces challenges: considerable
income inequality, rising population density, massive and
controversial immigration. In truth, the country is much better
prepared for the future now than it happened to be when
independence was forced upon it 50 years ago.
Though his critics point to his authoritarian style and ruthless
pursuit of what he considered right for his country, it must be
remembered that Mr. Lee stepped down as Prime Minister in 1990, and
gradually withdrew from politics thereafter, having carefully
planned his succession. Since then, Singapore's political
environment has opened significantly; the country's politics
are no longer comparable to the intense nation-building era of the
60s and 70s. In the most recent national elections, the opposition
won nearly 40% of the popular vote, its best result in four
decades.
The rise in internet access has fostered a much more vibrant
political debate, and vastly reduced the influence of
state-controlled media outlets.
On the economic and social score, Singapore remains one of the most
competitive economies in the world. In order to maintain rising
wages and improving living standards, it will continue to transform
its economy towards higher-value-added activities with strong
productivity growth. Key growth drivers for Singapore over the next
decade will focus on its role as one of the world's leading
financial centres; its competitiveness as a logistics, shipping and
aviation hub; and its role as a regional HQ for global
multinationals.
The government will have to strike a fine balance between remaining
fiscally prudent in order to retain high sovereign ratings, and
expanding welfare schemes to meet the expectations of entitlement
of the new generations of Singaporeans who only know Singapore as a
double-digit growth economic powerhouse.
The rule of law that Mr. Lee helped create in Singapore will
continue to give it a built-in advantage in attracting foreign
direct investment, even in an era in which many other countries in
Asia have emerged as potential investment destinations. While
certainly very attractive on their own, most countries in Asia
remain places where regulation is excessive, bureaucracy stifling,
corruption rampant and local talent scarce. Some neighbouring
countries even look like they are heading backwards in terms of the
rule of law, a major reason why many investors are reassessing
their decisions and rebalancing their risk portfolio across the
continent.
Meanwhile, Singapore is becoming more innovative as the country
moves up the value-added chain, the social and political
environment relaxes, and some of Singapore's best talent stays
home. Bloomberg's annual index of the world's most
innovative countries ranks Singapore in the top five in the world
in terms of manufacturing innovation and research personnel, and as
the eighth most innovative country in the world overall. Globally,
Singapore comes ahead of other rich economies including the
United Kingdom,
France, and
Canada, and only two spots behind the
United States.
The keenest observers agree that the long-term outlook for
Singapore remains very bright indeed, which is the finest tribute
to the long-lasting legacy of its founding father.
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