Today Singapore is no longer the young unknown upstart trying to punch above its weight. In 50 years, a Singaporean model of economic development has emerged to gain international awareness. It is a model that has allowed Singapore to quickly attain global competitiveness and is used to remain relevant and significant to today’s fast paced world.
In this article, our board member Mr. David Lim, shares his thoughts on Singapore’s economic development. Currently a Director of Ascendas India Trust and Wheelock Properties (Singapore), his past responsibilities include CEO of Jurong Town Corporation, CEO of Port of Singapore Authority, CEO of the China-Suzhou Industrial Park (China based), CEO of Neptune Orient Lines and Chairman of Jurong International. He has also held political office from 1997 to 2006, in various capacities including Senior Minister of State for Defence, and Acting Minister for Information, Communications and the Arts.
We have often been invited by emerging economies to bring Singapore’s experience in economic development to their states and countries. They are attracted by the bright lights of the Singapore skyline, and the transformation we have made from third world to first over just a few decades of almost uninterrupted growth.
But the conditions that brought this about were unique over the course of our history, both in Singapore, and in the world that we competed against. Our economic strategies and success cannot and have not been duplicated. Emerging economies today face different economic challenges; and each country has its own particular set of political, economic, social and cultural conditions.
What can be shared and applied are the principles of development, which remain as relevant today as it was for Singapore five decades ago. Three broad ideas should be considered as prerequisites for development and growth.
First, focus on creating jobs. Many have championed the construction of infrastructure, or raising educational standards, as the key to development. These are important and critical components. But the pursuit of such activities must be aimed at creating jobs. Otherwise, educated people with no jobs will leave the country, draining it not only of the investment that went into their education, but also depriving the country of their skills and contributions that could otherwise have helped others find jobs. Likewise, too many monumental infrastructure works and iconic buildings have been constructed which benefit primarily the contractors (and their benefactors), but not the people at large.
The focus on creating jobs begins with a hard look at the state of the economy and society. Some have asked whether they can leapfrog from menial jobs to high technology jobs. And the answer isn’t a simple yes or no. What can be done depends on whether the strategy can find support with investors, and that in turn depends on whether investors have confidence that the government, institutions, and attitude of workers can be relied on to make their investments work. And yes, education is an important part of this process, and education strategies need to be pursued in parallel.
Attracting job generating investments requires attention to a whole host of other issues – from infrastructure, to rule of law, to investment policies and incentives, etc. It is much more difficult to do than building highways or power plants, and a harder political goal to live up to. And yet, it is the most important guiding idea for economic development, and a lens through which all other efforts should be filtered.
Second, choke off land speculation. One of the easiest ways to make a bundle of money in a short time is to take a large tract of land, hire an architect or urban planner, and draw up fanciful plans to transform the land into some futuristic and fantastic metropolis. This plan is then pushed hard, sometimes with legislative fanfare, and speculators begin to buy up land and push up prices against their future potential use. But land intrinsically is worth little. It is activities on the land which give land its value – residential, commercial, industrial use. And when land prices rise faster than what they are worth to investors (and not speculators), they crowd out those very investors that are needed to create jobs, which would in turn have generated incomes, and which in turn would have created demand for land, and enhanced land values. Instead, land speculation starves the economy of job generating investments, leading inevitably to a collapse in land prices, and setting back economic growth before it has even taken root.
Thirdly, fight all kinds of corruption. This is perhaps the hardest to do, for there are many facets to the problem. Poorly paid officials have every incentive to leverage their limited official powers as much as they can, to supplement their meagre earnings. Officials higher up the chain get easy pickings taking a percentage of these payments for approvals and favours. Corruption was widespread in Singapore in the early years of nationhood, and was fought tenaciously, strictly, and impartially. The CPIB – Corrupt Practices Investigation Board – was a much feared organisation, as it had to be, to be effective. But at the same time, those who toed the line were rewarded – not as handsomely perhaps as they might have been through corrupt practices, but enough to make it worthwhile to help make an incorrupt system work. Fighting corruption is largely a political problem, and requires political leadership that believes in this work, sets the example, and has the will to eradicate this insidious practice.
These three broad ideas are not the usual strategies mooted by consultants. They are hard to achieve, often intractable in nature, and do not offer instant results and gratification. They are inconvenient to discuss, as even raising the subject threatens vested interests and raises expectations, perhaps to levels beyond the ability of governments to realistically fulfill during their terms.
And yet they are foundational. It can be done, as Singapore has demonstrated to some effect. It takes a core of good men and women who are singularly focused on doing what needs to be done. And where such people can be found who are able and willing to implement these ideas, the future is bright and promising.
Economic Development Innovations Singapore