[Photo Credit: SG50]
Singapore today stands as nothing short of an economic miracle, thanks to the visionary leadership of the late Mr Lee Kuan Yew. He bequeathed a great legacy; now it is up to us to uphold it.
The pinnacle of great leadership, Machiavelli once wrote, is to ensure a safe, stable and prosperous state.
Singapore today is one such shining example, thanks to the economic far-sightedness of our late founding Prime Minister, Mr Lee Kuan Yew.
Every Singaporean alive today knows of Mr Lee and what he has done for Singapore. While we may not have known him personally, we all knew him in the manner that mattered most: through the successful Singapore he had devoted his entire life to building.
From colonial backwater to economic powerhouse
As a nation-state, we have come a long way over the past 50 years.
When the country became independent in 1965, it was, bluntly put, little more than a big slum on a sandbar, with nary an economic resource to draw upon, and whose major industry as a British naval base had disappeared.
By today’s standards, such a state would likely be condemned to perpetual poverty without foreign aid. Few would have bet on its chances of surviving, let alone of succeeding and becoming an economic powerhouse.
But succeed we did, and succeed we must. Mr Lee, the then-Prime Minister, vowed to make it happen, proclaiming, “Singapore will survive!”
[Queen Street in Singapore, circa 1960. Photo Credit: Rollins College]
He consulted Dr Albert Winsemius, a Dutch economist who came to Singapore in 1960 as part of a United Nations economic mission.
The verdict given was disheartening: “Singapore is going down the drain; it is a poor little market in a dark corner of Asia.”
But there was one ray of hope: Singapore did have one principal asset, its workforce. In Dr Winsemius’s words, “[Singapore’s] greatest asset is the high aptitude of her people to work in manufacturing industries. They can be ranked among the best factory workers in the world.”
So Mr Lee set to work creating jobs for the local population.
He recognised that for Singapore to survive, it had to look beyond its then-hostile neighbourhood and turn to producing and exporting goods for global markets. As DPM and Finance Minister Tharman Shanmugaratnam pointed out in a recent interview, “it was Mr Lee who spotted the potential of multinationals, particularly in the United States…he spotted it early, and he went for it together with the EDB.”
From there, Singapore’s economy progressed through five key phases: the creation of basic industry (mainly clothes manufacturing); attracting MNCs to Singapore; moving up the technology ladder into electronics; moving further up the value chain to become a global financial hub, and finally, becoming a global transportation hub.
The sweet taste of success
Dr Winsemius, who masterminded these development phases for Singapore’s economy, would remain the chief economic adviser to Mr Lee and his government from 1960 to 1984.
Some may wonder, then, whether Singapore owes its economic success to Dr Winsemius. But if Dr Winsemius was the brain, Mr Lee was the face – and also the key driving force for turning plans into reality.
Together with his first-generation Old Guard colleagues, Mr Lee focused on three factors to drive Singapore’s economy. Firstly, he made Singapore an attractive market by building a skilled workforce. Secondly, he diversified Singapore’s bets across various foreign markets and different corporations. Thirdly, and most importantly, he spoke to investors and gave them confidence in Singapore.
The economic model paid off. Within three decades, from 1959 when Mr Lee first became Prime Minister to 1990 when he stepped aside as Senior Minister, Singapore’s GDP per capita increased by 29 times, leaping from around US$435 to more than US$12,700.
(By comparison, Malaysia only managed a 10-fold increase from US$230 to US$2,400 during the same period.)
The results are yet more remarkable if we consider a longer time frame, until Mr Lee left the Cabinet in 2011. Between 1960 to 2011, Singapore’s GDP per capita surged from US$435 to over US$52,870 – more than a 100-fold increase.
[Photo Credit: The Economist]
Today, Singapore’s GDP per capita stands at above US$55,000, surpassing even that of United States’. We have also been ranked the second most competitive economy and the second freest economy in the world, according to the World Economic Forum and the Heritage Foundation respectively.
Thanks to Mr Lee’s engineering, Singapore emerged as a powerful financial hub in one generation alone.
Now that he has passed on, it is Singapore’s turn to confront the hard truths about our economy: Are we still competitive? Can we continue building on the excellent economic framework we inherited? And in the face of Asia’s overall emergence, how can we stay nimble enough to handle new challenges?
One worrying trend is that in recent years, our society has started showing signs of fraying under pressure.
Social inequality is growing, as is public discontent with the government helmed by Mr Lee’s eldest son, the current Prime Minister Mr Lee Hsien Loong. The government has been trying hard to strike a fine balance between being fiscally prudent and expanding social welfare schemes, in order to retain its high sovereign ratings.
Economically, Singapore has continued to shine, though productivity growth remains low.
Despite the government’s efforts in launching schemes such as the Quality Growth Programme to drive productivity and innovation, labour productivity growth rate averaged around 0.5% in 2014, falling far short of the targeted 2 to 3%.
Singapore has made up for it by having longer working hours and continuing to import foreign labour, but it’s definitely not a viable solution in the long-run, especially given the public backlash against an open immigration policy.
What we need, suggests William Pesak of BloombergView, is to innovate – to invent new ideas, industries and processes – and not to rely on new recruits.
He’s got a valid point. And economist Rajiv Biswas from IHS Global Insight clearly agrees, saying that for Singapore to maintain its high GDP per capita, “it will need to sustain strong productivity growth to support steadily rising wages, while keeping unit labour costs constrained. Singapore’s future success will therefore depend on continued transformation of the economy towards higher value-added industries.”
Which then begs the question of how, exactly, can we innovate and transform our economy?
It’s time to get creative
If we look closely, our country has actually already started taking baby steps towards this economic transformation.
Over the years, Singapore has been busy diversifying into different sectors, growing as a research and development hub, bio-medical hub, banking and finance centre and even the healthcare destination of Asia.
As a knowledge-based economy, we continue to attract multinational investments, which, in Finance Minister Shanmugaratnam’s words, are “qualitatively quite different from what we’ve had in the previous 40 [years]”. Companies such as pharmaceutical giant GlaxoSmithKline and drug manufacturer Chugai, for instance, are placing high-quality and long-term “mission critical” investments in Singapore to develop new technologies.
As seen from this year’s Budget announcement, the government is also actively supporting and providing opportunities for local small- and medium-sized enterprises (SMEs) to innovate and venture abroad. Initiatives, such as tax incentives and a venture debt risk-sharing programme to help secure financing, will be progressively introduced for SMEs to expand their foothold into overseas markets and grow on the international stage.
Innovation in our global marketplace is clearly the key to moving forward. But at the same time, there are also other ways we can seek to innovate.
One possible way, albeit an indirect one, would be to revamp our existing education system, which is still heavily based on rote learning. Why not consider taking a leaf out of Finland’s book, where schools are scrapping traditional “teaching by subject” in favour of “teaching by topic”? With innovative thinking instilled from a young age, future generations of Singaporeans will be better equipped to shape our economy of tomorrow.
Thank You, Mr Lee
Mr Lee left us a great legacy: an already successful economy in a first-world metropolis. Now, it is up to us to uphold it.
Instead of resting on our laurels, we need to continue looking ahead, innovate radically, and reinvent ourselves to meet the challenges of the global economy.
Whether we wear black in solidarity this weekend or not is immaterial.
The best way of honouring the late Mr Lee, really, is just to protect his legacy: we won’t let anyone knock us down.