Country Policy Brief on Singapore

Introduction

Founded in 1819 by British Sir Stamford Raffles as a trading post for the East India Company, Singapore has grown to be one of the most successful economies in Asia. Although a small city-state with no natural resources within, the Island has had two things working in its favor. The first is that it is surrounded by the sea (an important natural resource) and the second is its strategic geographical position of being in the middle of the world’s main East-West transportations route. The combination of these made Singapore a successful fishing village and port for trade in its earlier years.

The early 20th Century saw Singapore becoming a major entrepot, exporting the region’s raw materials like rubber, tin and petroleum as well as distributing manufactures from Europe. It gained self-governing status from Britain in 1959 and spent a short-lived two years as part of the Federation of Malaysia from 1963. By the time of its independence in 1965, Singapore’s economy, riding on the post-war boom, was already growing steadily at a rate of nearly 6% per year (Huff 1995, p. 1422). An immediate challenge of separation from Malaysia was that the Federation’s economic strategy of Import Substitution Industrialization (ISI) proved unfeasible for a small independent Singapore. Thus, out of necessity and capitalizing on its geographical advantages, Singapore focused on an Export-Orientated Industrialization (EOI) economic strategy (Tremewan 1994, p. 31-35). A highly favorable world economic climate due to the growth of a new international division of labor from the 1960s enabled Singapore to attract many multinational foreign investments. Initially focused on manufacturing from the late 1960s, its role as a financial and business services hub ascended in importance from the early 1980s (Huff 1999, p. 34-35).

Today, Singapore’s Gross Domestic Product (GDP) per capita and Human Development Index (HDI) ranks within the top 25 of the world, ahead even of some developed nations (United Nations, 2004). Known as one of the four East Asian Tigers, and normally thought of as the most successful, it has relatively equal income distribution, hardly any absolute poverty and has had full employment since 1973 (Huff 1999, p. 33). Despite such remarkable economic achievements, Singapore still draws constant criticism for its authoritative government. Indeed, many Singaporeans are still uncomfortable with the ruling People’s Action Party (PAP) and its past and present policies.

The rest of this paper will take a look at two views of Singapore’s development since Independence from two different individuals. The first view will be from an ordinary middle-class Singaporean and his criticism of the government’s far-reaching intervention in the political and economic realms of Singapore society. The second view will be a response from a government official. This paper will then conclude with some remarks from the author, seeking to draw together the two views and proposing a way forward for Singapore’s future development.

A Middle-Class Singaporean’s view: Too much government control

There is no doubt that Singapore has achieved marvelous growth since Independence in 1965. Our presently high GDP per capita and relative equality is perhaps greatly due to the ruling PAP. My complaint, however, is that such success has been greatly tainted by a paternalistic government that has sought to control all aspects of life in this country for decades. In particular, many Singaporeans have been unhappy with four areas where our government has had too much control: control over society and politics, labor unions and wages, the economy and the education system.

Perhaps the greatest concern about life in Singapore that many Singaporeans have relates to the issue of freedom – or lack of it. The PAP has been the only political party in power since 1959 and has restricted freedom in two ways. The first deals with the lack of freedom in society in general due to rigid social rules imposed by a government that thinks it knows best in all matters. Critics have thus rightly labeled our country a “nanny state”. An example of this would be its tight censorship laws and its famous ban on chewing gum. Closely related to such tight societal control is a perhaps more unfair suppressing of any opposition to its rule. Since 1963, the Internal Security Act (ISA), which allows the detention without charge or trial of anyone deemed a danger to the stability and security of Singapore, has been used effectively to silence all opposition (Perry, Kong & Yeoh 1997, p. 63). Despite calls to repeal the Act, it remains till this day and “effectively deters Singaporeans from expressing dissenting political opinions” (Amnesty International 1998). Recently, the ruling PAP has resorted to a different tactic (rather than the use of the ISA) to suppress opposing views. It has successfully filed libel suits against those deemed a threat to its power, resulting in the bankruptcy (and thus inability to run for elections) of some high profile opposition leaders in recent years (Strange 2004).

Tight government control extends also to the labor market. This has come through the controlling of labor unions and wage levels. In the first place, trade union membership has always been very low at about 15% of the workforce. Furthermore, the close relationship between the government and the National Trades Union Council (NTUC) – which all unions must affiliate with – means the government has been able to assert a strong influence over trade unions. In a report for the World Trade Organization (WTO), the International Confederation of Free Trade Unions (ICFTU) noted that “various legal provisions…restrict freedom of association and the right to collective bargaining in Singapore, particularly with regard to trade union registration and to freedom of association in the public sector.” (ICFTU 2000). The government’s influence over wage levels in Singapore has occurred through the creation of the National Wages Council (NWC) in 1972 as a tripartite body with equal representation from the government, the PAP controlled National Trades Union Congress (NTUC) and employers. The NWC is responsible for setting annual wage level guidelines which have been closely followed despite not being binding on employers. Because two of the three constituents of the NWC are the government and no significant non-government trade unions have existed in Singapore, the government has thus been able to exert a strong depressing control over the level of wages of Singaporeans. This is clearly seen in that during the period from 1975 to 1992, wage levels of production workers in the manufacturing industry increased more slowly than in the other Asian Tigers (Huff 1995, p. 1425).

In regards to the government’s control over the economy, this has been done in two ways. The first is in aggressively inviting Multinational Corporations (MNCs) through tax breaks and other incentives – let us also not forget the above point of creating a favorable labor market climate – and the second is through the formation of many state-owned enterprises (also known as Government-linked Companies, or GLCs) (Soon & Tan 1993, p. 40). Despite similarities, Singapore’s economic model stands in contrast with the other Asian Tigers in that while the latter countries had an EOI economic structure that aimed to nurture the local capitalist class, in Singapore “foreign capital has so overwhelmed indigenous firms that the latter have played no role in most export industries and a small role in the rest.” (Hamilton 1983, p. 63). Because of the ubiquitous presence of both MNCs (over 4,000 at present) and GLCs, a recurring complaint has been that local entrepreneurship and private enterprise have been stifled and crowded out as a result (Ramírez & Tan 2004, p. 513).

The last point relates to the government’s control of education. In the past, higher education (post secondary level) was not as readily available as it has been since the 1990s (Huff 1999, p. 41). Furthermore, the education system has always been geared towards mathematics and science in an unbalanced way – to the neglect of the arts and humanities – and this continues till today. This is clearly seen in the limitation in the variety of non-science subjects offered in pre-university education and the fact that the better students would generally all be in the science, rather than the arts, stream. A result of this is that many Singaporeans today have mourned the dying out of liberal arts subjects like English Literature, with Editorials in the Singapore’s main newspaper regularly defending the subject since 1995, when it became an optional subject at O levels (Ong 2002). The reason the government makes certain the dominance of science and mathematics is obvious: scientists and engineers are assumed the ones who will provide the creative advances for the country’s economic growth. However, such a co-opting of the education system towards the advancement of economic goals ignores the true purpose of education, which is to create people critical in their thinking and prepared for life as a whole – not just economic life. One could go further, as many have done, and argue that the rote learning method of study normally integral to mathematics and science has failed greatly. Indeed, “the education system in Singapore is now widely seen by employers and throughout its society as failing to encourage the creativity and adaptation basic to long-term economic development.” (Huff 1999, p. 47).

A Government official’s response

The enormously successful economy of Singapore has a great deal to do with the ruling PAP’s leadership. Many of the policies criticized above are in fact what has enabled Singapore’s economy to be such a success. There is no doubt that the PAP has ruled Singapore in an authoritarian manner but one could justify such control in three ways. The first has to do with stability. Many people believe that democracy would neither be desirable nor sustainable until a certain level of economic, social and political modernization and stability has been reached. Seymour Lipset has argued that there are social and economic prerequisites for democracy while Samuel Huntington has alerted us to political modernization as a prerequisite (Lipset 1959; Huntington 1968). Indeed, opening a country to democracy too early on could result in political unrest that could threaten to derail economic and political development (Handelman 2003, p. 30). Such was clearly the case in the context of Singapore at Independence. Singapore had a majority Chinese population and was, like former Prime Minister Lee Kuan Yew put it famously, a “Chinese island in a Malay sea” (Lee 2000, p. 25). Thus, the threat of social instability and ethnic conflict loomed at Independence and furthermore it was only in the previous year (1964) that Sino-Malay racial riots occurred which resulted in 36 deaths and over 500 people injured (International Security Department 2003). In such a context, it could be argued that stability, rather than democracy, was needed and thus an authoritarian regime rather than a democratic one. Secondly, former Prime Minister Lee Kuan Yew has often spoken of the existence of “Asian Values” (Barr 2000). It is arguable that in contrast to Western-style democracy, Asia’s unique Confucian cultural tradition warranted the presence of a “soft” authoritarian regime. Unlike the Western focus on individual liberty, Confucianism emphasizes harmony, order, meritocracy, respect for hierarchy and also sanctions the creation of a political elite. Confucianism and “Asian values” thus gives the ruling PAP’s paternalistic government a culturally derived legitimacy. And finally, the PAP has resorted to authoritarian rule simply because we believe we have the best people for the job and without us in charge, Singapore’s future could be in danger. As one of our first leaders has said, “Confucius believed that unless the government is in hands of upright men, disaster will befall the country. By the way, in this respect, the PAP also believes the same thing.” (Tremewan 1994, p. 119).

Beyond the general defense of authoritarianism laid out above, I will now respond to certain specific criticisms. Firstly, the communal riots mentioned above and threats of communist infiltration could be said to justify the use of the ISA for Singapore’s early history. Recently, the threat of terrorism has made relevant the need for the ISA. In fact, all over the world many countries have laws which allow the government, in important situations, to curb civil liberties of individuals for the greater good of society – a good example being the recent US Patriot Act. It is in such a context that we believe the continuation of the ISA is necessary.

Secondly, the strict control over the trade unions and wages could be justified by the need to control industrial disputes and wage levels in order “to secure international manufacturing competitiveness.” (Huff 1999, p. 36). This was initially in response to the United Nations Industrial Survey Mission report that average wages in the manufacturing establishments were 20-30% too high to compete with other exporters in Southeast Asia and that Singapore’s confrontational industrial relations would be a barrier to economic expansion (United Nations Industrial Survey Mission 1961). Resulting labor controls were indeed an important cause of Singapore’s successful economic growth as MNCs flocked to take advantage of the favorable labor market situation. As for the criticism that there were too many MNCs in Singapore, it is important to note that a small country like Singapore did not have much choice in how it wanted to expand economically. Ejection from the Federation left it with little choice but to welcome foreign capital and orient its economy outwards. It is acknowledged by the present government, however, that there is a need to nurture local enterprises and that MNCs, as well as GLCs, have had a negative effect in this area. In recent years, the government has done much to promote local entrepreneurship and it has also slowly divested its share in GLCs, gradually allowing some to privatize. No doubt more could be done but all this does not mean that MNCs and GLCs did not serve Singapore’s economy well in earlier years.

Lastly is the issue of education. The lack of higher education early on in Singapore’s independent history was “aimed at maximizing short- to medium-term economic growth and preventing graduate unemployment.” (Huff 1999, p. 41). Indeed, at that stage of its economic history, the education system was made to play an important role in aiding Singapore’s embarkation towards industrialization and it needed to if Singapore were to develop. Thus the focus on science and mathematics. Singapore’s focus on these areas to the neglect of the arts and humanities remains as it has to be realistic and acknowledge the role such areas of studies and profession play in the continual growth of its economy. The need for a more balanced and holistic education and one that nurtures a creative spirit is acknowledged and the government has been doing much in recent years to reach such a goal.

It is indeed human to desire freedom and choice in the decisions we make and thus understandable that many Singaporeans feel strongly that there has been too much government control over their lives. However, I hope I have explained that for Singapore’s history since Independence, there were important tradeoffs to be made between economic growth on one hand and freedom on the other. The government believed economic growth to be more important than freedom for the past four decades and thus acted accordingly; the population, in most cases, accepted that. Having progressed much, the government has in recent years acknowledged the desire of Singaporeans for more freedom and has gradually relaxed its controls in response.

Conclusion

The above exchange highlights very well the tensions faced in Singapore’s development history – that of the tradeoff between economic growth and individual freedom. Looked at from another perspective, one could say it’s at the very core an issue of idealism vs. pragmatism. That is, the individual may be idealistic and desire a perfect world of economic prosperity and individual liberty. Being a politician, however, means one needs to make tough decisions and learn the language of compromise. Such is the paradox of development that there is a price to be paid for progress. Singapore’s price was its freedom.

Although Singapore today has already achieved much prosperity and development, it cannot afford to be complacent. The limitations of being a country with a small population and land will always remain. With China on the rise and its neighboring Southeast Asian countries growing strongly, a future of continual prosperity is in no certain way guaranteed for Singapore. In such a scenario, how should Singapore face the challenges in the coming decades? And how would this relate to the Singaporean’s desire for more freedom and less government control? That is, would meeting future challenges mean continual suppression of freedoms?

The view the author puts forward is that in future, the relationship between freedom and development no longer needs to be seen as one of tradeoffs. The reason is threefold. Firstly, the creativity that is prized in this knowledge-based economy can only be cultivated in a free environment. What this means is the following. It is acknowledged that nowadays education and knowledge have become important. And thus, despite its geographical limitations, Singapore can focus on harnessing the capital of knowledge. While it has a good education system to start with, the challenge is to ensure that its education system produces people who are not only well-educated but who also possess the creative flair that will help them to excel in such a knowledge-based economy today. And experts say that nurturing creativity can only occur in an environment free of control and excessive rules (Ng 2001). Thus, future economic growth for Singapore may depend on less government intervention in all aspects of society. Such will not only nurture creative people to take advantage of today’s knowledge-based economy, but also create the entrepreneurial flair that Singapore needs greatly. Secondly, Singapore’s future development may depend on allowing greater pluralism in politics. In the rapidly changing, knowledge intensive world today, it can no longer be the case that wisdom is monopolized by one group of people. The government can ill afford to ignore the ideas and views of other people and other parties and if Singapore’s future is to continue to be bright, it is arguable that the political system needs to accept more diversity of voices. And lastly, freedom and development need not compete with each other if we define development as freedom. As Amartya Sen (2000) argued so eloquently in his book “Development as Freedom”, freedom is an end of development, or put in another way, freedom constitutes development. Indeed, an important aspect of development is that people are free to enjoy their lives and their choices. That means that eventhough one is economically well off, one can’t be said to be developed (in a “capability” approach sense) if one is oppressed and controlled by another. Development is thus multi-dimensional and its full meaning cannot be captured solely by an economic definition. This form of thinking destroys any defense of taking an authoritarian route to development and in that sense Singapore cannot continue on with its previous path if it is to achieve such a multidimensional form of development.

While the PAP’s past authoritarian measures could be justified by Singapore’s historical situation and its stage of development, its path to greater development may necessitate the gradual loosening of the tight governmental control. Whether this will occur remains to be seen.

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