Economic miracles sometimes need course corrections, even in Singapore, which last year was home to more US dollar millionaire households per capita than any other country, according to Boston Consulting Group.
From 1959 onward, under the leadership of Lee Kuan Yew and his successors, Singapore transformed itself into a rich hub for a range of industries, from financial services to transportation to pharmaceuticals. From 1960 to 2010, the city state’s gross domestic product increased 41-fold, to 285 billion Singapore dollars (R1.7 trillion), as it became the world’s second-busiest container port and fourth-largest financial centre. Three of the world’s six strongest banks are based in Singapore.
As non-Singaporean workers and companies have poured into what the World Bank says is the easiest place on earth to do business, some Singaporeans have been left behind. The gap between richest and poorest has widened in recent years.
Non-Singaporeans now make up more than one-third of the island’s population of 5 million. The influx of wealthy expatriates has inflated housing prices, while the opposition Workers’ Party argues that large numbers of immigrant labourers have depressed local wages.
Against this backdrop, the voters in May’s general election handed the ruling People’s Action Party (PAP) its smallest margin of victory since 1965. While the PAP still got 60 percent of the votes, the decline from previous showings was bracing enough for Prime Minister Lee Hsien Loong, Lee Kuan Yew’s eldest son, to promise a period of soul searching and to pledge to pay attention to the electorate.
“My mantra is to listen, learn and lead,” said Lui Tuck Yew, the new transport minister.
The Workers’ Party, which won six seats in parliament (up from one in the 2006 election), called it a watershed election.
Some Singaporeans went further. Catherine Lim, a best-selling novelist and political commentator, said: “I call it a renaissance – a Singapore revolution of sorts.”
Lee Kuan Yew co-founded the PAP and was the world’s longest-serving prime minister when he stepped down in 1990 after 31 years in office. He presided over a hybrid democracy: though political opposition was minimal, there were regular elections.
Remaining in the cabinet first as senior minister and then as minister mentor, Lee was succeeded by Goh Chok Tong and, in 2004, by his eldest son, Lee Hsien Loong.
Over the decades, the city state achieved its success by encouraging foreign investment, avoiding corruption and emphasising discipline, efficiency and interracial harmony. To reduce Singapore’s reliance on exports, the government encouraged new industries through business-friendly taxes and a minimum of red tape.
The Singaporean economy has grown mostly without interruption since 1986. The exceptions are a 2.1 percent contraction during the Asian financial crisis in 1998, a 1.2 percent drop in 2001 after the dot-com bubble burst and a 0.8 percent shrinkage during the 2009 global financial crisis.
While Macau, China, has been the biggest player in casino gambling since it overtook Las Vegas in 2006, Singapore will take second place by the end of this year, American Gaming Association president Frank Fahrenkopf forecasts.
In 2005, as part of an effort to further diversify the economy, the government lifted a four-decade ban on casinos. The island’s two huge gaming resorts opened last year and have attracted almost 35 million people.
Immigration has driven Singapore’s development. Smaller than New York City in area, it has few natural resources. To fuel its ambitions, Singapore attracted globe-trotting professionals and entrepreneurs from places such as North America, Europe and India, as well as lower-paid labourers from countries including China, the Philippines and Bangladesh.
“It feels like an invasion because one day you wake up and there seem to be foreigners wherever you go,” Singaporean maintenance engineer Dixon Chew says.
Unaccustomed as it was to opposition, the PAP might have underestimated popular discontent, said Vishnu Varathan, an economist at Capital Economics (Asia) in Singapore. “The government has missed some clues, and there are very legitimate reasons why people are unhappy.”
After the election, Lee Hsien Loong moved quickly to show he had heard the voters. He reshuffled his cabinet. The government announced plans to release more land for homebuilding. It also said it would review ministerial salaries that are among the highest in the world.
In a statement a week after the election, the elder Lee and Goh said it was time for change as they resigned from the cabinet.
“We have made our contributions to the development of Singapore,” they said. “The time has come for a younger generation to carry Singapore forward.”
The government began to address immigration before the election. “We have moved quite fast over the last five years,” Lee Hsien Loong said last year. “But now, I think we should consolidate, slow down the pace. We cannot continue going like this and increasing our population by 100 000, 150 000 a year indefinitely, and we should give Singaporeans time to adjust and our society time to settle and integrate better the newer arrivals.”
In that vein, the government granted 48 023 permanent-residence and citizenship applications in 2010, down about 40 percent from 79 388 the year before.
Adapting to shifting currents is something that Singapore has excelled at since Lee Kuan Yew came to power a half century ago. His exit marks more than a symbolic threshold for Singapore and for his son. The government recognises that popular demands at home cannot go unmet.
The prime minister’s challenge will be to keep making the city state his father built attractive to business and foreign workers while making sure born-and-bred Singaporeans continue to get a piece of the economic miracle. – Bloomberg