Rajiv Chaudhry / Writer
In this four-part series, Rajiv contends that Singapore’s current economic model of high growth, which has served the nation well in the past, is unsustainable for the future as it will undermine Singapore’s ability to provide a high standard of living for its people.
Part One | Part Two | Part Three | Part Four |
It is widely known that growth is associated with development and that developing countries continually strive for growth because they wish to move forward along the scale in the development continuum.
But growth comes with costs.
Does there come a point in time when “growth at all costs” can be challenged, when continual growth no longer leads to unlimited benefits for a country’s citizens? Does the equation “growth equals development” always hold?
My answer is an unequivocal No.
The equation does not hold when a country is small, has limited resources and land size, and has achieved near developed country status. To continue to seek unlimited growth under these circumstances when a tipping point has been reached will result in a slow but sure decline
I suggest that that point has now been reached in Singapore. It is time to review the “growth at all costs” model, with a view of better understanding the implications and costs and thereafter moderating and managing the process of controlled growth to ensure a sustained quality of life for our citizens.History has proven that Singapore’s economic and political decisions in the past were “right”. Our leadership has propelled Singapore forward and upward from Third World to First, to borrow the title of Minister Mentor Lee Kuan Yew’s second volume of memoirs – all in one generation.
But just because something has worked well in the past does not necessarily mean that it will continue to work well in the future. Circumstances change and with them, thinking must adapt to new frameworks and concepts, with a view to sustaining a viable future for the citizens of our country.
Growth under limited circumstances
The Singapore Tourism Board (STB) bills the country as “Uniquely Singapore”. Singapore is certainly unique, though perhaps not in the sense the STB means. There is no other country with an economy comparable in size to Singapore but constrained by very limited natural resources.
Singapore has a land area of 710 sq km and a GDP of $257 billion supporting a population of 4.84 million people.
The only other country that comes close in terms of land area, GDP and population is Hong Kong which covers an area of 1,108 sq km and supports a population of 7 million. Its GDP in 2008 was US$207 billion (S$310 billion).
Due to its physical constraints, the primary question for policymakers becomes: how can Singapore grow under such limitations? The answer, it seems, has already been implemented.
A high-growth strategy served Singapore well in the first 25 years of independence. It is well-documented that when Singapore separated from Malaysia in 1965, both its economy and infrastructure were fragile. The departure of the British forces soon afterwards exacerbated the situation and it was necessary for Singapore to go out to the world on a war footing to market itself as a destination for MNC investments.
Singapore has been singularly successful in this quest.
Between 1965 and 1990, Singapore’s annual GDP ballooned from S$3 billion to S$66 billion or by a factor of 22 times. Between 1990 and 2008, the economy mushroomed further to S$257 billion, or by a factor of nearly 4 times – impressive growth by any standards.
Yet, this growth comes at a price. But more on this later.
Besides the constraint of space, Singapore faces another limitation: Manpower, or the lack of it. When the nation-state attained independence, population size stood at 1.88 million. By 1990 the population had increased to 3 million, of which some 10% or 311,000 were foreigners. By 2008, the population had increased further to 4.84 million, with 478,000 Permanent Residents and 1.2 million foreigners. Citizens now comprise some 65% of the population, down from 90% in 1990.
To accommodate the 61% increase in the total population since 1990, there has been a frantic pace of construction. The steady influx of people into the country has kept up the pressure on rentals and property values, thus creating wealth on paper.
People basked in the warm afterglow, knowing that their savings, invested mostly in property, are not only safe but, like warm baker’s dough, are steadily rising.
There are consequences, though, to the relatively rapid and sudden increase in population on a land-limited island like Singapore. These outcomes will be discussed in my next article.
End of Part One.
Part One | Part Two | Part Three | Part Four |
Rajiv Chaudhry is self-employed. He is concerned about where S’pore is headed and hopes to share his views with Singaporeans.
HELP keep the voice of TOC alive!
If you like this article, please consider a small donation to help theonlinecitizen.com stay alive. Please note that we can only accept donations from Singaporeans. Thank you for your assistance.Do you have a flair for writing? Volunteer with us. Email us your full name and contact details to theonlinecitizen@gmail.com
#23) Do you think a $8/- per hour is better or $10/- is better. do you think you can have a better life if you have S$200,000/- per month, S$2,500/- per month or only S$300/- per month.
My point is this: people earning more than the minimum wage, including many low-income families, will have to incur additional costs, because the costs will be passed to consumers. even the workers who are paid minimum wage may have to incur a higher cost of living.
My bigger point is this: using heart alone is not the best way to help the people you wanted to help. the situation is that it is hard for the lowest lowest income group to improve their life. and the reality is that everyone needs to fork out more to help them.
The question is whether people are genuinely willing to pay more to support a welfare state. If you pay taxes, you are better off than many people already. If you think you are paying the “govt” a lot now, you’ll have to pay even more taxes under the welfare state scheme. (If you look at the budget report, the salary to the politicians although high is insufficient to support support much more social welfare.) Are you genuinely interested to help the people in this way?
The next important question is how to make it work. Implementing a successful and efficient (i.e. low wastage) welfare system is not just about redistributing wealth from the rich to the poor. Trial-and-error without due consideration adds considerable economic and political burden to future generations.
Mr Rajiv writes: “History has proven that Singapore’s economic and political decisions in the past were “right”. ”
- So are all the ISA detentions without trial, physical and mental torture including women who were stripped naked and slapped, men who had urine poured over their heads all “right” political decisions?
Ravi Article is very well written. The past economic model of dependent on MNC and GLCs that exclude Home Grown Enterprises has already fail and PAP still in their Dream lands.
Look at Taiwan, their Scholars from MIT go back Taiwan in the 80s to create World Class Enterprises but our scholars came back to join PAP.
Currently Singapore has only Creative Technologies who is create by Non Scholar Mr Sim worth to mention but also dying very soon.
Good Luck for Singapore!
it’s all in maslow’s hierachy, baby. All in maslow’s.
#54: The past economic model of dependent on MNC and GLCs that exclude Home Grown Enterprises has already fail and PAP still in their Dream lands.
i’m not quite sure this concludes that local enterprises are suppressed. the edb has been trying hard to grow them but hasn’t been very successful. the fact that creative is mostly based overseas shows difficulty of breeding local business that brings revenue INTO singapore
this ultimately has lead the govt to continue to rely on GLCs to compete globally, and thus adding on to their political burden…
i feel that if ministers are taking care of themselves the more they should look into the minimum wages for lower group in order to sustain and maintain the standard of living as we more on.
besides, they are over paid many times and lower group pay getting decreasing??
as economy grow so as expenses so it logic and fair increament should be across the board porportionally. if not, it is a problem for lower group to suffer which happening now.
i feel sometime if i have voted the party to become ruling party and you seem to take good care of yoursevles but not us then i think something is wrong somewhere.
If you Study Econonmic you know what is crowding out effect!
Why America, Taiwan society can be so successful cause of their competitive , enterprenuer and fearless environment in business, political area.
Why we Singaporen are so fearful, study hard and work in MNCs or GLCs and listern to your Boss. It is Gov Induced Culture of suppressing any alternatives and oppositions that might be of greater influence than them.
That is life in Singapore!
“My point is this: people earning more than the minimum wage, including many low-income families, will have to incur additional costs, because the costs will be passed to consumers. even the workers who are paid minimum wage may have to incur a higher cost of living.”
instead of suppressing wages, bring down the other factors in cost of living: public housing prices, petrol tax, ERP, GST, office rental, retail rental etc.
“and the reality is that everyone needs to fork out more to help them.”
Help who? Our great ministars
if you check out the budget report which is available from MOF website, you’ll see that although the ministers’ pay are high, the total expenditure for political and parliamentary appointments is small compared to the whole public expenditure, not enough to increase social welfare support by much (compare it with this year stimulus package)
they justify the high pay by the necessity to retain people who can bring in the revenue. How true is it? To some extent, I think it is plausible — personal income tax and GST in total take less than 20% of the fiscal revenue. Corporate taxes takes up about 10% to 20%. The rest (majority) arises from either direct or indirect state ownership of entities or investments.
since they generate most of the economic activity, you do have some right to blame them for not getting you a job. but bear in mind that the more you expect from them, they harder they work on what they are good at — creating jobs by meticulous central planning — and this cycle continues…
“they justify the high pay by the necessity to retain people who can bring in the revenue. How true is it? To some extent, I think it is plausible — personal income tax and GST in total take less than 20% of the fiscal revenue. Corporate taxes takes up about 10% to 20%. The rest (majority) arises from either direct or indirect state ownership of entities or investments.”
there are many other taxes like petrol tax, alcohol tax, cigarette tax, COE etc. Also, why are HDB prices so high. Please provide detailed breakdown on cost, and save the BS on market subsidy.
kkk,
Also, let me stress this, we are not asking for social welfare. We are only asking the govt not to make too much money out of us
Angelina #33 and Que #32 were spot-on in their respective posts.
Joe #55: “it’s all in maslow’s hierachy…..”, unquote.
The poorer Singaporeans start from the basics; hunt for jobs, get a job to buy food, shelter…..and survive with monthly arrears here, there and mostly to the PRIVATISED ESSENTIAL GOODS AND SERVICES PROVIDERS WHICH ARE ALL PROFIT CENTRIC. The housing, utilities, healthcare, public transport, education, medias are all profit driven entities.
The Talented and Elite Singaporeans start with a huge bank account, buy highend properties locally and overseas, flying first and business class, dine and wine and enjoy the companies of each others’ tai tai, dance and changing partners.
The Rulers increasing foreigner intake to help in economic development to benefit Singaporeans ? Do the average Singaporeans think they benefitted from the Scheme ? I FEEL SQUEEZED !!!
patriot
Karl Marx had said throughout History, One Class will be displaced by Another Class and afterwhich they will tightly secure their power . There is no fair System expect in True Democracy like the US.
Now the Ruling Class of Singapore had to justified its existence and they are fearful to be displaced and will try whatever means to suppress the oppositions!
Are we going to serve Ns to protect this class.
Mr Rajiv also writes: “History has proven that Singapore’s economic and political decisions in the past were “right”. ”
- So are all the charges, jailing and eventual bankrupting of J B Jeyaretnam “right” political decisions?
“The rest (majority) arises from either direct or indirect state ownership of entities or investments.”
KKK, where do you think the money for investment comes from? Out of the blue? out from air? That’;s quite a tunnel vision, omitting other stuff just to bring out some points. Nope, those are partially from your CPF contribution, that is from 20% of your own wages. Although personal income tax and GST contribute less then 20% of our fiscal revenue, another part of the fiscal revenue is derived from the investment that your CPF money is used for, with a measly return rate to you. and don’t forget that that money is usually freeze inside the account unless you are buying homes or you are retiring with an ever changing age-requirement. and don’t forget what Small Time Businessman Says, that there are ofhter form of indirect revenue generation”
“workers who are paid minimum wage may have to incur a higher cost of living” Somehow a fact seems to be missing here, they are a higher cost of living and that’s the problem here…lol…
Oh man, KKK, thx for the good laugh “since they generate most of the economic activity,” that’s a really good one plus “they harder they work on what they are good at — creating jobs by meticulous central planning” I really enjoy it…
CIGXM how much of this economic activity is generated by them? Yes they affect our growth with their fiscal and monetary policy mr KKK,but generation of most economic activity? however, you seems to have forgotten that Labour Hour are contributed by the people. and that, In order to appeal for MNC FI etc in Singapore, Singaporeans has been suffering from stagnating wage growth.
“if you check out the budget report which is available from MOF website, you’ll see that although the ministers’ pay are high, the total expenditure for political and parliamentary appointments is small compared to the whole public expenditure,”
Using this yardstick, then a lot of developed countries will have an even relatively smaller ministerial salary payout vs their whole public expenditure – crude yet reasonable judgment by their much bigger size hence a bigger pubic expenditure. i do not have the figures, please feel free to dispute.
“since they generate most of the economic activity, you do have some right to blame them for not getting you a job. but bear in mind that the more you expect from them, they harder they work on what they are good at — creating jobs by meticulous central planning — and this cycle continues…”
well, did we initiate the cycle in the first place. they have guarded jealousy the need to be the only ones (fixing the oppos ???) to control and plan. now no more magic right and trying to parry away this ‘nagging burdensome unwanted’ expectation.
Thanks, Rajiv, for paraphrasing some of the ideas in my TOC article in a more accessible form. However I would like to point out one error. You say that GDP in Singapore increased from S$96 billion to USD 257 billion from 1990 to 2008. The correct figure is S$257 billion which would be a rise of roughly 2.6 times. Also what was the increase in real terms and per capita, which is more relevant in developmental terms, and also illustrates how the current government growth model is based on the fairly simple strategy of just adding more labour and capital inputs. This was the same strategy that ended in disaster for the Soviet Union. In fact labour productivity fell by 8% in 2008 and was slightly negative in 2007, which has important consequences for real wages. I await the latest productivity figures with interest.
If the Government does not bring in the foreigners to reside in SIN, how are our superstores, supermarkets, in fact all the retailers, going to survive. Who is going to buy our housings and to keep the property prices high ? There were village squatters to resettle to HDB, about the only property most resettled Singaporeans are able to afford. Now that almost all villagers are resettled, the only way left to prop up the price of HDB is to relax the rules governing the eligibility to sell them.
Why did the villages have to be cleared of occupiers, who were there long ago, and the cleared(of settlers) lands left un-utilized ? Why do the HDB keep building new estates, when almost all Singaporeans are already in HDB Housings ?
When our leaders say that they care for us, i believe them because we are their money generating machines.
patriot
Thanks, Kenneth, you’re quite right.
The figures have gone out wrong. The correct historical GDP figures (at current market prices) are:
1965 – S$2.96 billion
1990 – S$66.78 billion (x 22 over 1965)
2008 – S$257.4 billion (x 4 over 1990)
I’ve tried to address some of the points you have raised in the later parts, though perhaps not in exactly the same terms.
Ordinary S’poreans are bearing the brunt of this silly growth-at-any-cost policy. Life is stressful in this overcrowded island.
Don’t expect any empathy from the Higher Mortal ruling elite because they continue to live in their bungalows in prime locations guarded by Gurkhas. They are living a life totally different from Lesser Mortals.
To “Right” #53 and #66 ”
I accept the criticism on human rights abuses.
I was focusing more on the economic aspects of political decisions such as keeping the economy open etc.
My apologies for the oversight.
Growth was generate through the expense of general populations thru indirect taxation like foreign worker levys, super inflated HDB, transport prices by controlling the supplies but added sweetner like rebates with minimum impact.
I always advised younger people think very careful for big tickets item like HDB flat and don’t fall into the trap of 10 yrs car loan as the bank and gov will always suck your blood if you just earning $2500.
As we know Economic Growth is generate by Population Growth, Land Growth and Technology Growth. The Growth in past few years was artifically inflated without sustainable fundamentals and now is the effects we are enjoying!
Older people are really wiser. They are the ones who should stay. People below 30 can easily get another job. They should fo 1st when there’s an economic crisis.
I board the bus everyday & find that there are less foreigners. The MRT is another thing. I try to avoid taking MRT altogether.