The Singapore economy is near breaking point and cannot be sustained going forward without society tearing apart, says a former government economic planner who has just completed a 45-page paper “Creating Jobs and Enterprise in a new Singapore economy – Ideas for Change”. Tan Jee Say feels strongly that new economic directions are urgently needed to prevent a socio-economic tragedy from unfolding, and he has proposed a $60 billion National Regeneration Plan to transform Singapore into a knowledge-based regional services hub that puts Singaporeans first in jobs and enterprises created in a new Singapore economy.
Jee Say’s analysis and prescription are persuasive, according to Lord Butler who as Head of the British Civil Service in the 1980s and 1990s, oversaw the “painful transition” of the United Kingdom from a predominantly manufacturing economy to a knowledge-based one. Lord Butler commended the paper and described it as a thorough and well-argued piece of work that deserves the attention of policy makers.
by Tan Jee Say
The Singapore economy has become more volatile in recent years, with business cycle fluctuations becoming more pronounced, and Singapore experiencing three recessions (1998, 2001 and 2009) in the past 15 years, in contrast to only one recession (1985) in the 30 years between 1965 and 1995. The greater volatility led to more job losses that lasted for longer periods. Volatility has resulted in lower growth.
Low Productivity
Singapore’s low labour productivity growth in recent years is a statistical phenomenon and is the result, not the cause, of our poor economic performance. To focus on raising productivity as a key economic strategy, an old and discredited strategy adopted by the government since the early 1980′s, is like putting the cart before the horse – can we expect it to succeed when it has failed to do so in the last 30 years with productivity continuing to be stuck in the lows to this very day in spite of all the high-sounding campaigns by high-level productivity councils? Rather we should focus our minds on economic policy because it is bad economic policy that has resulted in Singapore’s heavy dependence on foreign unskilled and low-skilled workers that in turn pulls down labour productivity.
Unsustainability of Manufacturing
A major contributor to the increased economic volatility was manufacturing which has been promoted by the government in the past 5 decades as a key pillar of its economic growth strategy. The strategy was successful in the first 2 decades but by the early 1980′s, it was running into bottlenecks as Singapore’s constraints manifested themselves.
Singapore has little comparative or competitive advantage for manufacturing to flourish as land, labour and skills are in short supply. The manufacturing sector can only remain viable in Singapore through more subsidized factory land and space, uninterrupted inflow of cheap foreign labour, and generous tax holidays and other giveaways. Such economic distortions in the last thirty years have delayed Singapore’s economic restructuring. We cannot afford and should not tolerate further wastage, not even for another year.
Two additional factors weigh against manufacturing – firstly, most top students are not opting to read engineering as their first choice in the local universities and polytechnics, a trend that does not augur well for the innovative potential of nor the prospect for ‘complex manufacturing’ , a niche that the ESC wants to promote; and secondly, Singaporeans are happier working in the services sector than in manufacturing industry. Without a happy and talented workforce, can complex manufacturing succeed in a sustainable way?
Which Services for the Future?
Singapore’s future lies in services. We can thrive as a dedicated services hub for the region as we had done so in the past as a vibrant commercial metropolis even before Singapore went into manufacturing in a big way in the 1960′s.The rest of the region has also progressed as we have. To continue to be relevant to them, we have to develop into a full-fledged integrated services hub with the best offerings available in the field. It should be knowledge-based that will capitalise on Singaporeans’ high level of education and experience of the world’s best practices. It must be the right kind of services that do not exploit or offend the sensitivities of the region.
Picture credit: http://en.wikipedia.org/wiki/Marina_Bay_Sands
The two huge casinos are the wrong kind of services activities to have. Economic development is more than just about generating jobs and income growth. There is a moral purpose as well, otherwise we might as well turn Singapore into a prostitution hub or a distribution centre for drugs which will bring us untold riches. Economic development is about developing and using human capital to produce decent and worthwhile goods and services in a sustained way.
On the other hand, casinos are a soft option that preys on human weakness to generate profits. They destroy the work ethic and lead to broken families and other social problems. The casinos should be closed down so that Singapore can part company with those who choose to prosper through vices such as gambling, prostitution or drugs; only then can Singaporeans once again walk tall and proud on the high and honourable path to economic development and prosperity.
To make up for the economic loss from closing down the casinos, we need to move aggressively to develop those services we are currently good at providing so as to yield quick returns such as services involving the port, transport connectivity, financial institutions, education and healthcare. While we can be proud of having good basic infrastructure, there are still serious gaps to be filled particularly in education and healthcare. Once these holes are plugged, Singapore will have a fully developed infrastructure that will enable it not only to uplift the well-being and standard of living of its own citizens but also have additional capacity to serve the needs of the region.
End of Part One. You can read Part Two here
________________________
The writer was with the Ministry of Trade and Industry from 1979 to 1985 where he headed economic and manpower planning and also served as secretary to the late Dr Albert Winsemius, the economic adviser to the Singapore Government. From 1985-1990, he was the principal private secretary to Mr Goh Chok Tong. In 1990, he went into investment banking and subsequently took up fund management. He is a Chartered Fellow of the Chartered Institute for Securities & Investment. He is a graduate of Oxford University where he read philosophy, politics and economics.
He will be sharing his insights of the Budget 2011 this coming Saturday 19th Feb at TOC’s Budget Forum 2011.
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“Unless the economy grows in future, we’re not going to have surpluses to share. So while you’re very happy with the generosity of the Budget, I would myself focus on the first part, the growth element. This is the Grow and Share Budget, so we have to grow first before we can share, not just for this Budget but for the future (too),” said Mr Goh today.
Hell with you where is the Switerland standard of living?
lets say i run a business, at the end of every financial year, profits are not reinvested to grow the business, but are instead creamed off & locked up as surplus, i am not sure this can be a good thing.
of cos running a country might be different.
i had a friend, he worked extremely hard, n he locks up 75% of his income monthly as ‘surplus’, i told him u r ill treating yourself.
no dating, no kids, no pets, no entertainment, terrible food, no nothing, penny pinching, overly calculative n surely not happy.
i told him: go n learn something, do something u like, if u live this way, u r not living, u r merely existing.
u have to invest in yourself, add value and create meaning, no point treating oneself like a financial commodity.
Wander if Singapore become will one become a casino hub. Hope this day will never come.
We need new bloood to spur other areas of growth, not having ‘gambling’ as part of our growth. To have casino in our small island can result in high rate of gambling addiction. It will be no point trying to solve the addiction issue later if it once becomes a broadbased problem.
We must to ban all Singaporeans, PR & foreign workers entering the casino. Casino is built for tourists only. Not for us and those who work here.
Do away with the two IRs? What happen if Malaysia which has already one long established one in genting decides to let the current two singapore IRs relocate to their Iskandar Economic Zone which is just across the straits and directly opposite Singapore? Will Singaporeans be queuing up to go there? We should put on our thinking caps and not to make desperate moves that would eventually harm ourselves.
I believe they will be glad to have IR but without the casino.
If Barisan Nasional wants to lose in the next election, they can go ahead and build casino in Iskandar Economic Zone.
Malaysia is not so desperate.
Good read. Thanks for taking the time Mr Tan Jee Say to pen your thoughts and idea.
Always good to have alternative views that are cogent and well thought out regardless of whether it is adopted.
Indeed rare in our context for someone with your background to stick your neck out. Kudos to you!!
Singapore’s Economic Growth Model – Too Much or Too Little?
Linda Lim
Professor of Strategy, Ross School of Business, University for Michigan
lylim@umich.edu
Prepared for the Singapore Economic Policy Conference, October 24, 2008
Singapore’s Economic Growth Model
Singapore’s economic growth model of the past forty-odd years is well-known,
justifiably much-admired, and widely written and talked about in international policy and
academic circles.
Like its fellow “Asian tigers”—Korea, Taiwan, Hong Kong, and before them, Japan–this
growth model was based on the export of initially labor-intensive manufactured goods to
world markets, followed by a move up the technology and value-added ladder as
comparative advantage shifted. Like Korea, Taiwan and Japan, but unlike Hong Kong,
economic development in Singapore was substantially state-directed and included a
managed-float currency regime. Unlike Korea, Taiwan and Japan, but like Hong Kong, it
was carried out with free trade and capital flows.
Over the past two decades, as Korea and Taiwan especially have liberalized economically
(and politically) along many dimensions, reducing the state’s role in their economies, and
Hong Kong has remained the freest economy in the world, Singapore’s economy has
remained firmly state-directed even as it diversified out of export manufacturing and into
high-value services. Today, there are three major differences between Singapore’s
growth model and those of the other Asian economies usually considered its peers,
beyond its obviously much smaller size.
The first is the heavy reliance on state-promoted immigration, which is strictly though not
always successfully restricted in the other economies.
The second is the continued dominance of multinationals and government-linked
corporations in sectors of the economy that elsewhere have strong domestic private sector
participation. Most notably, outside of banking and property, there is an absence of the
large corporations established and grown by domestic private entrepreneurs that are such
a distinctive feature of the business and economic landscape in Japan, Korea, Taiwan and
Hong Kong and have expanded globally—the Sony’s, Samsung’s, Acer’s, Hutchinson’s
etc.
The third difference is the lesser integration of Singapore’s economy with that of its
Southeast Asian neighbors, in contrast to the rapid and strong market-led integration of
Northeast Asian economies, including China.
=================
http://www.ess.org.sg/Events/Files/2009/Prof_Linda_Lim_-_SCAPE_(for_ESS_dialogue)%5B1%5D.pdf
the MBS image strongly resembles an image that i took and own.
see http://en.wikipedia.org/wiki/File:Marina_bay_sands_night_skypark_2010.JPG
if it is the same image, please note that i’d licensed the image as requiring attribution, but i don’t see that here.
thanks.
See the video of the 1st part of this paper here: http://www.xtranormal.com/watch/11850450/creating-jobs-and-enterprise-in-a-new-singapore-economy-ideas-for-change-part-1
IR casinos are best kept as it is. Do not expand anymore, just maintain it good and have more precautionary education to the people. We can’t stop people from gambling, neither can we ignore the IR casinos as it is just not only gambling but it also brings a string of other economic aspects into singapore economy as well. So, 2 is enough… enough to attract tourist, investment, economy and most important, educate the people well. Remember, we can’t stop people, you stop them, they go some other places to satisfy their urges. And so what do we gain from here? Is it the same square one? Please, singaporean…think again.
Manufacturing sector is still very much needed as skill and expertise is very much needed. For example, welding, drilling and precision engineering. If we forgo this we will not be able to catch up thereafter with other developing countries. It will not be surprising next time all metalworks has to be done in Malaysia. We should have our own people who can do the job. The defence sector also need those and technology for any developed countries is a needed exploration into further innovation in the time to come. Once we lost this, we will not be able to catch up. Have a backup plan is good rather than rely on other developing countries for manufacturing.
Manufacturing/Electronics investment in Singapore is about 25% of the Spore economy. The growth over the last 5 decades has depended on this sector. Not forgetting the spill over effect into other logistics, services, support, R&D and finance areas.
This is my only disagreement with the well thought through report. We can’t do away with this sector. It will probably take another 2-3 decades of careful planning and restructuring of the economy to move away from this sector. Let’s not rock the driver of the economy for now.
I agree with Dr Tan that “Singapore’s future lies in services”.
But the great question is “How much?”
In defining that “Singapore has little comparative or competitive advantage for manufacturing to flourish as land, labour and skills are in short supply”, the author had infact written off the manufacturing sector in a general sense. We need to bear in mind that the manufacturing sector is made up of a variety of industries. It is like a basket full of fruits- some rotten, some fresh. Hence we cannot write off a sector (basket) without examining the specific industries (fruits) in it. The situation may appear shitty, but there may be a few gems hidden beneath the shit.
The second issue lies in Singapore’s service sector. Is our service sector diversified sufficiently for us to phase out manufacturing?
It is worrisome if our economy’s current services hinges disproportionately upon the financial sector- a financial disaster such as the Subprime Crisis will wipe out much of our economy.
We need our economy to be sufficiently “diversified” to be able to take various shocks (our economy is a metaphorical giant portfolio).
If we are to look at what Dr. Goh Keng Swee has cone again, we will see a big and long-term growth plan:-
(1) Leverage on our advantages
(2) Setting priorities right
(3) Tak consistent and focused actions
on priorities set
(4) Build up total resources through education, revamping academic-based system to one of poly- ITE- and practical courses that support the whole economic growth long-term sustainable master plan.
(5) With new ministers like Mah Bow Tan, around, governemtal economic long-term sustainable growth master planning is in disarray because of change to tax-and-privatize system to enrich the governments and stay in control and power.
These are our current problems. Opposition parties must not give up their talented team now available to contribute and come up with a new economic long-term growth master plan one that will be strongly knowledge-based and leveraging on our educated workforce.
Past productivity schemes and economic restructuring adopted after the past recessions such as that undertaken by V Bala have been haphazard lacking such visions of Dr. Goh.
Time to change control illusions and self-centered mindset of our past leaders with new visions.
This guy is completely ignorant of economics. Economies grow when people produce things that others buy, that’s why manufacturing has made Singapore so wealthy. The business cycles are/were caused by government intervention, which, if ceased immediately, would only improve the economy. It’s ideas like his—that elites at the top should dictate our morals, and that economies are somehow “better” if they are whatever the elites deem “moral”—which will be the downfall of Singapore. This guy is useless, no wonder he’s a government economist!
My point above—that economies are better, if wealth is the measure, when they are allowed to do whatever they percieve as profitable, and not whatever politicians allow—is proved by TSJ’s own admission that the Singapore economy would boom and bring “untold riches” if they were allowed to market sex and mind altering substances.
On a side note, government intervention is objectively mind altering, and any intervention which prevents humans from doing what they want is also IMMORAL.
He thinks it’s “moral” for the government to tell you what you can and can’t do, while he admits that his own feelings are holding the economy back! And then he purports to tell us what would improve the economy? He already told us! Drugs and sex, things people ACTUALLY WANT. Also, DO NOT DECREASE manufacturing, as that is what the REST OF THE WORLD WANTS FROM THEM.
TSJ is dumb. His pro-government, anti-economy ideas are precisely the reason that politicians (necessarily corrupt, for all times and places) employ people like him. They know exactly what’s good for politicians and what will ruin the economy, and they try to tell us it’s what’s best for us! We already know what’s best for us, now get the hell out of our way, thank you.
Let me emphasize that I am pro to neither party. I am neutral and open to all views and ideas as long as it makes sense and benefits the country and citizens.
Firstly, I think personal attacks and ugly remarks should be avoid as it turns the thread into something personal instead of targeting at the original issues. Let’s not side track.
Secondly, if one looks at the issues neutral, one can see it clearly. If you can see the politics played, be it at work, home or on the country scale, leaders involved argued and insist on their points because they want to win and so that they can remain in power and for the interest of the people at heart has become second and defeats the purpose in the first place. It can be seen everywhere on a political scale. I am not insisting that it is happening here but it is really for the discernables to decide.
Thirdly, as everyone is advocating that competition is healthy for everyone, isn’t it healthy too to have another party challenging one another when making policy rather than there are only one party doing whatever they think is feasible which at times they might have missed out certain points or ideas which might be even better. As the saying goes, 一山还有一山高, meaning there will always be somebody better out there. If the decision maker always thinks that he/she is the best, then judgement made might be clouded by arrogance.
If both party is really for the best interest of the people, then I think both party shouldn’t mind if alternate voice in the parliament. When politicians engage in power struggle, the only people who suffers are the citizens.
Sometimes, do take a look out of the country and understand what other countries has done to benefit their citizens. Free education till university, heavily subsidised medical, cheap and quality transportation, minimum wage, ‘citizens first’ policy, tax free for food and clothing necessities, and many more. Of course, not one same policy is going to work for all countries in the world but to always compare with the better countries instead of the worse countries and work on matching or better that policy will only improve the country. Let me list a very layman example, when one switch job, one always compare if the other party is offering a better remuneration or not. i do not think one will switch to a company which gives them something worse.
Just one of the examples, in Korea, citizens are only allow to visit one particular casino in the country. Although plans are they might relax the laws a little to allow more choice of casino, the country is big and ours is small comparatively. If the casino or “IR” is allowed based on the principle idea of promoting tourism and tapping on the patronisation of foreigners as another form of revenue for the country, maybe, citizens should be disallowed to patronise any of the two. But looking any the skyhigh cost of overheads in Singapore, the two might not last long. Looking on the other side, this might curb the social degradation and family problems arising from irresponsible gambling and if there is really a need for Singaporeans to visit a casino, they can always visit ‘Mr Lim’in the mountain which they have been doing so before the emergence of the 2 ‘IRs’ here.
The list can go on and on and I might not necessary have the best solutions but I think no ideas is a bad idea so as not to inhibit generation of more ideas.
Just my two cents worth
We do not suppress the ideas those who are the conscience and fidelity of society. Imagine the good and unity of this country the minute love and its attributes are stressed, I mean, it easily coagulates the four races Singapore has – Malays, Indians, Eurasians and Chiness.