Singapore still has a lot to celebrate about, one year after SG50, the 50th anniversary of its independence after separation from Malaysia. This is particularly so, when seen against the grim backdrop of the world economy faced with the disruptions associated with Brexit, and with the prospect of a Donald Trump presidency for the US.
But because Singapore’s economy has been built on globalisation, its fortunes – or otherwise – are very much tied to the global situation.
In this, recent economic news in Singapore is slightly more sobering. Economic growth has been sluggish. Singapore’s manufacturing economy has shrunk for the 13th consecutive month. The unemployment rate rose to 3.1 per cent in the second quarter of this year, up from 2.6 per cent.
An event like Brexit seems to be an act of political suicide for the City of London, and hence a gift on a silver platter for Singapore, a competing financial centre. But if only things were so straightforward.
A Citi report released last month warned that Brexit could in fact dampen the prospects for Singapore’s banks. “Sluggish GDP and market uncertainty could also constrain fee and non-interest income growth,” the Citi report said.
The political mastery of the PAP
Last year, the Singapore government led a year-long celebration which it dubbed “SG50”. A “celebration fund” was set aside for the purpose, but the eventual expenditure – at about S$10 million – was double that.
What the ruling People’s Action Party (PAP) had most to celebrate about was its astoundingly increased share of the popular vote in the September 2015 general election. Private sources indicated that even PAP leaders and its rank-and-file members could not believe their good fortune.
At 69.9 per cent, and having reclaimed one constituency from the opposition, the results represented a remarkable turnaround from the PAP’s dismal results at the 2011 general election, where the PAP scored its poorest result in post-independent Singapore.
Some attributed the results to the “LKY effect” – that immense outpouring of national grief on the part of Singaporeans, when the country’s first prime minister Lee Kuan Yew (LKY) died in March 2015. According to the standard wisdom, that engendered among Singaporeans a collective sense of gratitude towards the PAP, which Lee led from its establishment in 1954, to stepping down in 1993, about three years after Lee stepped down as prime minister (he held on to the position of Secretary General of the PAP for a while longer after relinquishing the premiership of the country).
His authoritative – and, as some would say, authoritarian – figure continued to loom large over the party and much of the country even after that, at least until 2011 when he finally left the cabinet.
The “LKY effect” can be debated on and on by observers and scholars. But the fact remains that it was the political mastery of Prime Minister Lee Hsien Loong that revamped much of government policy and its public relations image, after the dismal 2011 election results – which were not dismal if one were to go by international standards.
And it was a stroke of luck too, for Prime Minister Lee, that the first signs of economic trouble in Asia and in Singapore showed up almost right after his electoral coup-de-grace.
Are there really lessons from Singapore to be learnt?
Many developing countries – and developed countries – seem to want to learn from the Singapore experience. But the lessons from Singapore are probably not applicable to just about any other country. Singapore is simply too sui generis.
Nevertheless, the lessons from Singapore that can be drawn relates to how it has mastered the “rules of the game” of the global economy, as alluded to at the start of this article. For lack of a better descriptor, it is neo-liberalism – broadly defined – that Singapore has mastered.
There is no doubt a heavy dose of state intervention in the economy that one can witness in Singapore. But this is not the inefficient centrally-planned economy that many a developing state had fallen victim to, in the course of 20th century history.
The greatest lesson Singapore could possibly share with the rest of the world, though, may be more in the diplomatic sphere than the economic. And that is a developing story that would very much depend on how Singapore continues to balance itself and its interests between the two world powers – the US and China – with regard to an issue which frankly does not concern it at all.
That of course about the South China Sea.
Singapore is increasingly being pulled between the two giants. Just last week, China’s foreign ministry called on Singapore to respect China’s position on the South China Sea disputes – namely that China rejects the ruling of the Permanent Court of Arbitration last month.
The remarks from Beijing were made in reference to what Prime Minister Lee Hsien Loong said while on a key visit to Washington, namely that all countries should respect international law and norms. That was a very innocuous way of addressing the South China Sea issue.
The position that China asks of Singapore is a very hard one for Singapore to stomach. Furthermore, many have accused China of subjecting ASEAN to a divide-and-conquer approach, with regard to the maritime disputes.
How Singapore will handle an issue like this one will truly determine its place in the annals of powerful city-states.
If Singapore continues to manage its relations with the US and China well, that would be the single most important lesson Singapore has for the world.