Jan 7, 2011
Lessons from Singapore
Singapore has embraced globalisation and ensured its economy stays competitive, strategies Malaysia could learn from as it strives to become a high-income nation. -- ST PHOTO: NG SOR LUAN
TINY Singapore's gross domestic product was US$210 billion (S$271 billion) last year, higher than Malaysia's US$205 billion.
Singapore's GDP per capita was US$36,573, compared with Malaysia's US$6,975. In 1965, Singapore and Malaysia had GDP per capita of US$512 and US$335 respectively.
Why has there been such a wide disparity in economic performance between Singapore and Malaysia over the last 40 years? As far as political systems are concerned, both have been classified as either authoritarian or semi-democratic countries. But where the economy is concerned, Singapore is way ahead of Malaysia. About 400,000 Malaysians are now working in Singapore. Singapore has a population of only five million.
Singapore's business environment and competitiveness rank among the world's best. It is not only the world's second-largest container port and fourth-biggest foreign exchange trading centre, it also has the world's largest concentration of millionaires. Its per capita income surpassed that of Japan in 2007.
Indeed, in his recent book entitled The Era Of Low IQ, Mr Kenichi Ohmae - nicknamed Japan's Mr Strategist - listed Singapore and China as winners in the new era of globalisation. He opined that Japan should learn from Singapore to arrest the trend of low IQ among Japanese.
Owing to its geographical advantage and willingness to open up to foreigners, Singapore is able to attract talent from all corners of the Earth.
On the other hand, Malaysia is prevented from giving full play to its advantages by its ethnocentric mindset. If Malaysia fails to adopt a people-centric mindset and use fully its human, land and material resources, its economic achievements will be limited.
Singapore, like Malaysia, took the route of establishing labour-intensive industries to create jobs in the early 1960s and 1970s. However, by the early 1980s, Singapore had begun to transform itself into a skills- and knowledge-intensive economy and adopted a high-wage policy to accelerate this transformation. Till today, Malaysia does not dare to employ a similar strategy.
In the late 1980s, when globalisation sparked international competition, it became more difficult to upgrade industries using the high-wage policy. In other words, failure to seize opportunities early led to a doubling of costs.
In the 1990s, Singapore's development strategy leaned towards achieving economic diversity and becoming a knowledge economy. As a result, it became more market-oriented and strove to meet investors' needs, through offering better intellectual property rights protection, lower corporate taxes, greater ease in obtaining permanent resident status and more flexible labour policies. All these have helped to enhance Singapore's brand power and boost its appeal as an international investment destination.
One can say that many of Singapore's key policies revolved around increasing competitiveness and improving its business environment. Such orientation provides a bigger catalyst than Malaysia's Vision 2020 goal of becoming a 'high-income nation'.
This is because high income is a goal pursued by all nations and is not significant on its own. If high income is a goal set in relation to enhancing competitiveness or policy implementation, then it would be a great driving force.
For instance, if we ask how we can increase competitiveness, we will try to come up with a winning formula. If the formula is right, the objective will be achieved. But if we merely mention 'high-income nation', it will sound like a slogan and no concrete action is likely to be taken to find a winning formula.
By the same principle, Taiwan's strategy is to upgrade its industries and become a high-tech island. That is more realistic than the goal of becoming a high-income nation. If an economy can increase its competitiveness and productivity, move up the value chain, be highly innovative and attract talent, it will naturally develop into a high-income nation.
Singapore can be said to be a pragmatic nation that has capitalised on, instead of rejecting, globalisation. This is unlike former Malaysian prime minister Mahathir Mohamad, who responded negatively to globalisation by bringing up the 'New Malay Dilemma'.
Singapore's elite leadership has striven to benefit from globalisation. Malaysia should learn from Singapore's proactiveness.
From the perspective of governance, Singapore has taken pains to avoid becoming a nanny state with a dependency culture but it is not an uncaring capitalist nation. For instance, its Central Provident Fund (CPF) system and housing policy have given Singaporeans economic security. Though income is not equally distributed in Singapore, it can be said to be an economically prosperous and relatively safe country.
In 2005, 93 per cent of Singaporeans owned homes, of which 88 per cent were affordable public housing flats. This high rate of home ownership, coupled with accumulated CPF savings, has made Singaporeans substantial stakeholders, which enabled the People's Action Party to consolidate its power base. By adopting a 'carrot-and-stick approach', this ruling party truly has some tricks of its own.
This article appeared first in Oriental Daily News, a Malaysian Chinese-language newspaper.
Singapore can be said to be a pragmatic nation that has capitalised on, instead of rejecting, globalisation. This is unlike former Malaysian prime minister Mahathir Mohamad, who responded negatively to globalisation by bringing up the 'New Malay Dilemma'.
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Posted by: eclat administrators Sr Lanka | February 02, 2012 at 10:17 PM