Singapore – Top Gear

With the recent demise of Singaporean founding father Lee Kuan Yew a lot has been said about this wondrous city-state. Economically, Singapore is one of world leaders and has been such for the last dozen of years. RIAC has asked high-ranking business representatives in the field to share their expertise. Rita Ramalho one of the managers on the Doing Business unit from the World Bank group alongside Charlotte Jiang, private sector development specialist, have shared their insight.

With the recent demise of Singaporean founding father Lee Kuan Yew a lot has been said about this wondrous city-state. Economically, Singapore is one of world leaders and has been such for the last dozen of years. RIAC has asked high-ranking business representatives in the field to share their expertise. Rita Ramalho one of the managers on the Doing Business unit from the World Bank group alongside Charlotte Jiang, private sector development specialist, have shared their insight.

Rita Ramalho, manager on the Doing Business unit from the World Bank

How you see Singapore economically right now? What has changed over the years?

Rita Ramalho

Rita Ramalho: We measure business regulations across the world including public policies that make it easier or harder for a company to actually operate in a country. There Singapore is No. 1 and has been so for the past 7-8 years. Before that Singapore had never gone lower than top-three. Singapore has always stressed this area as one of the priorities where they actually simplify business regulations. Singaporeans have always been following the best practices. They are constantly pushing it forward and trying to be better, never satisfied with the accomplishments. Almost every year they have a reform modifying national business regulation procedure. They’re always questionings themselves “How can we make it more efficiently?”, “How can we serve our citizens better?” Singapore has one of the most qualified civil servants. They are well-educated, knowledgeable, constantly seeking best practices from other countries. Regular public questionnaires are organized to find out what can be improved in the domain of civil service.

Is it easy for countries in the region to work with Singapore because they are so well-managed and well-developed?

Rita Ramalho: I think Singapore works with other countries to disseminate their good practices. For instance, they explain how they implement their good practices in their country to partners in and outside the region. Through APEC and other organizations they also try to spread good practices. People from other countries come and try to learn from their system, how they manage business.

Nan (Charlotte) Jiang, private sector development specialist, World Bank

From Third World to First, in One Generation

Charlotte Jiang

In the past 3 weeks since Lee Kuan Yew passed away, the outpouring of tears and sorrow showed the world how much the first Prime Minister and founding father of Singapore was respected and loved. Charismatic, “world-class strategist” and “giant of history” – eulogies have described him as all of these and more.

Most notably, Lee transformed Singapore from a shipping port with no natural resources to one of the richest, safest and most orderly countries in the world in just one generation.

When the Dutch economist, Dr. Albert Winsemius, arrived in Singapore to examine the country’s potential in industrialization in 1960, he gloomily remarked upon the sluggish economy as a “poor little market in a dark corner of Asia”. Labor strikes, capital flight, and uncertainty over political stability under the newly elected People’s Action Party (PAP) – led by then only 35-year-old Lee – over shadowed the island country.

Lee and his PAP coordinated with Dr. Winsemius and formulated ambitious national economic strategies to promote the country’s manufacturing sector, including attracting foreign direct investment and establishing industrial estates (particularly in the reclaimed swampland of Jurong). Situated at the narrow southern entrance to the Straits of Malacca, Singapore links resource-rich mainland with global shipping routes. The favorable geographic location provided local industries access to international market and the growing industrialization permitted the country to rise in the global value chain. Lee also proposed cross-border economic collaboration, including the China-Singapore Suzhou Industrial Park in the 1990s, which has become a role model for China’s economic cooperation with other countries. The PAP also led the country to transform its service sector from small-scale, family-owned sundry services to higher skilled value-added activities such as financial services and information technology to sustain competitiveness in the new global economy.

Another important economic strategy, as Lee remarked, was “to develop Singapore’s only available natural resource – its people”. Built on the British education foundations inherited from the colonial times, Singapore developed world-class institutions such as the National University of Singapore and Raffles Institution. Lee also established a national system of generous sponsorship to permit the best Singaporean students to obtain education at the world’s premier universities. Lee was also the mastermind behind the promotion of English education in the 1960s-1970s and Mandarin education in the 2000s upon the rise of China. Today, Singapore is amongst the world’s top countries in various aspects of education, including academic performance, equity in education opportunities, educational resources, student engagement and motivation. While being city-state of only 5.4 million inhabitants, the country has 2 of the world’s top 100 universities, National University of Singapore and Nanyang Technological University, according to the Times Higher Education World University Rankings. Lee also advocated for talent exchange, a vision which transformed Singapore into a regional education hub for young Asian scholars and training center for visiting Chinese officials. In 2011, Xi, then China’s Vice President, told Lee in Beijing that “tens of thousands of Chinese officials at various ranks have been to Singapore for visiting and studying”, and “this has played an important role in promoting bilateral relations and China’s construction for modernization”.

Flickr / Jennifer Le
Anton Tsvetov:
The Great Lee Forward

To support economic growth, Lee and his PAP were also committed to cutting red tapes and creating an ideal environment for entrepreneurs. The World Bank annual Doing Business report continuously ranks Singapore’s regulatory environment to be the most business-friendly in the world. Today, it takes only 2.5 days to incorporate a business and 6 days to export a cargo of goods in Singapore, compared with the OECD high-income average of 9 days and 10.5 days, respectively. Singapore also boasts competitive tax rates for entrepreneurs. Businesses only pay 18.4% of profit in taxes and social contributions, compared with an average of 41.3% in OECD high-income countries. Efficient business regulation and solid education foundation, coupled with advance technology and skills brought by foreign firms, allowed the country to develop itself into the Asian hub for innovation, technology and entrepreneurship. Over the past decades, the PAP has pledged to expand investment in research and development (R&D). One more recent example was the Research, Innovation and Enterprise (RIE) plan announced by Prime Minister Lee Hsien Loong in 2010, which invests a further S$16.1 billion into R&D in 2011-2015. This perhaps reflects the strategic thinking of Lee, then Singapore’s Minister Mentor, in continuing directing the country towards a research-intensive, innovative and entrepreneurial economy that creates high-value jobs and prosperity for its citizens. Just in past 10 years alone, the number of Singaporeans running their own business has doubled, giving the city-state the world’s 2nd most entrepreneurs per capita, behind only United States.

Lee was also the same man who attempted to, in his own words, “interfere in the private life of citizens”. Particularly, he attempted to influence personal decisions on marriage and having babies in the 1980s as the Census showed that better-educated women tended to marry late and have fewer children than less educated ones. In response to the Census, Lee instituted policies to organize matchmaking activities for single graduates in the civil service, statutory boards and government-owned companies, as well as encourage better-educated married women to have more children by granting them tax benefits and their children priority admission to schools. The schemes were reversed later, upon public uproar including from graduate women. Critics may see Lee’s efforts at social engineering as instruments of control which meant to impose order and produce obedient citizens to be led by a small leadership bred from intellectual elite. But perhaps he simply wanted to improve Singapore by changing the social-economics to help the country thrive. After all, he has a track record of employing a governance model very much based on Asian values – that is – to place the wellbeing of the collective community before the individual.

Today, Singapore is no longer the poor or little market that Dr. Winsemius saw 55 years ago. On the contrary, the country is one of the richest, ranked with 9th largest GDP per capita and 2nd highest income per capita in the world. Leading the country from third world to first in just one generation, Lee’s life-time dedication has left the country rich legacies to march into a new era.