Inside Story

The Singapore grip

Singapore is good at solving economic problems, but its political stagnation is stopping it from dealing with urgent social challenges

Tim Colebatch 17 December 2021 3762 words

Singapore’s underclass: migrant workers at a building construction site in June this year. Suhaimi Abdullah/NurPhoto via Getty Images

It was years ago, but I will never forget my defining Singapore experience. All morning I had been bustling to and fro on the metro, marvelling at its efficiency, its driverless trains arriving every five minutes and dropping you off at smart clean stations with underground passageways radiating in all directions. Why can’t Australian cities build systems like this, I thought.

I rode up an escalator from Somerset station into a small park shaded with trees — another thing Singapore does well. In the distance I saw an old man standing on a path, holding up a pile of books for sale. As I got closer, I recognised him: Singapore’s long-time opposition leader, J.B. Jeyaretnam. Bankrupted and driven out of parliament by repeated defamation suits from the Lee family rubber-stamped by compliant courts, the former London-trained barrister was now reduced to selling his own books in a park. Thank God Australia’s not like this, I thought.

Twenty years on, I found myself in Singapore again, a tourist seeking to escape Australia’s long lockdown and rejoin the world. We’re free to fly anywhere, but in fact there are fewer than fifty flights a day out of Australia, and almost a third of them are Singapore Airlines and its budget carrier Scoot flying to and from Singapore. Well, I thought, why not? The Covid paperwork was demanding but not oppressive, and everything we’ve come to like about Singapore is still there: the sheer efficiency of the place, the buzz of modernity in its architecture and technology, the trees everywhere deflecting the heat, the range of experiences on offer, great food and even great coffee just around the corner.

I had a ball. But my mind kept coming back to the place itself: it must have changed, but how? It’s thirty-one years since its formative leader, the bullying genius Lee Kuan Yew, stepped aside to become “senior minister” to his successor, Goh Chok Tong. In 2004 Goh in turn stepped down for Lee’s eldest son, Lee Hsien Loong, who remains Singapore’s leader today.

The Lee dynasty will end with him. The mere suggestion of a third generation evoked so much opposition that his children (all of whom spell their names Li) ruled out careers in politics. But rule by the People’s Action Party appears set to continue indefinitely. It has not lost an election since 1955, and it has no intention of allowing that to happen anytime again.

Singapore, writes commentator Cherian George, is still a country where you have to weigh up the potential consequences for your career before expressing opposition to any government action. (And George speaks from experience: his own criticisms of the government led to his being repeatedly rejected for permanency at the prestigious Nanyang Technological University.)

It is not feasible for a tourist to organise interviews while on a trip, so books became my way of discovering how Singapore has changed. Interesting to note that Singapore’s government allows itself to be criticised in books, but not on film. You can find books on the political opponents monstered by Lee Kuan Yew in Singapore’s bookstores, but a much-praised film interviewing some of them, To Singapore, with Love, remains banned. The rationale? Ordinary people don’t read books on politics, but they do watch films.

Four books came home with me: three by people who want Singapore to be more open and democratic, and one examining how Singapore got many things right by doing them its own way.

Jeevan Vasagar, a British journalist of Sri Lankan Tamil ancestry, was the Financial Times correspondent in Singapore, and his Lion City: Singapore and the Invention of Modern Asia is an excellent introduction to today’s Singapore. Chua Mui Hoong, a columnist for Singapore’s main paper, the Straits Times, is a wary social critic whose Singapore, Disrupted brings together some of her favourite columns. And Cherian George, once her colleague, has recently published a collection of more substantial essays as Air-conditioned Nation Revisited. (Lee Kuan Yew once famously said that the air conditioner was the greatest twentieth-century invention because it allowed people in the tropics to keep working rather than fall asleep in the heat.)

Within Singapore’s establishment, legal academic and diplomat Tommy Koh is a prominent figure at the liberal reformist end of the spectrum. In editing Fifty Secrets of Singapore’s Success, he celebrates things Singapore has done well: from monetary policy to its national airline, fighting corruption, the Singaporean maths system, parks, public toilets, Changi airport… There’s a long list, all worthy, even if some chapters are superficial.

Singapore has a lot to celebrate. It also has a lot that needs changing. Its rulers have a great appetite for celebrations, but very little appetite for political reform.

Singapore in 2021 is a richer version of Singapore in 1981. Economic success cohabits with political repression. Its economic choices have become more complex as it has become a rich nation, but it remains a stand-out performer. Yet there has been little growth in social and political freedom, where it is a stand-out non-performer, lagging far behind its potential.

Take the economy first. On the usual measure for comparing countries, real GDP per head, Singapore sure is a stand-out: the International Monetary Fund ranks its GDP per head, adjusted for price differences, as the second-highest in the world, behind only Luxembourg, and twice Australia’s.

But that is meaningless. The scale of corporate profit-shifting means tax havens now dominate the top of that IMF ranking — and Singapore is one of them. Comparisons of household consumption per head, though imperfect, are a better measure of real living standards.

On the World Bank’s measure, Singapore in 2020 enjoyed the seventh-highest consumption of goods and services per head of any country, in real terms, behind the United States (first) and just ahead of Australia (ninth). I’d take that with a grain of salt too, but there is no question that what was once an impoverished colony has become a rich country, and is on track to become one of the richest.

The title of an old book on how Singapore did it, Strategic Pragmatism, sums it up well. Rather than follow the precepts of eighteenth-century economic liberalism, Singapore has carved out its own way, testing what works and designing its own solutions. Taxes are low, but as Vasagar puts it, whereas in Hong Kong the tycoons used to dictate to the government, “it is the government that is supreme in Singapore.” Through its investment arm, Temasek Holdings, it is the major shareholder in a third of the companies on Singapore’s Straits Times index. And its reach is everywhere.

You want to buy a home? Well, the vast majority of Singapore’s housing is owned by the government and simply leased out to buyers. You can buy a home, but only for the remaining length of its ninety-nine-year lease, and then you have to surrender it to the government. (At least that’s the official line: it will be interesting to see whether they stick to it when the crunch comes.)

Singapore has 5.5 million people on an island of just 729 square kilometres, so 95 per cent of homes are apartments. If you want to buy one, you need to check first that doing so would not disturb the racial balance of the apartment complex. Apart from its worker dormitories for those it calls “non-residents” (we’ll come to them), Singapore enforces a racial mix in every block, to break down racial stereotypes and prevent ghettos forming.

You want to buy a car? Well, you’ll have to bid for a licence to own one. That alone will set you back around $50,000 (the Singapore dollar currently is virtually on par with the Aussie) because the government enforces a quota on car ownership. That effectively means only the well-off can own a car. Again, it’s for good reasons: roads already occupy too much of Singapore’s limited space, so the government has invested to create world-class train and bus services instead.

You want to go on strike for a wage rise? Think again: Vasagar tells us the last legal strike was in 1986. Singapore’s core economic strategy has been to make itself a haven for foreign investment. It has tailored its economic policies to make itself irresistibly attractive as an operational centre for global players. Allowing strikes, or rapid wage rises, doesn’t fit with that goal.

It is true that Singapore practises small government in one sense: there are few welfare payments — no pensions, no unemployment benefits — and healthcare is basically user-pays unless you run into really big hospital bills.

But the government can avoid those costs because it requires workers to put 20 per cent of their modest salaries into the government-run Central Provident Fund. You can dip into those savings, on certain conditions, to buy a home or pay hospital bills. The system also originally served a second goal by providing the government with cheap funds for its large infrastructure agenda, but gradually the focus has shifted more towards meeting the saver’s needs.

The common thread in all of this is that government plays the central role. Since it was divorced by Malaysia in 1965, Singapore’s government has established or expanded centralised systems to deal with issue after issue. It runs one of the world’s most activist industry policies: it decides which industries it wants and what it will offer to get them, and then pursues the big global players to get them to locate some of their operations in Singapore.

Initially, the focus was on establishing Singapore as a base for manufactured exports, and that remains a core part of its policy. Singapore’s manufacturing output has swollen threefold since the turn of the century, whereas Australia’s has grown barely at all. Singapore remains a big producer of semiconductors and other IT and electronics goods, a huge centre of oil refining and petrochemicals, and a growing global pharmaceuticals hub. Manufacturing still comprises 20 per cent of Singapore’s economy, whereas it has shrunk to just 6 per cent of Australia’s.

But over time, Singapore’s focus has expanded to logistics and services. Having inherited a great seaport from the British, Singapore has kept investing heavily to expand and modernise the port to make it the best in the world. It applied the same attitude in reclaiming coastal land at Changi, building a new airport and constantly upgrading it to keep it the world’s best.

The books by Vasagar and Koh explain well how its leaders realised in the mid 1980s that manufacturing alone was not enough; Singapore must equally become a leader in service industries. Its traditional role as the commercial hub of Southeast Asia was expanded to make it one of the logistics centres of the world. It wooed global service companies as keenly as it had sought manufacturers, offering tax holidays and permanently low taxes if they set up regional operations centres in Singapore. (That’s the policy that led to its becoming a tax haven.) And it set out to make Singapore the financial centre of Asia.

Another crucial decision Singapore made around that time was to change the goal and methods of its monetary policy. At a time when countries like Australia were allowing financial markets to set the value of their currency, and telling their central banks to target low inflation, Singapore went in the opposite direction. It decided its monetary policy should aim to provide stable exchange rates, reducing the risks for industries competing in global markets. The Monetary Authority of Singapore built up a large war chest it could use to prevent the markets taking the dollar outside its comfort zone.

It is the polar opposite of the policy successive Australian governments and the Reserve Bank adopted when they allowed the mining booms to send the Aussie dollar skyrocketing, at the cost of firms competing in global markets. From the start of the first mining boom in 2004, Australia’s manufacturing output per head slumped by an astonishing 25 per cent over the next fourteen years, as the inflated dollar made otherwise viable firms uncompetitive.

Even now, on the IMF’s estimates, Australia’s price level is the seventh-highest in the world, comparable to prices in Scandinavia and remote Pacific islands. By contrast, Singapore’s dollar has been held at levels that keep down production costs. The US dollar buys 83 per cent more goods and services in Singapore than it does in Australia.

This did not happen by accident. The best chapters in Koh’s book — including Peter Wilson’s chapter on monetary policy, and Gopinath Menon’s on transport policy — provide a quick sketch of the choices policymakers faced, and why they chose the policies they did. I wish the book had fewer, longer chapters that might have explained the same process in other areas; some former policymakers who contributed chapters used their pages simply to pat themselves on the back.

Vasagar sums up lessons from Singapore’s success that we should never forget. “Singapore works because it appoints diligent and talented people to positions of leadership,” he concluded. “The system roots out corruption. Its leaders are unabashed about stealing effective ideas from elsewhere… There is a strong emphasis on managerial ability rather than effectiveness at campaigning or winning battles of ideas.”

And that is the link between Singapore’s advanced economy and its retarded democracy. Its ministers don’t need to worry about campaigning or trying to win the popular argument, because the system makes them electorally invulnerable. And so, as Lee Kuan Yew put it memorably in his 1986 National Day speech, “We decide what is right — never mind what the people think.”

The common theme of the books by Vasagar, George and Chua is that Singapore’s leaders need to cast off that mindset. The rule of Goh Chok Tong and Lee Hsien Loong has softened the way Singapore’s authoritarianism is applied, but without changing its fundamental role. The state is just as powerful as it was twenty years ago. The people are just as powerless.

Every institution with power in Singapore is effectively an arm of the government. There is no free press: the media is either government-owned or controlled by the government’s right to appoint its boards, and the opposition has little access to it. There is no independent judiciary; no minister has ever lost a defamation case in Singapore’s courts. There are no trade unions independent of government. The relatively few NGOs must operate warily to avoid incurring the wrath of the ministers and officials whose decisions they comment on.

There is no right of assembly: to hold a meeting of five or more people requires a permit from the police. There is no ombudsman, no charter of human rights, no freedom of information legislation. Singapore has world-class engineering infrastructure, but little of the infrastructure of democracy as we know it.

It does have free elections. But even they are held on boundaries drawn up by the government to maximise its chances, including a strange system of dividing most of the city into seventeen winner-take-all wards electing four or five candidates on a single ticket. (That partly backfired at last year’s election when the Workers’ Party won two of the wards, and opposition slates came close in two others.) And those elections are held in an environment in which the government has all the power, and has shown ruthlessness in using it to maintain its control.

Cherian George cites a telling example. In Europe, Australia and elsewhere, governments have been grappling with ways to deal with fake news and baseless slanders on the internet. Singapore has acted — but solely to give the government the right to require Facebook and the rest either to post its response to any online posts it considers inaccurate alongside the original comment, or to remove the posts. Only the government is protected against fake news, and only it can decide what is fake news.

Initially, the government allowed debate on the fake-news legislation. But when it appeared it was losing the argument — with even the publishers of the Straits Times urging that an independent regulator rule on disputes — it cracked down. The debate suddenly ended, critics were shut out of the media, and their patriotism was questioned by government MPs. George adds: “Such nationalist dog whistles unleashed troll attacks, in a style reminiscent of… populist movements overseas.”

Why doesn’t the government trust Singaporeans with the freedoms people have in countries like Taiwan, South Korea, Indonesia and the democracies of Europe, America and the South Pacific? George argues that most Singaporeans would re-elect it anyway, because they think it’s mostly doing a good job. Perhaps it is the lack of crisis that explains its refusal to open up: since it likes having all the power, and faces no threat of defeat, why bother with popular reforms?

George cites another example: the succession. Lee Hsien Loong will turn seventy in February, and has had serious health issues. In the previous parliament, one of his two deputy prime ministers was a widely admired Tamil economist-turned-politician, Tharman Shanmugaratnam. Chosen by his global peers to chair the ministerial committee overseeing the International Monetary Fund from 2011 to 2015, Tharman was seen by Singaporeans as a progressive reformer. A poll in 2016 found 69 per cent of Singaporeans would support him to be prime minister, twice as much as any other candidate. Why not do so?

“Tharman is uniquely equipped to guide Singapore,” George writes. “He is a world-class policy wonk who also happens to be extremely popular. He has won over the public, not with empty rhetoric or simplistic solutions, but through his palpable sincerity in wanting to build a country where people are treated with dignity and (their needs met), whether those needs are economic or more intangible.”

But to appoint a Tamil as prime minister of a predominantly Chinese country? It was too much for the People’s Action Party. In late 2018, Lee announced that Tharman, then just sixty-one, would step down to become senior minister, and the new deputy prime minister — effectively the heir apparent — would be fellow minister Heng Swee Keat. Too honest for his own good, Heng later told a university forum that the older generation was not ready for a non-Chinese prime minister.

It was a near-fatal misreading of a proudly multiracial people. At the 2020 election, Heng almost lost his seat, while Tharman’s slate won the highest vote in the country. A year later, Heng stepped down, and the succession is now unclear. Another opportunity to move forward was lost.

Let’s close by noting three interrelated issues confronting Singapore’s society and government.

The first is common to all the new rich countries of Asia: South Korea, Taiwan, Hong Kong and even China. The workaholic culture and rising expectations that have fostered their economic success have also seriously eroded their fertility rate — so much that Chinese Singaporean women now give birth at the rate of just 0.94 babies over their lifetimes, and Indian Singaporeans 0.96. (Malay Singaporeans, who tend to be less well-off, have a far higher fertility rate of 1.82.)

The overall fertility rate of 1.10 is barely half the rate needed for zero population growth. It comes despite a hefty baby bonus: $8000 for the first two children of a marriage, $10,000 for subsequent ones. Falling fertility is a problem in Australia too, but at least our rate is 1.58 — a record low, but far higher than in any of our rich neighbours.

Doubtless other factors contribute. Singapore is far from having gender equality, low wages surely deter some would-be parents, and politicians and society frown on anyone having children outside marriage. But when women feel forced to choose between having a career and having children, increasingly they are giving priority to their career.

For Singapore, the risk of a falling population is exacerbated by a dirty little secret: the city hosts a vast underclass of “non-resident” workers on temporary visas. Some are in well-paid jobs (and resented by locals for that), but many others do dangerous or low-status jobs as construction labourers, factory hands and domestic servants.

There are about 1.5 million of them among Singapore’s 5.5 million people, more than a quarter of the population. But that was all I could find about them in the statistics. These workers reside in Singapore — the labouring men and factory workers often in crowded dormitories that have become an ideal environment for spreading Covid-19 — but they have no path to permanent residency and are expected to return to their home country when the job ends.

Vasagar tells us these temporary workers, mostly men from China, India and Bangladesh, and women from Indonesia and the Philippines, make up three-quarters of the construction workforce that builds Singapore’s world-class transport infrastructure and apartment towers, and most of the workers on its factory lines: relatively low-paid jobs that Singaporeans don’t want. The migrants the locals resent are the skilled ones who take the well-paid jobs they do want.

But as Chua Mui Hoong points out in Singapore, Disrupted, even the low-income workers put downward pressure on wages for locals in the lower half of the income range. She too wants a more democratic Singapore, and keeps trying to persuade ministers that giving the people more power would not see the country collapse. But she also crusades against what she sees as rising inequality in a once-egalitarian land where almost everyone lived in government-built flats, relied on public transport, sent their kids to the local school and had similar incomes.

That is not the Singapore of today. The government’s latest statistics show median wages for full-time workers range from $14,167 a month (including superannuation) for in-house legal counsel down to $2000 for factory hands and shop assistants, $1535 for baristas, $1400 for waiters and $1300 for office cleaners and the assistants at food and drink stalls. And that’s monthly pay, for full-time work, with 20 per cent of it going straight to your super account. It’s not much to live on.

Australia has its versions of these problems: the workaholic culture, the plunging birth rate, a policy of importing temporary workers rather than raising wages, and low incomes in many jobs. Singapore has excelled in devising solutions to economic problems. But political stagnation may be impeding its ability to solve social problems requiring subtle and flexible minds. •

Postscript: The prime ministerial succession became clearer in June 2022 when Lawrence Wong — profiled for Inside Story by Michael Barr — was named as Lee Hsien Loong’s successor.