COMMENT: Singapore wrestles with the constraints of success
Bloomberg
Fri, 18 August 2023 at 1:52 am GMT+1·6-min read
Residential buildings in Singapore, on Tuesday, Jan. 3, 2023. Singapore's recovery held up in 2022, with a relatively strong year-end performance shoring up the economy ahead of an expected global slowdown this year. (Photo: Bloomberg)
By Daniel Moss
(Bloomberg Opinion) — How much talk about reinvention does one of the world’s most successful, if tiny, economies have to listen to? Quite a bit, judging by a high-powered conference in Singapore this week.
Convened to mark the centenary of founding prime minister Lee Kuan Yew’s birth and canvas ideas for at least part of the next 100 years, the Reinventing Destiny gathering was a mix of back-patting and must-do-better. Amid generous helpings of quotes from, and anecdotes about, the city-state’s towering historical figure was a sobering message: As arduous as Singapore’s first six decades as a republic have been, the next 60 years are replete with huge challenges. Some of them are very different, but no less existential, than those faced by Lee.
The world is decidedly less keen on globalisation. Instead of having the abundant labour that drove a boom in the 1970s and 1980s, Singapore faces headcount shortages and an electorate with reservations about embracing immigration too warmly. US-China tensions are far more consequential for Asia than the US-Soviet rivalry that dominated much of LKY’s era. Rates of economic growth in Singapore are no longer stratospheric; they are more akin to advanced economies. And China, the region’s big growth engine, has stumbled.
Beijing’s current woes, among them deflation and waning domestic demand, received perfunctory attention. Too little time was devoted to what the fizzled re-opening there means for Singapore. Rather than being a boon to the rest of Asia, China is weighing on it. On Tuesday, the People’s Bank of China unexpectedly cut key interest rates and reports showed slowing production, consumer spending and a collapse in property investment.
And there is the less tangible but critical question of whether what worked in the past is still fit-for-purpose. It’s easier to play catch-up than retain a lead. In the former, there is scope for experimentation, for casting around to find niches which work and for breaking a few moulds along the way. The goal is also clearly in sight: attract investment, educate the workforce, develop health care, all of which are means to basic economic survival. Then comes prosperity. But the maintenance of high prosperity — as opposed to the drive to attain it — can be a trickier task.
In Singapore’s early years, risk-taking was fundamental to the entire enterprise. It would be unfortunate if, having made it to first of the class, Singapore lost the ability, or willingness, to roll the dice. Acknowledging that he was speaking with more tact than he usually manages, former US Treasury Secretary Larry Summers — a fan of LKY — emphasised the primacy of a culture of creativity. “I wonder how a person with the mixture of traits that Elon Musk has, or that Steve Jobs had, would function and would or would not be permitted to flourish in the Singaporean system,” he mused. “The optimal amount of rule breaking in a creative society is substantially greater than zero.”
Source: Bloomberg
Some of this may be the price of success: In my four years here, I have sat through lots of conferences and seminars dwelling on creativity — or lack thereof. Being aware of the challenge is one thing, taking big leaps to address it is another. Is the drive still there, the fire in the stomach, Jessica Tan, the Singaporean who is co-chief executive officer of Ping An Insurance Group, wondered. Citing friends running businesses, Tan relayed anecdotes bemoaning Singaporeans’ tardiness when it came to return-to-office after Covid.
Still on people, or the lack of them: immigration. The preparedness to woo the best and brightest for key jobs in tech, finance, aviation and shipping has been vital. Just as critical are the legions of workers from South Asia, Malaysia, Indonesia and scores of other places. They work on construction sites, in bars, kitchens, drive busses, deliver mail and nurse the sick, not to mention the live-in maids and nannies who are staples of middle-class life in Singapore.
With a dwindling birthrate and greying population, Singapore has little choice but to import labour. I would rate this as one of its biggest hurdles. The government is encouraging couples to get busy, but there are limits to the state’s capacity to churn out more kids. Again, this is a by-product of economic progress and the country is far from alone. Japan, South Korea, Thailand, China, Hong Kong and Malaysia share similar problems, although of different magnitude. Worryingly, one of the great reservoirs of people, the Philippines, is heading in the same direction.
Singapore’s total fertility rate, the average number of children a woman can expect to bear in her lifetime, fell to a record 1.05 last year. (A bit more than 2 is considered the level at which a population can naturally replenish itself.) The country has grasped the predicament. “If we carry on this way, we will be extinct,” warned Cheong Koon Hean, chair of the Lee Kuan Yew Centre for Innovative Cities.
Immigration has become a flashpoint in domestic politics. Singapore’s population has grown significantly, to about 5.6 million last year from 4 million in 2000. Roughly a third, including permanent residents, are foreigners. Ever since a big swing against the ruling People’s Action Party in 2011 that was attributed to backlash against immigration, leaders have been sensitive to voter concerns about who comes in, where they are from, and how long they stay. Tensions also built during the pandemic and the deep recession that Covid wrought in 2020.
Lawrence Wong, the finance minister who is likely to be Singapore’s next prime minister, conceded the difficulties threading this most delicate of needles. At the conference, he mixed cold economic reality with the implicit demands of a more competitive electoral landscape. “If we are not able to bring in immigrants to top up the population then we are in structural decline, and eventually the population will decline, the workforce will decline and Singapore will decline,” Wong said. “At the end of the day, the numbers are constrained by how much we are able to integrate the new arrivals.”
These are first-world challenges. I’m still not sure what comes next: More of the same, admittedly an enriching formula, with the odd tweak, or something new required by a different mix of circumstances? Whatever the answer, there’s bound to be a useful LKY quote. I hope to be around for it.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously, he was executive editor of Bloomberg News for economics.
