Monday, December 18, 2006

Post No. 95b: Singapore: Place or Nation? -- A Response

First and foremost, I must say that, and I suppose most of you all would agree with me, the talk by Professor Linda Lim was a most insightful and thought-provoking one which discussed several important issues, ranging from Singapore’s model of economic development to the issue of foreign talent in Singapore to the national identity of Singapore. However, though the talk was an insightful & thought-provoking one that contained several elements of truth within it, it seems to me that Professor Lim may perhaps have overstated her case for some aspects of her discussion and neglected some other crucial aspects relevant to the issues being discussed. With this in mind, this essay would not only be a personal response to the issues discussed in Professor Lim’s talk but also an attempt to perhaps highlight the points which Professor Lim may have overlooked in her talk.

Indeed, as most of us all would surely know and as Professor Lim has also pointed out in her talk, Singapore was perhaps never an independent and sovereign entity before 1965. For most of its history, Singapore has been, more often than not, governed as part of a larger entity, be it the Johore Sultanate, the British Colonial Empire or the Malaysian Federation. Coinciding with this, Singapore has, for most of its history, lacked what most of us all would understand as a “national economy”. Instead, Singapore’s economy had been largely dependent on foreign inputs & capital and, starting from its days as a free port for entrepot trade, the main economic activity found here was trade & commerce.

In fact, it may be observed that even during the 1950s and early 1960s when Singapore, being under the influence of then-fashionable economic nationalism and dependency theory, adopted a policy of Import Substitution Industrialisation (ISI), in which local industries are protected from the competition caused by the influx of foreign imports through the imposition of tariffs on imports so as to allow them to develop economies of scale, this policy was, in part, also geared towards preparing for a common market after a merger with Malaya.

Then, as we all know, this common market never happened and by 1965, Singapore suddenly found itself, separating from Malaysia, becoming an independent country. Thus, faced with circumstances which were extremely dire (e.g. neighbouring countries which focused more on their own economic development, confrontation with Indonesia, high rates of unemployment, a large & growing population, the announcement by the British in 1968 that they would be withdrawing their armed forces from Singapore, a low level of industrialisation, lack of natural resources), the only viable option for Singapore, at that time, was to abandon its previous policy of ISI and to embark on a policy of Export-Oriented Industrialisation, to appeal to foreign investors, mainly in the form of multinational corporations, to set up businesses in Singapore while the state began to establish state enterprises such as Jurong Town Corporation and Neptune Orient Lines.

And, as pointed out by Professor Lim, this economic policy of favouring foreign investors and state enterprises, while allowing the rapid industrialisation of Singapore’s economy, also contributed to the marginalisation and crowding out of local businessmen.

However, while there may perhaps be an element of truth in Professor Lim’s assertion that local businessmen were marginalised due to political motivations, it can be observed that a more important motivation was that local businessmen of that time, who mainly operated in trade & commerce, lacked the necessary level of expertise, capital & technology and the necessary type of management model, considering that most of them were still operating on a family business or business tycoon model, to move Singapore’s economy towards industrialisation. Thus, with this in mind, Singapore, rightly or wrongly, decided to welcome foreign investors and to establish state enterprises to help jumpstart the industrialisation of Singapore’s economy.

In addition, it should be noted that Singapore’s policy towards local businesses, in the form of Small & Medium Enterprises (SMEs), may perhaps be undergoing a process of gradual change, in that the government is perhaps becoming more supportive of them and more willing to take them on as partners to state enterprises. For example, if I’m not wrong, SPRING Singapore has in place a few programmes that seek to provide funding and other forms of support for local SMEs.

Also, it would seem to me that Professor Lim’s assertion that there is perhaps a lack of “national champion” enterprises in Singapore is perhaps somewhat fallacious. I mean, just look at Singapore International Airlines (SIA). Yes, it may have started out as a state enterprise but, nevertheless, it is still a Singaporean company. Why should SIA be any less of a “national champion” just because it started out as a state enterprise? Other successful local companies which, in my opinion, can perhaps be entitled to the epithet of “national champion” would be Creative Technologies and Hyflux. And we too need to see that local SMEs, such Bee Cheng Hiang (“美珍香”) [you all cannot imagine how surprised I was to find a Bee Cheng Hiang outlet in Shanghai during my recent trip to China] and Ya Kun, have also ventured overseas.

Furthermore, though I may perhaps be wrong about this but it would seems to me that the Singaporean state is perhaps “retreating” from the local economy somewhat, in that it has been selling off and privatising various state enterprises and/or subsidiaries of them. Of course, it cannot be denied that, despite this possible “retreat”, the Singaporean state perhaps still remain as a dominant player & force in the local economy.

Yet, putting aside the economy theory of laissez-faire economics for the moment, let us consider whether, in the globalised economy of today, the dominance of the state in a country’s economy is really such a bad thing that most of us may have perceived it as. Well, it would seems to me that an economy, which is strongly backed and/or dominated by a strong state, may have an additional edge in being able to enter into foreign markets and to ward off foreign competition. Thus, in this sense, the dominant role played by the Singaporean state in the local economy may not be all that bad a thing.

However, of course, on the other hand, the strong presence of the state in a country’s economy may also pose problems when companies of that country, especially those that are linked to the state, attempt to invest in and/or buy over foreign companies. In such situations, economic nationalism may rear its ugly head, causing citizens of a country to protest against the involvement of a foreign company in their economy, on the grounds that the latter is an instrument of the foreign state to gain control and/or influence over their country’s economy. This can be clearly seen in the ongoing Temasek Holdings-Shin Corp saga, in which not only the legality if the former’s investment is brought into question but also its strong links to the Singaporean state, despite the repeated assurances by the Singaporean state that Temasek Holdings’ decision to invest in Shin Corp is purely based on commercial considerations and not political considerations. Hence, it remains debatable whether the strong presence of the Singaporean state in the local economy is a plus or minus for the latter.

It should also be noted that while the involvement of Singaporeans in the economic development of Singapore is perhaps indeed a crucial ingredient in the project of creating a sense of ownership in Singaporeans, it is and cannot be the only ingredient. Yes, while successful economic development was and perhaps still is an important part in Singapore’s nation-building process, there exists other critical aspects to this process e.g. political participation (which, I admit, remains debatable as to whether this is enough in Singapore). Also, it need to be observed that though it may perhaps be true that ordinary Singaporeans, according to Professor Lim, are not involved in the economic development of Singapore, the Singaporean state has perhaps made a conscious effort to ensure dividends arising from Singapore’s economic prosperity are received by Singaporeans. Of course, there are those who will argue that this distribution of economic dividends has not been one which is equitable in nature.

Moving on, I am in agreement with Professor Lim on her point that the Singaporean state tend to involve itself in the “picking of winners” (a process which I think resembles how students “spot” questions for their exams), in which certain sectors of the economy are identified as sectors which have huge potential for development. The state will then invest large amount of resources into supporting, promoting and developing these sectors in Singapore. Apt examples of this would be Singapore’s emphasis on IT in the 1990s and its current emphasis on the life sciences and tourism (just think about the IRs, the proposed development of the Southern Islands into a tourism hotspot and the development of the Marina area).

This approach by the Singaporean state of “picking winners” has received much criticism. And the main criticism, similar to that espoused by Professor Lim, is that given the lack of success in the previous economic sectors that were picked by the state as “winners”, the state should instead allow market forces to pick the “winners”. Another criticism would be that due to aggressive promotion of certain economic sectors by the state, many Singaporeans, including students, invested their effort, time & money in these economic sectors, thinking that they are “boom” sectors, only to find their prospects not all that good when these sectors did not turn out to be “booming”. Indeed, criticism of such a nature have already been made against the government’s recent “bet” on life sciences, especially after this article came out in the newspapers recently.

Yet, looking at this issue from another perspective, we may perhaps observe that this “picking of winners” is something done by the government in order to pre-emptively identify economic sectors which Singapore can do well in, so as to maintain the competitive edge of the Singaporean economy. In my opinion, this “picking of winners” resembles how entrepreneurs, after studying the economic trends, decide to invest in a certain business. These entrepreneurs know very well that there is no 100% certainty that their investment would pay off and that there will always be a certain level of risk involved in their decision to invest in a certain business. In the end, we need to see that as in gambling, investing and in Life, we win some and we lose some. Hopefully, Singapore’s “bet” on the life sciences would turn out to be a “winning bet” in the long run.

Next, I would like to look at the issue of foreign talent in Singapore. Well, I do agree with Professor Lim that there is a perception amongst most ordinary Singaporeans that foreign talent receive better treatment from the state and that they themselves are somewhat relegated to becoming “second class citizens” in their own country. Yet, at the same time, it seems to me that, with its recent announcements to provide “preferential treatment” to Singaporeans in terms of medical subsidies and education fess, the government has recognised that there is such a common perception amongst Singaporeans and is moving to counter such a perception. Of course, it remains to be seen whether such “preferential treatment” would be enough to overcome such a perception. Or would it be a case of too little and too late?

In addition, I would like also to discuss the issue of the government’s attempt to root Singaporeans to Singapore through providing them with greater chances of political participation. Well, in my pinion, the Singaporean government seems to have realised, since the 1990s, that, with changing attitudes amongst Singaporeans, it can no longer only solely rely on the promise of economic goods to gain the support of Singaporeans. In fact, it seems to me that, with the increased volatility and uncertainty of the globalised economy, the Singaporean government has realised that it can no longer, with absolute certainty, provide economic goods to Singaporeans as a means of winning their support. Thus, in order to acquire a more secure base of support and to perhaps combat political apathy amongst Singaporeans, the Singaporean government seems to be moving away from the model of transactional leadership which it has long employed to perhaps a model of promoting greater political participation amongst Singaporeans. Of course, this move does not mean that the Singaporean government is totally abandoning transactional leadership nor does it mean that it is opening up the local sphere of politics to such an extent in which their dominance is undermined. Instead, we would observe that the government, wanting to have its cake and eat it, is perhaps only promoting a form of “active citizenry” which is non-confrontational, non-political and limited to certain issues. It remains to be seen whether this would be enough or would it only whet the appetite of Singaporeans for greater political participation in the long run.

In conclusion, though I may be misreading Professor Lim’s position but it seems to me that her diagnosis of whether Singapore is a place or nation is perhaps too overly pessimistic. Yes, I concede that perhaps Singapore is now not yet a nation. Yet, the more important question, I think, would be: will it become one in the future? Well, I have no certain answer to that, considering what Mr. Kishore Mahbubani (Dean of the Lee Kuan Yew School of Public Policy) have said about the short lifespan of city-states throughout history in a recent documentary on Singapore, but as a Singaporean, I hope that it will become a nation, not merely a place. To end off, allow me to quote what Dr. Catherine Lim has recently said in an address at the Institute of Southeast Asian Studies on 1/12/2006: “Singapore will then no longer be just a niche nation, a boutique model, where visitors come to learn how to build science centres, prevent pollution, improve the public transportation system, improve the teaching of mathematics, etc. It will no longer be described as just efficient, innovative, progressive, etc, but as great”.

1 comment:

Anonymous said...


you are brimming with optimism. i don't even know if Singapore is a home. like you noted, with the government's practice of scouting prospective areas, and the win some, lose some thing...

well, even if they made educated guesses - don't you get the feeling that Singapore is Singapore Inc.?

Yes, Singapore Inc., another subsidiary of Temasek Holdings! Heh. Sorry for being such a cynic aye.

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