Singapore is not good model for developing country
When Myanmar’s reforming President Thein Sein visited Singapore in January, officials there offered lessons on how to modernize and attract foreign investment. Singapore’s eagerness to court Myanmar’s ruling generals has been a diplomatic feature of the international community’s two decades of trying to crack open the reclusive country.
Now that Asia’s “next economic frontier” has started to open up, Singapore – where Myanmar’s senior generals bank and seek.
hospital treatment – is keen to offer itself as a dazzling example of how to become a first-world economy within a couple of generations.
It’s a siren call that should be resisted, said Rodney King, the Australian author of the controversial book Singapore: Myth and Reality.
“Singapore is not a good development model and not one a developing country should follow. Singapore has basically conned the world about its nation-building achievement,” said King. “It is frightening that they should regard Singapore as a good model to follow.”
Years of robust growth in Singapore were driven initially by waves of foreign capital into the city-state and more recently by the import of foreign workers, who now make up one-third of the population. The government’s jealous husbanding of much of the economy, meanwhile, has rendered impotent much of the nation’s faculty for creative business.
“Its entrepreneurial, innovative capacity is quite small. It’s got a very small local private sector, unlike say South Korea and Taiwan, where there are vigorous entrepreneurial cultures. In Singapore, they don’t really have that,” said King, who spent many years working in the island-state.
It is unlikely that Singapore says this in its diplomatic and commercial outreach to Myanmar. Ashfaqur Rahman, chairman of the Center for Foreign Affairs Studies in Bangladesh, had no doubt what Singapore hopes for when he noted how it shunned the previous Western policy of making a pariah of the ruling junta.
“The basis of this strategy was to gain from a relationship which was essentially economic. Singapore invested heavily in Myanmar and traded with her. It even pushed other [Association of Southeast Asian Nations] members to allow Myanmar to join the regional organization.”
Myanmar citizens, who for decades have been mired in corrupt economic lethargy, are no doubt dazzled by Singapore’s success in turning a former modest British trading hub into a confident modern nation with a per capita income among the highest in the world.
Remarkably an island state with just 1% of Southeast Asia’s population still attracts nearly half of its foreign direct investment. Yet this success has come “at considerable costs in terms of independent development, human rights, freedom, and workers rights”, according to an academic paper published last year.
That part of the economy not in foreign hands is dominated by government-controlled institutions run by the local nomenklatura. Keeping an every present watch is the People’s Action Party (PAP), which has run virtually a one-party state since independence.
“One of the key features of the Singapore model is that the commanding heights of the economy are controlled by the state – directly or indirectly. Burma [Myanmar] had all its state enterprises taken over in 1962 by [the late general] Ne Win, which has just dragged the economy into the ground,” said King.
“If they were going to follow the Singapore model they would be just repeating the mistakes that they have already made. Singapore crushes individual enterprise but [Myanmar] is going to need all the enterprise it can possibly muster to get over 50 years of chronic warfare and political repression.”
King’s criticism might have less sting given Singapore’s wealth were it not also echoed by an increasing number of complaints rising from within the city-state. Indeed, many now question whether the “Singapore model” is still valid. In last year’s general election the ruling party won its lowest share of the vote since independence.
Productivity gains have been notoriously weak for decades, hardly what the casual observer might imagine from a country regularly ranked as one of the most competitive.
The American economist Paul Krugman infuriated Singapore’s founding father Lee Kuan Yew 20 years ago by claiming Singapore’s growth could be explained by more of everything – capital and labor – except efficiency.
Ever since the launch of the “Teamy the Productivity Bee” campaign three decades ago, the government mantra has been to focus on generating greater added value. Despite myriad training initiatives, worker productivity has barely grown by 1% a year in the new millennium.
Growth has been sustained by an inflow of foreigners that has doubled the island’s population since 1980, with foreigners and non-Singapore born citizens now representing three-fifths of the population. “We’ve grown in the last five years by just importing labor,” said Lee Kuan Yew himself in 2010.
The country arguably hasn’t maximized that influx. “They imported all these scientists and technicians from all over the world but the outcome has been fairly modest. These people have found working in a bureaucratic structure quite stifling,” said King. The authorities “spend tons of money on resources but the ambience isn’t there really. They seem to be able to attract talent, but when they get them they can’t operate the way that they want.”
Singapore shone in the headlines again recently when one of Facebook’s founders, Eduardo Saverin, was revealed to have given up his United States passport in favor of residency in Singapore to “invest like crazy.”
Saverin joins an elite of super-rich floating on top of an ordinary public, many of whom struggle to make ends meet in an increasingly expensive city. The bottom half of the population experienced either falling real income, or no gain in income, over most of the last decade.
High inequality levels have combined with falling social mobility, reinforcing the grip of the privileged upper class to the point where even the government recognizes this threatens the social compact.
One of the city-state’s most respected economists, Professor Lim Chong Yah, said in April that the city’s Gini coefficient (a measure of equality) of 0.47 was approaching the “danger level” of 0.5 when typically income inequality starts to tear at a country’s social fabric. He has advocated a “shock” therapy of pay rises for workers and tax penalties for the rich.
King estimates one-fifth of the population lives in poverty as measured by Organization for Economic Cooperation and Development standards. “They have been able to attracts lots of foreign direct investment … at the cost of Singaporean living standards.”
Singapore may now have passed some sort of inflexion point. The first two generations of PAP leaders have faded from the scene – aside of course from the Senior Lee himself – and the younger leaders do not seem to hold the power to cow the population as in the past.
“This has been a country of frightened, intimidated people. In the 1950s and ’60s, Singaporeans were feisty, gung-ho people but Lee and co killed their spirit,” said King.
This past timidity in the face of authority permitted a series of policy mistakes followed by awkward U-turns. One notable quirk came in 1970 when Lee discouraged big families after deciding the population was too high, only years later changing his mind to beg (rather comically) Singaporeans to breed more freely.
Over the years, careful observers have pointed out that Singapore’s “success” owed much to being a small, compact island that made political and social control relatively easy, so enabling it to experiment with robust but effective national development strategies.
By contrast, Myanmar is an infinitely more complicated jigsaw of ethnic, geographic, economic and historic problems in a space that is one-thousand times bigger. “Vast, sprawling countries like Indonesia, (Myanmar) and Thailand … would find such strategies a great deal harder to implement,” said King.
To be sure, Singapore’s founding myth as a mosquito-infested swamp of palm plantations and kampong dwellers in 1965 is a compelling one for underdeveloped countries like Myanmar eager to learn the secrets of rapid enrichment.
Nothing could be further from the truth, however. In 1965, Singapore was one of the most developed cities in Asia in terms of industrial development, living standards and literacy of the population, argues King.
“Singapore’s nation-building success, such as it is, was based on a set of highly favorable circumstances that are unlikely to be found elsewhere,” he said.
Singapore surely must be praised for many things, not least its relatively clean dealings in a region benighted by corruption. But, if King’s assessment is correct, then Myanmar might be wise to examine carefully the advice from an authoritarian state of growing inequality struggling with low productivity and rising social unhappiness.