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BusinessWhat drives Singapore

What drives Singapore

Singapore is a true underdog of the developing world; and it has pulled of one of the most remarkable development projects of all time. Just inside 50 years, this once vulnerable and poor nation made the stride of the century to find itself in league with world’s most advanced countries. An economic transformation from that of a third world country to a first world country is no easy feat for a small city-state like Singapore, Writes Asrat Seyoum.

They say need is the mother of all inventions. Well if there is one place this popular adage really comes to life is Singapore. This small city-state formed on a 23 km by 42km island in the Asian Pacific Region is truly challenged by environmental limitations. To begin with its total landmass is barely 720 (71,900 ha), smaller than a sizable commercial farmland in Ethiopia. This poses a serious problem to accommodate its population of 5.3 million people, both in terms of residence and business activities.

Singapore has not been blessed with an underground resources either; with no prospect of oil and gas or fresh water resources. Its limited domestic market coupled with a very competitive productive workforce in the region has made it difficult for the country to compete in the investment market. On top of that, at the time when it gained its independence from the British colonial rule in early 1960s; Singapore was home to poor and deeply divided ethnic groups: Chinese, Malays and Indians.

This small labor-intensive economy generated less than USD one billion and had per capita income of less than USD 500. Unemployment and housing shortages were among some of the difficult challenges the government of the then young Singapore had to address. The majority of its population lived in squatter settlements without any infrastructure in place.

In fact, this true underdog of the developing world has pulled of one of the most remarkable development projects of all time. Just inside 50 years, this once vulnerable and poor nation made the stride of the century to find itself in league with world’s most advanced countries. An economic transformation from that of a third world country to a first world is no easy feat for a small city-state like Singapore. Today, Singapore is USD 350 billion economy with one of the highest per capita incomes in the world: USD 61,766.

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 “How did you do this?” is the most common questions asked by visitors; and almost every Singaporean admits that Singapore’s rise was predicated on one thing: severe shortage of natural resources and their endeavor to escape that reality.

According to Mohamad Maliki Osman (PhD) senior state minister, Ministry of Defense, Ministry of Foreign Affairs, and Mayor of South East District, Singapore has realized early on that it does not have much by way of resources except its people. We knew that our best bet would be to invest in our people, he said.

Today, Singapore has a top-notch education system which ranks first in the world. And that made everything possible.

Nevertheless, Singapore’s 50-year journey cannot be fully summarized by few good policy choices in education and economic management; rather its political and social evolution over the years is also an integral part of the story.

Upon his return to Singapore, after finishing his studies in the UK, the first Prime Minister of Singapore, Lee KuanYew – best known by the shorthand LKY – who is widely perceived to be the man behind modern Singapore, took on the task of keeping his country together in an increasingly fragile global environment. After establishing the nation’s first independent government; he started to evaluate the geopolitical situation in the ASEAN region and decided that his country would be better off to join its neighboring Malaysia.

After a series of talks on September, 1963, Singapore, Malaya, North Borneo, and Sarawak Crown Colonies formed what came to be known as the Malaysian Federation. LKY actively participated in the Malaysian politics for close to two years but failed to overcome an increasing strife between the central Malaysian government and the self-administration region of Singapore.

Maliki believes that the growing tension between the two due to ethnic inequality and political rivalry has finally resulted in the expulsion of Singapore from the federation. As many records have it, it was a hard reality to swallow for LKY and his peers. Nevertheless, on 1965 Singapore was declared an independent nation; still poor, with limited land area and ethnic division.

LKY’s plan for his country was multifaceted; but the most immediate and pressing problem was to solve the housing and unemployment issues. Some historical records say that these two problems have threatened the very fabric of Singapore’s social order. The new government of independent Singapore started to take action immediately.

In this regard, the government embarked upon massive low-cost housing project and was able to deliver as much as 50,000 homes between 1960 and 1965.This gave rise to one of the largest Asia-based urban, industrial and infrastructure consulting firms with a global presence: Surbana Jurong.

Today, Surbanan Jurong has a footprint in 40 countries around the world, has completed master planning for cities and townships in more than 30 countries, planned over 100 industrial parks around the world and most of all, it has attached its name with one of the seven engineering wonders of the world: the Snowy Mountain hydroelectric scheme.

Seetoh Kum Chun, Vice-president of planning with Surbana Jurong, has lived through it all. With her company’s global profile today, the most crowning achievement for her is the one million houses they designed in Singapore.

“Since the early days of housing development, the focus was to use the fastest and most cost-effective ways to build as many housing as possible till the 70s and 80s, where the focus was on creating a quality living environment that focused on community building and design,” Chun recounts Singapore’s housing Saga.

Slowly, she says, attention was paid to quality and having a total living environment, especially in the 90s. Nevertheless, after 2010, the housing authority’s priority was upgraded to creating a new generation of high density urban housing that is environmentally friendly.

At present, close to 80 percent of Singaporeans live in public housing which they bought through mortgage schemes. Since space is one of the most stringent constraints in Singapore, high-density, high-rise buildings were the chosen model of housing development.

As a matter of fact, some 16 percent of the current Singaporean landmass is a reclaimed from the ocean that surrounds it using sand as the main material of filling. Part of the land used in the development of Marian Bay Sand Hotel, one of the most exotic and swanky hotel resorts in Singapore, boasting a rooftop infinity pool which is the largest in the world, is built in the reclaimed part of central Singapore.

Apart from space, small domestic market is one of most serious limitations Singaporean leaders recognized early on. This gave rise to one of the most open, free market economy in the world. Maliki reflects on this sentiment saying that the biggest threat to Singapore in this day and age is the protectionist tendencies budding in some of the largest global players.

The worst thing for Singapore is impediment to free trade and closed-door polices, Maliki explained, and that is because of the unsustainable domestic markets for an economy size of Singapore. Today, Singapore holds considerable competitive advantage in biomedical sciences, manufacturing and as a global Research and Development (R&D) hub.

Perhaps the most impressive achievement for Singapore is its strategic positioning in Asian Transshipment Hub serving the movement of goods and service to and from the region. As it stands at the moment, 90 percent of the cargo that lands in Singapore both through air and sea does not stay in Singapore.

On air transport, Changi Airport stands as one of the world’s busiest cargo handler today. Serving over 100 airlines, flying over 400 cities and transporting some 62.2 million passengers every year, it stands as one of the most vibrant airports around the world. With dedicated cargo center and airport logistic park complimented by 70 hectares of free trade zone, Changi has the capacity to handle 3 million tons of cargo annually.

Currently, Changi handles over 2.2 million tons of cargo. It operates one of the widest networks in Asia with more than 7,000 flights weekly, of which 280 are cargo freighter flights. It is the only airlines linking 45 cities in the growing South East Asia Region.    

On the other hand, the transshipment business of Singapore is also the most vibrant, handling 33.7 m Teu container volume annually. It is the second busiest port next to Shanghai. Nevertheless, it’s the busiest transshipment port.

Furthermore, Port of Singapore has two main commercial port terminal operators, namely PSA Corporation Limited and Jurong Port. Both ports can accommodate all vessel types including container ships, bulk carries, ro-ro ships, cargo freighters, coasters and lighters.  The Port of Singapore includes terminals located at Tanjong Pagar, Keppel, Brani, PasirPanjang, Sembawang and Jurong. So, how does a small city-state with limited domestic demand, space and resources manage to run such an outward looking open economy? Well, many people say it is simply an economic miracle. But, a closer look at the inner workings of Singapore offers some incites.

For one, Singaporeans are freakishly unified in thought and practice. From low-level factory employee to the top-level management; everybody speaks a similar language: the need to stay competitive in the global business environment and to stay as efficient as humanly possible.

Productivity, efficiency, seamless processes, synergy, technological solution and upgrading are some of the buzzwords in 2018 Singapore. Companies and workers alike are eerily obsessed with improving productivity around-the-clock. Both as a nation and individuals; Singaporeans are highly passionate about staying relevant in the fast changing global business world.

“We have to say relevant; and we had to keep innovating and upgrading!” is a sentiment that is reflected by any ordinary Singaporean. Self-improvement is almost a cultural thing in Singapore. So is obeying the rules. According to locals, Singapore is so strict in enforcing rules and regulations that it is sometimes called the “Fine City”; indicative of some of its stringent laws and the accompanying fines.

According to some visitors, some unusual laws like feeding pigeons in public, walking naked in one’s own home (if curtains are not pulled down), not flushing public toilets, spiting in public and the like could get you in trouble in Singapore.

With all his achievements, LKY was a leader who was criticized for authoritarian tendencies. This aspect of the great LKY is divisive at best for many Singaporeans. Most young people do not deny LKY’s authoritarian approach in the past.However, they seem to have made peace with it thinking that it was a necessary evil to achieve what Singapore has achieved in the space of 50 years. Now, many say, the administration of LKY’s son Prime Minister Lee Hsien Loong is more participatory and gives voice to the people. Yes, still opposition politics is a fringe idea in Singapore.

However, there are few opposition voices in Singapore especially against the high salary the country’s politicians are paid. For instance, the Prime Minister is the highest paid PM in the world with an income of USD 1.7 million a year, four times that of the US presidency and many times that of China.

The fact of the matter is most African nations aspire to emulate the Singapore development model. But, oddly, most of them lack the key derivers Singaporeans had and probably are not willing to sacrifice as the Singaporean did in the past 50 years.  

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