What’s Happening in the World: Singapore

By Dan Napa

Last November 17 to 19, 2021, the Harvard Business School Club of the Philippines together with Harvard Club of the Philippines Global and HBS OPM and John Clements Consultants, Inc., hosted a webinar series entitled “What’s Happening in the World”. It was a series of online case studies discussion featuring Professor Dick Vietor and Professor Kristin Fabbe, focusing on the latest case studies on key economies: Singapore, China, India, Australia, Japan, Philippines, and the United States of America.

Singapore has long been regarded to be one of the most advanced economies in the Southeast Asian region. It stands head and shoulders above the rest of its counterparts as being one of the most advanced when it comes to standard of living, at par with first-world countries from Europe and North America. However, much like the rest of ASEAN, this was not the case post-World War II. Professor Vietor started off the case discussion by showing a photo of Prime Minister Lee Kuan Yew from the 1950s, waiting in line at a hand-pump water well. This image set the stage to show how poor Singapore started after becoming independent from its colonial rulers: the British, the Japanese, and eventually the Malaysians in 1965.

The growth of Singapore was spurred from these series of events, and the newly independent government focused its attention on the following pursuits: security, housing, and job creation. These priorities led to the steady growth of the country. Understanding the circumstances of Singapore and how it was able to develop at such a fast pace was discussed in detail by Prof. Vietor.

Here are my key takeaways from this session:

• Singapore had no colonial hang-ups. Despite having been colonized for several hundred years, the country was quick to open its borders to international trade. Being a very small island, it had very little resources and had to rely on outside investments to grow. The country started off by becoming a manufacturing hub which led to the construction of a reclamation area built specifically for manufacturing facilities. Singapore also invested heavily in its infrastructure, realizing its position in the ASEAN region, and construction of cargo terminals for ships coming in and out of Asia was vital to its positioning as a hub for shipping and trade.

• Singapore ranks 3rd in the world when it comes to the corruption perception index. The government of Singapore was established through the leadership of Lee Kuan Yew when it was emancipated from Malaysia. It has been said that the best and brightest in Singapore end up working for the government since it values competency and integrity as the foremost requirements for its civil servants. Government employees in Singapore receive salaries competitive to the private sector and are among the best in their respective fields, may it be in finance, trade, labor, security, etc.
• Key institutions in Singapore were vital in the rise to prominence of the country. The Central Provident Fund Board, Educational Development Board, Housing Development Board, Monetary Authority of Singapore, Temasek, Standard Industrial Classification, and Agency for Science and Technology and Research — these institutions reflected the priorities of the government, which in turn started the ball rolling for the marginal gains that led to its growth.

• The labor force of Singapore was quick to climb the value chain in terms of its competencies. What started out as a country that focused on manufacturing quickly became a powerhouse in trade and finance in a span of 50 years. The government prioritized the education of its youth and even created programs with industry partners to help upskill the labor force. While this was a great strategy, it also came at the cost of having to import labor for blue-collar jobs.

• Singapore’s trade surplus is high. Despite the ongoing global crisis, the country can continue to invest in the global market and can continue to support the growing interest of foreign companies to invest in the country. The surplus also allows Singapore to protect its currency against devaluation. For years, even before COVID-19, the exchange rate ratio to US dollar remains at 1.3S$ to 1 USD. The most challenging issue for Singapore is how to balance its relationship with two opposing global partners: China on one side, being its biggest export market, and the US as its political ally.

These factors came together well for Singapore: its history, geography, and culture all helped make Singapore into what it is now. While western countries may look at the strict laws of the country, the reality is that the people are more than happy to comply. Discipline and love for their country gave Singaporeans a sense of duty to uphold their values. What remains to be seen is if this kind of heavy-handed, government-guided rule will be sustainable in the age of social media and globalization.

The Philippines stands to learn key lessons from Singapore. First and foremost, the opening of the market to Foreign Direct Investment. Currently, the Philippines ranks last in ASEAN when it comes to FDIs and it all boils down to the burdensome requirements for companies to invest in the country. Ownership laws, ease of doing business, as well as rampant corruption are some areas that need to be improved to make investing in the Philippines more attractive to foreign companies.

Second, investing in education to create a more competitive labor force. While the Philippines has one of the highest literacy rates, the skills being taught are geared more towards the services sector. Creating an ecosystem which prioritizes STEM learning and higher education (PhD, Masters) for science and technology will help create a better opportunity for getting higher value work into the country, such as R&D in the manufacturing sector.

Lastly, eradicating corruption, which is the everlasting scourge of the country. It has long been said that the Philippines is not a poor country; it is a rich country being run by corrupt politicians. 2022 is a banner year for the country and educating the voting population on electing competent individuals rather than personalities will be key in rising out of the rut that we are in.

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About the author:

Dan is a Business Management graduate of the Ateneo de Manila University. His interests are shipping, sports, radio, game development, and animation industries. When he’s not working, Dan can be seen spending time on his bike. He loves riding anything with two wheels and often goes on adventures around the city or in the neighboring mountains surrounding Manila. His love for bikes is only surpassed by his love for food; so far, food has been winning.