RH: ROBERT's ALMOST-COMPLETE ARCHIVE OF WORKS..... My other blog is "I came, I saw, I solved it" at http://i-came-i-saw-i-solved-it.blogspot.com/.......... Robert Ho REQUEST FOR STATEMENTS at http://roberthorequestforstatements.blogspot.com/2011/01/robert-ho-request-for-statements.html

Blog Archive


About Me

My photo
My archive of works is at http://i-came-i-saw-i-wrote-it.blogspot.com/

Thursday, February 15, 2007

A second Singapore: Why we succeed and fail

There is another Singapore and it is a failure for precisely the same reasons that the original is said to be a success.

That second Singapore is of course, the China-Singapore Suzhou Industrial Park (SIP). That US$30 billion industrial park was initiated in 1994, with the intention of building a modern, industrial city over 20 years covering 70 square kilometres, a veritable second Singapore. Now, like the ego of Lee Kuan Yew, who brain-childed the project, this has been scaled down to eight square kilometres and US$131 million, with an additional US$65 million in loans. (Read latest about US$8 billion price tag). Rents from the 100-odd tenants don't even cover costs. In short, the SIP is a failure.

But when Lee Kuan Yew initiated the project, he had everything he needed to succeed. Black and white agreements from Beijing giving him the power to run things as he chose. All the land he needed. Cheap labour. Chinese industriousness. The opportunity to start and build from scratch, a second Singapore, based on the very blueprints of success that Singapore had developed. The opportunity to avoid the mistakes made in Singapore and to copy the best practices that succeeded. Still he failed, losing huge sums of taxpayers' money in the process.

The failure of the SIP thus calls into question the basis of Singapore's 'success'.

To put the conclusion before the argument, Singapore succeeded because it was the best among the worst; the most attractive city in a region of backward countrysides and other, far less attractive, cities.

Consider. When Dr Winsemius, the first economic adviser to Singapore, first studied our economy in the 1960s, he saw a relatively advanced, tiny city, in an impoverished region of Malaysia, Indonesia, Philippines and IndoChina. It was then already an attractive little red dot, with a legacy of uncorrupt British government, administration, civil and legal service, security forces, trading links and a hub for sea and air traffic. It was already serving a vast hinterland of Malaysia and Indonesia. There were already British and European trading houses, some dating from as early as the 1800s. Most important of all, Singapore sat squarely on the vast sea and later air, routes between the West on the one hand, and Japan, Korea, China and Hongkong in the East. And as traffic between West and East grew, especially via the juggernaut economy of Japan, Singapore boomed. Singapore got further boosts from the yen revaluations in the 1980s, which pushed Japanese companies overseas, many to Singapore. Indeed, Singapore had grown rapidly even from Raffles' early days, as he noted in his letters upon his subsequent visit after he founded the island in 1819. He wrote about 'the rapid growth of trade and the doubling and re-doubling in the numbers of the many merchants and workers from China and the surrounding regions'.

All these are absent in the SIP, which is why it failed. More importantly, note that Lee Kuan Yew is also not a factor in Singapore's 'success'. And most importantly, note that Lee Kuan Yew, although a potent factor in the SIP, nevertheless presided over a disastrous failure. That says something about Singapore's success, the SIP's failure and the respective roles of Lee being a factor or non-factor.

Being the best among the worst practically guarantees success.

For example, take the current situation, which is similar to that of preceding decades. One in four people on the island is a foreigner. Except for a small percentage of highly-paid expatriate executives, they are all cheap labour, repairing and making roads, sweeping streets, pruning plants by roadsides, labouring at construction sites, in manual jobs in shipyards and in assembly-line operations. In other words, these cheap labour from neighbouring and even further away countries are holding up an awfully large sector of our economy. Put another way, if these were withdrawn overnight, Singapore would falter, if not fall.

Indeed, it is precisely because the region is badly off that Singapore is able to take advantage of this cheap labour to run its economy. And these workers, from their tens of thousands from neighbouring Johor to India, Sri Lanka, Philippines, Indonesia and China are what's propping up the economy. The tens of thousands from Johor are the best. They arrive on their motorcycles at daybreak and return at nightfall, giving no trouble at all, only their labour.

It is not only cheap labour that accrues to being the best among the worst, but capital and investments, too. For example, it is no secret that Indonesia's two-percent Chinese control over 80% of the Indonesian economy and that they park most of their spare money in Singapore, usually invested in everything from properties to companies. Similarly for Malaysian flight capital and capital from other less attractive areas. So Lee Kuan Yew had not only foreign cheap labour, but also cheap capital and cheap business acumen and nowadays, cheap foreign talent.

What if Singapore is but only a best among the best? For example, if Singapore's neighbours were as developed and as attractive as Singapore? The answer is, Singapore would have no competitive advantage and quickly fall behind the others. To restate this in another way, imagine if Singapore were to be suddenly transported to the middle of Europe, say, next to Switzerland. Would Singapore be able to progress at all in a region of developed countries? The answer is clearly no. Singapore does not have the visionary leaders or the capable politicians or the ingenious businessmen and the enterprising private sector people to succeed in a more competitive region. Its success, if that is what it is, is almost all dumb luck. Of being in the right place at the right time. The SIP was not in the right place or the right time and therefore failed, despite Lee's best plans and efforts. Those factors could not be duplicated and therefore the 'success' could not be duplicated.

Thus, Singapore's relations with its neighbours is not so much symbiosis as parasitism. Singapore thrives, like a virus, simply because it is smaller, simpler, more single-minded and focused than its hosts. By being the best among the worst, it sucks the most advantageous features from its surroundings and stands out from it, just as Lee Kuan Yew seems eloquent simply because the rest of Asia don't even speak English; or knowledgeable simply because other Asian leaders don't bother to read the latest American gurus or intellectual fads, let alone quote them to Western journalists.

This means that Singapore's chances of survival and prosperity are actually very good. Since the region seems to be constantly mired in problems, and to remain poor forever, the virus called Singapore will feed and multiply off its weakened hosts indefinitely. Far from the region's problems creating problems for Singapore, Singapore can only benefit from the inflow of cheap labour and capital flight, as it did in the recent 1997 regional economic turmoil, no thanks to a brilliant and prescient Lee Kuan Yew. It is axiomatic that whether in good times or bad, Singapore will always do better than its neighbours and this has nothing to do with its leadership. Indeed, despite Lee's dictums, even if the number of opposition MPs in parliament were to increase from the present three to 30, this will not result in the slightest difference to Singapore's progress but will only lead to more transparency in its policies, greater democracy and finally, a government responsive to the wishes of its people, from ministerial salaries to policies favouring foreigners over citizens.

Recently, a journalist described in an article that Singapore is the "best house in a bad neighbourhood". This is not quite correct. It would be more apt to describe Singapore as 'the 7-Eleven among the neighbourhood provision shops'. Being the 7-Eleven is of course, being brighter-lit, having better selected and displayed merchandise and a good brand name. These are often enough to ensure profitability and survival among the lacklustre provision shops.

Thus Singapore will thrive, despite, not because of its leaders. It is the inevitability of being a bright spot in a dark area.