Business & Investment

Singapore at Fifty

On August 9 this year, Singapore celebrated 50 years of independence with fireworks, events and parties across the island. It has become independent twice, once from British when it decolonised from Great Britain in 1959 and then in 1965 when it was expelled from the Federation of Malaysia. This small island tucked in a corner of the Pacific Ocean has grown, literally and metaphorically, to be a force to be reckoned with globally.

Singapore is indeed small – just 716.1 square kilometres. Fifty years ago, this was a poor tropical island with few natural resources, no compulsory education and a potentially explosive racially and religiously diverse population. Now it is a stable country, ranked as one of the safest in the world, a global financial and export centre with some of the world’s most highly skilled workforce. It has also been rather successful: over the last five decades, GDP per capita has increased at a 10 per cent compound annual rate.

That record is a tribute to Lee Kuan Yew, the country’s first Prime Minister, who died earlier this year. He set out to unite the different races and create a new, united nation. Economic success was regarded as essential, not just for economic development but to help stabilize the country politically.

Singapore was historically one of the world’s busiest ports, thanks to natural resources nearby like Malaysia’s palm oil and oil in Jarong but Lee’s government had much more ambitious aims and set out to expand Singapore’s economic base http://www.forbes.com/sites/forbesasia/2014/07/10/what-makes-an-asian-tiger-singapores-unlikely-economic-success-lies-in-its-history/. Initially the government focused on attracting foreign manufacturing companies with a low cost workforce, but increasing competition from other Asian countries towards the end of the 1970s led to a realization that Singapore needed to evolve into a more highly skilled economy.

The government began to focus on education and eventually created a system that enabled more academically gifted students to excel. Today Singapore’s education system is one of the best in the world, with TIMSS – which ranks progress in maths and science –  regularly rating its students top in both on a global basis.  This has helped Singapore evolve over the last two decades into a leading centre for research, science and technology, with government incentives to attract major pharmaceuticals and technology companies to invest locally.

As the oil boom of the 1970s flourished, Singapore became regarded as one of the most desirable locations for expatriates, enhanced by a combination of fiscal and regulatory incentives. With zero tolerance for crimes of any kind – including chewing gum and dropping litter – Singapore became, and has remained, one of the safest places in the world.

Visitors are often struck by the general obedience of the population:  staff smile at customers in shops thanks to government efforts to encourage smiling and car pools help to reduce traffic congestion. Lee’s government may have been a dictatorship, but it was a benevolent one, and the current government shares those characteristics. Freedom of expression in Singapore is limited, but there is a communal interest in ensuring the island’s stability and civil order, essential for the livelihoods of the island’s working population of around 3.5 million and 1.3 million expatriates.[9]

Lee’s government also set out to create a premier financial trading centre in Asia with tax incentives for foreign companies and zero tolerance of corruption. Today, says Joel Carpenter, Group Marketing Manager St James’s Place Asia, Singapore is the most highly regulated financial market in Asia, second only to Hong Kong in terms of volumes traded[10].

Last year, St James’ Place Asia acquired The Henley Group, the Singapore-based independent financial advisers, to complement its Asian partnerships in Hong Kong and Shanghai. Carpenter believes that SJP Asia is uniquely well placed to offer a unique financial planning service to expatriates in the region.

“Singapore is still a growing centre and regional headquarter for many international companies,” says Carpenter. “It’s an attractive place to work not far from anywhere – Bali, Thailand and Malaysia are all within easy reach.”

Although many expatriates are on contracts of only two years usually, a growing number are deciding to stay on after that, says another SJP partner, Daphne Ashford-Smith. Initially, some companies offer attractive packages to expatriates to encourage them to relocate, often including housing, medical  care, education, flights home, a car and utility expenses. Expatriates may find their disposable income is high while these living costs are covered.

However, many of these contracts tend to be two years and the majority of expatriates are on local contracts. She observes that many families need to have both parents at work to cover the cost of living in Singapore. The government encourages women to return to work, and offers some help towards this with tax relief on the employment of domestic workers. Paid maternity leave is only eight weeks.

Working hours in Singapore tend to be long, but Ashford-Smith says that having access to good and reasonably affordable childcare has helped her to return to full time work with two children, and another on the way and enables her to enjoy quality time with her children.

Singapore also provides good education, compatible with the British system. In addition to well-established local schools like Tanglin Trust School, Marlborough College has opened a campus nearby in Southern Malaysia[11]. Pupils can migrate from the school in Asia to the main school in the UK if their parents return to the UK. Dulwich College has also opened a school in Singapore under franchise. [12]

George Rippon, partner at SJP Asia, has also observed that more and more people are coming out to set up their own businesses, so the need for personal financial planning has never been greater. Overseas companies are no longer set up to provide long term financial security for non-nationals, he says. In addition, the majority of British expatriates will repatriate to the UK on retirement.

The challenges that faced Singapore when it first became independent may have been resolved but it faces fresh challenges today, socially, politically and economically. Yet this tiny tropical island’s ability to evolve quickly and consistently, not just since independence but for centuries, suggests it will continue to thrive in our rapidly changing world.

Published in The Investor, 2015

Photograph: TPS Dave Singapore City Skyscapers

 

 

 

 

 

 

 

 

Additional sources

 

CIA Factbook / Singapore

 

Singapore consists of one main island and 63 smaller islands with a total land area of 716.1 square kilometres. Land reclamation has

Land Reclamation increased Singapore’s territory by about one fifth since independence.

 

http://eeas.europa.eu/factsheets/docs/factsheets_europe_day_2014/factsheet_singapore_en.pdf

 

[1] https://www.academia.edu/4306642/Singapore_achieved_independence_in_1959_due_to_a_lack_of_British

[2] http://www.worldatlas.com/webimage/countrys/asia/sg.htm

[3] http://www.worldatlas.com/webimage/countrys/asia/sg.htm

[4] http://www.visionofhumanity.org/sites/default/files/Global%20Peace%20Index%20Report%202015_0.pdf page 8

[5] www.WorldBank.com

[6] OECD report Singapore: Rapid Improvement Followed by Strong Performance

[7] OECD report Singapore: Rapid Improvement Followed by Strong Performance

[8] writers’ visit

[9] Population 3,547,809 http://www.worldatlas.com/webimage/countrys/asia/sg.htm

 

[10] Interview with Joel Carpenter

[11] http://www.marlboroughcollegemalaysia.org

[12] interview with George Rippon

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