Is Singapore a right partner for us?
There has been a lot of conversation and discussions on Singapore as the government entered into a free trade agreement (FTA) with Singapore recently. Some attempt to assess the costs and benefits of the agreement. A lot has been spoken about trade in goods and trade in services.
The government points out that the agreement will pave the way to attract more foreign direct investment through the agreement. Close integration with an economy through an FTA is not just all about trade in goods and services but encompasses many other aspects: transfer of technologies, best practices and models in governance and managing interface between governments, cooperate sector and citizens, management advancements and many others.
Therefore, the purpose of this article is not to analyse or reassess those arguments but to provide some thoughts and glimpses on the Singaporean economy to look into the merits and demerits of having a strategic trade, investment and economic partnership with Singapore.
Gross domestic product (GDP) of Singapore was US $ 323 billion in 2017. The per capita income is US $ 57,713. Singapore is among the top in the world in many other development indicators. However, several decades ago, this was not the case. It was just a place for entrepot trade with poor living and working conditions associated with pollution, low-income and social disharmony.
Singapore was able to address many of these issues by achieving a developed country status within a very short period of time, literally well within the reach of one generation’s life time. In this backdrop, it is natural for one to be inquisitive of the secrets behind this incomparable success.
This is not to forget the fact that Singapore is one of the city states in the world and therefore, there is no rural sector in the country. Being a small island, comprising 719 square kilometres, Singapore practically has not much natural resources other than human resources with the geographical advantage of being located in the centre of a sea route that links East Asia and the west.
Some tend to attribute the success of Singapore as driven by the dire necessity of a nation that had little to capitalize on. When referring to the Singaporean development story, often we quote Prime Minister Lee Kuan Yew’s words, when he once told that Singapore has to follow the Sri Lankan development model.
However, if we look into the matter more insightfully, one can learn that Singapore adopted good lessons not from one country but from many countries and many economies.
Today, Singapore’s trade is three times GDP. This clearly shows that to overcome the limits of the smallness, Singapore opened the second wing – the expansion of economic activities to overseas, not only in terms of trade but also investment and economic cooperation. China, India and Indonesia were the best examples of Singapore’s interventions in other countries.
In the context of rapidly changing global production systems, ever increasing use of ICT and confused economic policies adopted by superpowers, let’s look into several areas of governance where we can learn from the Singaporean experience and practice.
Policymaking and implementation
It is common to complain that lack of policies hinder the development of our country. But one should not forget that having no policy is already a policy. Then what must have gone wrong in our case? In Singapore, it has been often told that ‘policy is implementation and the implementation becomes policy’.
One of the distinguished features of governance in Singapore is they are very clear of the different roles of civil servants and politicians and boundaries of their jurisdictions in policymaking. Once the government has taken a policy decision, analysing its technical aspects, providing alternative options, formulating strategies and implementing modalities are the responsibilities of the government officials or technocrats.
Not having a clear understanding of the roles of different actors can lead to a confused situation, as we have seen in many instances. This can lead to a chaotic state when social media and other means of communication are active and capitalizing on the situation.
In any country, smooth implementation of policies requires consistent fund provision and also political backing. Distributing the available funds among different portfolios of the government, with different demands, is often a challenge for any country particularly for developing countries.
Usually the finance ministries try to make a rationale of distribution, sometimes adopting robust methodologies such as econometric modelling, input-output tables, etc. and often take into account institutional capacities and political realities.
However, each and every ministry naturally tries to maximize its budget each year. The system in Singapore seems allowing the ministries to justify their fund demand by justifying their position within the government’s overall targets over the coming years and for that they can use various means, including robust methodologies.
The merit of that kind of truly a demand-driven approach, compared to a centrally-controlled supplydriven system, is that ministries become thorough on the challenges of their respective portfolios. Moreover, the ability for ministries to transfer funds between programmes under a block budget system allows flexibility in allocation and optimal use.
One of the other aspects of good governance is to make sure that the objectives set by the government were achieved in an efficient manner through an effective institutional mechanism. For this, the government should be able to have an adequate control power over the agencies to get their service for achieving the overall development objectives.
Fundamentally, three aspects have to be taken into consideration: their budget, human resources and strict and periodic assessment over performance. To look after these three aspects with regard to government institutions, a mechanism comprising three well-coordinated agencies is set up by the Singapore government i.e. the Finance Ministry, Strategy Group and Public Service Division.
While the Finance Ministry is fully taking care of budgeting, the Strategy Group works on strategic alignment across the government and the Public Service Division is responsible for developing strong leadership and engage officers, building future-ready organisations and promoting good governance. The latter two agencies function under the Prime Minister’s Office.
Public sector transformation
If a country tries to transform its economy to capitalize the emerging global trends, the first steps perhaps to transform its public sector, are to be geared towards that objective. This is the fundamental thinking Singapore seems had. This encompasses two main aspects: building right kind of leadership among civil servants and building future-ready institutions.
There is an independent agency to oversee and manage the transformation of the public sector in Singapore. The Strategy Group under the Prime Minister’s Office is entrusted with that responsibility in Singapore.
Singapore was able to maintain consistency in the transformation of the public sector since the inception. At the beginning in 1960s, the focus was on creating ministries and boards structured to aim at national priorities.
Towards 1980s, the emphasis was given to efficiency and market-based institutional reforms. Globally, such reforms were guided by the perceptions on the roles of state and market with the objective of introducing non-state actors in service delivery and governance.
However, this is not to forget the fact that the Governmentlinked Companies with Tamasek Holding Ltd played an important role in economic development by investing heavily in telecommunication, banking, airlines, power, ports and other sectors. However, the government interventions were in terms of deregulation, privatization and liberalization.
In 2000 afterwards, the transformation focused on introducing the culture of change and innovations in the public sector. Often we talk about innovation in enterprises in our development agenda. However, we fail to introduce or at least strongly encourage innovations in the public sector. This included the use of the Internet and provision of online and mobile services.
What we can learn from Singapore high-tech service delivery is to become not only high tech but also high-touch. There is no use of upgrading the technology of service delivery if it is out of the reach of the targeted people.
One of the other principles highly taken into account in Singapore is the whole of the government approach. This is particularly relevant to us as our institutions, ministries and agencies suffer chronically from being worked in isolation. This makes citizens, corporate sector and economy as a whole inefficient and sluggish, adding cost to the private sector.
While adopting all these transformative actions along with sophisticated tools, one can expect that the interface between the state and citizen to be remote in Singapore. The government has taken several measures to improve the citizens’ active engagement.
Various committees such as the Committee for Future Economy, formed to look into the policies for future economy and Singapore Conversation 2012-13, covered areas of education, transport, housing and healthcare and have extensive citizen consultation sessions to ensure the people’s perceptions are reflected in the policies.
Citizen-centric service delivery
The public service delivery in Singapore is always planned and managed from the perspective of the life cycle of citizens. In other words, it is not just blanket service provision but specifically looking at the needs of the children, youth, middle-aged and elderly. The best examples of such service delivery are the health and housing sectors.
Eighty percent of the housing in Singapore is built by the Housing and Development Board (HDB), which is a statutory body under the National Development Ministry. Like many other institutions in Singapore, the HDB’S approach in providing housing is holistic and that is why it is the Housing and Development Board rather than the housing development board.
The HDB not only builds houses but also transforms towns to create a comfortable living environment for people. One of the other salient features is the concept of ‘sole agency’. The HDB is the sole agency in charge of public housing and this enables using resources more effectively.
The government housing is however not free. Different financing supports, including mortgage financing, facility to use the Provident Fund savings for down payment, etc. are available. Depending on the income and affordability, the government provides subsidies for people.
Looking at the nicely planned townships and housing schemes, one can think the HDB’S task as less challenging, compared to the less developed countries’ task. However, we should not forget that the HDB started in 1960 to address the housing crisis, characterized by the unhygienic slums and crowded squatter settlements.
Whole of government and public trust
It has been revealed that the Singaporean government is highly concerned on building public trust. Without gaining the public trust, Singapore would have never been able to achieve this outstanding success. Consistency in policies along with the mobilizing economy for carefully targeted outcomes with realistic time targets, have been key in Singapore to build public trust.
One public service, trusted, lean, agile and innovation in the government are the other key elements contributed to win public trust. Apart from the traditionally accepted method such as integrating across agencies, online service and streamlining and simplifying processes things like use of simplified language to communicate is given high emphasis.
Being ruled by one political party for a considerably long time undoubtedly places Singapore in an advantaged position to implement the policies consistently and give results. Nevertheless, there is a lot a country can lean from the Singapore practices and experience. There are instances where the Singaporean government paid political price by taking politically unpopular decisions.
Understanding disruption
Traditionally to offset the disadvantages created for some or other groups by trade liberalization, trade adjustment programmes are designed. However, it is important to also understand the disruption created by technological innovation - it does exist at wider level. Cloud computing, artificial intelligence, blockchain, etc. penetrate to businesses at unprecedented temp, which will have an impact on the market, society and particularly workers’ skill levels.
Therefore, Singapore is highly concerned on the technology adoption rate by society. This clearly shows us that the challenge for small economies and nations like us is always renewed and therefore, one needs to be vigilant on the dynamics around and within us.
Future economy
Continuous learning, adopting to change and being kiasu or afraid to lose out have been integral part of the development model of Singapore. As a latecomer in 60s to 70s, Singapore followed export-oriented industrialization at the beginning.
This followed industrial restructuring era, focus on competitiveness and so on. Today, 71 percent of Singapore’s GDP comprises of service sector whereas manufacturing represents 19 percent. Taking the current dynamics in the regional, global and technological frontiers into account, Singapore set up a committee to make recommendation on the future economy.
The committee appreciates highlights of the external context characterized by inter-alia changing global value chains in two ways, outsourcing by some and more insourcing by others, including major powers, growing protectionist economics, undermining international trade, particularly hurting small economies, shortened innovation cycles, disruption created by rapid changing technology.
While identifying the vision of the country in terms of people’s skills, innovative and nimble businesses, the vibrant connected living environment and coordinated, inclusive and responsive government, the committee formulated strategies to reach the vision. Specific implementation modalities such as industry transformation maps and also synergies between and across industry boundaries have been formulated.
One of the distinguished features is going beyond conventional thinking and deepening openness. For instance, looking beyond value adding to value creation and level up Singapore brand globally, which are important for us to consider in our context too.
Foreign policy - being useful to others as a small nation
Achievements in economic vibrancy, social cohesion and advancement in technology would have not been possible for Singapore unless they were able to make relationships, enter into partnerships with overseas businesses, other economies and nations. As a small nation, Singapore had been consistent in foreign relations. Being important and useful to other nations is the ethos followed.
Final remark
There are many contradictions in the world. We can see once a socialist superpower switching into a liberal economic path while the main capitalistic economy starts adopting protectionist policies. In this context, the course for small nations as Singapore would be close to the major powers but not align to any and follow a middle path.
It seems while being relevant to major powers, Singapore was bold to champion free trade and open the economy and oppose to protectionism, which is believed to bring disastrous consequences for a comparatively small and open economy like Singapore.
More importantly, one of the important achievements among others is social harmony, which is part and parcel of the development model of Singapore and leads to form one Singapore nation. (W.A.D.S. Gunasinghe is currently Additional Secretary to the Development Strategies and International Trade Ministry. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the institutions he affiliates)