SINGAPORE: South East Asia Review - Poor little rich country.

SINGAPORE: South East Asia Review - Poor little rich country. - Singaporeans are legendary worriers. Their current concern is prosperity, reports Sid Astbury.

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Last Updated: 31 Aug 2010

Singaporeans are legendary worriers. Their current concern is prosperity, reports Sid Astbury.

Pity Singapore, where gloom and doom scenarios abound. A quarter century of stability is threatened, as voters defy new leader Goh Chok Tong and in a snap election pick four opposition MPs to face 77 on the government benches. Workers fear for their jobs, as the numbers of unemployed balloon to nearly 2% of the labour force. The integrity of Treasury officials is questioned, as foreign exchange reserves fall to less than US$60 billion. Inflation races out of control to 4%.

Yes, Singaporeans are now fretting that the rising standard of living is bringing growing pains. Explains Goh, "Ours are the problems of affluence - obesity, controlling the number of cars, and meeting the aspirations of a population accustomed to rapid progress and high standards."

Prime Minister Goh took office in November 1990 when Lee Kuan Yew stepped down after 31 years in power. Just before the election, he said that if his liberalism did not find favour with voters, "then we can all go back to authoritarian government, the way in which most Asian countries are governed." The threat did not work; PAP's share of the vote fell to 61% "I hoped for a solid endorsement to strengthen my position," he said. "That endorsement did not come."

The declining numbers of tourists is what Trade and Industry Minister Mah Bow Tan frets about. On current performance Singapore will be lucky if final arrivals figures are up 4% in 1991. Mah attaches at least some of the blame for this downturn to the Japanese, the biggest single group of visitors to the tropical island-state. They are not queuing to buy branded items as they used to. The rate of the Singapore currency, up 7.6% against the greenback over 1990 alone (in 1991, up to April, the rise was 3%), and the reduction in luxury taxes back home, have conspired to make the Lion City less of a shoppers' paradise.

Arrivals were over 5 million in 1990. Employment in the sector accounts for one in nine jobs and receipts add up to around 6% of GNP. Singapore has by far the biggest slice of the meetings and incentive travel business in Southeast Asia, and is on a US$625 million spending spree to keep things that way. A new convention and exhibition centre is being built and a marine for cruise ships. The venerable Raffles Hotel re-opens in 1992 after a S$100 million facelift. Singapore is touting its cultural heritage as it once paraded its shopping malls.

It goes against the grain for Singapore to sell itself as an ultra-modern city-cum-clearing-house for regional business deals, but that is what it is. With probably the world's best airport and some of its finest hotels, peerless communications and jam-free roads, Singapore is rightly seen as a super-efficient base for business forays into the region.

Singapore firms already do good business in Vietnam, Burma and China, and the city state is having success positioning itself as a pivot for a growth triangle that takes in the southern Malaysian state of Johore and the nearby provinces of Indonesia. Reasoning that Singapore is short of land and labour, but quick-witted and modern and so able to play a catalytic role in the region's development, Deputy Prime Minister Brig-Gen Lee Hsien Loong says that the six members of the Association of Southeast Asian Nations (Asean) should "go beyond promoting regional stability to more substantive economic cooperation, since the global business climate has become increasingly competitive." Asean links Brunei, Indonesia, Malaysia, Singapore, Thailand and the Philippines.

Viewing Singapore as just a springboard for the rest of the region leads some to miss the massive commercial opportunities in the city itself. Per capita income is now over US$11,000 a year and private per capita consumption US$5,660; the latter is forecast to grow to US$14,800 by the end of the decade or, to put it another way, from 51% to 70% of the EC average, and from 39% to 62% of the US average. Big bucks, by any measure.

How true are these words by Finance Minister Richard Hu: "The limiting factor for our continued growth will no longer be land, as we once thought, but people." The tight labour market saw wages climb 20% in US dollar terms over 1990, a higher rate than in Korea, Taiwan and Hong Kong - the other three Asian NICs. Singaporeans are quick to point out, however, that the four remain competitive against the developed countries. With manufacturing wages at US$3.78 an hour, compared with US$12.42 in the UK, Singapore workers still seem a snip.

The US economic forecasting firm DRI warns that Singapore might find itself losing markets to South Korea, Taiwan, Malaysia and Thailand if it does not contain its wage rises and currency appreciation. Accordingly, it advises that companies "should increasingly see Singapore as a finance, distribution and information centre for Southeast Asia than as a production base." DYR sees the economic growth rate accelerating to 7.2% in 1992 and then slowing to around 5% a year for the rest of the decade.

Predicting that a tighter monetary regime will be instituted to cool the economy, Nickolas Kwan of Merrill Lynch in Singapore warns that "for GDP to keep growing at 7% to 8% for five to six years is not a good thing." Poor little Singapore. If only a few more countries could be so unlucky.

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