How one tiny Southeast Asian island turned crazy rich
Flying from Kingsford to Changi Airport for the first time really makes you feel like Rachel Chu from Crazy Rich Asians. You might not be blessed with a Nick Young, but stroll just minutes from your gate and you can indulge under the world’s largest indoor waterfall, immerse in a 4D movie at one of three cinemas or go down a 12m slide before you splurge at Balenciaga (or Louis Vuitton if that’s more your style). When you take a short cab to the city, you might think that you’re seeing some billionaire’s yacht precariously balancing on three 200m high skyscrapers. And you might think to yourself... is Sydney really all that?
For a tiny island stranded in the middle of an economically developing region, Singapore’s palatial opulence comes as much of a shock to most as Nick’s family riches did to Rachel. The nation boasts the 4th highest GDP (PPP) per capita in the world, ranks among the least corrupt nations and sees 1 in 6 of its citizens holding assets worth over $1M USD. Meanwhile, the state sits among the 20 smallest countries on the globe and possesses no significant natural resources. So, how did the tiny South-East Asian city-state of just over 5 million people become so crazy rich?
Singapore’s success story can be traced back to August 9, 1965; the day which marked the island’s formal independence. In its preceding years as a British colony, over two-thirds of its populace resided in unsanitary and violent shantytowns, with GDP capita per levels suffering among the low $US hundreds. But its very first Prime Minister - Lee Kuan Yew - held a radical and ambitious vision to turn the ‘third-world country into a first world country in a single generation.’
Foregoing individual freedoms for economic prosperity
Lee saw that Singapore could offer something that many of its South-East Asian neighbours could not; stability. This meant foregoing many individual freedoms; through extreme malapportionment and gerrymandering, Lee maintained a strict one-party rule and led the state for over 30 years. His administration saw the introduction of many draconian reforms; where those found of corrupt conduct or narcotic trade risked the death penalty. And the party outlawed all independent labour unions, instead creating a National Trade Union Congress, which it had direct control over. Those seeking to protest the party’s reforms were often quickly jailed without the chance of a fair trial.
Such stability, in conjunction with low tax rates, few capital restrictions and highly liberal immigration policies made Singapore a highly lucrative destination for multinational corporations. Today, Singapore ranks 3rd in the world for net foreign direct investment inflows, only behind the United States and China which hold significantly larger populations.
Singapore's NET FDI Inflows
Leveraging on the presence of multinational firms at the time, the Lee Administration set up technical schools, seeking to shift its exports from low-skilled to high-skilled industries. The Government paid such companies to up-skill workers in areas such as IT and electronics, shifting the nation from one which primarily specialises in industries such as textiles to areas like biotechnology and aerospace engineering.
Public Infrastructure
The Lee Administration’s policy on public housing has equally been regarded as one of the central factors leading to Singapore’s rise. In Australia, just about 3% of the population reside in public housing estates, with programs primarily targeted at low-income individuals at risk of homelessness. While in Singapore, public housing residents do not live in fear of the same stigma or ostracisation. With 80% of its population living in public housing estates, government housing is the norm.
The Land Acquisition Act provided Lee’s Party the authority to compulsorily acquire private land, which it would then use to construct affordable transport infrastructure and public housing. This policy not only allows residents to buy property at more affordable values today, but means that the vast majority of Singaporeans now live in self-contained towns connected to schools, supermarkets, malls, hospitals, hawker centres and recreational facilities. Each housing estate today is linked to an MRT station which connects all residents on the island.
Moreover In 1989, the Ethnic Integration Policy was introduced to establish racial quotas on flat ownership within each block and neighbourhood. The Act served to promote social cohesion between the many racial groups and social classes of Singapore, preventing the formation of secluded ethnic enclaves and socio-economically disadvantaged suburbs that are common across the developed and developing world.
By offering such accessibility, Lee led Singapore into a nation which thrives in multicultural cohesion and economic opportunity.
Location
Singapore may not be gifted with many natural resources, but its natural location has made the island an international connecting hub for sea and air cargo. Situated right in the middle of Southeast Asia, Singapore's container ports are the busiest in the world with links to 123 countries. Changi Airport is also one of Asia’s busiest airports, holding many of the world’s connecting flights which the government has exploited to promote its tourism sector.
The success story of Singapore is a handbook which all countries - developing or developed - should take a page from; whether that be recognising the advantages offered by globalisation or the importance of social cohesion. I’m sure American Economics Professor Rachel Chu took a few notes.
Flying from Kingsford to Changi Airport for the first time really makes you feel like Rachel Chu from Crazy Rich Asians. You might not be blessed with a Nick Young, but stroll just minutes from your gate and you can indulge under the world’s largest indoor waterfall, immerse in a 4D movie at one of three cinemas or go down a 12m slide before you splurge at Balenciaga (or Louis Vuitton if that’s more your style). When you take a short cab to the city, you might think that you’re seeing some billionaire’s yacht precariously balancing on three 200m high skyscrapers. And you might think to yourself... is Sydney really all that?
For a tiny island stranded in the middle of an economically developing region, Singapore’s palatial opulence comes as much of a shock to most as Nick’s family riches did to Rachel. The nation boasts the 4th highest GDP (PPP) per capita in the world, ranks among the least corrupt nations and sees 1 in 6 of its citizens holding assets worth over $1M USD. Meanwhile, the state sits among the 20 smallest countries on the globe and possesses no significant natural resources. So, how did the tiny South-East Asian city-state of just over 5 million people become so crazy rich?
Singapore’s success story can be traced back to August 9, 1965; the day which marked the island’s formal independence. In its preceding years as a British colony, over two-thirds of its populace resided in unsanitary and violent shantytowns, with GDP capita per levels suffering among the low $US hundreds. But its very first Prime Minister - Lee Kuan Yew - held a radical and ambitious vision to turn the ‘third-world country into a first world country in a single generation.’
Foregoing individual freedoms for economic prosperity
Lee saw that Singapore could offer something that many of its South-East Asian neighbours could not; stability. This meant foregoing many individual freedoms; through extreme malapportionment and gerrymandering, Lee maintained a strict one-party rule and led the state for over 30 years. His administration saw the introduction of many draconian reforms; where those found of corrupt conduct or narcotic trade risked the death penalty. And the party outlawed all independent labour unions, instead creating a National Trade Union Congress, which it had direct control over. Those seeking to protest the party’s reforms were often quickly jailed without the chance of a fair trial.
Such stability, in conjunction with low tax rates, few capital restrictions and highly liberal immigration policies made Singapore a highly lucrative destination for multinational corporations. Today, Singapore ranks 3rd in the world for net foreign direct investment inflows, only behind the United States and China which hold significantly larger populations.
Singapore's NET FDI Inflows
Leveraging on the presence of multinational firms at the time, the Lee Administration set up technical schools, seeking to shift its exports from low-skilled to high-skilled industries. The Government paid such companies to up-skill workers in areas such as IT and electronics, shifting the nation from one which primarily specialises in industries such as textiles to areas like biotechnology and aerospace engineering.
Public Infrastructure
The Lee Administration’s policy on public housing has equally been regarded as one of the central factors leading to Singapore’s rise. In Australia, just about 3% of the population reside in public housing estates, with programs primarily targeted at low-income individuals at risk of homelessness. While in Singapore, public housing residents do not live in fear of the same stigma or ostracisation. With 80% of its population living in public housing estates, government housing is the norm.
The Land Acquisition Act provided Lee’s Party the authority to compulsorily acquire private land, which it would then use to construct affordable transport infrastructure and public housing. This policy not only allows residents to buy property at more affordable values today, but means that the vast majority of Singaporeans now live in self-contained towns connected to schools, supermarkets, malls, hospitals, hawker centres and recreational facilities. Each housing estate today is linked to an MRT station which connects all residents on the island.
Moreover In 1989, the Ethnic Integration Policy was introduced to establish racial quotas on flat ownership within each block and neighbourhood. The Act served to promote social cohesion between the many racial groups and social classes of Singapore, preventing the formation of secluded ethnic enclaves and socio-economically disadvantaged suburbs that are common across the developed and developing world.
By offering such accessibility, Lee led Singapore into a nation which thrives in multicultural cohesion and economic opportunity.
Location
Singapore may not be gifted with many natural resources, but its natural location has made the island an international connecting hub for sea and air cargo. Situated right in the middle of Southeast Asia, Singapore's container ports are the busiest in the world with links to 123 countries. Changi Airport is also one of Asia’s busiest airports, holding many of the world’s connecting flights which the government has exploited to promote its tourism sector.
The success story of Singapore is a handbook which all countries - developing or developed - should take a page from; whether that be recognising the advantages offered by globalisation or the importance of social cohesion. I’m sure American Economics Professor Rachel Chu took a few notes.
