One World Insight Blog | Douglas "Las" Wengell

Asia Power Unifying: Rail link from China to Singapore

In the planning stages is a rail network that will connect China, into Vietnam, through Cambodia, into Thailand, down Malaysia and to the southern tip of mainland south-east Asia, Singapore and its huge port. Much development is required. The French built Vietnam’s rail line a century ago and anyone who has traveled on it knows that it is cumbersome and slow. Cambodia’s rail network collapsed over decades of war and neglect. (Phnom Penh, the capital, lacks a train station.)

 

It’s completion will be a major boon for Asian commerce and supply chain manufacturing efficiencies. It would also be a pleasure as a traveler…

Top-down Capitalism, Singapore Style

The Switzerland of Southeast Asia, Singapore is an economic miracle. Considering the depressed environment in the West, its 2010 growth forecast is an impressive 8 percent, and its trade-dominated economy grew 32 percent in the first quarter on a adjusted annual basis.

Out of a tiny island at the southernmost tip of the Malay Peninsula, it gained independence from Britain in 1963 and, in one short generation, transformed itself into a legendarily efficient place where per capital income for its 3.7 million or so inhabitants exceed that of many European countries, the education and health systems rival the West, its largely corruption free, 90% of households own their own homes, taxes are relatively low – and sidewalks are famously clean and free of homelessness.

At what cost is this prosperity and security? Many argue that it is a socially engineered, nose-to-the grindstone, workaholic rat race, where the self-perpetuating ruling party enforces draconian laws, squashes free press, and offers dubious financial transparency. (It’s joked that the central government micromanages the details of life down to how flight attendants dress on the state owned company, Singapore Airlines.)

Lee Kuan Yew, the “minister mentor,” is up there with Fidel Castro and Nelson Mandela in terms of dominance, influence and history shaping a nation. He masterminded the “Singapore Model,” converting a country one-eight the size of Delaware, with no natural resources and mix of ethnicities, into Singapore, Incorporated.  He attracted foreign direct investment by building communication and transportation infrastructure – planned from the top down – made English the official language, recruited brilliant government officials with salaries equal to those in the private sector, and cracked down on corruption without mercy. The model – a unique mix of free enterprise and tightly controlled personal liberties – inspired China, Russia, and Vietnam.

“To lead a society,” Yew says in Darwinian terms, “one must understand human nature. I have always thought that humanity was animal-like. The Confucian theory was man could be improved, but I’m not sure he can be. He can be trained, he can be disciplined.” Yew’s criticism of America is that when too much freedom is given, it’s taken for granted. The rights of individuals to do “their thing” is at the expense of an orderly society, not exactly what Adam Smith and Anne Rand had in mind when they posited that the pursuit of individual wealth is, ultimately, a service to society. Singaporeans are proud of their safe, clean nation-state. They ask: What good are freedoms if you’re afraid to go out at night?

Singaporeans are always striving, and at some level, fear falling behind the hungry, foreign born immigrants who make up 25 percent of the population. So competitive is Singapore cultural tradition that by age ten kids are tracked according to “normal,” “special,” and “express,” in terms of their potential to contribute to society. Those at the top make the most money, lucky for them. It’s like the whole society s striving to get into Harvard, from birth to death. The struggle to stay ahead never ends.

Such a highly controlled society breads conformity and a “creativity crisis,” the challenge faced by autocratic governments like China and Vietnam. Imitation is not innovation. Singapore is now chasing after biotech as China is green energy. Whether they can produce the creative leadership required to succeed in the global marketplace is yet to be seen. Singapore, unlike China, is prepared to lure the most talented global citizens to its small island, in the same way Microsoft imports software engineers.

In some ways, it’s just another example of One World in which the nation-state continues to loss its grip to the innovation-driven global corporation that hires not nationals but the most talented global citizens. Passports matter, but less so.

Singapore – #2 in Economic Freedom in the World

After Hong Kong, Singapore is the most laisser faire economy in the world.

 

http://www.heritage.org/index/Ranking.aspx

 

Economic models that are only theory in the West, and so often espoused by The Economist, are implemented in Singapore. Traffic congestion is dealt with by resource pricing (photo), whereby the route, type of vehicle and time determines a journeys cost. Prostitution is heavily regulated and sin taxes on alcohol and cigarettes are high (a beer at a bar cost about US$7.00), helping offset the healthcare burden.

Upon separation from Malaysia in 1965, Singapore was faced with a lack of physical resources and a small domestic market. In response, the Singapore Government adopted a pro-business, pro-foreign investment, export-oriented economic policy combined with state-directed investments in government-owned corporations. The ruling party, once described itself as socialist but after becoming openly capitalist now described itself as  pragmatic, that is, like China, capitalism with authoritarian social controls.

Singapore's strategy proved successful, producing real growth that averaged about 8.0% from 1960 to 1999.

Its business environment is corruption-free and transparent, inflation is stable, and it enjoys one of the highest GDPs in the world. The so called Singapore Model is the combination of economic planning and rigorous free-market principles. Primary exports are services, electronics, chemicals and up-and-coming biotechnology. In turn, it imports natural resources and raw materials as the country has no land to develop. Strategically located, its port is the busiest in the world.

 

Excellent education system makes for highly skilled labor.

Singapore – New Biotechnology Player

Singapore is always reinventing itself. As a nation, it lives the motto, “only the paranoid survive.”  The electronics industry leads Singapore's manufacturing sector, accounting for nearly 50 percent of its output, but the government also is heavily promoting development of the chemicals and biotechnology sectors, which now account for 16 percent of manufacturing. Hundred of millions of dollars are being invested in infrastructure, fund research and development, and recruiting top international scientists.

Leading drug makers such a Merck, Pfizer and GlaxoSmithKline have set up plants here.

The Prosperious City-Nation of Singapore

Staying with a business school classmate and his family. He works in the banking.

 

Singapore is wealthy, civilized and sterile. About 80 percent of the population are Chinese, dating back to ninetieth century British colony days. English is the primary language, and Mandarin second, a good combination as we enter the twenty-first century. At some point, the government instituted civil reforms to “govern” the Chinese population, by passing strict conduct codes regarding smoking, spitting, j-walking, chewing gum and littering. It worked. Expensive compared to the rest of Asia. Excellent food.

 

Like Hong Kong, international brands and lavish displays of materialism are apparent. I am told by a national that Singapore is a haven for the rich to run away from their troubles (or illicit activity) in other parts of the world. One thing is for sure, it's nothing like the rest of SE Asia.