Singapore’s government structure is a republic; but, unlike the democratic republic of the United States, most officials are appointed by the party that wins the general election. This type of structure mitigates much of the partisan debate that occurs in a two-party system; and, solidarity within government creates an environment in which the city-state is able to operate under a single strategic mission over an extended time horizon.
Almost from its inception, Singapore has adopted the philosophy of employing private sector strategies on behalf of the public good. Throughout its more than five-decade history, the nation has operated under only one strategic plan; and though the overarching philosophy was almost as old as Singapore itself, in 1994, Singapore Unlimited was formally inaugurated and presented to the world by their Economic Development Board.
…to sustain long term economic growth, Singapore will have to turn inward and focus on human capital supply chains within their own borders.
As a result of 140 years of British colonialism, heavy-handed government intervention was not only widely accepted, but broadly considered to be essential for Singapore’s survival, if not success. To compete with economic superpowers, all of Singapore’s ships would have to sail in the same direction, so to speak.
A distinct advantage of Singapore Incorporated, a.k.a., centralized decision-making, is that virtual, vertical integration is possible, across multiple tiers of any system which includes many individual companies and even government agencies. Making decisions that are good for Singapore is good for business; and, as one beloved American president famously said, “a rising tide lifts all boats.”
Perhaps the greatest disadvantage to centralized decision-making is its chilling effect on competitive innovation. When companies cooperate, rather than compete, incentives to outperform each other are diminished. Only in a competitive environment will privately-owned corporations take risks to win contracts and increase market share.
When compared to the US free market model, Singapore is able to purposefully focus government resources and private capital on the same targets, in order to secure foreign investment and foreign contracts; but it is also unlikely to be the seat of the next generation of disruptive innovation in the supply chain industry.
Under the leadership of Goh Chok Tong, and then of Lee Hsien Loong, Singapore has enjoyed astounding economic growth and become an international player in the logistics industry—an astonishing feat, considering its size and its economic past. Unfortunately, as is the case in most countries, the benefits of economic growth have been concentrated on the wealthy elites. The working class and the poor have not realized the same economic windfall as their wealthier counterparts.
The owners of wealthy private corporations that do business with Temasek Holdings Private Limited and GIC Private Limited, which is an investment company owned by the Government of Singapore and which manages Singapore’s sovereign wealth fund, respectively, enjoyed the appreciation of assets at a rate, seldom seen on the global market. Upper-middle-class Singaporeans who were fortunate enough to purchase or inherit real estate in the 1960s or 1970s enjoyed double-digit annual growth in property values for several decades.
The growth of Singapore’s corporate elites is due to the rapid growth of its logistics infrastructure and technology. Much of the growth in private and small commercial real estate values has been attributed to the influx of foreign buyers associated with the international interests around the logistics trades. Foreign, skilled workers helped to feed expansion and economic growth, while simultaneously contributing to the steady rise in real estate values.
Singapore’s position as ASEAN’s go-to logistics hub is well established and not easily challenged, but one could argue that its era of rapid growth is behind them. Now that the shipping infrastructure is built and the international contracts are in place, it is unlikely that real estate prices will continue to rise from here or that corporate earnings will continue to grow by default. Though revenues from the logistics sector will continue to feed the national economy, economic growth from this point forward will be challenging. In a supply-constrained, small city-state, expanding logistics operations will be very difficult to accomplish. Future economic growth will have to come from greater efficiencies—a prospect that is more challenging in a system with new technology, new infrastructure, and already high efficiency. Without legacy systems to replace or an underperforming workforce to improve, a leveling off of their steep growth is inevitable.
Singapore’s fifty-year strategy has served it well. Its public/private partnership provides a formidable competitive advantage over free markets; however, to sustain long-term economic growth, Singapore will have to turn inward and focus on human capital supply chains within its own borders. There is still a significant poor population in Singapore, and the current generation of young, middle-class couples are increasingly being priced out of the real estate market; while foreign workers from foreign companies are buying up Singaporean properties.
Finding and trimming inefficiencies within Singapore Incorporated’s logistics operations may be difficult, but there are plenty of low-hanging fruits within the national economy. Uneducated Singaporeans should be trained to work in the nation’s high-tech logistics industry. Many of the jobs at foreign-owned companies could be filled with local labor, provided they are trained and ready to work. A reduction in unemployed or underemployed local workforce and an abundance of highly trained workers, from labor through management, would make Singapore more attractive to foreign interests and more economically healthy as a nation.
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