Singapore by John Curtis Perry

Author:John Curtis Perry [Perry, John Curtis]
Language: eng
Format: epub
ISBN: 9780190469528
Publisher: Oxford University Press
Published: 2016-11-03T00:00:00+00:00

Defining an Economy

It starts with the port and Lee Kuan Yew. He chose the harbor constituency of portside Tanjong Pagar as his political home base because of his frequently reiterated belief in the importance of the port and his desire to build closer ties with labor. He cultivated the unions by giving them advice but tolerated no disruptions jeopardizing smooth production of goods and services.

At that point few people if any were yet thinking in terms of a thriving Singapore independent of Malaya, but the success of the port hinted at that possibility. Its maturity as accumulator, processor, and distributor of goods and raw materials would certainly put such a new state far ahead of other developing nations. The port buttressed the rest of the economy, which would go through several major transitions, but trade would remain a consistent part of these. Nonetheless the port and its functions, important as they were, lacked the capability to provide a good livelihood for everyone. Singapore desperately needed the jobs that industry could provide.

In 1963–65, when part of the newly created Malaysia, Singapore followed the orthodox economic line of the time for ambitious nations and took up a policy of import substitution, satisfying domestic wants with local manufacture. This seemed a way to create jobs. These were labor-intensive endeavors, turning out more of such things that local factories had already been making: cloth, shoes, furniture, and simple hardware. But gradually the wage scale rose, making these goods more expensive and less competitive. And multinational corporations, of increasing interest to Singapore as another possible generator of jobs, had no interest in producing such prosaic goods.

In any case, the import substitution strategy of producing at home what otherwise would need to be purchased from abroad ended with dramatic suddenness when Singapore abruptly became independent in August 1965. With the loss of its Malaysian hinterland, a new and tiny state urgently needed something more than the home market. Singapore’s traditional trading houses, both Chinese and British, were geared toward commerce and unfamiliar with manufacturing. These merchants were not the bellwethers that industry demanded. Foreign talent and foreign capital were necessary to generate jobs and product. But how to attract these?

At the beginning of the 1960s, only half of Singapore’s population was literate in any language. Although hard workers, Singaporeans lacked technological skills; they had to acquire them from overseas. Because their domestic market was so small they needed to export what they produced. They had to compete with the lower wages and docile labor of Hong Kong while their products had to be competitively priced. Moreover they needed to attract capital to modernize power stations, water supply, and roads; indeed to create all the infrastructure characteristic of a smoothly functioning modern economy. At first, foreigners with money to invest were put off by the political and social volatility of Singapore, with racial tensions actually exploding into riots in 1964.

Racial violence erupted when Malay kampongs, traditional villages, were destroyed to make room for new public housing, the justification being that living standards would rise.

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