20 July 2014
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Singapore and leadership

Singapore's economic miracle is the result of strong leadership, writes Sophia University's Julian Knoche. But will a new style of leadership be necessary to take the city state forward?

Singapore's economic miracle is the result of strong leadership, writes Sophia University's Julian Knoche. But will a new style of leadership be necessary to take the city state forward?

Singapore is a southeast Asian island city-state. It is a very diverse and young country. On 31 August 1963, Singapore declared independence from Britain and joined with Malaya, Sabah and Sarawak to form the new Federation of Malaysia.

As part of Malaysia, Singapore's economic and social development came to a halt as the Malaysian parliament blocked many bills. Race riots broke out in Singapore in 1964. After much heated ideological conflicts between the two governments, in 1965, the Malaysian parliament voted 126 to 0 to expel Singapore from the Federation.

Singapore gained independence as the Republic of Singapore (remaining within the Commonwealth) on 9 August 1965 with Yusof bin Ishak as President and Lee Kuan Yew as Prime Minister. Everyone who was present in Singapore on the date of independence was offered Singapore citizenship.

Since then, it has seen a massive increase in wealth. Before independence, in 1965, Singapore had a GDP per capita of $511. Today, in purchasing power parity terms, Singapore has the third-highest per capita income in the world. It is one of the few Asian countries which has experienced exceptionally high growth rates during the past four decades. And it is one of the original “Four Asian Tigers”, along with Hong Kong, South Korea and Taiwan.

Furthermore, Singapore is one of the few developing countries, which made the transition from a developing to developed status. Indeed, Singapore made the transition from a low-skill and low-tech to a high-skill and high-tech country. The agricultural-based economy has become a manufacturing and service based economy. Most people in Singapore now work in the service sector, which employed 2,151,400 people out of 3,102,500 jobs in December 2010. Life-expectancy has been increasing and poverty has become rare.

Today, the Singaporean economy is known as one of the freest, most innovative, most competitive, and most business-friendly. The 2011 Index of Economic Freedom ranks Singapore as the second freest economy in the world, behind Hong Kong. The Global Competitiveness Index 2012-2013 ranks Singapore as the first most competitive country in world.

The Networked Readiness Index 2013 ranks Singapore as the second most tech-savvy country in the world, just behind Finland. The Global Innovation Index 2013 ranks Singapore as the 8th most innovative country in the World. According to PISA (Program for international Student assessment, 2009), Singapore ranks as the 5th best education system in the world.

The country is currently the only Asian country to have AAA credit ratings from all three major credit rating agencies -- Standard & Poor's, Moody's, and Fitch. According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world. Singapore attracts a large amount of foreign direct investment as a result of its location, corruption-free environment, skilled workforce, low tax rates and advanced infrastructure. More than 7,000 multinational corporations from the United States, Japan, and Europe are present in Singapore.

Singapore is a world leader in several economic areas. The country is the world's fourth leading financial center, the world's second-biggest casino gambling market, one of the world's top three oil-refining centers, the world's largest oil-rig producer, and a major ship-repairer. The port is one of the five busiest ports in the world. It is also the world's fourth largest foreign-exchange trading center after London, New York and Tokyo.

Singapore is doing quite well in terms of environment, an issue that concerns almost every country in the world. The number of private cars on the road is restricted so as to curb pollution and congestion. Car buyers must pay for duties one-and-a-half times the vehicle's market value and bid for a Singaporean Certificate of Entitlement (COE), which allows the car to run on the road only for a decade. The costs are generally very high and thus only one in 10 residents owns a car. The air pollution is therefore quite low compared to other big Asian cities like Beijing.

According to ESCAP, the total fertility rate is estimated to be 1.3 children per woman in 2011, one of the lowest in the world and well below the 2.1 needed to replace the population. To overcome this problem, the Singapore government has been encouraging foreigners to immigrate to Singapore for the past few decades. The large number of immigrants has kept Singapore's population from declining. Its population has even been growing thanks to immigration, passing from about 3 million people in 1990 to 5 million people in 2010.

Singapore has the world's highest percentage of millionaires, with one out of every six households having at least one million US dollars in disposable wealth.

Despite its relative economic success, Singapore does not have a minimum wage, believing that it would lower its competitiveness. It also has one of the highest income inequality levels among developed countries, coming in just behind Hong Kong and in front of the United States.

Since Singapore has arrived at the top of the ladder, its future development will depend on its capacity to innovate. Its future also depends heavily on the world economy, because the Singaporean economy depends heavily on exports.

Indeed, Singapore is arguably over-dependent on exports, with the highest trade-to-GDP ratio in the world at 407.9 percent. Singapore is the 14th largest exporter and the 15th largest importer in the world. This means that the economy is very exposed to fluctuations in the world economy.

Along with Indonesia, Malaysia, the Philippines and Thailand, Singapore founded ASEAN (Association of Southeast Asian Nations). Its aims include accelerating economic growth, social progress and cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully. Border issues still exist, however, with both Malaysia and Indonesia, and both have banned the sale of marine sand to Singapore over disputes about Singapore's land reclamation. Some previous disputes have been resolved by the International Court of Justice. In 1979, Singapore also joined the Non-Aligned Movement.

Singapore's economic miracle is the result of strong, and arguably authoritarian, leadership. From 1965 to 1990 Lee Kuan Yew was Singapore's Prime Minister. From 1990 to 2004 Goh Chok Tong was Singapore's Prime Minister and in 2004, Lee Hsien Loong, the eldest son of Lee Juan Yew, became the country's third Prime Minister. But the aging Lee Kuan Yew, who is now almost 90 years old, remains firmly present behind the scenes.

Indeed, although Singapore is one of the most developed countries in the world, it remains an authoritarian regime. Freedom House ranks Singapore as "partly free" in its “Freedom in the World” report. The Economist ranks Singapore as a "hybrid regime", the third rank out of four, in its "Democracy Index". In 2011, the World Justice Project's Rule of Law Index ranked Singapore in the top countries surveyed for "Order and Security", "Absence of Corruption", and "Effective Criminal Justice". However, it scored low for both "Freedom of Speech" and "Freedom of Assembly". In 2009, Singapore was ranked 133rd out of 175 nations by “Reporters without Borders” in the Worldwide Press Freedom Index. Singapore has possibly the highest execution rate in the world relative to its population.

The Singapore regime remains stable at the moment. But it may see a deceleration of its economic development, along with rising unemployment, in the next decade, because of the slowdown of the world economy and its own economic maturity. Discontent and unhappiness could rise, and a collapse of the regime might become a real threat.

An authoritarian regime can be good for a country, when the population is uneducated -- if the regime is not corrupt and pursues enlightened policies, as Singapore has done. But since the country is now well educated, a democratic regime would now be more suitable. A possible transition to a real democratic system will probably be the main change and challenge in the next few decades.

Singapore’s economic development and strategic advancement can serve as an example for other countries such as most under-developed African and other Asian countries. Since a large proportion of African people are still highly uneducated, democracy may not be the best solution for many countries for the moment.

Lee Kuan Yew once said: "I am often accused of interfering in the private lives of citizens. Yes, if I did not, had I not done that, we wouldn't be here today. And I say without the slightest remorse, that we wouldn't be here, we would not have made economic progress, if we had not intervened on very personal matters - who your neighbor is, how you live, the noise you make, how you spit, or what language you use. We decide what is right. Never mind what the people think".

In conclusion, Lew Kuan Yew's style of leadership was very effective in enabling Singapore to climb the development ladder. But all things considered, a new kind of leadership is increasingly necessary. As reflected in recent election results, it is being demanded by the population which would like political and social freedom, as well as economic freedom.

Most importantly, a freer and innovative society can be a breeding ground for an innovative economy, which Singapore needs now. And Singapore's citizens may be a greater source of knowledge, ideas and wisdom than the government gives them credit for.
Tags: asean, singapore, development, democracy, Lee Kuan Yew, authoritarianism