Singapore's development and achievements over 50 years
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What will Singapore be like 40 yearsfrom now? I can’t tell you. Nobodycan. But I can tell you it must be atotally different Singapore because if
it is the same Singapore as it is today,
we’re dead ... We have to remake Singapore – our economy, our education system, our mindsets, our city.
– Prime Minister Lee Hsien Loong (2005)
We can no longer prosper and progressthrough hard work alone.Our people have to masterdeep skills in every field, and
our enterprises have to bringnew ideas to the market.
– Deputy Prime Minister andFinance Minister TharmanShanmugaratnam (2015)
50 and beyond: Singapore’s economic transformation
BT Infographics
Source: MTI, DOS BT Graphics: Jennifer Chua & Ludwig Ilio
10
8.1
7.1
13.6
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11.1
6.5
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7.4
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8.79.4
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-0.7
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7.5 8.3
-2.2
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71,318
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-0.6
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KEY INDICATORS
UNIndustrialisationProgramme
New PM:Lee Kuan Yew
Singapore joinsFederationof Malaysia
EDBestablished
Singapore gainsindependence
Konfrontasiends
Singapore issuesown currency;Asean formed
MASestablished
National Wages Council,National Productivity Boardformed
Stock Exchange
of Singaporeincorporated
Global oil crisis thwarts8-year run of double-digitgrowth; Temasek Holdingsincorporated
MTIset up
World hit bysecond oil shock
GIC – then knownas GSIC – formed
Singapore employers beginpaying a levy for foreign workers
Global economy shows
best performancein eight years
Singaporeplunges intorecession
Gulf War
GST introducedat 3%
Sars; Iraq War;GST increased to 4%
New PM:Lee Hsien Loong;
GST increasedto 5%
GSTincreased
to 7%
GlobalFinancialCrisis
Lee Kuan Yewdies
Asian
FinancialCrisis
Singaporeslumps intorecession
Local stock marketenjoys super bull run
Apecestablished
New PM:Goh Chok Tong
1965 19701960 1975 1980 1985 1990 1995 2000 2005 2010 2015
Quick economicrecovery, but
reboundshortlived
Singapore fallsinto recession
1979 – 1985• Rising wage costs,
tight labour market• Competition from
lower-cost developingcountries
GROWTH STRATEGIES• Shift to higher value-add
and skills-intensiveinvestments
• 1979: three-year wagecorrection policy to pushup wages, induceefficient use of labour
• 1981: First productivitycampaign, emphasising
manpower development,automation
OUTCOMES• Growth averaged
7.7% pa• Nominal value-added per
manufacturing workerrose by S$8,600 overperiod
• Skilled employmentdoubled to 22%
1985 – 1991• 1985-1986: First
recession sinceindependence
• Due to weakexternal demandand fundamentalinternal problems(loss of competitiveness, constructionslump, oversaving)
GROWTHSTRATEGIES1986 EconomicCommittee Report
• Cost-cuttingmeasures: reduceemployers’ CPF rate,wage restraint
• Promote services –eg tourism & banking– as actively asmanufacturing
OUTCOMES• Quick rebound,
double-digit growthby 1987
1991 – 1997• More mature
economy, slowergrowth
• Faster rising costs,more bindingresource constraints
• Greater overseascompetition
• Relatively low-techbase
GROWTHSTRATEGIES1991 StrategicEconomic Plan• Growth Triangle
network of Singapore,Riau Islands, Johor
• Move to developedeconomy: enhancehuman resources &soft infrastructure;help local firms expandabroad
OUTCOMES• Growth averaged
8.5% pa• Direct investments
abroad shot up fromS$16.9b in 1990 toS$75.8b in 1997
1997 – 2001• 1997: Asian
FinancialCrisis
• Rise of China& India bringsopportunities,challenges
GROWTHSTRATEGIES1998CommitteeReport
• Vision tobecomeglobally
competitiveknowledgeeconomy
• Manufacturingand services astwin enginesof growth
• Developgloballycompetitivelocal firms
• Governmentto be businessfacilitator
2010 – Present• New & volatile
global economicenvironment
• PM Lee Hsien Loongforms EconomicStrategies Committeeto build capabilities, maximiseopportunities, fostersustained andinclusive growth
GROWTH STRATEGIES 2010 Economic Strategies CommitteeReport
• Raise productivity ofworkers in all sectors,with raising wages asend-goal
• Reduce reliance onforeign workers byraising leviesprogressively
• Budget 2010: NationalProductivity Fund setup, Productivity andInnovation Credit (PIC)introduced
In five decades, Singapore has weathered five recessions, clocked 18 years of double-digit growth, and transformed into a global hub for finance and commerce.Through all the swings and dips, one thing has remained true – the relentless push to stay competitive. The Business Times takes a look at Singapore’s economic transformation,and ponders on the strategies that may lie ahead. – By Kelly Tay and Andrea Soh
Three main dimensions to future growth:
Industry contribution to GDP (%)
GDP per capita, population
1ADVANCEDMANUFACTURING
Deep capabilities inwide spectrum ofdisciplines – electrical,mechanical, and
process engineering
Diverse portfolio ofindustries concentrat-ed in a city-state
New opportunitiesfrom technological
trends
• Pervasive innovation inevery firm, industry
• Develop own products &
services• Become leading centre for
value creation in businessstrategies of foreigncompanies
FROM VALUE ADDITIONTO VALUE CREATION1
• Hone deep skills inevery vocation
• Learning at every
stage of life• Multiple pathways to
success
MASTERYOF SKILLS2 SINGAPOREAN
CORE3• High-skilled, innovative
teams in every sector• Good careers for
Singaporeans• Globally competitive
local companies
2 APPLIED HEALTHSCIENCES
Strong science
foundation, respectedhealthcare services,deep Asian consumerand market insights
New demand fornon-traditional modelsof care, due to growingaffluence and rapidlyageing population inAsia and elsewhere
3 SMART &SUSTAINABLEURBANSOLUTIONS
Countries in regionalready look toSingapore as a model
and pioneer ofsustainable citymanagement
Growing urbanisationworldwide
4 LOGISTICS &AEROSPACE
Already Asia's
leading logistics hub,airport, and seaport
Rising volumes oftrade in Asia
Allow companies tocompete on factorsother than costs
5ASIAN & GLOBALFINANCIALSERVICES
Already among the topfive internationalfinance centres in theworld
Rapid growth of AsianfinanceRise in areas likeinfrastructure funding,structured tradefinance, wealth
CITIZEN POPULATIONTOTAL POPULATION
0
1
2
3
4
5
6
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
20142010200520001995199019851980197519701965
20142010200520001995199019851980197519701965
POPULATION (MILLION)GDP PER CAPITA S$, AT CURRENT MARKET PRICES
1960 – 1964• Small country, no
natural resources• Dependent on
entrepot trade,British militarybases
• Little industrialknow-how &domestic capital
GROWTHSTRATEGIES• 1960: First state
development planby UN team
• EDB set up to
spearheadindustrialisationeffort, attractforeign investments
• Import-substitutionapproach, tariffs onimports
OUTCOMES• Growth averaged
5.2% pa• Manufacturing’s
share of GDP grewfrom 11% in 1960 to13% in 1964
1965 – 1978• After separation from Malaysia, import
substitution no longer relevant• High unemployment of 10%, exacerbated by
closure of British bases which provided40,000 jobs
• Konfrontasi threatened trading post role
GROWTH STRATEGIES• Export-oriented approach• Attract foreign investors to grow manufacturing
and financial sectors• Investments in infrastructure, nationalised
companies in areas where private sector lackedexpertise
OUTCOMES• Growth averaged 10% pa
• Unemployment rate fell to 3.6% in 1978• Manufacturing’s share of GDP grew from 14% in
1965 to 24% by 1978
63,49849,715
41,01835,346
23,139
14,92110,7146,0672,8321,580
2.1m 2.3m 2.4m2.7m
3m
1.9m 1.9m2.2m
2.6m2.8m
3.5m 3m
3.1m 3.2m 3.3m
4m 4.3m
5.1m5.5m
JurongIndustrial
Estate JurongBird Park
SingaporeZoo
ChangiAirport
Gardensby the BayMBS
% GDP GROWTH (2010 MARKET PRICES)
FIVE DECADES OF TRANSFORMATION
As Singapore’s economy matures and enters a new phase, the
government is expecting slower but better-quality growth.
Expansion will be driven by deep skills and innovation, with
Singaporeans at the core.
In Budget 2015, five growth clusters of the future were identified. The aim is to build on existing
strengths, and to focus on areas with growing demand, and where Singaporeans can excel.
WHAT'S NEXT? 2015 AND BEYOND
Note:Citizen populationfigures for 1965,
1975 and 1985not available
SingaporeFlyer
Merlion
Underwater World Esplanade
2001 – 2010• 2001: Singapore economy
contracts 1.2%; Dotcombubble; Sept 11 terroristattacks
• 2003: Sars crisis, tourism& entire economy suffer
• 2008/2009: GlobalFinancial Crisis
GROWTH STRATEGIES 2003 Economic ReviewCommittee
• Ensure competitiveness,cut corporate & income taxto 20% from 25%
• Flexible foreign worker
policies• National continuing
education & training bodyrecommended
OUTCOMES• Economy grew strongly, on
the back of strong inflows offoreign workers
• But reliance on cheapforeign labour led to lowerproductivity growth
• Infrastructural pressures
The question was, howto make a living? How to
survive? This was not atheoretical problem in theeconomics of development. It
was a matter of life and deathfor two million people.
– Founding prime minister Lee Kuan Yew (1978)
W H Y
E X I S T I N G S T
R E N G T H S
18.4
17.5
15.85. 1
12.5
17.5
11.5
6. 914.3
23.6
9. 36. 24. 6
19.6
16.5
10.4
Others
Finance & insuranceConstruction
Business servicesTransportation & storage
Manufacturing
Other services industries
Wholesale & retail trade