The History of Singapore. Editor: Jean E Abshire. The Greenwood Histories of the Modern Nations Santa Barbara, CA: Greenwood, 2011.
Since its independence in 1965, Singapore’s transformation has astonished observers around the globe. The degree of progress in economic and social development, and the speed of change, is nearly unrivaled. After the merger with Malaysia failed, Singapore had little to recommend it other than an excellent location and a hardworking population. It had little land, no natural resources, an economy that was vulnerable to fluctuations in international trade, and an economic development program that was unviable. The obstacles before the political leadership, the People’s Action Party (PAP), were immense, but they successfully charted a new course for Singapore. The focus of their efforts was forward thinking: they were at the leading edge of poor countries using export-oriented manufacturing for economic development, essentially a step into contemporary economic globalization. Along with Hong Kong, South Korea, and Taiwan, Singapore became part of the elite group known as the Four Asian Tigers, newly industrializing economies with some of the highest economic growth rates in the world. Across the decades, the government shifted strategies to stay with, or ahead of, the global economic trendsetters, and it has paid off. In terms of social development, the government pursued policies that improved the quality of life for many people, especially in the areas of housing, education, and health. The area that has made the least progress is political development toward a free and democratic government; the government holds regular elections but limits basic freedoms of press, speech and assembly, and suppresses political opposition before it can develop into a competitive force. Thus, while the economic benefits have been enormous, Singapore’s development has not come without cost, at least to some individuals.
The Early Years of Independence, 1965-1973
Prior to ejection from the federation with Malaysia, the PAP set a course, under the advisement of the World Bank, toward import-substitution industrialization, which was a typical approach at the time for developing countries. Under this type of industrial development, countries erect considerable trade barriers against imports from other countries and seek to develop domestic industries to produce and replace goods that were once imported. The government hoped these industries, mostly low-wage and labor intensive, such as textiles, would absorb many of the unemployed workers (10% in 1960). Success in import substitution depended, in part, on a domestic market that was large enough to purchase the new domestic products. While there was a large potential market for domestic products when Singapore was part of Malaysia, Singapore’s population of just less than two million was not adequate for a successful domestic market. Thus, upon independence, the political leadership immediately shifted to a different strategy.
The PAP pursued export-led industrialization that would be funded primarily through foreign investments. This was necessary for several reasons. Hong Kong and Taiwan had benefited from the flight of industrial entrepreneurs from the People’s Republic of China, whereas Singapore had commercial entrepreneurs but few with industrial experience. Moreover, Singapore could not rely on regional trade or investment because of trade barriers in the neighboring countries. Finally, due to a political climate created in the 1950s, the political leadership had the opportunity to focus on foreign funding. In the 1950s, the PAP embraced the left-leaning masses of poor laborers as the party’s base. The wealthy conservatives were sidelined by the overwhelming electoral strength of the PAP and lost political status within society. This left the PAP free to pursue whatever policies it wished, without feeling the political pressure to take wealthy domestic interests into account. The PAP chose to focus almost exclusively on what foreign investors would offer, which, in addition to funding, was also managerial expertise and ready markets for the exported goods.
To create an inviting foreign investment climate, the government put a number of policies into place. First, it implemented a series of financial incentives, including substantial tax breaks. Second, the government positioned itself as a low-risk investment environment through peaceful labor relations. To prevent the labor unrest that had plagued Singapore in the decade before independence, the government passed legislation intended to limit conflict and improve productivity, including limited vacation time, longer working hours, and reduced payments for overtime. Decisions relating to job assignments, promotions, lay-offs, etc. were placed solely in the hands of management and were no longer subject to negotiation, which had been a prior source of labor-management conflict. Concessions to workers included sick leave, severance pay for lay-offs, and increased employer contributions to the national retirement fund, the Central Provident Fund. In 1971, the government took a further step with the creation of the National Wages Council, on which members from the government, labor, and management worked together to set wage levels. Collectively these policies created a very stable work environment, which, coupled with government programs for vocational and technical training to provide basic skills to the workforce, made Singapore a desirable investment locale.
While working on the foundations of this favorable investment environment, the government acted in other ways to advance the export-led growth plan. It revamped the Economic Development Board, created shortly before independence. It continued to promote economic development but shifted financing operations to the new Development Bank of Singapore. The Development Bank provided funding partnerships to private capital investments, particularly if an investor was wary of funding a project alone, giving government-related institutions a considerable role in the development of Singapore’s economy. In addition to providing funding, the government established a number of government-led companies, many of which formed joint-venture partnerships with foreign corporations. These government-led companies are an enduring feature of Singapore’s government-managed economy. This affiliation with the government has lent them credibility and security as partners for investors, but they nevertheless function largely as independent, for-profit, competitive companies. The government quickly formed government-led companies in areas that it especially wanted to target for growth, including transport, shipbuilding, oil refining, and more. By 1974, the government had some involvement in at least 124 different companies.
While forming these plans, the government suffered a blow that threatened its progress. In 1968, the British government announced that it would withdraw from its naval and army bases in Singapore within three years. This raised a number of security concerns, but it also would have a negative economic impact. British military spending accounted for 20 percent of Singapore’s revenue at the time and for tens of thousands of jobs. The immediate fear was a sharp increase in unemployment. Lee Kwan Yew traveled to London to explain Singapore’s position and won a number of concessions from the British. Singapore’s government gained control of all military facilities, including schools, hospitals, shipyards, airfields, and 10 percent of the land on the island in addition to assistance with job retraining, a defense system, and a sizable financial award. What initially looked like potential disaster was turned into lucrative opportunities through the exploitation of these new resources. For example, the Sembawang Naval Base became a major port installation and was central in Singapore’s development of shipbuilding and ship repair industries.
The new resources left Singapore well positioned to capitalize on several international economic developments of the time. There was increasing oil exploration in Southeast Asia and Singapore’s existing port, petroleum storage facilities, and small refining infrastructure, as well as its location between Middle Eastern oil suppliers and top users in Asia, left it well positioned to become the region’s petroleum center. Already in the 1960s, Mobil set up operations in Singapore to service its Indonesian oil fields, and in 1970 Esso opened a refinery. Seeking to promote itself in this arena, the government established the Singapore Refining Company to develop joint ventures with foreign companies. The high quality facilities at the Sembawang port were useful in these endeavors, particularly for shipping, storage, and supporting oil exploration operations. The involvement of the United States in the war in Vietnam created demand for petroleum and other products, and helped drive the boom that Singapore experienced during this time. By 1970, oil comprised 40 percent of Singapore’s manufactured exports, and within a few years, it was one of the world’s top refining centers.
Concerns about transiting the Suez Canal because of conflict between Israel and its Arab neighbors increased demand for shipping support in Asia. Singapore quickly established the goal of becoming the second biggest shipping, shipbuilding, and ship repair site in Asia, behind Japan. The effects of these efforts were immediate: The revenue from Singapore’s shipbuilding and repair nearly doubled in just two years, from $64 million in 1966 to $120 million in 1968. The Sembawang shipyard was eventually an asset for that undertaking. To offer further support for the project, the government established another government-led company, the Neptune Orient Line. Improving existing port facilities, including a major expansion of container shipping capacity completed in the early 1970s, also added to the success.
Regional trade also increased after the first few years of independence. The Konfrontasi conflict ended in 1966, improving relations with Indonesia. Tensions remained with Malaysia, but Singapore began trying to repair these relations. In 1970, Singapore offered local entrepreneurs a tax benefit to invest in Malaysia and Indonesia. A short time later Lee Kwan Yew made his first Malaysian visit since the failed merger, resulting in the division of several joint Singaporean-Malaysian economic ventures that had caused ongoing tensions between the two countries. For example, the joint airline, Malaysia-Singapore Airlines, was decoupled and two separate airlines were established; Singapore Airlines, a government-owned corporation, subsequently became one of the world’s most highly regarded air carriers. These reduced tensions with both Malaysia and Indonesia opened the door to increased regional trade, which further helped Singapore’s growth.
Another major development was the decision of Bank of America to establish a “dollar market” in Singapore. The goal was to make U.S. dollars available for loans to borrowers in the region. The government successfully courted Bank of America to make Singapore the site of this market by offering a range of tax incentives, such as exempting from taxation the interest earnings of foreign depositors. Other banks soon followed Bank of America’s example in establishing financial operations, including a gold market, in Singapore. These activities created a sizable financial sector that provided diversity in Singapore’s economy, making it less vulnerable to shifting economic trends associated with a narrower economic base.
Singapore’s economy changed dramatically during this era, with an average economic growth rate of 10 percent in the 1960s and accelerating even faster in the 1970s. Until the new economic program was put into place, 70 percent of Singapore’s foreign investment came from Britain. Soon, however, that shifted as funds flowed from the United States, other European countries, Hong Kong, Taiwan, Malaysia, and Australia. By 1972, the United States was the source of 46 percent of foreign investment and the following year became the biggest trading partner next to Malaysia. Moreover, 70 percent of the value of manufactured goods was produced by companies that were partly or entirely foreign owned and these goods comprised 83 percent of exports, shifting much of Singapore’s trade away from entrepôt commerce. In terms of percentages of gross domestic product (GDP), in 1965 commerce accounted for 30 percent and manufacturing 15 percent. By 1973, commerce had dropped to 26 percent and manufacturing rose to 24 percent of GDP. The government succeeded at reducing unemployment to such a degree that, by the early 1970s, Singapore had to import foreign workers to meet demand for labor.
Accompanying the economic progress were significant improvements in social development. At the time of independence, Singapore, like many poor countries, was plagued by substandard housing, housing shortages, health problems, and an undereducated population. The government sought to rectify the problems. While the PAP advocated socialism, it is important to note that this was not a form of socialism that would be recognizable in a Western context. In the West, socialism implies a welfare state with a range of government programs to assist the poor and needy, in particular, but generally to redistribute wealth and minimize income inequalities. Often these efforts will take the form of government-funded health care programs, government-funded pensions, subsidized housing and food assistance for poorer people, financial support for the disabled and unemployed, and sometimes even government-assisted daycare and elder care. In its most comprehensive form, the government may offer “cradle to grave” assistance to its citizens. Singapore’s approach was (and continues to be) quite different. In fact, the government viewed the welfare state as undermining both the work ethic of citizens and the family as the basic unit of society, which bears responsibility for the wellbeing of all family members. The government made social investments that would support economic growth.
One of the government’s first acts was to expand the Central Provident Fund, the retirement savings system, from applying only to government employees to applying to all employees, a system that still exists today. Unlike in an American-style social security program, the government’s role is small and there is no redistribution of wealth. Workers and employers are both required to pay a certain percentage, initially 25 percent for each party, into a savings fund from which workers can later draw. This was a major step for providing for the long-term wellbeing of Singaporeans.
Hand-in-hand with the Central Provident Fund was the work of the Housing Development Board. Initially it built thousands of high-rise apartment for lower-income Singaporeans; with time, it expanded into building somewhat larger apartments for middle-income citizens. The scale and scope of construction was enormous as whole new towns were created, the first, Queenstown, as early as the mid-1960s and the second new town by 1973. These towns sought to meet all needs: People could work, shop, obtain healthcare, and enjoy other services all within the created town, and they had access to the growing public transit system when they needed to leave the new town. This removed people from the slum-like conditions of the dense urban center, and allowed the government to gain control of that land, replacing old dwellings and shops with office and hotel skyscrapers to support new business development. While the Housing Development Board constructed and operated many of the apartment buildings, the model was not one of pure social support. There was some subsidy given, but overall the residents paid the costs. The savings in the Central Provident Fund assisted the government in financing the housing construction as well as improvements to the infrastructure, including basic utilities, roads, and public transit.
This large-scale housing construction had significant social implications relating to Singapore’s ethnic composition. The official policy of the new country was multiculturalism. The four school systems in each language had legal equality, and any of the four languages could be used in the parliament. The government granted official recognition to holidays from each religious group (two Hindu, two Muslim, and one Chinese), although it was left to the individual communities to sponsor celebrations as the government remained a neutral actor above the fray of ethnic difference. While government officials spoke out in support of Chinese-medium schools, any hint of advocacy for one ethnic group was condemned as ethnic chauvinism, which was incompatible with the goal of a multicultural society. Indeed, the government’s policy was that ethnic conflict could destroy the state, so the wellbeing and, indeed, the survival of the country depended on ethnic harmony. In this context, the work of the Housing Development Board led to massive social integration. The old ethnic enclaves were razed and citizens from all over Singapore were relocated into ethnically mixed apartment complexes. One of the government’s tasks was to forge a Singaporean national identity that transcended ethnic difference, and creating ethnically integrated living spaces was a central feature in the project.
Another major social construction project involved education, which needed to be transformed to accommodate the demands of the developing economy. In 1966, the government introduced bilingualism into the schools whereby students would study one of the other four languages in addition to the language of instruction in their school. The schools developed a special emphasis on marketable skills that could be used in the industries, with particular focus on technology and science. Since English was seen as the language of commerce and technology, many parents opted for English education. The schools were also an important tool for national identity formation. For example, since 1966, students recite the National Pledge, “We, the citizens of Singapore, pledge ourselves as one united people, regardless of race, language or religion, to build a democratic society, based on justice and equality so as to achieve happiness, prosperity and progress for our nation,” at school assemblies and on important national days.
The goal of improving quality of life also necessitated changes in health care. The government launched a program of immunizations to combat diseases like smallpox and polio. Land reclamation projects, involving drainage programs, increased useable land for both housing and industrial development while helping with mosquito-borne illnesses like malaria. The expansion of the infrastructure gave nearly everyone access to piped water, and connection to the sewer system, which helped control illnesses from contaminated water, like cholera. These efforts improved the overall health of the people and soon the leading killers mirrored those of wealthy countries: heart disease and cancer instead of preventable diseases.
The last major social development issue the government tackled in the early years was problematically high population growth, which worsened the problem of unemployment. The Singapore Family Planning and Population Board was established in 1966, and charged with leading the effort to achieve zero population growth. The Board launched a Stop at Two campaign, encouraging people to have no more than two children, and the government established penalties and incentives to encourage compliance. Families with more than two children were placed lower on the priority list for government-built housing; government employees who had more than two children were denied maternity leave; hospitals charged higher fees for delivering the third and successive children; and no tax deductions were given for any children beyond the second. Simultaneously, the government legalized abortion and voluntary sterilization. The program, coming at the same time as increasing education and improved job prospects for women as well as increasing wealth (all demographic shifts associated with reduced population growth), worked almost immediately.
One might expect that independence would come with a certain amount of political change. In fact, there was very little. The Legislative Assembly became the Parliament and an appointed president took on the ceremonial role of head of state. Otherwise, the constitutional structures remained unchanged from those established in the late 1950s. The PAP’s unfettered control of government remained intact, enabling the party to initiate the economic and social development programs. While the party won a majority of seats in both 1959 and 1963, developments in 1966 cemented its hold on power. The opposition party, Barisan Sosialis (BS), sorely undermined by previous security actions that resulted in the imprisonment of much of its leadership, opposed the newly independent state, claiming it was a neocolonial entity, and BS members of parliament boycotted the parliamentary sessions. In 1965 and in 1966, the BS tried to mobilize student protests at Nanyang University. The University expelled students both times, and added the requirement of a voucher attesting to “suitability” for university admission. Security officials jailed more party members. Through 1966, the BS members of parliament gradually resigned and, by the end, the PAP controlled all of the parliamentary seats. In the 1968 elections, the PAP won all the seats, although there were only a handful of voting districts where opposing candidates ran for election. In 1972, there were contests for most of the seats, and the overall PAP vote declined to 70 percent, but it still managed to sweep the election and control all seats in Parliament.
It appears that the PAP leaders’ early struggles, particularly against the political unrest and threat from its own communist wing as well as problems with ethnic rioting in Singapore and Malaysia, left the leaders with a jaundiced eye toward democracy. They viewed it as a tool of communists and those advocating ethnic divisions. The leaders’ own comments make their position plain: Lee Kwan Yew said, “… checks and balances interfere with governing in a developing country where executive action must be swift,” and that one could not “… allow subversives to get away by insisting that I [have] ot to prove everything against them in a court of law.” Kishore Mahbubani, Deputy Secretary for Foreign Affairs, wrote,
“Freedom does not only solve problems; it can also create them. The United States has undertaken a massive social experiment, tearing down social institution after social institution that constrained the individual. The results have been disastrous…. Many a society shudders at the prospects of this happening on its shores. But instead of traveling overseas with humility, Americans confidently preach the virtues of unfettered individual freedom, blithely ignoring the visible social consequences.” Another PAP leader expressed it this way, “… I don’t believe that consultation with the people is a very productive exercise. People, even with education, tend to be irrational.”
With that rhetoric in the background, charges of weak democracy, and even human rights abuses, have plagued Singapore virtually since its founding. The government justifies its actions and positions in several ways. First, PAP leaders argue that good government provides for the wellbeing of its citizens and, thus, anything that potentially undermines Singapore’s desirability as a global center for investment, trade, finance, etc. must be stopped. This includes anything that could compromise Singapore’s political stability such as political unrest or ethnic conflict. Democracy, in their view, invites both those risks and must, therefore, be limited. Second, the PAP is quick to point out that in their regular elections, in which people are free to express their political preferences, voters return the PAP to leadership in election after election. Finally, the PAP argues cultural difference: Unlike in individualist Western societies, Asian societies like Singapore put the interests of the group first, and that it is both unfair and culturally imperialist to place Western, individualist demands on a society that made different cultural choices. The argument that trumps all, however, is economic: If it is good for the economy, it is good for Singapore, and political stability via the PAP is good for the economy.
The PAP achieved its exclusive hold on political authority by suppressing potential opponents, and controlling society. It is important to recognize in this context that there was no practical difference between the PAP and the government. Many scholars look to the demise of independent community organizations as a major tool of PAP control, as organizations unaffiliated with the PAP have been co-opted, intimidated, or driven out of existence by the PAP. The Chinese community, for example, had a vibrant network of clan, regional, temple, and burial-society organizations that thrived throughout the colonial period. Many of these organizations revolved around the leaders in the Singapore Chinese Chamber of Commerce, who were elites by virtue of the individual wealth they had amassed. However, the PAP’s need for loyalty for social stability led it to undermine any organization that could compete for people’s loyalty, and the organizations of the Chinese community fell on hard times after independence. The government especially tightened restrictions on activities by ethnic communal groups after ethnic rioting in Malaysia in 1969. Student groups, known for their political activism, also faced restrictions. Students at the University of Singapore were not permitted to select their own student union officers, and the university administration controlled the union’s funding. More intimidating for students, however, was likely the knowledge that the PAP influenced many hiring decisions for both government jobs and those in government-related companies. Anyone marked as a troublemaker was unlikely to find a good job after finishing college. It was government regulations that undermined the labor unions, in the course of their consolidation into the progovernment National Trades Union Congress, and also through the loss of most of their functions with the labor and wage regulations that the government implemented as part of its economic development plan.
In lieu of unaffiliated community organizations, the government created a network of new ones. Already in 1960, the government established the People’s Association, which was charged with running community centers, kindergartens, and other amenities to increase social connectedness. Many of these were launched along with the new apartment complexes being built to help create a new sense of community as people moved from their old neighborhoods. However, the organizations were also tools of social control. For example, in order to teach kindergarten, one had to be a PAP member, and government-trained staff operated the community centers. The People’s Association also served as an umbrella for a number of Citizens’ Consultative Committees, which were supposed to be independent of the party but did not develop in that manner. The name implies they would be a vehicle for citizen input and feedback but instead are a downward communication avenue from government to people.
The government also extended its political authority through media control. The broadcast media had been in government hands since the beginning. The print media, in contrast, had historically been an instrument of communist provocation, prompting the government to exert stricter authority. In 1971, the government targeted newspapers, and by the end of the year, only one of four English-language newspapers, the Straits Times, still existed. Simultaneously, the government challenged the non-English newspapers by suggesting they were foreign influenced, which threatened national security, and targeted journalists who worked for those papers.
Several colonial-era control laws were repeatedly renewed in case efforts at co-opting or intimidating opponents failed, specifically the Internal Security Act and the Preservation of Public Security Ordinance, both of which permit detention without trial. Both of these measures had a pre-independence track record of effectiveness, making their retention desirable. For example, the Internal Security Act had been used as part of Operation Cold Store in 1963, through which PAP leader and communist organizer Lim Chin Siong was jailed for six years. The Preservation of Public Security Ordinance had been used against the Straits Times in 1959 when its journalists were threatened with arrest and detention for questioning the merger with Malaysia. These laws were further expanded to assure social control into Singapore’s years of independence.
While establishing and maintaining authority was a primary task for the PAP in the early years, another project, developing political culture, also received due attention. One aspect of the political culture formation was tied to the multicultural national identity discussed above, but there were other important characteristics of the emergent political culture that affected Singapore’s political, social, and economic development. In a sense, the values promoted by the PAP were a blurring of the lines between the economic and the political, with emphasis on meritocracy, integrity, competition, efficiency, discipline, self-reliance, and respect for success.
These values applied to government and policy in a variety of ways. The government emphasized merit in its decisions on education policy, such as linking academic performance to admission and scholarships for college, as opposed to considering social concerns like ethnic representation for admission decisions or financial need for scholarships. Academic performance was also the basis for employment after graduation rather than non-merit-based factors like personal connections. The education system featured a tracking system so top-performing students, even at elementary levels, could be directed into successively more elite paths. Encouragement of self-reliance was evident in the decisions regarding a welfare state with, for example, pension funds being established as workers’ savings plans, rather than a government-supported program. These values even shaped PAP candidate selection. PAP officials had to pass a screening process before being allowed to run for office. Many were headhunted based on strong performance in the bureaucracy, government-led corporations, or the private sector. If individuals did not perform up to the level of party expectation, they were dismissed. Integrity is obvious in the almost corruption-free governance that leaders considered important for attracting investment to Singapore. In many ways, the state, society, and economy blended for the common cause of economic growth.
In addition to facing domestic challenges, the leaders of the new country had foreign policy concerns to address. Foreign Minister Sinnathamby Rajaratnam, who held the post from independence until 1980, was widely considered a master diplomat. He recognized Singapore’s dependence on relationships with other countries for economic wellbeing and national security. The improved relations with Indonesia and Malaysia that opened the door to trade also facilitated diplomatic relationships. Rajaratnam was crucial to Singapore’s inclusion among the founding members (together with Indonesia, Malaysia, Philippines, and Thailand) of the Association of Southeast Asian Nations (ASEAN), an important step in Singapore’s political globalization. ASEAN members worked together for mutual economic development and regional security, including combating narcotics trafficking and policing the Strait of Melaka, which continued to have problems with piracy. Singapore’s government, however, recognized the global power of the United States as an important piece of Singapore’s security configuration, particularly once the British completed their military withdrawal from Singapore. Immediately after independence, the country implemented a policy creating a military and compulsory national service for most Singaporean males; however in the case of a broader conflict, Singapore recognized the need for bigger, more powerful allies. In the early years, leaders reached out to Israel for military training and advice, as Israel used the military to integrate members of a diverse society, and could thus serve as a model for Singapore. The Israeli military also had experience in defending itself against much larger and stronger neighbors, something Singapore initially feared it might need to do. Relations with Israel also indirectly aligned Singapore with the United States. The military relationship with Israel ended once relations with Malaysia and Indonesia improved, but it serves as an example of both the breadth and strategic nature of Singapore’s foreign relations, not just for trade but for security and diplomacy.
Singapore’s first years as a country recorded amazing levels of development. A World Bank/International Monetary Fund report from 1970 painted a picture of success, saying that Singapore had “a general sense of ebullience & optimism” and “it is this proper sense of urgency which makes Singapore such an exciting place to live in and which, tempered as it is with humanity & concern for the well-being of the individual citizen, lies at the heart of Singapore’s outstandingly successful development & achievements.” More critical evaluators point to the price of democracy and justice. In the words of Lee Kwan Yew, “I am often accused of interfering in the private lives of citizens. Ye[t], if I did not… 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’s right. Never mind what the people think.”
Ongoing Growth, 1973-1990
While Singapore’s accomplishments were considerable, the government was careful not to slow down and fall behind the curve. Much of the world experienced a severe economic downturn in 1973-1974, but Singapore weathered it well thanks to a diversified economy and massive government spending on housing, infrastructure, etc. However, leaders saw the need for changes in the economic development strategy and the need for social progress and political action to support those endeavors.
New Economic Development Plans
The initial economic plan solved the problem of unemployment by creating many low-skill, low-wage jobs but a problem that had grown worse was income inequality. Lee Kwan Yew acknowledged that development had been substantial but not just or equal. By the early 1970s, the per capita income was the second highest in Asia. Singapore had a small group of extremely wealthy people, but the common worker had been left behind, with worker wages rising only about 5 percent compared to a 100-200 percent increase in executive compensation. In order to address this disparity, the government developed a new economic plan that invited higher skill, and thus higher paying and higher profit, jobs to replace the low-paying, sweatshop-type jobs created by the initial wave of industrialization.
Leaders announced a program, ultimately nicknamed the second industrial revolution, to replace labor-intensive work with technology-intensive work. The National Wages Council implemented “corrective wage policy” in which it increased wages to levels competitive for medium- to high-tech industries, thereby forcing manufacturers either to upgrade their production to merit higher wages or move their low-skill work to another country. The government increased training programs, gave tax breaks for training expenses related to medium- and high-tech employment, and gave more tax breaks to companies in desired industries to new establish operations in Singapore or to upgrade existing ones. Initially, certain high-skill foreign workers, such as engineers, were admitted to jumpstart the development. The targeted industries included petrochemicals, precision engineering, aerospace, electronics, computer software and hardware, medical instruments, office equipment, etc.
The petrochemical focus was logical given the ongoing importance of the oil industry, including exploration, extraction, and refining. In the 1970s, extensive new oil fields were found in the Gulf of Thailand, the Indonesian archipelago, and the South China Sea; Malaysia, Thailand, Philippines, and Vietnam became oil-producing countries, but Singapore had the advantage with an already well-established infrastructure. From 1977 to 1982, 40 percent of Singapore’s gross manufacturing exports was oil, although that percentage soon decreased as the new industrial program increased exports in other areas, especially electronics. The government’s commitment to the new industries was vast: To provide space for large petrochemical factories, it undertook land reclamation, and one, large Jurong Island emerged from seven small islands.
Massive amounts of new foreign investment flowed in, doubling between 1979 and 1984. In addition to the new industries, increases in off-shore banking caused growth in the banking sector, and heightened Singapore’s prominence as a financial center. All of this helped further diversify the economy, which became an increasing priority for the government to assure continued, steady growth. The Economic Development Board increased its promotional efforts by opening 22 offices in the United States, Japan, and Europe, all of which had been targets for luring investment since the beginning. The Economic Development Board could highlight many desirable characteristics in its marketing. Singapore offered skilled and English-speaking workers; a highly improved infrastructure with quality communications facilities, expanded and mechanized port facilities, and a new international airport at Changi; a taxation and regulatory system that favored business; and political stability and noncorrupt government that facilitated the security of investments. Changes in the economic policies of China also yielded new economic opportunities; as China opened its markets, Singapore, with its large ethnic Chinese population, positioned itself to capitalize on the situation.
However, the mid-1980s brought Singapore’s first economic downturn since independence with a drop in per capita income and gross domestic product. The recession especially affected manufacturing and oil refining. This was a surprising event as people had become accustomed to growth, and there was talk of malaise and charges that Singaporeans were insufficiently entrepreneurial. A special taskforce concluded that the recession was caused by changes in the global economy and that Singapore’s international competitiveness was declining. The government implemented a series of new priorities and plans to turn things around. To reduce business expenses and help Singapore become a center for profitability again, policy makers cut business taxes, utility costs, international telephone charges, and employer contributions to the Central Provident Fund, and the government offered subsidies for property rentals and port fees. The government also pushed for advanced technology and higher value-added business investments. The focus shifted to marketing Singapore as a “total business center” for international corporations where Singapore could serve as a regional company headquarters with proximity to production sites in nearby countries that had cheaper labor costs. Singapore could offer a range of business support services like banking, accounting, and law along with motivated and experienced managers. Again the government initiated new programs to increase the skills and productivity of the workforce, with special training for clerical, administrative, and technical staff. The strategy was successful: by 1991, 3,000 international corporations had Singapore-based offices, including Citibank, DuPont, General Electric, Hewlett-Packard, and IBM.
A second strategy attempted to capitalize on Singapore’s many small- and medium-sized companies, many of which were Chinese family firms that had been virtually ignored in the government’s development plans up to that point. The government hoped these firms could exploit China’s entry into globalization by establishing trade relationships, finding investment opportunities, and meeting the demands of China’s growing wealthy elite. This was part of Singapore’s plan to become an international investor in the surrounding region, rather than just a recipient of international investment. The government-led corporations partnered with the small- and medium-sized companies for much of this activity. Economic planners also hoped that Singapore, with its total business center assets, could employ its Chinese-speaking population as an intermediary for European and American companies that lacked the language skills and cultural insights for easy business relationships in China.
Many social changes happened during the first years after Singapore’s independence, but the government’s social engineering programs continued. Two programs seem connected to the ongoing development of a national identity. While government rhetoric touted multiculturalism, a communal slant developed through the creation of pro-Chinese programs. Government leaders, including Lee Kwan Yew (who once said of himself, “I am no more Chinese than President Kennedy was an Irishman”), promoted Chinese-language education, suggesting that English-educated Singaporeans lacked cultural roots. To combat this perceived problem, one program promoted what leaders called Confucian Values, specifically traditional Chinese values, such as discipline, industriousness, frugality, family-orientation, etc. Administrators added Confucian and other Asian values courses to school curricula. While it may have been aimed at forming identity and creating roots, some scholars have pointed out that Confucian values also support a hierarchical society where benevolent leaders rule at will and elites are not challenged, which would support a government’s control of society and economy. Around this time, too, the government drastically cut social programs, such as financial support for people with disabilities, since it was a family’s responsibility to take care of people who needed assistance, and everyone who could possibly work should do so. The other program advocated the use of Mandarin by everyone, from food hawkers to business executives. Speaking Mandarin could not only be used to do business with China but also to promote economic relations with Taiwan and give Singapore an edge over Westerners and the Cantonese-speaking people of Hong Kong. The campaign was also an attempt to unify the Chinese community and to undermine the ongoing use of dialects. The bottom line was that the government wanted people to speak proper Chinese, and that was Mandarin.
Beyond government initiatives, results of the efforts to build a multicultural identity seemed mixed at most. Intermarriage rates among communities remained low, even when there were no religious differences. The Malay ethnic group showed signs of difficulties, particularly as the government gradually removed the few special provisions they had as a group (such as free college tuition). While there were some poor Chinese, the Malay group more than others lagged in socioeconomic progress, such as wealth and educational attainment. In 1981, the government set aside funding for the establishment of a Malay community organization, Mendaki, to be led by Malay members of parliament. The group was to encourage educational progress, which in turn would increase the financial wellbeing of the community. Finally, perhaps most telling was what developed in the integrated housing units. Once people had greater choice about where to live, communities began to resegregate. In studies regarding people’s likes and dislikes about government housing, one of the frequent complaints was lack of community, little neighborliness, and other indicators of a sense of communal isolation. There developed certain areas where members of a particular ethnic community tended to live in greater number.
Changes in the housing situation facilitated this partial resegregation. By 1989, the Housing Development Board had built well over 800,000 apartments and virtually the entire population had adequate housing. The Board permitted people to purchase their apartments at affordable costs, and by the mid-1980s, the vast majority of people owned their own homes in the apartment blocks. Workers used their contributions to the Central Provident Fund for housing purchases, thus the increase in homeownership did not reduce the government’s role in people’s lives. Instead, the government essentially became banker to most citizens, especially considering that most people did their personal banking at the Post Office Savings Bank, a government operation. The buying and selling of homes permitted people greater choice in where they lived, and thereby undermined the policy of full ethnic integration in housing.
The social engineering plan with perhaps the greatest success was the Stop at Two program to halt population growth. Singapore achieved zero growth by the later part of the 1970s, and by the mid-1980s, the program had overshot its mark. Women were in the workforce in increasing numbers; and although a substantial wage gap existed, women actually had an advantage in employment and gaining seniority, since they did not have to serve in the military like their male counterparts. Women with higher earnings and women of the Chinese community tended to have the fewest children, whereas poor women and women of the Malay and Indian communities tended to have more, but the overall trend was sharply downward. Suddenly the government needed to engineer population growth, although it sought to do this selectively, encouraging poorer and less educated people to stop at two but encouraging wealthier and more educated women to have more. Policy makers put in place various incentives to promote reproduction, including tax rebates, medical and housing benefits, priority in school choice, and childcare assistance. The government also created a Social Development Unit that acted like a matchmaking service for university graduates. It sponsored weekend retreats with equal numbers of male and female attendees; there were lessons in table manners, dancing, and other social skills. Despite the effort, there was little success in halting the slide of the birthrate.
One problem of social development to which government gave no attention was an increasing gap between the haves and the have-nots. There were members of society, typically the wealthier ones, who were fully integrated into the globalized city that Singapore had become, working on international finance deals, working for multinational corporations, traveling overseas on business, etc. There was another part of society that had been left behind and was not living globalization. Tensions increased in the 1980s, although the government dismissed them as “politics of envy.”
The PAP retained power throughout this period, although with some upsets. Having become accustomed to no opposition in the Parliament since 1966, it came as a shock in 1981 when a member of the Worker’s Party won a seat in a special election. The situation grew more alarming in the 1984 general election when the PAP lost two seats to the opposition. While this did not compromise the PAP’s ability to rule whatsoever, it was nevertheless a blow to party leaders. Lee Kwan Yew declared, “If … it continued this way then the one-man-one-vote system must lead to our decline, if not our disintegration.” To address an apparent desire for opposition voices, the government decided to add up to three nonvoting opposition members of parliament if opposition parties won fewer than three seats in an election. More to the point of protecting its power, prior to the next general election in 1988, the government enacted a significant change to the representation system in Parliament. Instead of having a single member of parliament represent voters in a given district (called constituency), the PAP began a process that continued over the years to shift to group representation constituencies in which a number of single member districts would be consolidated and represented by a group of parliamentarians. In the initial round in 1988, each of the group constituencies had three representatives, and one of the three had to be either Malay or Indian in order for the group representation system to meet the government’s stated goal of increasing minority representation in Parliament. Opponents of the system criticized the move as an effort to prevent opposition parties from winning seats, as they have to win a majority of the vote in larger voting units. No party other than the PAP has won seats in a group representation constituency since the system started in 1988.
Beyond its engagement with the questions surrounding parliamentary elections, the PAP expanded government influence over political actors in other ways during this period, including new legislation to exert greater control over the media. The 1974 Newspaper and Printing Presses Act mandated newspaper companies, editors, and printers to obtain annually renewed licenses, which the government may choose not to renew; in 1977 most of the country’s newspapers were brought under the control of a government holding company. In 1986, further legislation included provisions to restrict foreign publications that might influence Singaporean public opinion; the Far Eastern Economic Review and Wall Street Journal Asia, both highly respected media organizations, fell afoul of these laws and had their issues confiscated and their reporters declared unwelcome in Singapore. In 1982, a prominent bureaucrat, S. R. Nathan (who became president of Singapore in 1999), was placed in charge of the leading English newspaper, the Straits Times. Under his leadership, other Singaporean newspapers were restructured and put under the authority of the Straits Times, leaving print journalism virtually under government control.
The colonial-era security laws continued to be harshly applied. Government officials used the Societies Act, created to restrict the Chinese secret societies a century earlier, to target the Roman Catholic Church, which had advocated on behalf of immigrant workers, in particular Filipino maids, some of whom faced physical and sexual abuse by their employers. These immigrant workers’ few rights were largely unknown to them. When the Church sought to intervene on their behalf, the government expelled non-Singaporean priests and told the local Church organization to stay away from labor issues. The Internal Security Act continued to be a tool of authority, and legislators expanded its scope and frequency of use. In one notorious case, security officials detained Chia Thye Poh for 23 years on two-year renewable detention orders, which can be levied against anyone seen as a threat to security or the public order. Police arrested him in 1966 and did not release him until 1989, and then it was to a remote government house where he was prohibited from having any political visitors. People detained during this time period reported various forms of physical and psychological abuse, including beatings, sleep deprivation, threats to family, and forced confessions. Political leaders further strengthened the Act to permit any police officer to arrest a person believed to be a potential threat to security or social order, without a warrant, and hold that person for interrogation for up to 30 days.
Finally, another major tool for dealing with opponents is lawsuits for libel and defamation, in which Singaporean courts reliably rule in favor of government officials. To foreign newspapers, it is a reminder to be conscientious about what they publish about Singapore. To local individuals and organizations, such as opposition political parties, the common outcome is bankruptcy, which curtails political activities and has motivated a number of Singaporeans to flee the country to live in exile.
While the world changed much during these years and many of the earlier threats against social order in Singapore disappeared, the government saw an ongoing need for a strongly guided economy, society, and political system. A communist takeover would have undermined Singapore’s thriving capitalist society, but by the late 1980s, both China and the Soviet Union, the ideological leaders for international communist action, were reforming their own economic systems. Communism no longer posed a realistic threat. Nevertheless, the old-guard leaders seemed trapped by their life experiences of existential threat and acted accordingly. Economist Linda Y. C. Lim noted that Singapore’s economic development during this time had been praised by both free-market advocates like Milton Friedman and those that favored government intervention such as John Kenneth Galbraith. In a sense, Singapore’s approach to economic development offered something for everyone with robust, government-guided capitalism. However, Lim concluded, “Since independence, what has made Singapore successful is not the Invisible Hand of the free market, but rather the very Visible Hand, indeed the Long Arm, of the State.”
The Next Generation, 1990 Onward
Lee Kwan Yew, Singapore’s Founding Father, relinquished some of his day-to-day duties already in 1985, and in 1990, the PAP chose a new prime minister, Goh Chok Tong, to succeed him. Goh Chok Tong began his career as a civil servant and was tapped for upper management of the government-led shipping company, Neptune Orient Lines, before the PAP recruited him to Parliament and then the prime ministership. In 1991, the new prime minister and his team released their strategy statement, “The Next Lap,” outlining their plans and priorities for a future of “continuity and change.” The main idea was to build on the established foundations: increase funding for education to promote economic growth, expand the labor force by increasing the population via immigration and larger family size, and help people be self-sufficient to avoid the perils of welfare-state-based government spending on social programs. In many respects there was little change: The economic plan established after the 1985 recession rolled along and the economy grew; the Housing Development Board shifted its focus to upgrading housing; commercial ties with China expanded to full diplomatic ties; and the PAP remained in complete control of the government. Goh Chok Tong spoke of a more open society, and relaxed some censorship of nonpolitical media. Police used the Internal Security Act less frequently against critics, although the courts still meted out judgments favoring the government in libel and defamation lawsuits.
One policy shift was the 1991 decision to have a national ideology, something that Malaysia and Indonesia had also adopted years earlier. Leaders labeled Singapore’s national ideology “Shared Values,” and in many respects it was a reiteration of the earlier and largely unsuccessful Confucian Values campaign. The Shared Values statement was a simplistic distillation of some basic ideas from the cultures that comprised Singapore’s citizenry. There were five points: nation before community and society above self; family as the basic unit of society; community support and respect for the individual; consensus, not conflict; and racial and religious harmony. These were to stand in contrast to the individualist values of Western democracies that were plagued by crime, divorce, welfare programs, and the eventual financial ruin of the country as governments spend more to feed the ever expanding needs of society to assure reelection. Critics suggested the Shared Values were, as with the Confucian Values, a justification for the government to maintain tight political control.
Another nominal policy shift involved the presidency. The idea had been discussed in the 1980s, but it was not until later that the government transformed the presidency from a ceremonial, appointed office to an elected office with limited powers of oversight to prevent corruption (such as nepotistic appointments to the civil service) or unwise spending of the national reserve. The first election took place in 1993, but subsequent elections have not occurred due to the lack of opposing candidates. The Presidential Elections Commission oversees candidate selection based on qualifications standards so stringent, it is estimated that only about 400 Singaporeans could meet the criteria.
Indeed, through much of the 1990s, there was very little change, but late in the decade, a series of shocks brought about the worst recession since independence. It began in 1997 when the Asian Economic Crisis that started in Thailand spread to Indonesia, Malaysia, and beyond. Singapore’s level of investment in these countries and the amounts of weakened currency held by the banks was enough to push Singapore’s economy into recession. The government cut salaries for public employees, scaled back housing improvements, reduced employer contributions to the Central Provident Fund, and increased spending on programs such as education that would offer long-term economic benefits. The government also reassessed its strategy to cope with the increasingly rapid changes in the global economy. With the ascension of China and India and the improved development of other Southeast Asian countries, Singapore faced ever more competition. Leaders had to be vigilant about adjusting to meet new challenges and to capitalize on new opportunities. When economy began to recover in 2001, the government promoted alliances or mergers between Singaporean businesses and major global competitors in order to participate in the developing trend of consolidation within industries. For example, already in 2000, Singapore Airlines joined the Star Alliance, an international network of airlines that integrated their operations and shared passengers. Potential international partners pressured regulators for greater openness in business practices. At the same time, the World Trade Organization pushed for reduced regulation (liberalization) of sectors like finance and telecommunications. The government continued to encourage investment in poorer countries but began promoting investment in wealthy countries as well, such as SingTel’s (Singapore’s telecommunications company) purchase of a major part of the second biggest telecommunications company in Australia.
While the strategy was in place, Singapore confronted additional jolts that undermined the fledgling recovery from recession. The September 11, 2001 terrorist attack on the United States was a blow to the global economy, and caused a spike in national security concerns. As the wealthiest and only non-Muslim country in its neighborhood, the government feared Singapore might be a target for Muslim extremists, particularly those of Jemaah Islamiyah, an Indonesian-based terrorist group seeking the establishment of an Islamic state comprised of Indonesia, the southern Philippines, and the Malay Peninsula. Singapore increased its internal security provisions, resulting in the arrest of 15 Singaporeans in December 2001, and another 21 in September 2002, on charges of plotting terrorist attacks in Singapore and other countries. This spawned deep concern about how well the Malay population was integrated into Singaporean society. These events had economic repercussions, as did the outbreak of SARS (Severe Acute Respiratory Syndrome) in 2003, which killed 33 Singaporeans and caused a 30 percent drop in tourism. In 2004, a tsunami devastated parts of Indonesia and Thailand, and harmed the region’s economy. At about the same time, there was another global health scare with Avian Flu.
Singapore’s integration into the global economy has and will present challenges for the government and people. Singapore’s political leadership continues to push for changes that advance it as a knowledge-based economy to keep up with or ahead of the competition. Another political transition occurred in 2004, when Lee Hsien Loong, the son of Lee Kwan Yew, succeeded Goh Chok Tong as prime minister. Lee Hsien Loong has set his own path. Revised economic development plans target new areas of growth, some with significant political controversy. The most controversial involved the 2010 opening of two integrated resorts that offer casino gambling. While the government had long opposed gambling, the pragmatic new leadership concluded that it was too good an opportunity to pass up. The government hopes to increase tourism, which grew through the nineties but dropped off after 2001, and also capture some of the estimated billions that it is losing to Singaporeans going abroad to gamble. In typical fashion, however, controls limit the potential damage to Singaporeans. Citizens have to pay an admission of 100 Singaporean dollars per visit or 2,000 Singaporean dollars per year, whereas foreigners can enter for free. Singaporeans may not gamble on credit, and the government expanded counseling and rehabilitation services to help cope with gambling-related problems. The government also seeks to make Singapore a global education hub by capitalizing on its recent heavy investments in higher education. The goal is to have 150,000 international students at Singaporean universities by 2015. The third area for major development is medical tourism. Singapore offers first-rate medical care at minimal cost compared to the high costs of healthcare in the United States. For example, the 2006-07 cost of a heart bypass surgery in the United States was 130,000 U.S. dollars, whereas in Singapore it could be done for 18,500 U.S. dollars. The government’s target is one million medical tourists by 2012.
Still, challenges remain. Efforts to improve the birth rate have thus far failed, but the government keeps trying. The government now offers a Baby Bonus for second and third children, and a baby fund to which the government will deposit yearly matching funds to parental contributions for second and third children. More recently, the government announced a bigger bonus of 10,000 Singaporean dollars for third and fourth children.
As is common for highly globalized, knowledge-based economies, there are growing concerns and tensions that less-educated people are being left behind. At the same time as the bottom 20 percent of families suffered a decrease in income, Singapore was revealed to have had the greatest increase (22.4%) in number of millionaires among 68 countries studied. The government keeps pushing for family responsibility, and has mandated that children must care for their elderly parents, but the new reality Singapore faces is structural unemployment, a form of unemployment caused by the nature of the global economy that is difficult to overcome. Thus, the wealth gap will likely continue and perhaps increase, possibly causing greater discontent.
How Singapore handles these problems will determine how the country changes in the future. Singapore’s globalization thus far has been intensive in the economic and social sectors, but political globalization, which includes characteristics like expanded democracy, has been more limited. Singapore’s second generation of leaders does not appear substantially different from the first. Both have demonstrated a pragmatic approach to continue economic growth and justify their continuing political leadership. However, this may become more difficult as the economic competition becomes sharper, as dissatisfaction by those not participating in the economy grows, and as the government’s control of the media, especially the Internet, becomes weaker. Thus far, Singapore’s government has been relatively successful at limiting political criticism on the Internet, but this may not continue, since the country has extensive Internet penetration. Can the economy grow forever and will the people continue to be satisfied with wealth but not meaningful political participation? The People’s Action Party hopes so.