Special Report

Welcome to Singapore

If the much-abused term “economic miracle” deserves to be applied to any country, it can be clearly attached to Singapore; a country which by all rational predictions should have collapsed into poverty and civil war 30 years ago or at best, ended as a minority ethnic province of Malaysia. Instead we find a distinctly first-world country – happy, peaceful, prosperous and uniquely well governed – displaying a single minded devotion to superb food and boundless shopping.

Singapore is now busily reinventing itself as the banking and technology hub of Asia. Despite the generally negative press coverage of its “authoritarian governance” I have yet to encounter any country where the general populace appears as genuinely pleased with its government.

Singapore is an anomaly by any standards. A small ethnically Chinese City-state sandwiched between two sometimes turbulent Moslem countries; its early days were marked by severe instability after it was ejected from the Malaysian Federation due to Lee Kuan Yee’s refusal to embrace positive discrimination of the indigenous Malay population (as opposed to the rather more industrious ethnic Chinese). Under the “authoritarian” Lee Kuan Yee leadership, Singapore quickly reinvented itself as an electronics manufacturing and freight shipment hub. At one time it led the world in computer hard-disk production and grew from a colonial backwater into a major regional player within a very short time.

Currently, given the loss of its competitive advantage in manufacturing to China in the area of precision electronics, Singapore is reinventing itself once again; this time as a hub for high value- added financial services (in particular, asset management, hedge funds, and private banking) with a substantial side-bet on biotechnology.

In a region rife with ethnic violence, religious intolerance, and nationalism, Singapore is an anomaly. Religion is taken to be a purely personal matter, racist propaganda will get its author promptly locked up, and under a strict meritocracy, foreigners can be employed at the highest levels in financial, governmental and quasi-governmental institutions, including the Central Bank. While the native population is 74% In a region rife with ethnic violence, religious intolerance, and nationalism, Singapore is an anomaly. Religion is taken to be a purely personal matter, racist propaganda will get its author promptly locked up, and under a strict meritocracy, foreigners can be employed at the highest levels in financial, governmental and quasi-governmental institutions, including the Central Bank. While the native population is 74% Han Chinese, there is no discrimination against Indian, Malay or European minorities.

Singapore has received a considerable amount of bad press in the West for the “authoritarianism” of its regime. The press is censored, especially for anything which might provoke religious, ethnic or class-based conflict, but also for the expression of virtually any anti-governmental views. Public demonstrations are banned and political enemies have been sued into bankruptcy. While Premier Mr. Lee banned religious proselytizing, pornography and relentlessly prosecutes users of recreational pharmaceuticals. Smoking is permitted almost nowhere and cigarette packs bear truly gruesome pictures of smoke-induced diseases; even the sale of chewing gum and the public use of profanity are banned.

Cultural life has been desperately bland, but recently we have been treated to the amusing spectacle of a rather prudish and censorious government, faced with an urgent need to make Singapore a less risk-averse place more prone to US-style, out of the box thinking. Now the powers that be are actively promoting distinctly edgy theatre productions, and even some Bangkok- style nightlife… plus ca change!

In encounters with the always-polite Singaporeans; from taxi drivers to journalists and toplevel executives - when asked for their views on their government, most replied with what they thought us Westerners wished to hear - some mildly self-deprecating remarks regarding Singaporean “authoritarianism” as presented in the foreign press. Yet when we dug just a bit further, everyone quickly confessed to being secretly delighted with their government, something we have encountered nowhere else on earth!

From cabbies to billionaires, people felt prosperous, life was safe and predictable, taxes were low and one received excellent service for one’s money. Indeed, one fund manager went so far as to tell us that he had refused to apply for a tax exemption in what was a government-favored business sector as he felt that his taxes were already low and were well spent.

The Singaporean model is not an obvious export commodity. Singapore is small and deeply imbued with Confucian values and is graced with an efficient and almost preternaturally honest bureaucracy. Nevertheless, in its broad outlines, this model has clear relevance elsewhere in the developing world. If nothing else, as a demonstration that the particular form of liberal democracy that the West seeks to export is not necessarily the most conducive to human happiness.

Certainly, it can be argued that liberal democracy in developed countries either tends to be rapidly corrupted by financial interests or to be overwhelmed by man’s inherent anarchic tendencies in the absence of strong institutional constraints. But in a nation such as Singapore, where authoritarian leadership has been relatively enlightened, society has advanced far more rapidly than would have been otherwise expected and produced a happy and content populace.

Eric Kraus is adviser to the Nikitsky Russia/CIS Opportunities Fund. This article originally appeared in the newsletter Truth & Beauty (... and Russian Finance)

The opinions expressed in this article are those of the author and should not be taken to reflect the views of the publisher or the advertising sponsors of this Special Report.