How Singapore Became the World’s Hub

 This is Singapore - the second smallest nation in Asia. But despite its size Singapore is known globally as a leading, innovative metropolis. A global financial center that is home to one of the most important ports in the world. And it has become all this despite massive challenges that could have prevented the country's development- In this speech by former Prime Minister Lee Kuan Yew, made in 1971 just six years into Singapore’s independence, he hints that there is something deeper at the heart of how Singapore achieves progress.

"But of course, everyone knows that Singapore is a very rich place." "Good infrastructure, communication, sea, air, land, good banking system, skilled workers. Oh, it’s just, natural course of events. It wasn’t you know, we made it so.” Today, we will look at what he means with that. Understanding how the country innovates as well as why. 

To understand how Singapore managed to thrive despite the limitations that a city-state faces, we need to take a look at how this nation came to be. From 1819 to 1963, with the exception of a few years during world war two, Singapore was under British rule. The colony served as a key trading hub within the region, receiving goods from the West while also exporting raw materials sourced throughout Southeast Asia including rubber and tin.

How Singapore Became the World’s Hub

 Therefore, from very early on - the transshipment port transformed Singapore into a multicultural location, attracting British and European traders, as well as laborers and merchants from throughout Asia. In 1959, when the British granted Singapore the right of full internal self-government, the People’s Action Party, or PAP, led by Lee Kuan Yew, was elected into power. 

His party desired to increase the country’s standard of living by providing better jobs, housing, medical care, and education to its residents. To achieve these goals and secure Singapore’s independence from the British, in 1963 the PAP led Singapore into a merger with the Federation of Malaya as well as the Crown colonies of North Borneo and Sarawak, to form Malaysia. However, Singapore’s place in this unified state was short-lived. 

Also Read:-

How Apple is making incredible money?

Just two years after merging, Singapore was expelled from Malaysia due to economic and political disagreements. And Lee Kuan Yew’s disappointment following Singapore’s exit was captured on live TV: “You see, the whole of my adult life, I had believed in Malaysian merger.” Singapore was left as an independent nation,founded on the back of a failed dream. During this period, the country’s prospects were bleak and countless challenges arose. 

With the failed merger and already contentious trade relations in the region, the new city-state’s trade-reliant economy was considerably weakened. At the same time, the British expedited their withdrawal from Singapore, closing their military bases throughout the country, which further escalated the preexisting unemployment crisis. “20% of our economy is based on expenditure from military bases and military personnel. 

And if we get that run down I have straightaway 40,000 unemployed on the social welfare relief payroll. and we don't want that.” The British exit also meant that Singapore lost its military defense capabilities. And on top of this, racial tensions and riots throughout the 60s made developing a unified Singapore an even tougher task. The republic of Singapore was vulnerable. For many in Singapore, the top priority was mere survival. 

How Singapore Became the World’s Hub

This survivalist mindset has come to define Singapore’s economic, political and social systems. Lee Kuan Yew and his party evoked Singapore’s weaknesses to justify their monopoly on power as well as to crack down on political dissident sand critics in the media. However, with that power, the Singapore an government set forth to create a united and prosperous country, developing a state-capitalist and interventionist system to do so. 

Singapore’s state-capitalist system is supported by statutory boards. These autonomous statutory boards provide infrastructure and social services. For instance, since 1960, Singapore’s Housing and Development Board, HDB, has transformed the city-state’s housing situation. In the early years of independence, the HDB focused on housing the 550,000 Singaporeans, just over a quarter of the population, that were estimated to live in squatter-like settlements. 

Since then, the HDB, along with the Urban Redevelopment Authority established in 1974, have together developed 23 new towns and 3estates throughout Singapore. The city’s housing crisis was greatly alleviated through these two statutory boards; while in 1960 only 9 percent of the population lived in public housing, this rose to 80% by 1985, where it remains today. 

The Economic Development Board initiated in1961 has restructured and diversified the city's industries, reshaping Singapore into a global city. In the 70s, the EDB developed manufacturing capabilities in textiles, garments and electronics, while also starting to attract foreign direct investment into the country. As a small island nation, Singapore’s industrial development necessitated more land, which was reclaimed on the island’s edges. 

Industrial activities were concentrated in the Jurong region, which in the early 2000s expanded to include the reclaimed Jurong Island. To date there are dozens of statutory boards that have improved Singapore’s infrastructure, health, public transport, insurance and other services. Yet, along with these statutory boards, Singapore’s economic growth has also relied on fully and partially state-owned enterprises called Government-linked Corporations, GLCs. In the early 1970s, the Singaporean government,through GLCs, was responsible for 85% of gross output in the country’s iron and steel industries,and 67.8% in the shipbuilding and repair sector, with additional investments in food, timber and chemicals. 

How Singapore Became the World’s Hub

All in all, by the mid 1980s the Singaporean government owned 87 companies, and as some of these, such as Temasek Holdings and Government of Singapore Investment Corporation managed several enterprises themselves, the government was linked to just over 400 different companies. In the following decades, the Singaporean government engaged in limited privatization, releasing their monopoly on certain industries that were already flourishing. 

This not only created the conditions for the private sector and foreign corporations to invest in Singapore’s economy, but also enabled the government to shift their focus and invest in under-developed sectors. The country was able to move away from manufacturing garments and basic electronics and instead move towards becoming a leading global supplier of financial services, sustainable technology, and biomedical services. 

Over the course of a few decades, the Singaporean government strategically used its state-capitalist system to invest in the country’s success,pushing the economic profile to evolve and fit into an ever globalizing world. Essentially, The small island-nation with a population of less than 6 million people as of today, is embedding itself into global networks. May it be in global trade, with the Port of Singapore, which is the world's busiest transshipment port, or in other economic sectors, such as financial services. 

The government invests in emerging industries using a state capitalist approach adjusting its economy based on global transformations. In 1972, the Former Deputy Prime Minister of Singapore S. Raja ratnam talks about this approach: “an independent Singapore survives and will survive because it has established a relationship of interdependence in the rapidly expanding global economic system.” Today, Singapore’s Temasek Holdings and GIC are amongst the largest Sovereign Wealth Funds in the world, together holding over a trillion US Dollars in assets. 

But although Singapore has prospered by be coming an international hub, this approach has also opened the country up to international vulnerabilities. One such vulnerability is that of climate change. The Singapore Green Plan 2030, recognizes the threat climate change poses on Singapore’s survival. Besides facing the threat of sea level rise,as an island nation, Singapore imports roughly 90% of its food. And the nation relies on bilateral agreements,such as with the Malaysian State of Johor, for its water supply. 

Treated water is pumped from the Johor River towards Singapore, with pipelines running along the causeway that connects both countries. Facing this dependency on outside states for the necessities of life, as well as fluctuating temperatures that produce food and water scarcity globally, the Singaporean government has ramped up the development of smart and sustainable technologies in the name of self-sufficiency. 

How Singapore Became the World’s Hub

Following the world’s first commercial vertical farm that opened in Singapore in 2012, the Singapore Food Agency has implemented a 30by 30 target to produce 30% of nutritional needs locally by 2030. The Public Utilities Board has also increased the country’s water security, developing NE Water in the early 2000s, which is a pioneering water recycling technology. 

They hope that water recycling, along with water desalination facilities throughout the country, will sustain Singapore, eventually meeting 85% of water demand. Singapore’s government-led expansion into sustainable and smart technology is driven by need. And currently there are a number of projects that are being developed. Today, the country has one single landfill,located on its own island. But this landfill is expected to be at capacity by 2035. 

Singapore’s National Environment Agency is developing more waste-to-energy facilities, including Tuas Nexus an integrated water and solid waste treatment facility planned from the ground up. In line with the country’s goals for a car-lite future, the Housing and Development Board is constructing Tengah, Singapore’s first car-free town center full of green space and urban farming. 

After establishing itself as a global city in the first few decades of independence, the Singaporean government is now trying to utilize its growing local resilience against threats such as climate change to reassert itself as a global leader. The government is an active investor in many companies and has established statutory boards with wide responsibilities. 

Often these state interventions are justified by the stark warnings about the country’s vulnerabilities. At the same time, the question arises to what extent the narrative of vulnerability is also used to consolidate the power of the People’s Action Party, which has ruled the country since independence. As a nation that transforms vulnerabilities into opportunities, one can also wonder what other weaknesses the government will identify to justify its power and direct the country’s growth. The question also arises to what extent Singapore's successful concepts can serve as models for other regions. 

How Singapore Became the World’s Hub