By Ian Austin
The Singapore government post-GFC has moved to “anchor” in selected sectors and the peak MNEs within these designs for long-term national economic growth, and it showed how the national polity through the varying 2011 and 2015 election results has placed new demands upon governance within the island nation.
Singapore’s success story of attracting skilled professionals and multinational enterprises (MNEs) has been examined extensively as the small island state has, through rapid economic development, risen since the 1960s to become a global city.1 Singapore’s success has highlighted the crucial importance of good public governance; one able to adapt to new circumstances over time. The People’s Action Party (PAP) leadership’s highly pragmatic leanings, an international reputation for prudent financial management and an effective anti-corruption stance, has meant that foreign political and enterprise leaders have found the Singapore government easy to engage with. Recent efforts throughout the late 1990s and first decades of the 2000s to attract MNEs at the forefront of innovation (biotechnology, medicine, advanced electronics) have been built upon a foundation of a 30-year record of attracting and developing partnerships with MNEs looking to utilise Singapore at lower-level technical skills capacities (broad consumer electronics, shipping maintenance and others).
The Singapore government’s relationship with private enterprise is clear; it has been willing to participate in the national economy as either a dominant state-owned enterprise (SOE), and done so across many sectors. At the same time, it has not sought to protect domestic enterprises at the expense of foreign MNE interests investing into the national economy. State-owned enterprises, government-linked corporations (GLCs), and state-encouraged enterprises, founded and developed by the government, have both secured domestic economic advancement, enhanced international trade activity, and provided valued partners to MNEs operations in the island state. Singapore Airlines, Changi Airport, the Port Authority of Singapore (PSA) and the SGX (Singapore Stock Exchange), to name a few, are all products of this effective state activism, and are now internationally recognised for excellence in their respective sectors. As a city-state with a small market and a large strategically located port, the government and commercial elite (the two being interchangeable) has been a constant champion of global free trade. Today, Singapore remains active in both bilateral and multilateral trade processes. The Singapore government argues that even when multilateral processes such as the Doha round of free trade talks break down, Free Trade Agreements (FTAs) remain the pathway forward for the city-economy.2 Singapore’s political and macroeconomic environment, therefore, are all attuned to the needs and wants of MNEs seeking a risk-free environment from which to launch their products and services into greater Asia. Indeed, there is little risk in stating that Singapore is without peer in enacting policy prescriptions that are favourable to MNEs operations, and supporting these with an array of practical infrastructure, legal, human resource and social initiatives. For all of these collective economic achievements, or because of them, however, the very nature of Singapore’s continuing interaction with the international economy over the coming decades will be shaped by the very same central question now confronting developed and developing economies alike. That question being: With dramatic changes taking place in macro-environmental areas, such as technological advancements and national demographic profiles, how will polity concerns over material and social/environmental inequality be managed by the nation’s stewards?
Singapore’s Economic Future
In the decade since the global financial crisis (GFC) (2007/08-2017/18), Singapore has consolidated its position as a successful economy highly attractive to MNE investment. Whilst Singapore, like so many other countries, experienced rapid economic declines in GDP growth rates throughout 2008 and 2009, the long-term soundness of its economic governance meant that by the end of 2010 the island nation was once again experiencing robust growth.3 The real and lasting impact of the GFC came then in the form of the intellectual reevaluation that took place within PAP leadership and the economic community over the strategic direction of future national economic progress. Further, China’s relentless emergence as a global economic powerhouse, seemingly unhindered by the economic calamity besetting the United States and Europe during the first decade of the 21st century, and India’s rise in international services placed the city-state with the challenge of operating within increasingly competitive international sectors. By all measures, Singapore post-GFC has countered these challenges.4 Singapore’s substantive state-backed investment funds, most notably the Government Investment Corporation (GIC) and Temasek Holding, over the last decade have been actively engaged in rapidly advancing the nation’s capacity to attract new growth sectors.5 More specifically, the Singapore government and its investment arms have sought growth sectors with attributes that make any GFC-like withdrawal from the island state either impossible or highly daunting and costly for the enterprise involved. The Singapore government has made it plain in the wake of the GFC that a crucial criteria for its engagement, political, policy and material, with MNEs will be the level to which they “anchor” themselves to the island nation.
The most publicly-visible example of this anchoring policy has been the development of two large Integrated Resorts and Hotels complexes (IR&Hs, read casinos): Marina Bay Sands and Resorts World Sentosa. The impact of the IR&Hs upon the Singaporean economy since their opening in 2010 is undoubted and recognised by the continual utilisation of the Sands Marina Bay resort imagery as iconic of Singapore’s present and future.6 The logic of the PAP government’s decision to open IR&Hs (casinos) on the island state after many decades of most vocal opposition post-GFC is simply: the two massive casino development, whose accumulative investments totalled $US 12–14 billion, are entirely the product of state regulatory licenses: they simply cannot be relocated offshore. In return for this investment, and the significant domestic labour inputs required, the Singapore government has invested significant public funds to deliver to the ownership of the IR&Hs an international clientele profile. Equally, by design, the Singapore government rightly predicted that the development of the IR&Hs in themselves would see the clustering of high-end hotel and fashion brands in-and-around the Marina Bay Sands and Sentosa districts. International investors, professionals and clientele who associate themselves and their clients with the complete entertainment/lifestyle product surrounding the integrated resorts and hotels have added a new complexity to the nation’s service economy. The Singapore F1 Night Grand Prix, commenced in 2008, for example, stands as a pinnacle event in the effort to brand Singapore as a global city with its clustering of business, sports, design, leisure and entertainment interests.
Somewhat less visible has been the Singapore government’s moves to “anchor” international wealth management actors to the island nation’s future prosperity.7 Singapore has long been highly successful in attracting international financial sector enterprises. Since the GFC, the PAP has not only consolidated this position, but also enacted the Marina Bay Financial District to cement the island nation’s position as a top-tier international financial centre. The massive Swiss-based giant UBS, being but one example of an international wealth management actor who has been actively courted by the Singapore government elite (the GIC as the owner of 6.4 percent of UBS shares is one of the largest shareholders), and now making the island a global centre for various wealth generating operations.8 The sheer scale of the international banking and finance means that Singapore must be selective in its activities and focus on providing niche, but highly profitable services, most notably wealth management services (wealthy individuals or trusts). Along with traditional Western wealth management markets, Singapore has been even more successful in gaining market share within China, Russia, Latin America, Africa and the Middle East. There can be no doubt that Singapore’s ultimate aim is to surpass Switzerland as the home of private wealth management. Whilst this might have seemed fanciful prior the GFC, tectonic regulatory shifts in Europe and the United States have been altering the equation.9 Singapore’s position in Asia has proved decisive: the concentration of global wealth accumulation in the region continues unabated and Singapore has positioned itself as a most willing and capable servicer of this new wealth. The message from the Singapore authorities for greater Asia’s wealthy is uniform and assured: that high wealth individuals/trusts will find a welcoming and competent nation with a supporting regulatory and tax climate, including the vigorous enforcement of the strict privacy laws. As with the IR&H sector, the Singapore government’s combination of political, capital, education and other investments into the wealth management sector means that the cost of exiting the island state for any international entity would be high. Not least of all for the simple reason that the scale of accumulated state-directed wealth present makes the Singapore government a truly indispensable global client. As stated, by design, the Singapore government set out to anchor the leading banks and financiers within international wealth management sector to the island nation. International regulatory measures that have directly affected Switzerland to a greater degree than its Asian counterpart have no doubt been highly beneficial; but Singapore’s proactive endeavours have enabled it to define itself as a wealth platform for the Asian Century.
Political Continuity and Change
Despite a near decade-long (2010 – 2018) record of economic growth and the transitioning of the economy into service sectors anchored through political-policy (legislative) and capital means, the long political paradigm of the PAP’s dominance over the island state has been far from smooth. The PAP’s popular vote dropped to 60.14 percent in the 2011 general election compared to 66.6 percent in 2006 general election, but rose again to 69.86 percent in the 2015 election.10 The reason for the significant 2011 election decline in PAP’s popular vote was widely ascribed, not least of all by the Prime Minister Lee Hsien Loong, as a need for the long-term governing party to listen fully and engage with the lived experience of the national polity. The 2011 election revealed that the distribution of wealth and social progress, and not the net material increase in Singapore’s wealth, was now a significant factor in the Singapore polities’ decision-making.11 In response, PAP executed policies, most notably legislative restriction on foreign labour entry, can be defined as a “Singapore-first” mandate. The nine percent upswing to the PAP in the 2015 general election revealed that these measures and others have met with broad domestic approval. Most significantly, they attracted a rare public response from the international investment community, and particularly the MNEs operating on the island nation, who have depended on the ability to bring in foreign sources and human capital when required. The PAP, always a champion of MNEs investment into the island nation, nevertheless delivered a forceful rebuttal to these enterprises’ call for adjustments. Put simply, the 2011 election result, and the PAP’s recalibration and success campaign in 2015, reinforced to all that no matter the historical dominance of a party, it is never far from threats to its legitimacy should the electorate decide that the local is no longer at its very heart; that no matter the extent of the economic advancements achieved, without communal connectedness, of a sense of shared and equitable progress, legitimacy dissipates.12
Featured Image: Sands Marina Casino Photograph by Ian Austin
About the Author
Dr. Ian Austin is Senior Lecturer in International Business at Edith Cowan University. Most of his works examine Singapore as a wealth management centre and as a global city. He previously worked in Singapore for both private enterprises and the public sector.
- 1. Low, L. 2010. Exploring New Engines for Growth. in Chong, T. ed. 2010. Management of Success Singapore Revisited. Singapore: Institute of Southeast Asian Studies.
- 2. Singapore FTA Network. http://www.fta.gov.sg/ accessed April 2, 2009.
- 3. Chong, T. 2009. Singapore in 2008: Negotiating Domestic Issues, Confrontations and Global Challenge. pp. 289-304. Southeast Asian Affairs 2009. (Singapore: Institute of Southeast Asian Studies).
- 4. Singapore Department of Statistics https://www.singstat.gov.sg/ ; International Monetary Fund https://www.imf.org/~/media/Files/Publications/CR/2017/cr17240.ashx
- 5. GIC https://www.gic.com.sg/ ; Temasek https://www.temasek.com.sg/en/index.html
- 6. https://www.youtube.com/watch?v=sBPszhAIaQI Singapore “What’s Possible” campaign.
- 7. Robins, B. (March 10, 2014), Singapore turns its hand to wealth management The Sydney Morning Herald, www.smh.com.au/business
- 8. UBS Asset Management in Singapore https://www.ubs.com/sg/en/asset-management.html
- 9. Grant, J. (July 23, 2013), Singapore loosens Switzerland’s grip on wealth management, Financial Times, www.ft.com/cms/s/048c3630
- 10. Elections Department Singapore http://www.eld.gov.sg/
- 11. Yahya, F.B. ed. 2015. Inequality in Singapore, World Scientific Publishing: Singapore.
- 12. The electorate of Malaysia on May 9th 2018 sent this very message in a most profound way toppling the long-term UMNO governing coalition in a largely unanticipated electoral route.