Singapore

Innovation and Renewal in Singapore

In the current global context, the future of the Singapore model will depend on its ability to harness new technology and its own capacity for change  

The extraordinary transformation of Singapore from small trading post of the British Empire into vibrant centre of the nascent global economy is a source of pride for Singaporeans and a matter of interest for the rest of the world. At the time of its expulsion from the Federation of Malaysia in 1965, the ‘City of the Lion’ was a small island at the far end of the Malay peninsula, without natural resources, leave aside its strategic geographical position and the still unexplored potential of a young and diverse population (mostly made up of Chinese migrants). Yet, in the two decades immediately after independence, the Singaporean economy grew every year at an average rate of 8.5% and the fledgling city-state went from third world to first in just one generation. 

Several experts and scholars have tried to identify the secret of Singapore's success: geographic location or demographic structure; cultural identity or political regime; all very important factors but perhaps not the decisive ones. "The simple answer - according to former Singaporean diplomat Kishore Mahbubani - is extraordinary leadership." A ruling class educated in the best universities in the United Kingdom and returned to Singapore with the ambition of putting traditional British pragmatism at the service of the nascent national sentiment. Lee Kuan Yew himself, founding father and Prime Minister of Singapore, the man who ruled the city-state directly and indirectly for over 50 years, argued that the success of the Singapore model stemmed from its ability to respond effectively to new situations.

Indeed, Singapore's grandiose development might not have been possible if its leaders had not been driven by an abiding faith in technological innovation and a firm belief that economic success also depends on the ability to innovate and renew oneself. It is also due to this 'faith' that a city-state known all over the world as a commercial and financial hub never wanted to renounce to its manufacturing sector. Manufacturing, a major growth engine in the 1960s, has undergone a major technological transformation and it represents today a high added value sector worth around 20% of GDP. Meg Whitman, CEO of Hewlett Packard Enterprise, one of many big companies which have decided to bet on Singapore, has dubbed the city-state a miniature Silicon Valley. Very recent news seem to confirm this view: forced out from the Great America of Donald Trump, Chinese tech companies ByteDance and Tencent have decided to throw in their lot with Singapore and invest several billion dollars in the ‘Little Red Dot’.

For many years now Singapore has ranked in the top spots of the Global Competitiveness Index and the Ease of Doing Business Index, just to name two of countless global indicators celebrating the city-state as one of the best places in the world for doing business. The result is partly ascribable to its advanced financial and judicial system, but cutting-edge physical and digital infrastructures also play a role. It is precisely on the latter that the government wants to focus to overcome the Covid-19 crisis, which is dragging the city-state into the worst economic recession since 1965. Singapore, in the words of Prime Minister Lee Hsien Loong, must prepare for "a very different future," one which, according to a senior official, will be made of "bits and bytes, submarine cables and data", not just cargo and containers.

The cabinet had been working on it for some time: Covid-19 made it necessary to accelerate. In fact, already a year ago, the Enterprise Development Board, the government agency that guides the country's industrial development, presented to potential foreign investors some of the early achievements: the highest concentration of submarine cables in the world, the fastest broadband connection and a mobile penetration rate of 159%. The Digital Readiness Index 2019, an indicator developed by Cisco to identify the countries which are best prepared to accept the challenges of digitization, placed Singapore in the first place. Thanks to the growing tension between the United States and China and the exasperation of the situation in Hong Kong, even large multinationals of the likes of Amazon and Alibaba could not resist the call.

Five years ago, Kishore Mahbubani, in a book with a very suggestive title, "Can Singapore Survive?", singled out three major perils that the city-state would have to face in the years to come: a challenge from populist politics, the geopolitical clash between the United States and China , and a 'Black Swan', an extremely rare and hardy predictable event that would have put the Singapore model into question. The prophecy may have come true in 2020, at least with regards to its international dimension. After an initial moment of loss, Singapore seems coming to his senses: a city-state connected to the world, albeit through new digital ways, without giving up on the ambition to be everyone's friend and nobody's enemy. The faith in innovation which made possible Singapore’s astounding growth could now allow its survival.

By Francesco Brusaporco

Singapore and the Covid-19 emergency

Singapore’s experience with the virus reveals the complexity of the pandemic and the importance of a cautious approach to its management.

On June 25th the Italy-ASEAN Association organized a webinar on Singapore and its response to the pandemic with the Italian Ambassador in Singapore, Raffaele Langella and the President of the Singapore Institute of International Affairs, Simon Tay. 

When Singapore confirmed the first case of Covid-19 on January 23rd, the government rapidly implemented effective measures that contributed to contain the virus and significantly limit the number of infected people. Subsequently, between February and March, Singapore experienced a second moderate wave of contagion, attributable to flows of Singaporeans repatriated from abroad. Until the beginning of April, Singapore had less than 1000 cases and only 3 deaths due to the virus. However, in April, Singapore was hit by a third wave of Covid-19. This time the vast majority of cases occurred among the more than 300,000 migrant workers living in large dorms at the outskirts of the city, and the number of infections increased rapidly within a few weeks. As a result of this new surge, the Singaporean government was forced to impose more restrictive measures on the movement of citizens. Since 7 April, Singaporean citizens have had to comply with preventive measures called circuit breakers, which include the closure of all non-essential activities and the obligation to respect social distancing measures.circuit breaker​, che prevedono la chiusura di tutte le attività non essenziali e l’obbligo di rispettare il distanziamento sociale. 

In economic terms, Singapore's GDP is expected to fall by between -7% and -4% this year. Therefore, the government has responded with a significant increase in public spending, through four economic stimulus packages to support the economy, amounting to about 19% of Singapore's GDP. The intervention aims at supporting families, businesses and workers with measures such as subsidies, moratoria, tax deductions and favorable financing conditions for the most affected sectors (in particular tourism and aviation).  

The evolution of the health emergency in Singapore has shown both strengths and weaknesses of the city-state. Technological infrastructures and high level scientific research have enabled the government to respond effectively to the first cases of coronavirus in the country, revealing a certain scientific reactivity. This has allowed many economic activities to continue despite the pandemic, reducing the impact of the virus on the productive fabric of the country. However, the pandemic also showed some weaknesses of Singapore’s country system. As a commercial and financial hub, its dependence on regional and global interconnections has weighed and will weigh heavily on the government's ability to revive the country. Air and naval traffic has dropped dramatically, and this threatens to create serious problems for Singapore's economy. Moreover, the case of the immigrant workers has revealed one of the few weak points of the city-state: a direct dependence on foreign labor that is fundamental for the effective functioning of a smart-city like Singapore. 

It will be crucial for Singapore to reopen its economic system to international trade as soon as possible, in order to intercept new trends and strengthen the global dimension of the Singaporean economy.

Article edited by Tullio Ambrosone