The Singapore recipe for sustaining itself

It remains a melting pot where foreigners meet and help one another
By Lee Soo Ann, Published The Straits Times, 4 May 2013

In writing Singapore: From Place To Nation for students, I came to the paradoxical conclusion that Singapore is no more than a place where foreigners sustain foreigners. More accurately, it is a case of one kind of foreigner sustaining another kind.

Singapore may be returning from being a nation to being a place again. What had sustained Singapore, then, in its history?

During the British trading settlement in 1819, Singapore was established by the East India Company out of maritime rivalry between the British and the Dutch at that time. Located in Malacca, the Dutch had a chokehold on shipping going to China unless the British could establish a station south of Malacca.

Stamford Raffles had heard of Temasek from the Malay Annals, which he could read from his knowledge of Malay acquired when he was governor of Java. Consequently he sailed to the mouth of the Singapore River and, as the saying goes, the rest is history.

The location of Singapore at the tip of the Malay peninsula gave sailing ships an advantage when resting between the two monsoons, unlike resting in Penang, which was already British, as it was too far north. Chinese junks used to sail from China to South-east Asia from Zheng He's time.

Its location on the Strait of Malacca route to Australia and New Zealand gave Singapore a further advantage when the telegraph and telephone linked Britain to these colonies. With the shift to steam from sailing ships, Singapore became a coaling depot, for ships sailing to Japan and China as well. Singapore's proximity to oilfields in Sarawak made it into an oil distribution centre.

One may conclude that the prime maritime location of Singapore is responsible for its success in its first hundred years as a British territory. However, the location of Singapore has never changed in its entire history.

What did change was the capacity of foreigners to meet foreigners in Singapore in safety and to make a living for themselves. The Anglo-Dutch treaty of 1824 ensured that Dutch rivalry did not menace the economic growth of Singapore. The Dutch had all of the 15,000 islands of what is now Indonesia to grapple with.

Foreigners meeting foreigners is not a new concept but British rule made this concept real in Singapore. When foreigners brought with them different currencies as the medium of exchange, the British instituted the Straits dollar. This dollar gave birth to local banks which complemented the previous dominance by British exchange banks.

The British left each ethnic community to largely police itself and the growth of free trade was accompanied by the free inflow and outflow of people. Only during the 1930s Depression was there a limit on the number of males allowed in.

Women however were not subject to quotas, and considerable numbers came during the 1930s, which contributed to equalising the sex ratio, the consequential formation of families, and the baby boom of the 1940s and 1950s.

The limited self-government in 1955 followed by full internal self-government in 1959 saw a different group of foreigners entering Singapore to play an active role, and these were from the Federation of Malaya formed in 1948.

As Singapore was a British colony until 1963, Britain allowed those "up country" to enter Singapore. Many Malaysians entered Singapore after it was separated from being part of the Straits Settlements in 1946.

The 1957 Citizenship Act created Singapore citizenship, and many foreign-born residents of Singapore (especially those born in China) took advantage of the provision that they had stayed in Singapore for several years previous to 1957 to obtain citizenship. This explains why there were many pro-communist Singaporeans who were able to enter politics.

Many Malaysians who entered Singapore became Singapore citizens. It was only after 1965, when Singapore separated from Malaysia, that Singapore citizenship was more strictly granted.

The People's Action Party (PAP) government, which came into power in 1959, had many of these foreign-born citizens. Many of the leaders of the PAP were from the Federation. In the 1959 Cabinet, only one - Mr Lee Kuan Yew - was born in Singapore.

It was a case of one kind of foreigner sustaining another kind, those born in the Federation sustaining those born in China, to put it in broad terms.

Of course, there were Singaporeans born in Singapore, but they were in the minority, for the simple reason that for the several decades before 1946, the majority of those residing in Singapore were males.

In 1911, the percentage of Singapore island Chinese born in British Malaya was 20 per cent. In 1947, the percentage improved but was still only 40 per cent.

British Malaya meant Penang, Malacca and Singapore. If we were to remove those born in Penang and Malacca, the percentage of Singapore island Chinese born in Singapore would be much lower. Singapore citizenship before 1957, if granted according to Straits Settlements rules, was obtained by only the small minority born in Singapore.

Singapore was essentially an immigrant society, a frontier town, and it was only from the late 1940s onwards, with the onset of the baby boom, that those born in Singapore became more numerous. However these Singaporeans born in Singapore at that time were infants and children. They are now adults, of course, but then another spurt in those foreign born came from the 1980s onward.

A major reason is the fright Singapore leaders had after Separation in 1965, of the 1970 withdrawal of the British armed forces. The Government initiated anti-natal policies in 1970, which started with the legalisation of abortion. Abortions rose to one-third of pregnancies, and births fell. The level of abortions has now fallen, but is still around 10,000 a year.

Rising educational opportunities for women meant that they could join the workforce and seek further education for themselves, which limited them to the men whom they could look up to, unless the men themselves became better-educated.

Home ownership used to be of basic units, but over the course of time, there was continuous upgrading with couples choosing to live "beyond" their means, so that both husband and wife needed to work to pay off the mortgage.

The extension of housing loan terms from 20 to 30 years after the 1985 recession meant that couples saddled with long-term loans were less likely to want larger families.

What this meant was that the intake of foreigners had to be liberalised, from "traditional" sources like Malaysia to "non-traditional" sources such as Thailand and Bangladesh for construction, the Philippines and Indonesia for domestic helpers, and so on.

The foreign worker levy was introduced in 1990 to ensure that the cost to the employer of employing a foreigner would be equal to that of employing a Singaporean, but as this levy was in absolute and not percentage terms, eventually the cost of employing a foreigner fell.

And so it is today that the wages required to attract a foreigner may be high for the foreigner, though low for the Singaporean, so that the wage level in Singapore tends to be set by the foreigner. The average wage level for the Singaporean has not risen much in the last 10 years.

On paper, there are 3.5 million Singaporeans and 1.5 million foreigners, but these foreigners are largely working adults. However, only two million Singaporeans are working, the others being those who are old or young or still studying.

It is true that foreigners are needed to sustain the Singapore economy but the Singapore economy also needs substantial numbers of foreigners. Foreigners are helping to sustain foreigners!

If we take into account the fact that a substantial portion of Singaporeans are actually foreign-born (either in China or India or some other place, or Malaysia), the dominance of "foreign" Singaporeans is unquestioned. Singapore is now a place where foreigners meet and help one another, much like what it was then under British rule.

Those leading Singapore now can be likened to those who governed Singapore under British rule. This was largely beneficent rule, for the British did not "exploit" Singapore like what some other European powers did in their rule. Singapore did not have commodities or crops which could be supplied to the "mother" country.

Singapore was merely a place from where Britain managed its economic interests in South-east Asia, for not only was there Peninsular Malaya, but there were also Sarawak, Sabah and Brunei.

Those who govern Singapore now need to have the ability of the British to manage different kinds of foreigners, and in large numbers too.

The writer is a Senior Fellow at the Lee Kuan Yew School of Public Policy and also the Department of Economics at the National University of Singapore.

This is an edited version of the essay that is published in Commentary Volume 22, The Idea Of Singapore, The National University of Singapore Society.