The contrasting fates of Singapore and Malaysia

By Devadas Krishnadas, Published TODAY, 10 Aug 2015

Fifty years ago, Singapore was ejected from the Malaysian Federation. The two countries have since travelled very divergent paths while sharing some common characteristics. Both countries were colonised by the British, both were occupied by the Japanese during the World War II, both are multi-racial and multi-religious, and both have experienced considerable economic improvement since independence.

They also have significant differences. These differences should have been telling in favour of Malaysia. It was the hinterland for the Singapore economy. It had land, a multi-source commodity economy and a sizeable population. Singapore found itself suddenly distinct from its major market, dependent on Malaysia for water and faced with the hurdles of setting up shop as a newly sovereign state.



However, today, Singapore has celebrated its 50th year of independence in the best possible shape - politically stable, economically promising and socially affluent.

Malaysia, in contrast, lags behind Singapore on these counts. Putrajaya’s credibility has been undermined by its handling of the controversy over 1Malaysia Development Berhad (1MDB).

The political landscape is poisoned by suspicion and distrust among the races.

The Malaysian economy is running on fumes. The ringgit is at a 17-year low as investor confidence bleeds away.

Malaysia has for decades suffered a brain drain of its most talented, with Singapore a major beneficiary.

What lessons can be learnt from this dichotomy that seemed so unlikely 50 years ago?

FINDING THE RIGHT LEADERSHIP

First, what seemed like a disadvantage — not having a resource economy to rely on — proved to be a blessing for Singapore. The absence of the easy option of selling natural resources forced the Republic to focus intently on finding a myriad ways of making herself relevant to the global economy. This continues to be a perennial preoccupation for Singapore’s economic planners.

Second, an emphasis on human capital. Singapore’s leaders recognised that to make a go of things, it had only the quality of the people to rely on. Hence, it had to mobilise the full extent of Singapore’s human capital and to deal with the world on a competitive basis. This led to a decision to make English the language of commerce, administration and education and heavy investments into public education.

The high level of literacy and education among Singaporeans has been a major factor in ensuring that our workforce is plugged into the global economy.

Malaysia chose to adopt Malay as its language of administration and education, and its public education infrastructure leaves much to be desired. The result is a population whose most-driven opt for private education to help actualise their educational and professional aspirations.

Third, from the onset Singapore adopted the principle of meritocracy. Malaysia chose to legalise racial preference through the bumiputra policy. Its politics are also explicitly organised along racial lines. The end result of the choice of meritocracy is a Singapore where there is social mobility, reward for achievement and a sense of fair play. People vote with their feet, and Singapore has been the beneficiary of decades of talent migration from across the border.

Fourth, integrity. Mr Lee Kuan Yew’s pioneer administration set a hard and uncompromising standard of incorruptibility. This reputation for political and administrative integrity has had positive spillover effects as a generally desired social value in private and economic spheres as well. Malaysia, in contrast, has been dogged by decades of allegations of impropriety, of which the ongoing case involving 1MDB is merely the latest.

However, despite where things stand, Singapore’s future is not necessarily more assured than Malaysia’s.

First, while Malaysia can continue to reply on resource extraction, Singapore is in a permanent state of economic competition. The Republic’s success has been paralleled by rising costs that make it less cost competitive. Singapore now faces competition from rising regional neighbours and from changing global chains, most particularly the opening-up of the north and north-west trade routes in the Arctic.

Second, Singapore is facing hard constraints on land and population. Malaysia has space and people to spare. Singapore has to adapt its way past these constraints through innovation in land use and with significant labour productivity improvements.

Third, neither Malaysians nor global investors have high expectations of Malaysian political and bureaucratic leaders. This is in contrast to Singapore, where both the population and investors treat a high standard of political and public leadership as synonymous with Singapore and a critical success factor.

The recurring political question for Singapore is, can it continue to find the right leadership for each generation? The formula of using academic achievement to filter out those to lead is simplistic and naive. So much of what constitutes leadership is not what is in the head, but what is in the heart. The exam for the heart is life, struggle, hardship and failure — the very opposite of unrelenting success, career ease and guaranteed professional validation.

Singapore’s greatest risk is not that we cannot find leaders, it is that we may not find the ones that really matter. We must not lose sight of what leading should mean and assume that we can administratively churn out leaders.

The more pertinent tale of two countries is ultimately not about Singapore and Malaysia — although there are lessons to be heeded — but between Singapore past and the Singapore to come.

Singapore is a hard act to follow. The contrast in performance with Malaysia is stark. But Malaysia’s future as a nation is not in doubt. Singapore’s future, however, is highly conditional. As we celebrate 50 years of independence, we would do well to keep in mind that there is no certainty that we will have another 50.

Devadas Krishnadas is chief executive of Future-Moves Group, an international strategic consultancy and executive education provider based in Singapore. This commentary first appeared on his Facebook page.