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 Heading South?
In much of Southeast Asia, economic growth has stalled, freedoms are being rolled back and terrorism is a constant threat |
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Facing Up to China
To compete, Southeast Asia must crank up its domestic economies |
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The Lion In Winter
After years of prosperity, Singapore's economic success formula is failing |
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The Lion In Winter — page 2
During Singapore's years as an Asian Tiger, its unemployment rate never much exceeded 2%—meaning that essentially any able-bodied worker among the island's 4 million residents could find work. But joblessness hit a record 4.4% last year and is expected to rise further—possibly hitting 6% this year—as the multinationals that account for about three-quarters of the city's manufacturing output and 90% of manufactured exports look for cheaper sites, such as Malaysia and China, for their factories. Former Singapore stalwarts, including Compaq, Motorola and National Semiconductor, shuttered their plants in recent years, leaving the country's manufacturing sector with a net loss from 2001 to 2002 of some 12,000 jobs. Economists say this trend will accelerate. On June 19, U.S. electronics conglomerate Honeywell announced that it was shifting its Asian headquarters from Singapore to Shanghai, a move the usually cautious Straits Times characterized as a sign of things to come.
Could the wealth accumulated in four decades of hard work and ruthlessly efficient planning—the city boasts an annual per-capita gross domestic product of $21,230, one of the world's highest—disappear at the same astonishing pace at which it was accumulated? Prime Minister Goh and other leaders are adamant that Singapore can avoid that fate. "We can't be hanging on to the manufacturing sector [if] the semiskilled jobs can be done better in China and elsewhere," Goh says. "So we have got to move up the value chain into higher-skilled jobs." Goh and his colleagues say the city-state can be remade from the top down by steering the economy away from its dependence on multinationals and into niche areas that the country is uniquely suited to exploit: financial services like banking and insurance, for example, or specialized and high-tech areas like medical care and biotechnology. The trick will be to foster creativity, entrepreneurship and the ability to take risks in a business culture long accustomed to following orders.
In characteristic fashion, the Singapore government sought to tackle its problem by forming two high-level committees, one to look at the needed economic-policy changes and the other to look at the thornier cultural changes. The cultural committee will publish its formal recommendations later this year, but its chairman has already indicated that bold initiatives aren't in the cards. The economic committee, headed by Deputy Prime Minister and Finance Minister Lee Hsien Loong, reported its recommendations on Feb. 6. It eschewed sweeping changes, instead proposing tax restructuring, wage reform and external-trade expansion.
The lack of major policy recommendations is indicative of what might be called the Singapore dilemma: the efficient central planning that made the island such a success has become a millstone. To skeptics, it just doesn't seem possible that a government that succeeded by dictating its citizens' every move, right down to whom they should marry and how many kids they should have, can now foster a freewheeling atmosphere. "There are many people like me in Singapore," says Toh, the unemployed management consultant. "We grew up in the era when the government guided us in everything, told us what kind of jobs to train for. The people of my generation were made to fit the industry the country needed, working for the big foreign corporations. Now, suddenly, we're all supposed to be entrepreneurs. How can we change our personalities overnight? If they drop us, we will fall."
That sense of hopelessness has convinced thousands of Singaporeans, including many of the country's intellectual élite, to head for greener pastures. Emigration rates to favored destinations—Australia, for example—doubled in 2002, and a September 2002 survey by ACNielsen found that one-fifth of the country's population was seriously contemplating permanent departure. "At the end of the day," says Nicholas Woo, a lawyer now working as a partner in one of London's best-known firms, "Singapore is too small. I cannot think of a single country the same size with the same ambitions that has succeeded in achieving them." Woo, one of the many emigrants tagged "quitters" by Prime Minister Goh, has given up his Singaporean citizenship and now carries a British passport; he has married an Englishwoman and lives in a converted mill outside London with his two young children.
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