While the “Singapore model” was praised by the United Kingdom’s Foreign Secretary Jeremy Hunt on his visit to the Republic earlier this month, going so far as to express a desire to emulate Singapore’s low taxation and open-door policy, Prime Minister Lee Hsien Loong has expressed his doubts regarding using Singapore as a benchmark for the UK’s post-Brexit aspirations.
In an interview with Bloomberg Editor-in-Chief John Micklethwait at the New Economy Forum last Nov, Mr Lee said in response to a question on whether London can be a “Singapore on the Thames” after Brexit that such doubts arose from examining certain conditions that are unique to Singapore.
For example, Mr Lee said that the circumstances surrounding Singapore’s separation from the Federation of Malaysia in 1965 were different from those surrounding the UK’s exit from the European Union, the latter of which is more similar to ASEAN than a nation-state, as suggested by Singapore’s former ambassador to the UN and professor of public policy at the National University of Singapore Kishore Mahbubani.
Speaking to CNN, Prof Mahbubani said that Singapore, being “one of the founding members of ASEAN” benefits from the “trading bloc of 10 member states”, and suggested that “no Singaporean government would contemplate [leaving ASEAN] because that would be suicidal”.
“The ASEAN ecosystem is very important for Singapore’s economy and to leave a peaceful and prosperous neighborhood is not what you want to do,” he added.
In the Bloomberg interview, Mr Lee also said that Singapore and the UK have “completely different” histories and social welfare systems, given that Singapore was ejected from the Federation of Malaysia while the UK had chosen to leave the EU.
“You will have to find a different way to prosper having made the decision to leave the EU.
“Maybe, maybe if you look at Singapore, you might think you have some ideas that you can use, we hope so. But I don’t think you can take one society’s solution and just plonk it on a different society,” said Mr Lee.
“Britain has developed a system of state welfare, of government role in the system where the government accounts for 40 to 45 percent of the GDP.
“The Singapore government accounts for 16 percent of the GDP, maybe 17 percent.
“So to say that you’re going to be like Singapore, are you going to give up two-thirds of your government spending, state pensions and national health?” Mr Lee asked.
BBC News, however, reported Mr Hunt as saying that while “Britain can draw encouragement from how Singapore’s separation from the Peninsula did not make it more insular but more open”, he emphasised that the UK does not intend to “emulate the social or political model of Singapore”.
He said: “I was Health Secretary for nearly six years … I am a passionate defender of a health service that is free at the point of use [under the National Health Service] and, if you remember, I secured quite a lot of extra money for the health service during my tenure, so those things are very different.”
“Strong rule of law in an otherwise unstable region” a strong factor pulling foreign investment into Singapore other than low taxation: Economist Intelligence Unit senior editor
Singaporean author and Economist Intelligence Unit senior editor Sudhir Thomas Vadaketh opined that “the tax rate is one very small plank in a giant raft of attractive things about” the Republic that has attracted foreign companies, which notably includes the recent relocation of world-renowned British tech firm Dyson’s headquarters to Singapore despite founder James Dyson’s pro-Brexit views.
Mr Vadaketh told CNN: “There are not many places in Southeast Asia that can offer that much stability and a well-educated, working population”.
He added: “Why did the IBMs of the world come here very early on?”
“Part of the reason is we offered them [multinationals] lots of transparency and tax incentives, but we also gave them clarity.
“Singapore said, ‘Hey, we are not going to have a change in government in five years… Some nationalists are not going to come in and steal your assets.'”
However, the same “strong rule of law” may not be “conducive for the kinds of jobs and industries they are trying to promote here — from basic start-ups to pharmaceutical research and development”, given the increasing government crackdown on public discourse, particularly in recent times, added Mr Vadaketh.