On a national broadcast on Sunday (14 June), Minister for Trade and Industry Chan Chun Sing laid out one part of the government’s plan for the country’s future. In his speech, Mr Chan stressed that even as the country addresses challenges post by the COVID-19 pandemic, Singapore has to keep looking ahead and make investments to develop its “intangible strengths”, infrastructure, people, and businesses.
Mr Chan said that many investors have chosen to base themselves in Singapore not because of natural resources or cost, but because of Singapore’s strengths that are not easy to replicate in other places.
He said, “We are open, and connected with the world, we are trusted, we are united and stable as a society, and we have a skilled workforce.”
He added that while the COVID-19 pandemic has led many countries to pull back from globalisation, he stressed that Singapore should resist such pressures, saying “A less connected Singapore means fewer and poorer quality jobs for us.”
Despite the growing trend of protectionism around the world, Mr Chan said that Singapore can still “make a living and more” if it builds on its capability to play a critical role in global supply chains to produce high quality products and services that others value.
Another thing Mr Chan highlighted was the government’s efforts in digitalisation and internationalisation, the benefits of which he ensured will be shared among everyone in Singapore.
“COVID-19 has pushed many businesses and consumers to embrace the digital world. The digital trajectory will only accelerate, and not reverse,” said the Minister.
He added, “We must enable every Singaporean, young and old; every business, big and small, to go digital and thrive. Companies will embrace digital tools to create new business models and transcend our local market constraints.”
Mr Chan cautioned, however, that digitalisation alone would not be enough and that “real partnerships in the real world” is important as well.
“Many Singapore businesses have established regional and global presence in the past years, often in partnerships. The more established and larger companies help newcomers and smaller businesses,” he said, highlighting the example of CapitaLand opting to bring in other Singapore companies for their overseas projects thus helping them enter new markets.
The Minister added that the country will increase its efforts to nurture a new generation of regional and global businesses, facilitate more industry partnerships, and organise overseas Singapore business chapters to help newcomers venture abroad.
The thing is, while Mr Chan’s speech was seemingly positive and encouraging, it did lack certain details.
Veteran architect Tay Kheng Soon who praised Mr Chan’s speech as “excellent” in a Facebook post on Monday (15 June), noted that it was “information packed”, covering many topics which “demonstrated his vast knowledge and understanding of all the challenges Singapore faces.”
In his post, Mr Tay also highlighted Mr Chan’s implicit message to urge for a solid political mandate for the incumbent government following the next general elections. Mr Tay wrote, “He [Mr Chan] said, “We will build a better Singapore together!” The “together” meant a solid political mandate for the incumbent [government].”
Mr Tay continued to then point out that while the minister asserted that the government will create 100,000 jobs in healthcare, kindergartens, transport, and ICT and finance, he did not address the salary to living cost ratio for these jobs. The minister emphasised in his speech that “Global big business investments in Singapore are a must”, said Mr Tay, though he failed to note how many jobs that would create.
This is a pressing question as just two weeks ago (3 June), Chairman of the National Jobs Council Mr Tharman Shanmugaratnam highlighted in a Facebook post that more jobs will be lost than created as Singapore is facing a “major and urgent challenge” due to the COVID-19 pandemic, despite the gradual lifting of the circuit breaker.
He said, “The sheer uncertainty facing the world—no one can tell how long COVID-19 will last—will mean that we will have far fewer new job openings than jobs being lost over the next year, and beyond that if we are unlucky.”
Mr Tay also highlighted that the government’s “unwavering faith in Neoliberal corporate Globalisation” remains crucial, though it was “moderated” with Mr Chan’s reference to the Regional Comprehensive Economic Partnership (RCEP) trade agreement. This, Mr Tay noted is a “tacit reference to regionalism and to ASEAN”
However, even here, Mr Chan did not talk about Singapore’s immediate neighbours, Malaysia and Indonesia in relation to food, water, energy, and environmental security. So while Mr Chan’s speech does appear to be comprehensive, it merely affirms the path that the country is already on.
Mr Tay argued that what Singaporeans actually need is a “new vision of the future” instead which would prevent local companies from being “edged out” by global and local corporate priorities because of a “dependence on global and government linked corporate capitalisms”.
Over-reliance on foreign capital justifies the clampdown on fundamental rights
It’s clear from Mr Chan’s speech that there is a continued push for internationalisation in Singapore by attracting foreign investors as well as pushing local companies to break into the new markets overseas. Again, very much the same model that is already in play in Singapore.
But why is the same model from the 1970s still being employed now given how different the world is, especially in the face of a global recession that many experts have predicted would be far worse than the 2008 global financial crisis?
This isn’t a new question, of course. Back in 2017, veteran economist and former chief economist for GIC Mr Yeoh Lam Keong had addressed a similar notion.
He explained that when Singapore’s current economic model of reliance on foreign investment was adopted a few decades ago, the capital driving this export-oriented industrialisation, the know-how, and the technology in Singapore was going to foreign companies, not local ones. This, he said, was due to political expediency.
Mr Yeoh elaborated, “They [the government] had to jumpstart the economy, get to that success frontier. They did not have enough political time to do that without foreign direct investment (FDI). So the new model was FDI-related, export-oriented industrialisation.”
From Mr Chan’s speech, we can see that this is the model that the government has chosen to stick with as a post-pandemic recovery plan.
But local experts had already predicted that the model is not sustainable in the long-run. Mr Yeoh, in 2017, had noted that the person who created this FDI-reliant economic model, Goh Keng Swee, had raised concerns even back then that the government may end up being overreliant on this model and would need to eventually move away from it in order to build up Singapore’s own industries.
However, as the model justifies the clampdown on fundamental rights and stranglehold on politics by the ruling party, this model is maintained, noted Mr Yeoh.
He explained, “That created its own political-economic dynamic. By the justification of continuing dependence on foreign capital, you have said we cannot afford strikes, we cannot afford any industrial action, we cannot afford any democratic noise on the streets. We can’t even afford to have an occupy movement that we saw in Hong Kong, otherwise we will lose all this capital. So you have created and perpetuated a system that its original founder (Goh Keng Swee) found faulty for economic reasons but has severe political, negative implications that you must forever remain, a muted and docile polity.”
To drive home his point, Mr Yeoh highlighted that 100% of Singapore GIC’s total holdings at US$354 billion (in 2017) is invested in foreign companies, not local companies.
In the aftermath of the global COVID-19 pandemic which has brought many economies to a halt thus threatening many small and medium local enterprises, and even major global brands, this overreliance on foreign investment could end up becoming a weakness in Singapore, not a strength.
After all, as Mr Chan said, protectionism is on the rise around the world. And yet, the model persists.