Singapore's Achilles heel: foreign workers?

Singapore's foreign workforce has been in the news lately. It seems to happen every so often – generally for the wrong reasons.

The last time Singapore's foreign worker presence hit the headlines was in December 2013 with the infamous Little India Riot. (Yes, riots in Singapore and that too within the last decade!)

Today I would like to shed some light on Singapore's foreign worker presence and put forward some ideas for managing the situation in the coming years.

Let's start by putting the situation in context.

Modern Singapore's skyline (Photo: Wikipedia)

Size wise Singapore is about ten percent smaller than New York City at approx. 720 square kilometers versus NY's 780 sq. kms.

Singapore – though small in size – is an economic powerhouse. According to the recent estimates by the IMF, Singapore's GDP per capita on a Purchasing Power Parity (PPP) basis is equivalent to USD 105,700 which makes Singaporeans the third wealthiest people on earth.

In 2019, the World Bank also ranked Singapore at number three with a GDP per capital on a PPP basis of USD 101,500.

In case you are not aware, Purchasing Power Parity is a method which converts a country's local currency using "a theoretical exchange rate that allows you to buy the same amount of goods and services in every country." In other words, PPP allows one to measure and compare a citizen's ability to purchase goods and services across different countries using the same yardstick.

Because of its wealth Singapore has been a magnet for foreign labor – at least in during the last few decades. Consider the island's population.

In 2019, Singapore's population was 5.7 million with 1.7 million people or almost 30 percent being foreigners. By contrast, in 1990, Singapore's total population was three million of which 300,000 or ten percent were foreigners. By 2010, Singapore's total population was 5.1 million with a full one quarter or 1.3 million being foreign residents.

In other words, we've seen Singapore's population grow from 3.0 million (three million) with a ten percent foreign participation rate in 1990 to 5.7 million with a 30 percent foreign participation rate today.

It was in the 1990s that total population and foreigner numbers increased dramatically.

These are staggering numbers and come at a time when Singapore's own fertility rate has been falling from approx. 1.8 in 1990 to 1.14 in 2019. Only 35,300 babies were born in Singapore versus 49,800 in 1990. 

Singapore had more natural deaths than live births in 2019.

Singapore's subway system built with extensive participation of foreign workers (Photo: WIkipedia)

Unlike many other developed countries, Singapore's foreign worker population does not for the most part comprise of illegal immigrants. Foreign workers are tightly controlled by the government based on a complex quota system.

Singapore's system works well because employers of illegal workers face a fine of SGD 5,000 – SGD 30,000, or twelve months imprisonment, or both.

As at 2019, there were a total of 999,000 foreign workers on Work Permits in Singapore. Included in this one million number are 262,000 Foreign Domestic Workers or maids and 293,000 construction workers. Add in approximately 300,000 foreign professionals, management and other higher skilled foreign employees from the Employment and S-Pass permit categories and one gets a clearer picture.

Singapore has approximately 1.3 million foreign residents, including 300,000 foreign construction workers (Photo: Wikipedia)

Foreign workers are not only tightly controlled but also a healthy source of revenue for the government by means of an employment tax called the Foreign Workers Levy (FWL). 

For each foreigner employed in Singapore, employers must pay a Foreign Worker Levy. The amount of the levy varies depending on the skill level and category of the employee but generally ranges between SGD 300 – 700.

While it is not possible to obtain an exact revenue number for the FWL, Singapore's 2017 budget data stated SGD six billion (or USD 4.2 billion at present exchange rates) was raised under the following four heads: Foreign Workers Levy, Annual Tonnage Tax, Water Conservation Tax and (land) Development Surcharge.

Using only the figure of 293,000 construction workers one may guesstimate the amount raised (only for construction workers) to be in the range of SGD 1 – 2.5 billion (or USD 700 million – 1.8 billion); one billion if the levy was to be SGD 300 on each worker or SGD 2.5 billion if the levy was SGD 700 per worker.

Once levies from the other one million foreign workers are included it is safe to conclude the FWL is a nice source of income for the state – possibly SGD 3 billion or more annually (USD 2.1 billion).

By comparison, in the same year (2017) Singapore raised SGD 1.8 billion in liquor and tobacco taxes; SGD 2.7 billion in betting taxes from the local casinos; SGD 4.4 billion in property taxes; and 10.7 billion in personal income taxes.

Singapore's foreign workers are here voluntarily. Most will speak positively of their experiences in Singapore. Nonetheless, low skilled foreign workers are not paid generously.

Based on data collected in 2018 by a Singaporean NGO, Transient Workers Count Too (TWC2), the average monthly starting salary for a Bangladeshi or Indian foreign worker was SGD 400 – 465 (USD 282 – 328) versus the average Singapore monthly salary of SGD 3,100 (USD 2,200). To be sure, foreign workers are provided with basic accommodation and medical coverage by their local employers.

To be sure, one is not suggesting a cleaner be paid the same as bank manager. However, there are dangers to keeping the foreign worker community on the margins of Singapore's society – not marginalized but on the margins.

Presently, foreign workers are seen but not heard. They do but cannot say.

The quality of life of Singaporeans is dependent on the continued stable supply of cheap labor. As the Singapore Minister Minister for Home Affairs recently said, "They clean Singapore, they build our HDB flats ... they handle our waste management... they are helping us build our prosperity."

In other words, Singapore's wealth and competitive advantage are to some degree based on the availability of a steady and uninterrupted supply of cheap labor. For example, high quality public housing -  85 percent of Singaporeans live in owner occupied public housing – are not only constructed but also maintained on an ongoing basis by foreign workers.

Likewise, Singapore's world class public transport subway system is constructed by foreign workers. Additionally, some of those qualities which we tout as being intrinsic to Singapore's identity, e.g. clean public spaces and well maintained green spaces are in reality a result of foreign labor.

The dangers of dependency on foreign workers came to the fore in 2013 during the Little India riot and again during the present Covid-19 pandemic crisis.

Singapore's iconic structures such as the Marina Bay Sands rely heavily on foreign construction workers (Photo: Wikipedia)

During the present crisis, the authorities were so focused on maintaining the health of Singapore citizens and Permanent Residents that the almost one million foreigners on Work Passes were virtually overlooked.

It was a costly oversight which has affected the Singapore brand which prides itself on good governance and typically places the country on the top of most ranking lists. Additionally, it has set back the island's efforts to restart and normalize its economy by at least several weeks.

As an aside, by publicizing Singapore's one of Singapore's not normally talked about open secrets, its large foreign worker community, there is a feeling Singapore's dirty laundry is being aired in public!

Surely, Singapore has at least partly redeemed itself by ensuring there is sufficient testing available for all foreign workers. Additionally, the government has committed and continues to provide quality health care to all foreign workers in need, including world class Intensive Care health facilities all at taxpayer expense.

Singapore's dependence on foreign labor is at best an irritant and at worst a national security risk. Hence, there is ample reason to reduce the country's reliance on this demographic (dare one call labor a commodity?).

Innovation and adoption of new technologies are two ways forward; replacing human activity with robots and / or artificial intelligence makes a difference. For example, consider certain factory production lines where humans have been replaced with robots for many functions.

Simultaneously, Singapore must improve living conditions of foreign workers. Improving living conditions is a social responsibility. It cannot simply be left to the authorities by building new and better dormitories, etc. It requires a broad understanding by Singaporeans of the critical role foreign workers play in keeping the city-state functioning.

Implicit in this understanding is the need to more equitably compensate foreign workers. Surely, higher pay will necessitate a general increase in Singapore's price level as the cost of construction, waste disposal, cleaning, gardening, etc. (the list is long!) is directly linked to foreign workers wage levels. Pay more and Singaporeans must pick up the bill. No escaping that fact.

Singapore's treatment of foreign workers is a reflection of Singapore society and its people's values. Singapore must do better for its foreign worker community in the coming months and years. The country's excuses for not doing so are wearing thin.

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Imran is a Singapore based Tour Guide with a special interest in arts and history. Imran has lived and worked in several countries during his past career as an international banker. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on Instagram (@imranahmedsg); twitter (@grandmoofti) and can be contacted at imran.ahmed.sg@gmail.com.

Corona Covid-19 pandemic: death knell for the post-war world order?

Once upon a time the world – or at least the Free World - was led by Reagan, Thatcher and Mitterand. Leaders with presence, standing and most important of all, respect. They were even respected by opponents.

British Prime Minister Thatcher, US President Reagan, French President Mitterrand and
West German Chancellor Schmidt at an international summit meeting (L to R)

During those times the US and its likeminded 'friends,' e.g. Britain and France, ran the world using a combination of bribery and force. They lorded over other lesser nations through a series of interlocking multilateral security arrangements and an economic institutional framework comprising of entities like the International Monetary Fund (IMF) and the World Bank.  

In a nutshell, that was the post World War Two world order.

But those were different times. The developed world had money and delivered on promises. Other countries believed them.

The US, as the undisputed leader of the 'Free World,' provided a security blanket for its satellite states. In return for ceding a part of their national sovereignty to the US, the US provided clear leadership, especially in times of crisis.  

That was the 1980s. Much has changed in the ensuing four decades.

The Berlin Wall - the symbolic Iron Curtain dividing the world's two Superpowers (the US and the Soviet Union) - came down in 1991. That same year the Union of Soviet Socialist Republics (USSR) morphed – nay collapsed – and became the Commonwealth of Independent States (CIS). (The CIS structure was a graceful way for the USSR to exit the Russian Empire's historic obligations and focus on saving Russia itself.)

Socialism all but died with the Soviet Union. Today all countries engage in private enterprise and global trade. Meanwhile Socialism has been discredited though significant parts of socialist philosophy have made their way into mainstream thought, e.g. public healthcare and social safety nets.

China's Belt and Road Initiative reflects China's aspirations as a global trading power

As for the global economy, the US is no longer the undisputed master. To be sure, the US Dollar remains king but its throne is a little shaky.

In the past it was said, "If the US sneezes then the world catches a cold." Today, if the US sneezes, the rest of the world simply says, "Bless You" and moves on. The risk of catching a cold is remote – at least not an intense life threatening cold resulting in mass unemployment.

In 2020 the communist party managed People's Republic of China (PRC) has the world's largest economy. Based on data released by the IMF, World Bank and the CIA, China's economy is significantly larger than its closest rival. Indeed, China's gross domestic product (GDP) surpasses the GDP of the combined European Union (EU) nations.

The deterioration in the US position has not been only in the economic domain.

Extraordinary leaders create and husband prestige. Prestige is an invisible halo which adds to the 'je ne sais quoi' aura of rulers. It is built up over decades but can be lost quickly. 

American prestige reached its peak during the first Iraq war with Operation Desert Storm in 1991 and Powell's 'Shock and Awe' tactics of overwhelming force. Since 1991 a series of events have diminished US global standing.

Militarily, the downtrend started with the 1993 failed US intervention in Somalia, Operation Restore Hope and the casualties suffered in the Battle of Mogadishu. Then came the 9/11 attack, which taking place on US domestic soil was a watershed moment. The subsequent War on Terror, especially the Iraq war and the present scramble to exit Afghanistan, did little to help stem the dissipation of US prestige.

Simultaneously a succession of other minor events, though not as individually significant as the 9/11 attack, cumulatively resulted in tarnishing America's sheen. These include the US federal government shutdown in 2018 – 2019 (35 days) and 1995 – 1996 (26 days) and the 2008 Global Financial Crisis.

Despite the signs of decay, many still placed the mantle of leadership squarely on the US and its small coterie of European friends. However, with recent events surrounding the Covid-19 pandemic it has become increasingly clear the US and its 'friends' no longer rule the roost.

In its management of the Covid-19 pandemic, the world has seen the US's dysfunctional soul. While state governors are at loggerheads with the federal government over steps to contain the crisis the US Covid-19 death toll and infection numbers rise uncontrollably. As of April 2, 2020 US deaths attributed to Covid-19 have surpassed China, the original epicentre of the virus.

Through an unending sea of social media content, the world has witnessed the complete disarray in the US (and most of Western Europe) caused by the pandemic. Most revealing are not the lack of resources available to these governments' in tackling the virus but more so the lack of national leadership and policy implementation through state bureaucracies.

The world is used to headlines decrying poor governance, weak infrastructure; limited resources, etc. Such news headlines are common across large swathes of the world. However, they are more normally reserved for parts of Africa or developing Asia than for the US or Europe.

The Covid-19 pandemic has hastened post war global structural changes. The US and Europe, though still powerful, are less relevant international players. 

Following a steady erosion of economic and military power the irreparable loss of reputational prestige due to the management of the Covid-19 pandemic, neither the US nor Europe are able to provide global leadership. For example, there will be no Group of Seven summit resulting in a Baker Plan or issuance of Brady Bonds to save the world's economy from the ravages of the Covid-19 catastrophe. It's every nation for herself.

Until further notice, the world suffers a leadership vacuum.

China may vie to fill the position but it's not ready yet - perhaps in a few decades. More likely, second tier regional powers like India, Russia and Turkey will temporarily fill the void in their respective neighborhoods until a more stable arrangement is reached. 

No matter what the coming new world order looks like, one fact is clear: Trump, Boris and Macron cannot fill the shoes of Reagan, Thatcher or Mitterrand.

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Imran is a Singapore based Tour Guide with a special interest in arts and history. Imran has lived and worked in several countries during his past career as an international banker. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on Instagram (@imranahmedsg); twitter (@grandmoofti) and can be contacted at imran.ahmed.sg@gmail.com.

Pakistan's Kashmir obsession: unhealthy and unrealistic?

As the Pakistani Prime Minister Imran Khan arrives in New York for the latest session of the United Nations General Assembly it's necessary for Pakistanis to ask exactly what the country can do about Indian Kashmir.

Muzaffarabad is the largest city and capital of Azad Jammu and Kashmir. It is located near the confluence of the Jhelum and Neelum Rivers and is a four hour drive from Islamabad, Pakistan's capital. (Source: Wikipedia: Obaid 747) 

The country's economic managers are walking around with a begging bowl because the country cannot pay its bills leave alone spend money on national development. The Pakistan Banao (Bachao?) Certificates launched with great fanfare early in Khan's term and designed to raise Pakistan's foreign currency reserves have done little to strengthen reserves.

The economy is in the midst of a serious downturn with no recovery in sight for at least the coming 18-24 months. Large scale manufacturing is shrinking while small and medium sized enterprises labor under the effects of increased taxation, a sharp drop in the value of the Rupee and an emasculated consumer struggling to make ends meet while losing more discretionary income with each passing day given an official inflation rate above thirteen percent.

The country is running out of water but has no money to build dams. Despite arm twisting and 'forced donations' (e.g. via each Pakistan Railways ticket sold) the Supreme Court's Dam Fund is nowhere near numbers required to seriously assist with the urgent building of dams across the country. Indeed, the much hyped Dam Fund has become a hazy memory for most and an embarrassing one for those promoting crowdfunding as an alternate means to pay for massive national infrastructural projects. 

The electricity situation is no better. Despite suffering shortages and brownouts for the last several decades, Pakistan has been unable to fix its electricity load shedding problem until today. Much of the country suffers hours without electricity daily in both Winter and Summer months. Even when electricity is available it is not stable with voltage fluctuations playing havoc with machinery; a disincentive for manufacturing concerns requiring stable, uninterrupted electricity for normal operations.

The country has no proper waste management systems. Without a drastic betterment in urban sanitation levels improvements in preventive healthcare will remain wanting. (Picking up litter from urban areas and dumping it on the outskirts of cities so it is out of sight does not constitute proper waste management.) It's not surprising Pakistan is one of the only countries where polio still afflicts children. 

The air quality in Pakistan's cities is rapidly deteriorating due to pollution. Indeed, Lahore is blanketed by haze virtually on a daily basis with air quality moving into the healthy range an exception to the daily norm. Islamabad and Karachi are not far behind. This is the air Pakistan's infants breathe daily – and there is no shortage of infants given the country's fertility rate.

Pakistan cannot provide adequate food, housing, education or medical care to the majority of Pakistanis. In many households, animals are more precious than women, who have few effective social or economic freedoms. All these problems are compounded by Pakistan's unbridled population growth with its population increasing exponentially every few decades.

So as PM Khan travels back to Pakistan in a few days on on a borrowed Saudi luxury jet he may wish to ask himself what's more important for Pakistan's two hundred million plus citizens: ratcheting up Kashmir hysteria a few more notches or implementing a national development agenda on a war footing?

Imran is a Singapore based Tour Guide with a special interest in arts and history. Imran has lived and worked in several countries during his career as an international banker. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on twitter (@grandmoofti); Instagram(@imranahmedsg) and can be contacted at imran.ahmed.sg@gmail.com.

Hong Kong: heading towards irrelevance?

A few days ago a friend in the United States asked for my opinion on recent events in Hong Kong (HK). He prefaced his question with Chinese claims about international (read ‘Western’) involvement in stoking the unrest.

Admittedly, my response is not an essay worthy of Foreign Policy magazine. Nonetheless, for interested readers I have reproduced my response below.

Surely, there are 'agent provocateurs' within the HK protest scene. Intelligence agencies directly or at least indirectly are involved with the unrest. There is also a cyber war underway and both parties are pushing their respective narrative through social media.

However, the scale, depth and duration - it's been three months now - suggest genuine underlying grievances garnering popular support from a broad segment of the Hong Kong population.

A view of the protest demonstration in Hong Kong on June 9, 2019 (source: Wikipedia)

HK has historically been a society divided between the ‘haves’ and the ‘have nots’ so perhaps the fear of being left behind among those not in the civil or business elite, especially in light of recent increases in property prices is one major factor?

However, in a general sense Hong Kongers have not mentally accepted their accession to the People’s Republic of China (PRC). That psychological transformation from a British colony to a Special Administrative Region(SAR) of the PRC has not yet been made.

The reality for Hong Kongers is there is no going back to the previous status quo.

There is virtually no possibility of HK being given significantly more autonomy leave alone independence. That parts of the international community are providing 'hope' to protesters suggests, at least to some extent, these protesters are being used by segments of the international community to further their political agendas.

HK had lost its privileged position as a gateway financial hub for the PRC some years ago. PRC 2019 is not the PRC which (re)acquired HK in 1997. 

In the larger context, these protests are accelerating HK’s irrelevance. Within a decade or so HK will simply be another Chinese regional city, like Nanjing, Tianjin, Xian, etc. Surely, like all these smaller Chinese cities, HK will maintain a unique identity based on its own history.

But will HK remain a global, regional or international financial powerhouse and privileged gateway to mainland China? No. HK will become merely another wealthy, entrepreneurial Chinese coastal city.

Ideally, Hong Kongers should embrace their fate (some might even suggest good fortune?) as an SAR within the largest - and still growing - economy in the world. Subsequently, HK can consolidate its competitive strengths within the PRC context to secure a brighter future. 

However, time is fast running out for Hong Kongers to change the current trajectory.

Imran is a Singapore based Tour Guide with a special interest in arts and history. Imran has lived and worked in several countries during his past career as an international banker. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on twitter (@grandmoofti); Instagram (@imran_traveller) and can be contacted at imran.ahmed.sg@gmail.com

PTI’s Khan panders to Islamists and Mr Chief Justice I can’t hear you now?

Imran Khan's Pakistan Tehrik-Insaf (PTI) government's recent collapse in facing down Islamist radicals over the appointment of Pakistani Princeton University economist - who happens to be Qadiani - to a government advisory panel, is shameful.

Even more shameful is that Imran Khan did not use even one iota of his considerable political capital to support Atif Mian. There was no public statement from King Khan himself, only official comments by his minions.

Source: Wikipedia

Is this the Naya Pakistan for which Pakistanis voted?

Apart from the fact that the government's behavior is illegal - Pakistan's Constitution is unambiguous on the subject – it sets a dangerous precedent for the State's future. 

PTI's surrender places in doubt Khan's ability to follow through with his ambitious reform program in the face of protest. Economic reform requires tough decisions and if the government is only capable or willing to implement populist policies then whence the reform?

The incident underscores  the recent disintegration of Imran Khan's principles at the altar of political expediency – following on from his decision to appoint 'lotas' (aka electables) in a hitherto principled political party.

Undoubtedly, we cannot bury the notion of Naya Pakistan until the PTI's five year term is complete. However, the PTI has not had an auspicious start and the omens don't look good, especially for women and non-Muslim minorities.

Before one gives up all hope, perhaps one can give a shout out to the otherwise activist 'Suo Moto' Chief Justice? Yes, we appreciate your efforts in building dams Mr Chief Justice but can we request you also focus on your day job and dutifully enforce Pakistan's Constitution in Atif Mian's case?

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[i] No citizen otherwise qualified for appointment in the service of Pakistan shall be discriminated against in respect of any such appointment on the ground only of race, religion, caste, sex, residence or place of birth. Pakistan Constitution, Article 27 (1)

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Imran is a former banker and  has lived and worked in several countries during his international banking career. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on twitter (@grandmoofti); Instagram (@imranahmedsg) and can be contacted at imran.ahmed.sg@gmail.com

Note to Pakistan’s economic managers: reforming tax collection techniques

As the euphoria surrounding former cricket star Imran Khan’s election victory begins to fade in Pakistan, the country’s economic managers must deal with the hard tasks ahead. Immediately improving foreign currency reserves is simply a tactical necessity. The real challenges are strategic.

If Pakistan approaches the International Monetary Fund (IMF) for economic support – as is widely predicted by most analysts – then the IMF will remind Pakistan’s new Finance Minister of at least two priorities: increasing revenue and reducing expenses.

In order to achieve these two objectives there is a need to move away from the simple solution of imposing additional withholding taxes on an already excessively used taxation technique. To date, this method has only resulted in mixed success.

Presently, virtually any financial transaction in Pakistan’s organized sector, i.e. a documented transaction and not in cash, requires the collection of withholding tax. For example, registering a car or paying motor vehicle tax; registering a property; cash dividend payments made by listed corporations to individuals; and banking transactions such as preparing a bank draft all require collection / payment of a withholding tax. 

In theory, this tax payment is an advance tax and may be adjusted against future corporate or individual tax liabilities. In practice, few individual taxpayers make the effort to reduce their tax liability by the advance tax amount. For corporations, except maybe for top tier multinational and local institutions, increased bookkeeping coupled with a weak and often corrupt tax collection infrastructure reduce the incentive to claim advance tax. In other words, other than a few large corporations with sufficient resources to devote to copious bookkeeping, few businesses ever see the benefits of any ‘advance tax’ collected on their behalf.

Sure, it will be easy to continue and ‘widen’ Pakistan’s tax base by implementing additional presumptive tax on more transactions – or increasing percentages on existing advance tax payments - especially as these tax collections will likely be booked under the Direct Income Tax category and (falsely) boost the government’s claim of broadening the tax net.  Nevertheless, such taxes will only make Pakistan’s economy more inefficient by pushing up the cost of doing business, especially for Small and Medium Enterprises (SMEs), a backbone of the country’s economy.

Improving Pakistan’s tax collection infrastructure through reforming the operations of Federal Board of Revenue (FBR) is a prerequisite for success. It should be noted that reforming the FBR is a necessary though not sufficient condition for enhancing the country’s tax revenue.

One means of increasing FBR’s operational efficiencies is to reduce unnecessary human touch points. Corporate and individual tax payers should have as little interaction with humans as possible. Basic tax transactions must be simplified. More transactions should be shifted online. Online transactions reduce the possibility of corruption, improve speed and result in simplicity - an all round elegant solution.

To the naysayers who believe serious reform of the FBR is impossible only need look at the successes of NADRA and even the Election Commission. Both these government agencies have adopted new technologies and greatly simplified the lives of many Pakistanis as a result. Transactions which took weeks, months or even longer and were impossible without several unproductive visits to government departments are now routinely completed using a few clicks on a keyboard. Smart solutions are the way forward for the FBR.

Undoubtedly, increasing revenue and reducing expenses lie at the heart of any economic restructuring be it national, corporate or individual. Unfortunately, converting these two principles into effective policy decisions is a complicated process fraught with political minefields. Nonetheless, Imran Khan’s Justice Party (PTI) has a real opportunity to lay the foundation for genuine reform.

In my next post, I will discuss the necessity of approaching the ‘Filer’ and ‘Non-Filer’ distinction with greater finesse. ‘Non-Filers’ are not synonymous with tax evaders. Hence, throwing all ‘Non-Filers’ into a ‘penalize by paying more tax’ bucket is an unfair use of state powers. The policy must be improved to make it more equitable. Stay tuned.

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Imran is a Singapore based Tour Guide with a special interest in arts and history. Imran has lived and worked in several countries during his past career as an international banker. He enjoys traveling, especially by train, as a way to feed his curiosity about the world and nurture his interest in photography. He is available on twitter (@grandmoofti); Instagram (@imranahmedsg) and can be contacted at imran.ahmed.sg@gmail.com

Singapore’s strategic challenge: SG50 to SG100

SG50 celebrations are quickly fading from Singapore's collective memory. The mutual self-congratulations and laudatory speeches are a thing of the past. Indeed, the political focus has shifted decisively towards the future with the official announcement of general elections expected imminently.

While Singapore's 'usual suspects' (e.g. immigration, public transport, cost of living, etc.) will command most attention during the forthcoming election campaign, it is Singapore's welfare over the next 50 years which demand more focus.

Arguably, the 50 years nation building period since 1965 may prove easier to navigate than the coming 50 years. Why? Several reasons come to mind.

Lee Kuan Yew (LKY) is the most obvious answer.

Singapore was fortunate to have firm, visionary leadership for several post-independence decades – a luxury denied most newly decolonized nations. Leadership best symbolized by LKY, but also includes other cabinet members (e.g. Goh Keng Swee, Rajaretnam et. al.) influential in their own right in shaping critical national policy frameworks.

Singapore circa 1965 was a typical third world city: undeveloped, unclean and riddled with crime. Arguably, things could not get much worse – only better. Certainly, development is easier when started from a low base - improvements are more visible and impactful.

Singapore took a free market, export led approach to generating economic growth in an era when many decolonized countries practiced and preached economic self-reliance. China was well and truly a People's Republic. Deng Xiao Ping had not yet worked his magic. India was a socialist country firmly implanted on the Soviet Union's side during the Cold War. Both China and India were off limits to international investors.

For ASEAN's Asian Tigers it was a sunny period as they received large doses of direct foreign investment from wealthy industrialized nations. There was far less competition for the international investment dollar. Fast forward to 2015 and things are different.

Singapore no longer starts from a low economic base.

On the contrary, Singapore is now one of the wealthiest nations in the world. It is hard, if not impossible, to generate and sustain (say) seven percent annual GDP growth with GDP per capita at USD 56,000 versus the 1965 per capita income of USD 516. Put simply, seven percent growth equals an annual increment of USD 36 in 1965 versus a yearly increase in income of almost USD 4,000 today (a monthly wage increase of approximately SGD 450).

Suddenly one pillar of Singapore's historical social contract looks a bit wobbly?

Like other Asian Tiger economies, a key factor in Singapore's early economic success was its low cost structure. Contemporary Singapore is no longer cost competitive for traditional businesses. Quite the reverse, recent surveys suggest Singapore is now a frightfully expensive place for international companies.

That's not all. Singapore's economic success brings with it other concerns.

A wealthy, literate population has different expectations from the country's political leadership.

Having achieved success, some Singaporeans believe they are entitled to a 'cradle to the grave' social welfare structure, often citing various European countries as appropriate models. The increased demands by citizens coupled with the power of the social media – think Arab Spring – has on occasion forced the government's hand towards populist polices.

Undoubtedly, Singapore can afford higher social expenditure but if the 'entitlement' trend continues then Singapore becomes closer to Europe in other ways too: high taxes, poor delivery of government services and a rigid labor market. Or Singapore heads towards unsustainable social expenditure (think Greece)?

Unfortunately (or fortunately) ASEAN is not the European Union and no one owes Singapore a living!

Politically, no single leader has the gravitas and respect accorded to LKY and his team.

The political contract was simpler in 1965: the government improves economic conditions and the citizenry don't ask too many difficult questions. In contrast, today's electorate is keen to question the leadership and flex its muscles at the ballot box. The upshot: despite the ruling People's Action Party's achievements for Singapore over the last 50 years, the city's long standing rulers cannot take the popular vote for granted.

Consequently, the government cannot enact unpopular policies with the same bluster as before. A literate, connected and wealthy (entitled?!) electorate is not as easy to boss around as the less well-off, kampong dwelling Singaporean of the past.  

History is for historians and the future is for the next generation (or, PAP, what have you done for me lately)?!

Despite all the challenges face in an uncertain world, there are many reasons to argue for Singapore's continued success in the next 50 years.

Governmence structures are solidly in place.

Public service and the bureaucracy continue to attract talent due to competitive compensation structures. In an often unstable region, Singapore's educated and English speaking society provides a haven of stability which allows the country to charge a 'Singapore Premium.'

Currency reserves – effectively savings squirreled away for a rainy day - are sizeable.

Between GIC and Temasek, Singapore's two sovereign wealth funds, GIC and Temasek, contain a massive USD 538 billion in assets. A sum equivalent to approx. USD 161,000 for each of Singapore's 3.4 million citizens! These savings provide a limited insurance policy for increased social welfare expenditures.

Singapore's new found wealth also makes the country ideally placed in a capitalist world.

The Republic is a global investor in its own right with large investments, particularly in developing ASEAN and China. In time these investments will generate significant positive income for the country.

But let's forget logic for a moment. After all, human society is a collection of human emotional endeavours?

Singapore's future is about survival for its resourceful and creative population. So if necessity is the mother of invention (or re-invention is this case) then the odds suggest that this small (non-secular!) island republic will succeed in for the next fifty years!

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Imran is a business and management consultant. Through his work at Deodar Advisors and the Deodar Diagnostic, Imran improves profits of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com.