Future Directions in the Political Economy of Singapore |

Future Directions in the Political Economy of Singapore

20111104_NgiamTongDow_w170On 4 November 2011, the Lee Kuan Yew School of Public Policy hosted Mr. Ngiam Tong Dow for a lecture on “Future Directions in the Political Economy of Singapore”. During a long and distinguished career in the civil service, Mr. Ngiam has served as Permanent Secretary in the Prime Minister’s Office, the Ministry of Finance, the Ministry of Trade and Industry, the Ministry of Communications and the Ministry of National Development. He was also Chairman of the Singapore Economic Development Board.

Mr. Ngiam began his talk by charting Singapore’s early industrial history and explaining the role of foreign low-wage workers in Singapore’s economic transformation. He then discussed the role of foreign talent and most importantly, Singaporeans themselves, in shaping the future of Singapore’s economy. 

Former Singapore Prime Minister Lee Kuan Yew and his colleagues, Mr. Ngiam said, “could not have inherited a more unpromising city state” – a stagnant economy burdened by high unemployment, poor infrastructure and petty corruption. Singapore’s early leaders dismissed the prevailing “import substitution” model, which held that developing countries should impose tariffs on imports and depend solely on the domestic market. Instead, Singapore’s leaders took the bold step of embracing the global economy, allowing Singapore’s goods to compete with the rest of the world. This approach, Mr. Ngiam argued, was a risk that required discipline. To compete in a global economy, “you need to be the best or you have nothing”, he said. This strategy approach was successful as MNCs, mostly labour-intensive industries attracted by cheap labour, started to come to Singapore and the economy grew.

However, Mr. Ngiam noted that growth reliant on cheap labour was “not self-sustaining” and acknowledged that the government had “made some mistakes”. He said that instead of concentrating on skills enhancement and climbing the technology ladder in order to increase in productivity, the government took the “easy road” by importing cheap labour – a mistake that the economy is “still suffering for today”.

Mr Ngiam described Singapore’s current economic condition as “trapped in a time warp” and believes that Singapore needs to abandon its low wage policy and work towards higher wages driven by higher productivity. But he warned against instituting a minimum wage. Drawing on the lessons from the 1985 recession, he said “the government cannot mandate wage increases … the world will never pay you more than you deserve … wages can only go up with increases in productivity”. Instead, he recommended that Singapore “should not bring in those with education levels lower than the average education level”. He pointed out that foreign service workers create a strain on housing, infrastructure, health and social services, and called on scholars to evaluate whether the “value add of a low wage service worker to Singapore is higher than the cost”. 

Mr. Ngiam went on to discuss the role of foreign talent and R&D investment in Singapore’s transition to a knowledge-based economy. He said that we must remember the goal of “raising the level of competence” of Singaporeans and ensure that foreigners contribute value to the local people and economy. In the past, Singapore has been “too straightforward, not cunning enough” and often attracted “speculators rather than entrepreneurs”. He stressed that Singapore should welcome foreign talent but they “must make an economic contribution”.

Mr. Ngiam said R&D spending was about much more than just discovering patents. R&D investment should focus on the real objective: “raising the competence and skills of our scientists and engineers”. With this focus, Singaporeans can develop the “ability to solve complex problems – that’s how to be better than other countries”.

Mr. Ngiam’s parting words were on what lies ahead for Singapore’s economy and its need to deepen its self-reliance. The road ahead will be difficult for Singapore, he argued, because its future economic growth will depend on hard work as the country can no longer rely on cheap labour, nor should Singaporeans continue to outsource difficult tasks or engage consultants to solve their problems. Instead, Singaporeans must focus on upgrading their skills and knowledge and solving problems themselves.

Mr Ngiam warned against the dangers of “mental colonialism” – the mindset that foreigners are better than Singaporeans. As a result of this outlook, Singaporeans have “lost confidence in ourselves”, he said, and become “strangers in our own land”. While foreign talent is “good for [acquiring] specific technical skills”, Mr. Ngiam argued that “Singaporeans should be the drivers of their own economy”. Ultimately, to be self-sustaining, Singapore must take a ground-up approach and “grow our own timber”.

 

By Emma Dudley, a first-year Master of Public Policy student at the LKY School.

 
Speaker(s):

Ngiam Tong Dow, former Permanent Secretary in the Prime Minister’s Office, the Ministry of Finance, the Ministry of Trade and Industry, the Ministry of Communications and the Ministry of National Development and Chairman of the Singapore Economic Development Board

Date:
Friday, 04 November 2011

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