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Nation-building in Singapore: AY2014-5

HY2229/SSA2204: Lecture 8
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ECONOMY BUILDING AS NATION-BUILDING
A. Introduction: Brief Overview of Economy and Society
1. The Needs of an Economy
economy: a system that produces, distributes, trades and consumes goods and service
physical infrastructure (roads and railway)
people (mental health entertainment, knowledge schools and education)
organisation
2. Outcomes of Developing an Economy
3. Transiting from a Colonial Economy (and Society) to a Nation
Goh Keng Swee speaking to Chinese Chamber of Commerce on 15 March 1969:
Today the economy is in a strong position. We in Singapore believe in hard work.
We believe that enterprise should be rewarded and not penalized. We believe that we
must adjust ourselves to changing situations. We believe in seizing economic
opportunities and not let them go past us. Finally, we believe in self-reliance.
These are human qualities that have helped to transform an island-swamp into a
thriving metropolis. They are the traditional virtues of Singaporeans and so long as
we retain these virtues, we can face the future with confidence.
Tharman Shanmugaratnam on how Singapore has achieved its incredible economic
miracle (Interview with Credit Suisse, 20 March 2014):
I would say Singapores story can be explained by three factors: culture, particularly
the work ethic of the Singaporeans, our response to adverse external conditions and
our government, especially policies in education and housing. The government is
activist, not hands-off. But our whole approach is to enable people, and support a
culture of aspiration, work and personal responsibility, rather than have government
taking over responsibility. Thats how we enable as many people as possible to both
contribute and share in our countrys prosperity. Thats the best way to create an
inclusive society.
B. The Colonial Economy of Singapore, 1819 to 1942
1. Entrepot Trading Centre (had been a port since 14th century)
i.

Legacy as a Trade Centre in Southeast Asia

ii. British Foundations: free trade policy (laissez-faire)

anyone can come and trade without any tax


iii. Rubber, Tin, and others (pepper, gambiar); industry limited to processing
raw materials for trade
2. Development of Singapore Island
i.

Physical Infrastructure
a) Harbour / port facilities under Tanjong Pagar Dock Company (publicly
owned in 1905), later Singapore Harbour Board (1913) - predecessor to Port
of Singapore Authority (PSA)

Turnbull, 108: By 1903, Singapore was the worlds seventh largest port in tonnage
of shipping, but facilities were grossly inadequate, cramped and congested. Services
were expensive and subject to long delays.... There was no railway to the docks,
since railway schemes mooted thirty years earlier had fallen victim to the clash of
vested interests between Singapore companies and the government. The result was
that in the early years of the twentieth century, all goods to and from the docks still
had to be transported in bullock carts.
b) Railway lines: first lines laid in 1885 near tin mines in Perak; initial line
in Singapore between Kranji and Tank Road (near Fort Canning); Tanjong
Pagar Station in opened in 1932. By 1918, Singapore connected to Bangkok
by rail.
c) Roads: Johor-Singapore Causeway in 1923
d) Commercial / Financial services: Trade agencies, banks, insurance
companies
ii. Labour: migrants from East, South and Southeast Asia
a) Population: Significant increases since 1819
b) Societal needs: provision of basic amenities to work and live in
Singapore - water, electricity, sewage
Chinese protectorate was created 1877 to protect them from gang
kidnapping
Establishment of hospitals
iii. Sustaining a Colonial Economy: no tax on trade and use of Singapore port;
revenue mostly from tax farms (sale of pork, toddy, opium)

3. Catalysts of Change
i.

Economic Depressions

ii. Political Change: British intervention in Malaya (1874) opened up economic


opportunities for tin mining, rubber cultivation and other agricultural
produce striats settlement as a crown colony in 1867
iii. Technological Advancements. Transportation & Communication: steam
power (from the 1840s); opening of Suez Canal (18697); motorized vehicles
(early 1900s), Kallang Airport (1937) telegraphic lines (from 1850s); print
media - dissemination of information (as early as 1824); Agricultural
Science: Ridley and rubber tapping
iv. War cause stop in human flow and economic standstill
4. Creating a Plural Society
i.

Plural Society: is in the strictest sense a medley, for they [ethnic groups]
mix but do not combine. Each group holds by its own religion, its own
culture and language, its own ideas and ways. As individuals they meet, but
only in the market-place, [and] with different sections of the
community living side by side, but separately, within the same political unit.
Even in the economic sphere there is division of labor along racial lines,
Natives, Chinese, Indians and Europeans all have different functions, and
within each major group subsections have particular occupations. (John S.
Furnivall, 1956, pp. 30405)
Plural society are different group of people coming together just for trade

ii. Absence of a common social will. Example: The Pauper Hospital (original
version of Tan Tock Seng Hospital) originally funded by a tax on pork.
Resistance to using public funds for private enterprise, e.g. resistance to
income tax. People were throwing the issues to various group of people and
no one wanted to solve it together
C. Postwar Developments: 1945 to 1965
1. Key Highlights
i.

Decolonization, Struggle for independence: anti-colonialism affected


resumption of prewar economic activities, e.g. organized labour via trade
unions cannot be ignored; political instability and uncertainty 1947 1965
industrial unrest

ii. Population growth and unemployment

iii. Attempts to repair the faultlines of a plural society: beginnings of social


protection, e.g. social welfare (1946), social security (Central Provident
Fund in 1955 form of pension whereby the company pays for the old age)
iv. Increased competition from neighbours, e.g. Malaysia, Indonesia
2. Goh Keng Swee (1918-2010)
i.

Trained economist, Ph.D. from the London School of Economics in 1956;


civil servant in the Department of Social Welfare; joined PAP in 1958 and
was Minister for Finance, Defence and later Education

ii. Quoting Albert Winsemius, in reference to the numerous factory-openings


Goh officiated in Jurong: After 10,000 years Singapore will be like
Nineveh or Babylon of the modern world. From universities all over the
world, people will be sent to the ruins of Sinapore and they will start digging
and reconstructing the type of city this was. They will discover the name
Singapore but will not recall what it was, which civilisation it belonged to,
and they will find lots of stones they cannot decipher anymore. However,
they will discover that one name is always repeated: Goh Keng Swee. And
they will say, That must have been their god. They had a god whom they
called Goh Keng Swee and all these factories are temples to honour the
presence of Goh Keng Swee.
3. Economic Viability of Singapore
i.

The United Nations Industrial Survey Mission Report (aka The Winsemius
Mission Report)
a) Key recommendations: an import-substitution industry, open
economy to foreign investment, attractive terms (e.g. Pioneer
Industries status - relief from income tax), relaxed immigration for
foreign managers and technicians, expansion of technical education
and job training programmes

The Mission concluded, despite the political uncertainty surrounding the island-state in
1960/1, that Singapore has the basic assets for industrialization. With the resourcefulness
of her people, an active industrial promotion programme by the Government, and - this is
the main point - close co-operation between employers and labour, Singapore can
successfully carry out the expansion programme proposed in the report...
ii. The State Development Plan 1961-1964
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a) Identified high population growth rates as the main problem,
resulting in 2/3 of population dependent on 1/3 working population,
and increasing numbers each year looking for employment (about
52,000 within Plan period).
b) Main objective: to expend the resources at the disposal of the
Government and other Public Authorities in such a way that it
would contribute to increasing employment opportunities for those
who would be entering the labour market every year. (p. 33)
Economic Development
Social Development
Public Administration
Total

$ (million)
507.95
349.98
13.19
871.02

%
58.32
40.17
1.51
100.00

c) Social Development: Health, Education, Housing, Social Welfare all urgently needed to keep pace; Housing and Education the
biggest projected expenditure (respectively 154 million and 95
million approx.) 76 new schools / 10 15 000 new houses per year
d) Economic Development: Land and Agricultural Development (land
purchase, reclamation and flood alleviation), Industry and
Commerce (Economic Development Board, Jurong and Kallang
Industrial Estates, and public utilities), and Transport and
Communication
e) Economist Lee Soon Ann observed that the UN Mission Report and
the State Development Plan were two of the few (if not the only)
plans to perceive Singapore as a viable economic unit without
merger with Malaysia.
D. Financing and Sustaining a Nation
1. Ensuring sources of revenue by adapting and adjusting to changing circumstances
i.

1960s: Moving from entrepot trade dealing with staple products (e.g. rubber,
tin, oil and straits produce), to a labour-intensive industries, initially importsubstitution and later export-oriented manufactures (after separation in
1965)
a) Maintaining confidence: Goh Keng Swee and Jurong Industrial

Estate
b) Additional considerations, namely defending a nation (and the cost
of doing so).
c) National flagships: Singapore Airlines (1972), Changi Airport
(1981), continued development of the Port of Singapore (container
terminals at Jurong, Pasir Panjang, Tanjong Pagar and Sembawang,
plus some of the Southern Islands)
ii. Mid-1970s: From labour-intensive to capital-intensive (i.e. high-skilled,
higher value-added) industries, to a knowledge-based economy (e.g.
research and development, higher education) by the 1990s
a) 1970s to 1985: Second Industrial Revolution; semi-conductors,
integrated circuits, silicon wafers, electronics
b) From 1990s: high-tech manufactures; exporter of capital - overseas
investment, e.g. China (Suzhou), Vietnam, Indonesia, Malaysia;
local entrepreneurs, e.g. Creative, Hyflux
iii. Expansion of service sectors: Tourism, Integrated Resorts, Singapore as a
one-stop commercial and financial centre / international business hub
2. National Economy, Industrial Society, Regional-Global Hub
i.

Changing landscape: industrial estates, urban development (housing,


schools, public utilities and other amenities), network of transportation and
communications

ii. Expansion of the State: Central Provident Fund, Housing Development


Board, Economic Development Board, Development Bank of Singapore,
Jurong Town Corporation, Neptune Orient Lines....and many others
iii. The price: 1968 legislation - Industrial Relations (Amendment) Act,
Employment Act; seeming lack of protection for workers (local and migrant)
iv. Continued exposure to regional and global developments: British military
withdrawal, 1974 international oil crisis, economic depressions (1985, 1997
and 2000s); increased competition from other countries - economic
development of China and India; end of Cold War
E. Economy Building = Nation-building?
1.

Consistent themes throughout Singapores economic development, namely (a)


the focus on people, on the social; (b) the role of government in economic (and

social) matters - from benign neglect to paternalistic pervasiveness; and (c)


connections to region and world economies
2.

Contributions and benefits: full employment by 1970s; material security, wealth,


revenue for social development - in terms of housing, health care, and education;
contributed to social cohesion and political stability for the first couple of
decades of independence

3.

Limits: nature of economic development has led to a highly disciplined


workforce, social (and income) inequalities, local vs. foreign (which could be
seen as an identity crisis perhaps?)

4.

Linda Low and Lee Soo Ann in Globalizing State, Disappearing Nation? (pp.
149-150): Economic progress and national unity, which in an earlier era were
mutually reinforcing, may now run counter to each other.

5.

Contrast slightly pessimistic views of authors with this answer by Tharman


Shanmugaratnam, in response to a question about whether a young country has a
culture of its own:

Singapore is an accident of history, unlike most nations formed by the will of their
people to come together. It was a multicultural and multireligious society that
unexpectedly, in 1965, became an independent country. We were united not by a common
language, as nation-states often are, but by the search to make the most of what we
started with. What emerged was a social culture based on work. We told ourselves: we
want a better life: Singaporeans are always making an effort and looking for new
opportunities. This is in our DNA not a biological DNA but a social DNA, mind you,
that can vanish as quickly as it has appeared. It is something that requires constant effort
to recreate and preserve.
6.

Is Furnivalls 70-year old prescription for curing the ills of a plural society still
relevant for 21st century Singapore?

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unstable for lack of a common will owing to the disruption of society by the unrestrained
working of economic forces, acting in the interest of capital, or wealth applied to
production. Nationalism can provide an effective counter to economic forces.
Government should aim therefore at fostering the re-integration of society through
Nationalism. (Furnivall, Progress and Welfare, 1941: p. 48)

Prepared by Ho Chi Tim, 6 October 2014