Foundations Laid, Directions Set

Author: Michael Barr
Published:

None of us can choose the moment of our own births, but we have to admit that the Republic of Singapore got lucky. It was born into a landscape dominated by the Cold War and, in support of the capitalist side of this war, America engaged in diplomatic, military and economic sponsorship of the “free world”. The economic element of this triumvirate was Bretton Woods, an international system for monetary and exchange rate management. It was also a time when changes in transport technology opened new doors for a port city with manufacturing potential. These developments offered great opportunities for Singapore.

Not that this was all that obvious at the time. The government’s first response to this new world was a misdirection in which it appeared to be overtly hostile to the United States.[1] But it did not take long to perform a volte face and align itself firmly with America as one of its best friends (though never a formal ally) in Asia,[2] quickly making the American connection an integral element of both its domestic and international politics.

This relationship developed initially in the Cold War/Bretton Woods context, and continued to flourish in the post-Cold War era of neoliberalism. Throughout this time, the American connection underpinned a domestic political economy based on state-directed capitalism, working in partnership with America’s world—the so-called “free world” of US allies, friends, and business partners from whence came foreign direct investment and professional expertise, and to which went Singapore’s exports. Tiny Singapore’s place in this international political economy was fragile and highly contingent, but its leadership managed to make it work, with much of the credit due to Lee Kuan Yew’s personal high standing with the American establishment. Alas, times have now changed, and between a rising China and an increasingly unreliable America, it seems that a revision of the Singapore’s foreign alignments might be in order.

Loving your hegemon

Immediately following Singapore’s “expulsion” from Malaysia in August 1965, Prime Minister Lee Kuan Yew became involved in a shouting match with the US foreign policy establishment. As part of his megaphone diplomacy Lee threatened, among other things, to invite the Soviet Union to Singapore to provide a regional balance against China.[3] This was a surprising move for a man known as an Anglophile and one of the more pro-Western of the “non-aligned” post-colonial leaders. The US was keen to bring Lee and Singapore into its orbit, but the relatively young and inexperienced Lee was having none of it—until the British government forced his hand.

The decisive period was the months between November 1967 and February 1968, when the British Labour Government devalued the pound by 14%, with immediate, devastating effect on Singapore’s foreign reserves. It then announced that it was closing the Singapore Naval Base very soon, in 1971, a move that directly and indirectly threatened the employment of around 20% of the Singapore workforce. The closure itself was not unexpected, but the Singapore government had been led to believe it had years longer to prepare for this blow.

These developments shocked Lee, who regarded them as tantamount to betrayal. As soon as he had done what he could to manage the problems created by the British decisions, he took off for the US—for a sabbatical at the John F. Kennedy School of Government (Institute of Politics) at Harvard University. According to Lee’s memoirs, the Kennedy School made him “an honorary fellow and arranged breakfasts, lunches, dinners and seminars” so he could meet up with “a host of distinguished scholars”.[4] In November 1968 he was telling an 800-strong crowd of decision-makers at the Economic Club of New York about the virtues of investing in Singapore. He addressed another gathering there just a month later.[5] Over the next year he was such a frequent visitor to New York and the Kennedy School that the website shows the period of his fellowship as concluding in “Spring 1970”.[6]

The almost inevitable consequence of this strategy over the long term is that your national elite comes to identify both intellectually and personally with said great power

This was the beginning of a close relationship between Lee, his colleagues, and the American political and business establishment. Only a few years later his son and heir, Lee Hsien Loong, arrived to study at the US Army Command and General Staff College at Fort Leavenworth. Lee Hsien Loong studied at the Staff College from 1978 to 1979, after which he followed in his father’s footsteps by enrolling in a Master of Public Administration at the Kennedy School, where he studied from 1979 to 1980. He was, at the time, a senior officer and a rising star in the Singapore Armed Forces (SAF). Two years after his return to Singapore, Lee Hsien Loong became Chief of Staff of the General Staff in the SAF, after which he retired from the Army and entered politics, in 1984. He became Singapore’s third prime minister 20 years later.[7] Since the elder Lee’s initial sojourn in 1968, around 200 Singaporeans have studied at the Kennedy School.[8] Significantly, as of June 2017 this figure includes not just Prime Minister Lee Hsien Loong, but also Deputy Prime Minister Teo Chee Hean, Deputy Prime Minister Tharman Shanmugaratnam, and another four Ministers who between them make up nearly a third of the Cabinet (seven out of 22). On top of this, six more members of Cabinet are graduates of other American universities.

The pattern evident at Cabinet level flows down even more strongly into the upper levels of the ministries. Of the 25 positions of Permanent Secretary in the Singapore Civil Service (as of June 2017), 11 are held by graduates of the Kennedy School of Government, including all of the key centres of power plus a few others: Prime Minister’s Office, Defence, Education, Home Affairs, Trade and Industry, Finance, Manpower, Foreign Affairs, and Environment and Water Resources. Another six Permanent Secretary portfolios are held by graduates of other American universities.

Study in Britain also features prominently in the CVs of many senior members of the political and administrative elite, but the interesting thing is how often the US element has entered elite CVs as an afterword to professional education—as a Masters degree, often taken after a person has established himself or herself as a candidate for the elite. The pattern of treating the US as a “finishing school” began with Lee Kuan Yew and Lee Hsien Loong, both of whom did their main tertiary education at Cambridge and only crossed the Atlantic years afterwards. Indeed the Kennedy School of Government, which has featured prominently in this analysis, does not even offer primary degrees.

Thus most members of the senior ranks of the national elite have acquired an American post-graduate degree—usually in Public Administration, or a kindred “vocational” degree with a focus on world politics, and mostly at the Kennedy School of Government. This serves three purposes. The most basic is the acquisition of high-level vocational training from the best universities in the world. The second purpose is to ground the national elite explicitly in the perspectives common to the American political and foreign policy establishment. If the US is the world power and a key to Singapore’s fortune, then clearly the national elite needs to have personnel who are thoroughly familiar with the mindset of its ruling elite. The third purpose is to facilitate the sort of socialisation into the American halls of power and business that Lee Kuan Yew enjoyed during his sojourn at the Kennedy School in the late 1960s. The vocational education purpose could have been met without disrupting the Singapore elite’s more traditional orientation towards British universities, but to pull the Singapore elite in sync with the intellectual and social pathways of the new superpower, the sort of shift that began in 1968 with Lee Kuan Yew’s visit was required.

The reality of the second and third purposes is highlighted by more recent developments whereby in 2008 the government began offering incentives to scholars to study in Chinese universities, in recognition of the rising importance of China.[9] The China “pivot” is still in its infancy and is unlikely to ever become as deep as the American connection, but it does confirm the pattern that the Singapore elite follows: sync your personnel with the great powers so that as an elite you have intellectual and personal connections that can be exploited. The almost inevitable consequence of this strategy over the long term is that your national elite comes to identify both intellectually and personally with said great power. This does not happen instantaneously, but the end result is entirely predictable. Indeed this has very clearly been the long-term outcome of Lee Kuan Yew’s American “pivot” of 1968.

Lee Kuan Yew and Richard Nixon, 1970 - New Naratif
Lee Kuan Yew and Richard Nixon at the White House, 1970 Richard Nixon Foundation

Singapore has never formally entered an alliance with the US, but Tim Huxley describes the relationship as a “quasi-alliance”.[10] In 1969 (the same year that Nixon declared that he was scaling back American military commitments in Asia), the US Navy opened an office in Singapore to coordinate by-then regular ship visits (for maintenance, resupply, and “rest and recreation” functions) during the Vietnam War. In the 1970s Singapore and the US began conducting small-scale joint naval exercises. The US became Singapore’s main defence supplier during the 1970s, and in the early 1980s the US Air Force began using Singapore as a quasi-base for its operations in the Indian Ocean.[11] The defence relationship continued to intensify in the 1990s, and in 2007 the US opened its Navy Region Center in Singapore—the naval base you have when you don’t want to call it a base. Today Singapore is singled out by scholars such as Natasha Hamilton-Hart as the country in Southeast Asia which is “the most consistent and unequivocal” in its support of US foreign policy.[12]

RELATED ARTICLE: The Use of Humiliation as a Political Tool. Singapore’s government drastically altered the Vandalism Act in 1966 to forcefully suppress protests against its participation in the Vietnam War.

Clearly, Lee Kuan Yew’s extended sabbatical at Harvard at the end of the 1960s marked the beginning of a beautiful friendship. From that point, Singapore invested unreservedly in an American-sponsored future—not just in the military and diplomatic domains. It also joined America’s post-war economic world. In 1968 this was the world of Bretton Woods, but Bretton Woods collapsed almost immediately after Nixon’s revocation of the gold standard in 1971. Without hesitation, Singapore stuck with America as it negotiated its way through the 1970s and 1980s towards what we now call the age of neoliberalism.[13]

The fundamental difference between Bretton Woods and neoliberalism lies in the balance of power between capital and social goods. Bretton Woods set out to regulate and curtail the power and mobility of capital in order to maintain social goods such as full employment (at least in the First World), while still retaining a liberal international order.[14] Neoliberalism, on the other hand, regards the empowerment and mobility of capital as a primary social good in itself—and places “other” social goods, such as national sovereignty, employment, welfare and even essential services at a discount.[15] The most important link between them is the US as the central player in both systems, and it should be recognised that Singapore embraced America rather than either of the systems it sponsored. The Singapore government has always striven to profit within whichever system prevails, but it was never as concerned with the distribution of wealth and social goods as was implied in the Bretton Woods ideal; nor has it ever been as disregarding of welfare or its national interests as neoliberalism expects. It has successfully gone a considerable way down the neoliberal path, for instance by favouring international capital over labour, especially over cheap foreign labour. At different times it has tried to go further in its disregard of the distribution of social goods, only to pull back under domestic public pressure—notably in the 1980s, when it tried to unravel completely the system of almost-free hospital wards on which most Singaporeans depended.[16] Yet ultimately it was a variation of the Japanese model that Singapore followed and continues to follow rather than any Anglo-American model: a ménage à trois of strong state, strong bureaucracy, and big business, all manufacturing goods for external markets, ideally without losing sight of the welfare and politics of domestic constituencies.

Throughout all of these developments, it was the pivotal role of the US that held Singapore in thrall. Having placed a huge bet on America as the key to prosperity, the Singapore government had to play to win. Even China’s emergence as a new generator of wealth, which began about a decade after Nixon’s dollar default, has not shifted the centrality of America for the Singapore elite. Singapore’s relationship with China has developed within the context of the Singapore elite’s ongoing devotion to America. This attachment and tangible connection with America has proved the mainstay of Singapore’s relationship with the world. In a different way it has also underpinned its domestic politics, with the Cold War providing the backdrop for the Singapore government’s distinctive and home-grown style of repressive politics, at least for the first few decades of its life. 

The path to America

This little exploration of Singapore’s American connections and its place in the world removes any doubt—if such ever existed—that Singapore’s politics and its international relations have been inextricably bound with its economic development. Its domestic economics was part of a larger political economy, and its international trade was part of its economic foreign policy. This was not a new development. When the PAP won government in 1959, the self-governing colony was already a successful colonial city with links to the world. It had the highest average per capita income in Asia, one of the busiest ports in the world and a fine airport, and was a regional centre for education, and for rubber and oil sales.[17] Such lines of supply and sale were critical for a port city with no natural resources of its own, but in post-war Asia, none of the old allegiances could be taken for granted.

RELATED ARTICLE: Justifying Colonial Rule in Post-Colonial Singapore. The PAP uses the same three myths as the British colonial government—of vulnerability, meritocracy, and development—to justify their policies.

Singapore before independence was an integral part of a supply and produce network that ran between Malaya and the UK, with significant spurs running off in quite a few other directions, including Indonesia, Japan and the US. In the very late colonial period, the PAP government had hoped to perpetuate Singapore’s historical relationship with the Federation of Malaya so that it could continue exporting its rubber and other primary products to the world. It also hoped to sell Singapore’s manufactures on the peninsula. Unfortunately politics got in the way of both these hopes.

As late as the end of the 1950s, many of the old synergies with the Federation were still operational: Malaya was still producing 41% of the world’s natural rubber and most of that was still being exported through Singapore. Yet the two-year experiment of merging Singapore into the new state of Malaysia (September 1963–August 1965) did not just fail; it created such ill-will that the post-Separation relationship between the former colonies was fraught beyond reason. One of the many sticking points during those 18 months was the refusal of both the Malay and the Chinese wings of the central leadership in Kuala Lumpur (UMNO and the MCA respectively) to facilitate the economic integration of Singapore and the peninsula. It should not be surprising, therefore, that after Separation the situation did not return to the rather benign status quo ante. Rather, tit-for-tat spite and imprudent speeches by leaders escalated petty grievances into minor crises. In this environment, Malaysia and Singapore gradually introduced barriers, penalties and permit systems that made it more difficult to access each other’s workers, newspapers and products, even as the two sets of leaders were managing an orderly separation of their assets (notably airlines and shipping lines), currency, and the armed forces.

With the Malaysian market effectively lost, the Singapore government was left with only one viable economic strategy: manufacturing for export. And it worked. Unemployment in the 1960s was mostly around 8–9%, but just a few years into the 1970s Singapore’s unemployment problem had been transformed into a labour shortage problem,[18] thanks mostly to the government’s strategy of building a new manufacturing sector hungry for waged labour. This had been the primary economic development strategy for the PAP even before it won government in 1959. This is confirmed both in articles to this effect published in the late 1950s in the PAP’s journal, Petir, and by the fact that the decision to clear Jurong for factories was taken almost as soon as it took office, in 1960. The Economic Development Board (EDB) was started in 1961, charged with the twin tasks of enticing foreign direct investment and literally preparing the ground (i.e. clearing the land and building the factories, etc.) to pave the way for the arrival of multinational corporations.[19] While there had been a chance of economic union with Malaya, there was some ambiguity in the government’s thinking over whether the domestic market might play a significant role in its manufacturing strategy, but this dream died even before the experiment with Malaysia was ended.

International capital and the Singapore state worked together to turn Singapore into a key (albeit subordinate) node in inter-continental production cycles based and financed in places like New York, Tokyo, London and Amsterdam: a relationship between dominant, mostly Western capital and subordinate, Asian labour

With the economic direction focused unambiguously on manufacturing for export, the first challenge was to raise capital for industrialisation, closely followed by the quest for markets. The challenge of capital formation had been at the forefront of Goh Keng Swee’s mind since before the PAP won government, and featured prominently in the party journal, Petir, even before the 1959 elections. There were two distinct aspects to the need for capital: capital for public investment and for private investment. It had long been Goh’s intention to use the capital in the Central Provident Fund (CPF)—a compulsory retirement fund for Singaporean waged and salaried employees—as a vehicle for industrial and infrastructure investment. Goh had planned to begin raising the rate of contributions into the fund after the party won government.[20] In government he and his successors pursued this plan, systematically raising the monthly contribution levels from the 10% of income they inherited in 1959 to an unsustainable high of 50% in 1984.[21]

Yet even at these extraordinary rates, the CPF was only a partial solution for Singapore’s capital needs. Another source of capital was the three Chinese banks based in Singapore: they were told to hand over nearly half their capital to the new, government-owned Development Bank of Singapore (DBS), which then used its rivals’ capital to make itself the biggest commercial bank in Southeast Asia, pushing the original Chinese banks into the shade. The CPF and DBS, along with a few other resources (e.g. government reserves, Post Office Savings Bank deposits) made an impressive contribution to Singapore’s capital requirements, but they did not solve the need for massive and immediate job-creating investment in manufacturing. Private investment was needed to fund that, and there were severe limits to how much private investment could be raised on the island. The government’s answer was to do everything possible to entice multinational companies to move their manufacturing operations to Singapore, applying a more generalised version of the model that led Mobil to open its refinery on Pulau Bukum and shift its regional operation to Singapore.

The quest for private capital took Singapore’s business emissaries to America, Japan and Europe (including the UK, but with the Netherlands and Germany emerging as major investors via investment in electronics). Early efforts to entice Japanese investment met with only limited success, and it was not until the 1980s that Japan assumed major significance with a massive investment in the petrochemical sector.[22] Nevertheless, even by 1975, rising Japanese investment was already at a level comparable with the declining British investment. Clearly Singapore was expanding its field of vision far beyond its traditional comfort zone (see Figure 1).

The major prize was the United States. America was a land of both mass production and mass consumption. It was also underwriting the post-war capitalist economy on a global scale. By the 1970s, Singapore had established itself comfortably as part of its network of friendly Asian governments. Building on the contacts and the favourable impressions that Lee Kuan Yew had made during his sojourns at the Kennedy School, the EDB despatched officers to the US, knocking on doors, proposing business plans and promising the world—or at least cheap, compliant labour, tailor-made modern factories, a modern port and extensive tax holidays.[23]

Figure 1: Foreign Investment in Singapore Manufacturing, 1970–1975 Garry Rodan, The Political Economy of Singapore’s Industrialization, Table 4.5, p. 122.

 

Transport, technocrats and cheap labour

Thus, the government started down the path of developing its own distinctive developmental model, whereby international capital and the Singapore state worked together to turn Singapore into a key (albeit subordinate) node in inter-continental production cycles based and financed in places like New York, Tokyo, London and Amsterdam: a relationship between dominant, mostly Western capital and subordinate, Asian labour. Political economists described this as part of the New International Division of Labour.[24] Singapore’s strategy focused on manufacturing parts for inclusion in more complicated products (such as computers and electronic devices), but Singapore’s oil and ship repair industries can be considered different dimensions of the same transnational strategy. The success of this model was dependent on the simultaneous presence of many factors: easy and timely accessibility to Singapore from the important centres of world capital in the New World, the Old World and Northeast Asia; local access to raw materials; the use of fast, reliable and cheap seaborne transport for the movement of manufactured goods to and from distant factories and markets; high-quality infrastructure and world-class port facilities in Singapore; a cheap, reliable Singaporean workforce with enough sophistication to deliver goods to demanding specifications; and a stable political system with minimal sovereign risk. The most critical new element was the advent of fast, cheap transportation of bulk goods by sea, which suddenly made Singapore competitive as an exporter of manufactured goods to the US and Europe—a point whose importance was explained in detail to Lee Kuan Yew in 1968 by Ray Vernon, a Professor of Business at Harvard University.[25]

These factors are the leading and most obvious characteristics that explain the success of Singapore’s developmental model, but beyond these, a number of less obvious factors were in play. First, potential rivals were either slow to join the race (China, India, Indonesia, and Malaysia in the early decades) or were turned into partners (America and Japan in the early decades; China, India, Indonesia, and Malaysia more recently). The importance of the early partnerships with America and (to a lesser extent) Japan cannot be underestimated. It was this that drove the Port of Singapore’s decision to convert itself into a container port in 1966. Japan and the west coast of America were leading the world in containerisation, and they were among the world’s major markets for both consumption and manufacturing inputs.[26] If Singapore was to be their partner in Southeast Asia, it needed to be able to accept their ships and handle their containers. In essence, Singapore successfully rode the first wave of the shipping container revolution that began on 26 April 1956 in the Port of New Jersey, and which transformed intercontinental transportation, manufacturing, and consumerism on a global scale. Hence, in 1972, Singapore became the first commercial Asian port outside Japan to containerise, successfully staking its claim as the hub port for Southeast Asia.[27] Today, when every major port is containerised, Singapore retains its edge by having a higher capacity and a much lower “dwelling time” (time spent in port waiting, unloading, waiting, loading, leaving) than its neighbours.[28]

Second, state management of commercial enterprises was, above all other considerations, professional. Achieving this was not a simple matter, and in the early years government ministers were very much feeling their way, placing relatives, friends and old school chums into positions of great trust: men like Ngiam Tong Dow (the self-described “first PAP civil servant” who later became Head of the Civil Service),[29] J.Y. Pillay (later head of Singapore Airlines and the Development Bank of Singapore, among other roles), Cabinet Ministers S. Dhanabalan, Hon Sui Sen and Lim Kim San, and Goh Chok Tong. Only gradually did the government develop more systematic and relatively impersonal approaches to recruitment and management.[30]

Initially the state operated through companies and statutory boards fully owned and directly managed by government ministries. By trial and error the government eventually settled on its preferred model, based on the government-linked company (GLC). These were partially or fully government-owned companies given enough independence to act like a business in day-to-day affairs, but subject to more than enough government control to make them reliable instruments of state policy and political patronage. In 1974 most of the GLCs were consolidated into two holding companies: Sheng-Li Holdings (later Singapore Technologies and now ST Engineering) for the GLCs owned by the Ministry of Defence; and Temasek Holdings for the rest. In 1981 the management of the Singapore government’s direct overseas investments was consolidated into the Government of Singapore Investment Corporation (GIC), and in 1994 Singapore Technologies was moved under the umbrella of Temasek Holdings, leaving Singapore with two giant sovereign wealth funds: Temasek Holdings and the GIC.

By its nature, this arm’s-length management entailed surrendering real managerial power to trusted delegates, but even today one of the most distinctive features of “Singapore Inc.” is that power and the lines of command are very personal. No instrument of power—economic or otherwise—is allowed to drift out of the leadership’s orbit. Hence both Temasek Holdings and the GIC have always had members and trusted friends of Lee Kuan Yew’s family firmly embedded in the most senior levels of management, and between them these two bodies have become the country’s most important tools of patronage and power.[31] Despite its flaws and many false steps, the system has attained such a high level of professionalism that scholarship specialising in such matters regards Singapore Inc. as the most efficient form of state capitalism in the world[32]—having seemingly found a “sweet spot” that balances modest public and commercial accountability on the one hand, and centralised, long-term leadership on the other, all with relatively low transaction costs. Whether this record can be maintained in the absence of its architects remains to be seen, but as of the mid-2010s, this record is justly a source of national pride.

Third, both state and international capital required a quiescent labour force. The most basic requirement in this programme was a stable, reliable and useful body of people who needed regular paid employment. Such a workforce could not be taken for granted, since Singapore had long had a large underbelly of unemployed, underemployed, self-employed, and daily-rated workers who were barely part of the money economy at all. They might have been single men renting part of a room in Chinatown, or families living rent-free or squatting in a kampung (one of the many atap- or zinc-roofed villages), perhaps fishing or raising a few animals or chickens, or growing some vegetables to get by. Such workers had no more utility charges to cover than the cost of a bit of kerosene for cooking and lighting. This would not last.

As part of the government’s housing programme, kampung dwellers and squatters were systematically moved into high-rise government flats where rent and utility bills had to be paid and there was no room for animals or chickens. They needed steady wages.[33] Hence the workforce participation rate (the proportion of the adult population in regular paid employment) climbed in a spectacular fashion in these early years of development, as not just school leavers and hitherto unemployed or underemployed men went to work in factories, but women too.

CV Devan Nair - New Naratif
Devan Nair was a key ally of Lee Kuan Yew who played a critical role in disciplining Singapore’s labour unions. He was later betrayed by Lee and forced to resign the Presidency of Singapore.

To be useful, this putative workforce had to be given sufficient training for the new sort of repetitive unskilled and semi-skilled work that was likely to be on offer in factories. They also had to be socialised into being meek and compliant employees. Much of the government rhetoric in the late 1960s and throughout the 1970s was directed at fostering just such attitudes, but the most important work was done at the level of the factory floor itself, by the newly compliant trade union movement.

Critical to this process was C.V. Devan Nair, a charismatic and hard-working former left-wing union leader who switched his allegiance to Lee Kuan Yew in 1960. A year later he formed the PAP-aligned National Trades Union Congress (NTUC), successfully leading the government’s campaign to destroy the rival left-wing Singapore Association of Trades Unions. By the end of the 1960s, through a combination of detention without trial, harassment, regulatory action, and oppressive legislation, the Left had been destroyed, both in the trade unions and in other walks of life, and there was hardly a union in the country that was not affiliated to the NTUC and run by leaders sympathetic to the government.[34] One of the many roles of the new-look trade union movement was that of working with the government to organise and promote a seemingly endless stream of training and retraining programmes for adult workers. In addition, the entire education system was overhauled to produce cohorts of graduates suitable to work in Singapore’s rapidly changing economy. This was a much more significant and transformative investment.

It is no exaggeration to say that Singapore’s reliance upon cheap, vulnerable foreign labour has been at least as important to the country’s economic development as more celebrated aspects of the political economy, such as its highly educated citizen workforce

There was also an entirely separate workforce vital to the Singapore enterprise: low-paid foreign guest workers, from poorer countries in South and Southeast Asia. Transient workers had long been integral to Singapore’s success, whether as indentured labourers, plantation workers, gambier farmers, or sea nomads who followed a Temenggong. When Singapore found itself independent and economically vulnerable, the government began turning a stony face to foreign workers as it sought to protect the jobs of its citizen workforce. But once its unemployment problem was transformed into a labour shortage problem, foreign workers once again became an asset to be sought. In the mid-1970s there were up to 200,000 foreign workers; in 2004 there were 621,400; 900,800 in 2008; as of June 2015, there were 1,368,200 foreign workers, and they made up nearly 40% of the population.[35] Until the mid-2000s, low-paid foreign workers were overwhelmingly unskilled or semi-skilled, but today they also include skilled workers and professionals who are competing more directly with Singaporeans for jobs.

The contributions of low-paid foreign workers have been severely underplayed in Singapore’s economic history. Writing in 1994, Huff devoted only three sentences to the topic:

The job security of Singapore nationals was, in part, underwritten through hosting … guest workers … who could be sent home, and so bore much of the risk of unemployment in an economic downturn. In 1985 there was a net reduction of 96,000 jobs, but over three-fifths of those affected were foreign workers. These workers thus came to fulfil a function similar to that of recently-arrived immigrants from south China before World War II.[36]

In fact the contribution of low-paid foreign workers is much more extensive than Huff suggests—and much more fundamental than is suggested by economists such as Abeysinghe and Choy, whose analysis never moves past considering their impact on Singaporeans’ wages, salaries and employability.[37] Most foreign workers are low-paid and vulnerable; they are unskilled, semi-skilled or domestic workers, mainly from South Asia, China or the poorer countries of Southeast Asia, and they enjoy very few rights.[38] The unskilled and semi-skilled live in dormitories and the 13% who are domestic workers live with their employers. Such foreign workers have built Singapore’s factories, schools, skyscrapers, roads and railway lines. They drive the buses, work in the factories, cook and serve the food, clean the toilets and public buildings, and—perhaps the most basic of all—provided seemingly unlimited domestic service so that middle-class Singaporeans can work extremely long hours, knowing their flats and houses are being cleaned, their meals are being cooked and their children raised by cheap hired help. It is no exaggeration to say that Singapore’s reliance upon cheap, vulnerable foreign labour has been at least as important to the country’s economic development as more celebrated aspects of the political economy, such as its highly educated citizen workforce.

RELATED ARTICLE: Myths and Facts: Migrant Workers in Singapore. Singapore, as a society, is not able to properly comprehend, let alone address, the precise problems facing migrant workers, because of three pervasive myths about low-wage temporary migrant workers.

The Vietnam war

On top of these essential elements came a piece of singular good fortune: the economic boon provided by the Vietnam War. Singapore’s role in America’s war in Vietnam not only converted Lee Kuan Yew’s “American turn” of 1968 into immediate profit, but in the long term it also won a favoured place for Singapore in the American view of Asia. Singapore’s development strategy may have succeeded even without the input from the Vietnam War, but it certainly would not have enjoyed such a quick and successful launch. The oil-refining and ship repair industries were the big winners, with other manufactures also expanding or establishing themselves in the Southeast Asian boom generated by the war. Oil exports increased many-fold as Singapore fed off military-generated demand in Vietnam and Thailand. By the time the wartime bonanza came to an end in 1975, Singapore was well-placed to feed the oil demands of Japan’s manufacturing industry.[39] If not for the war, Singapore may not have had the refining capacity to meet Japanese demand, and without the common connection with America, Japan may not have turned to Singapore so readily.

The challenges of shifting sands

It is ironic that one of the major challenges facing Singapore today has been generated by the very American-oriented strategy that was the key to the country’s success over its first four decades. When you have a graduate of the US Army Command and General Staff College as Prime Minister, and around a third of your Cabinet and 40% of your Permanent Secretaries educated in America’s premier school of government and international relations, how dispassionate is the government likely to be in its attitude towards America? The American connection has served Singapore very well, but America has not been the only power in East Asia for some time. Not only is China a new economic powerhouse, but it has engaged in active pushback against both American military hegemony and the sovereign claims of its more immediate neighbours in the South China Sea.

Deng-Xiaoping-Meets-Lee-Kuan-Yew-in-Singapore - New Naratif
Deng Xiaoping visits Singapore and is welcomes by Lee Kuan Yew, November 1978

Under Lee Kuan Yew and Goh Chok Tong, Singapore’s relations with China were grounded in deliberate ambiguity. Lee Kuan Yew started visiting China in the 1970s—15 years before Singapore formally recognised it—and he emerged as a prominent figure smoothing China’s entry into international society throughout the 1980s and 1990s. He also set Singapore on the path to profit from China’s rise.[40] Yet he had never had any great love of—and certainly not much trust in—the Chinese regime. His memoirs and the books written in his old age make these points crystal clear—and also demonstrate the centrality of the United States in his thinking.[41] Under Lee Kuan Yew and Goh Chok Tong after him, Singapore’s relations with both China and the United States had their ups and downs, but always within well-defined limits that minimised offence to China while securing the American relationship. Relations on both sides (China and Singapore) have been openly self-serving, with only a superficial level of sentimentality. Singapore is currently the largest foreign investor in China and its third largest supplier of services, while China is Singapore’s largest trading partner, so Singapore has a lot to lose by a misstep. The current leadership is clearly aware of China’s importance and is making a long-term investment in building a China-literate leadership. Since around 2004 the government has invested heavily at the school, junior college and tertiary level within Singapore to produce China-literate entrepreneurs, and since 2008 it has been offering targeted incentives to encourage winners of overseas government scholarships to study in China.[42] Yet the relationship is currently under stress, and not just because China is becoming more assertive as it becomes more powerful.

An important element in facilitating the China relationship has always been, in the words of John Wong and Lye Liang Fook, that “there are no outstanding issues and no areas of open conflict between them.”[43] Even today, Singapore is the only member of ASEAN with a coast facing the Pacific that is not in conflict with China over its claims in the South China Sea. So with nothing directly at stake and so much to lose, why did Singapore take a leading role within ASEAN on the South China Sea issue in 2016? This proved to be a particularly bad year for Singapore’s relations with China, and most of the damage was self-inflicted.

In quick succession the Prime Minister upset the Chinese leadership multiple times: first by enthusing a little too passionately about its American connection during a visit to the White House, and then by engaging in a high-profile attack on Chinese claims in the South China Sea. The Chinese blowback came at the popular level through the nationalist Global Times newspaper, at the diplomatic level through carpeting the Singapore Ambassador in Beijing, and finally quasi-militarily through impounding nine SAF armoured vehicles in Hong Kong for several months, as they were on their way back to Singapore from Taiwan (of all places).[44] To suffer attacks as part of a quest is one thing, but in this case the suffering seems to have been prompted for no purpose. It is difficult to escape the conclusion that the elite’s personal attachment to the American establishment is getting in the way of hard choices.

The Singapore leadership is now facing a new order in East Asia—at the same time as question marks are hovering over the reliability and predictability of Donald Trump’s America as both a de facto ally and as a business partner. Singapore’s world is now very different to that which Lee Kuan Yew faced in 1965 and it is doubtful that the “huge bet” that Lee Kuan Yew placed on the United States in 1968 should be rolled over in 2018. Despite all the winnings that have come Singapore’s way in the past 50 years, it is probably time for Lee Hsien Loong to spread Singapore’s wagers a bit more broadly, and speak a bit more circumspectly.

This article is adapted from Michael Barr’s Singapore: A Modern History (I.B. Tauris, 2019).

 

References

[1]Daniel Wei Boon Chua, ‘Reinventing Lee Kuan Yew’s 1965-66 Anti-Americanism’, Asian Studies Review, 38(3), 2014, pp. 442–60.

[2]Khong Yuen Foong, ‘Singapore and the Great Powers’, in Barry Desker and Ang Cheng Guan (eds), Perspectives on the Security of Singapore: The First 50 Years, Singapore: World Scientific, 2016, pp. 207–228; Mark Beeson, Regionalism and Globalization in East Asia: Politics, Security and Economic Development, Houndsmills, Basingstoke: Palgrave Macmillan, 2007; Mark Beeson, ‘Geopolitics and the Making of Regions:

The Fall and Rise of East Asia’, Political Studies, 57, 2009, pp. 498–516; Richard Stubbs, Rethinking Asia’s Economic Miracle: The Political Economy of War, Prosperity and Crisis, Basingstoke, Hampshire; New York: Palgrave Macmillan, 2005.

[3]Daniel Wei Boon Chua, ‘Reinventing Lee Kuan Yew’s 1965-66 Anti-Americanism’, Asian Studies Review, 38(3), 2014, pp. 442–60.

[4]Lee Kuan Yew, From Third World to First: The Singapore Story: 1965–2000: Memoirs of Lee Kuan Yew, Singapore: Singapore Press Holdings and Times Media, 2000, p. 73. Also see and Chapter 3 and Chapter 28.

[5]Ibid., pp. 74, 75.

[6]Harvard University Institute of Politics website, http://www.iop.harvard.edu/kuan-yew-lee#comment-0, accessed 19 June 2014.

[7]Prime Minister’s Office website, http://www.pmo.gov.sg/cabinet/mr-lee-hsien-loong, accessed 6 June 2017.

[8]Harvard Kennedy School Magazine, Summer 2012.

[9]Public Service Commission, Public Service Commission Annual Report 2009, Singapore: Public Service

Commission, 2010.

[10]Tim Huxley, Defending the Lion City: The Armed Forces of Singapore, St. Leonards, NSW: Allen & Unwin, 2000, p. 208.

[11]Ibid., pp. 208–12.

[12]Natasha Hamilton-Hart, Hard Interests, Soft Illusions: Southeast Asia and American Power, Ithaca and London: Cornell University Press, 2012

[13]David Harvey, A Brief History of Neoliberalism, Oxford: Oxford University Press, 2005, Chapter 1.

[14]Jeff D. Colgan and Robert O. Keohane, ‘The Liberal Order is Rigged: Fix It Now or Watch It Wither’, Foreign Affairs, May-June 2017, pp. 38, 39.

[15]Harvey, A Brief History of Neoliberalism, Chapter 1.

[16]Michael D. Barr, ‘Perpetual Revisionism in Singapore: The Limits of Change’, The Pacific Review, 16(1), 2003, pp. 77–97.

[17]Gavin Peebles and Peter Wilson, Economic Growth and Development in Singapore: Past and Future, Cheltenham, UK; Northampton, MA: Edward Elgar, 2002, p. 26.

[18]Peebles and Wilson, Economic Growth and Development, p. 27.

[19]Chan Chin Bock et al., Heart Work, Singapore: Economic Development Board, 2002; and Schein, Strategic Pragmatism.

[20]Goh Keng Swee, interview with the author, Singapore, 1 September 1996.

[21]Peebles and Wilson, Economic Growth and Development, p. 90.

[22]Lee Kuan Yew, From Third World to First, Chapter 31.

[23]Schein, Strategic Pragmatism.

[24]This description is a simplification of Garry Rodan’s analysis of Singapore as a node in the New International Division of Labour. See Rodan, The Political Economy of Singapore’s Industrialization.

[25]Lee Kuan Yew, From Third World to First, p. 73.

[26]Linda Y.C. Lim, ‘Singapore’s Success: After the Miracle’, in Robert E. Looney (ed.), Routledge Handbook of Emerging Economies, London and New York: Routledge, 2014, p. 205.

[27]Marc Levinson, The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton and Oxford: Princeton University Press, 2006, pp. 209–11; Tatania Backes Vier, ‘Hub Ports: A Case Study of Port of Singapore’, Porto Alegre, 2010. Available from the UFRGS Lume Digital Repository at http://hdl.handle.net/10183/60515. Accessed 18 March 2016.

[28]See, for instance, ‘The 13,466-island problem’, The Economist, 27 February, 2016.

[29]Ngiam Tong Dow, A Mandarin and the Making of Public Policy, Singapore: National University of Singapore Press, 2006, p. 33.

[30]Michael D. Barr, The Ruling Elite of Singapore: Networks of Power and Influence, London: I.B.Tauris, 2014, chapters 3 and 5.

[31]For readings on GLCs, Temasek Holdings, the GIC and Singapore Technologies see, for instance, Peebles and Wilson, Economic Growth and Development in Singapore, Chapter 1; Tim Huxley, Defending the Lion City: The Armed Forces of Singapore, St. Leonards, NSW: Allen & Unwin, 2000, Chapter 8; Ross Worthington, Governance in Singapore, London and New York: Routledge, 2003, Chapter 5; Barr, The Ruling Elite of Singapore, chapters 3–5, 7.

[32]Joshua Kurlantzick, State Capitalism: How the Return of Statism is Transforming the World, New York: Oxford University Press, 2016, p. 29.

[33]For more on the urbanisation programme, see Loh Kah Seng, Squatters into Citizens: The 1961 Bukit Ho Swee Fire and the Making of Modern Singapore, Singapore and Copenhagen: Asian Studies Association of Australia in association with National University of Singapore Press and the Nordic Institute of Asian Studies, 2013.

[34]Michael Fernandez and Loh Kah Seng, ‘The Left-Wing Trade Unions in Singapore, 1945–1970’, Michael D. Barr and Carl A. Trocki (eds), Paths Not Taken: Political Pluralism in Post-War Singapore, Singapore: National University of Singapore Press, 2008, pp. 206–26; Rodan, The Political Economy of Singapore’s Industrialization, pp. 68–72, 106–109.

[35]Huff, The Economic Growth of Singapore, p. 348; Tilak Abeysinghe and Keen Meng Choy, The Singapore Economy: An Econometric Perspective, London and New York: Routledge, 2009, p. 70; Noorashikin Abdul Rahman, ‘Managing Labour Flows: Foreign Talent, Foreign Workers and Domestic Help’, in Terence Chong (ed.), Management of Success: Singapore Revisited, Singapore: Institute of Southeast Asian Studies, 2010, p. 200; Ministry of Manpower website, available at http://www.mom.gov.sg/documents-and-publications/foreign-workforce-numbers, accessed 18 January 2016. For a more comprehensive set of figures covering 1970–2014, with some gaps, see Yap Mui Teng and Christopher Gee, ‘Singapore’s Demographic Transition, The Labour Force and Government Policies: The Last Fifty Years’, The Singapore Economic Review, 60(3), 2015, p. 1550035-8.

[36]Huff, The Economic Growth of Singapore, p. 348.

[37]Abeysinghe and Choy, The Singapore Economy, pp. 81, 85, 136.

[38]Ministry of Communication and Information, https://www.gov.sg/factually/content/do-you-know-how-many-types-of-foreign-workers-we-have-in-singapore, accessed 23 November 2018.

[39]Stubbs, Rethinking Asia’s Economic Miracle, pp. 136–38.

[40]Zheng Yongnian and Lim Wen Xin, ‘Lee Kuan Yew: The Special Relationship with China’, in Zheng Yongnian and Lye Liang Fook (eds), Singapore-China Relations: 50 Years, Singapore: World Scientific, 2016, pp. 31–48.

[41]Lee Kuan Yew, From Third World to First: The Singapore Story: 1965–2000: Memoirs of Lee Kuan Yew, Singapore: Singapore Press Holdings and Times Media, 2000, chapters 36–40; Lee Kuan Yew (Interviews and Selections by Graham Allison and Robert D. Blackwill, with Ali Wyne), Lee Kuan Yew: The Grand Master’s Insights on China, the United States and the World, Cambridge, MASS., and London: The MIT Press, 2013, chapters 1–3; Lee Kuan Yew, One Man’s View of the World, Singapore: Straits Times Press, 2013, chapters 1 and 2.

[42]Michael D. Barr and Zlatko Skrbiš, Constructing Singapore: Elitism, Ethnicity and the Nation-Building Project, Copenhagen: Nordic Institute of Asian Studies, 2008, p. 224; Public Service Commission, Public Service Commission Annual Report 2009, available at https://www.psc.gov.sg/docs/default-source/module/annual-report/psc-annual-report-2009.pdf, accessed 13 June 2017.

[43]John Wong and Lye Liang Fook, ‘China-Singapore Relations: Looking Back and Looking Forward’, in Zheng Yongnian and Lye Liang Fook (eds), Singapore-China Relations: 50 Years, Singapore: World Scientific, 2016, p. 3.

[44]‘China warns PM Lee over South China Sea’, The Independent Singapore, 7 August 2016; ‘Troubled waters: Beijing’s ‘anger’ lurks beneath surface of Singapore Global TimesSouth China Sea row’, South China Morning Post, 30 September 2016; ‘Blow-by-blow account of the China-Singapore spat over Global Times’South China Sea report’, South China Morning Post, 28 September 2016 (updated online 17 October 2016).

 

 

Michael Barr

Michael Barr is an Associate Professor in International Relations at Flinders University, Australia, and a Fellow of the Australian Academy of the Humanities. He was Editor-in-Chief of Asian Studies Review from 2012-2017 and is currently its Associate Editor. His books on Singapore include "The Ruling Elite of Singapore", "Constructing Singapore", and "Lee Kuan Yew: The Beliefs behind the Man". He is also Academic Editor of New Naratif. Reach him at michael.barr@newnaratif.com.

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