Topic 5 Singaporean Good Governance(5)

8/18/2019 Topic 5 Singaporean Good Governance(5)

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losing ase

Singaporean

good

governance, prosperity

and

future

challenges

Introduction

Singapore s success

story

of

rapid economic development

has

been

examined extensively

by

admirers

from

near

and far,

as the

small island state has risen since

the

1960s

to become

a

global city that

attracts skilled professionals

and multinational enterprises (

Ghesquiere

2007; Lim

2009). Singapore s success has highlighted

the

crucial

importance

of

good public

governance,

one able to

adapt to new circumstances over time:

After

spending

forty

years engaged in

the

economic

development

of Singapore, I am convinced

that

the

most important

condition

for success is good

government.

A

good

government

is

one led by

able,

honest, selfless men and women (Ngiam 2006: 88).

The People s

Action

Party

(PAP)

leadership s highly

pragmatic

leanings, a reputation for prudent financial

management and an

effective

anti-corruption stance

has

meant that foreign

political

and

enterprise leaders

have

found

the

Singaporean

government

easy

to engage

w ith. Recent efforts

throughout the

late 1990s and first

decade

of the

2000s

to attract

MNEs at

the forefront

of

innovation (b iotechnology, medicine, advanced

electronics) have come

off the

back

of

a

30

-year record

of attracting and developing

partnerships

with

MNEs

looking to utilise

Singapore

at

lower-level

technical

skills capacities (broad

consumer

electronics, shipping

maintenance and others).

The Singaporean government s relationship

with

private

enterprise is clear;

it

has

been willing to participate

in

the national economy across many sectors,

but

has

never sought to

protect

domestic

enterprises

at

the

expense of foreign MNEs interested in investing in

the

national economy. State enterprises,

government-linked

corporations (GLCs) and state-encouraged enterprises

were all

founded

and

developed by the government,

largely

to enhance trade activity and support MNEs

operations in the island-state.

Singapore

Airlines,

Changi

Airport,

the Port

Authority of

Singapore (PSA)

and

the

SGX (Singapore Stock Exchange), to name but

a few, were all established and run by

the

Singapore

government

and are

now inte

rnationally recognised

for

excellence in

their

respective sectors. As a city-state

with a small market and a large,

strategically

located

port,

the government

and commercial elite (often one

and

the

same) has been a constant champion

of

global

free trade. Today, Singapore remains active in both

2 4

bilateral and multilateral

trade

processes (such as

the

Singapore-Australia

Free Trade

Agreement

(SAFTA)

and

the

multilateral

WTO

Doha Round of free

trade

talks) .

The Singaporean

government

argues

that

even when

multilateral processes such

as the

Doha Round break

down,

free

trade

agreements

(FTAs) remain

the

pathway

forward for

the

city-economy (Singapore FTA Network).

Singapore s political and macroeconomic environments,

therefore, are all

attuned to

the

needs and

wants of MNEs

seeking a risk-free environment from

which

to launch

their products and services

into

greater Asia. Indeed,

there

is little

risk in

stating that

Singapore is without

peer

in enacting

policy

prescriptions

that are

favourable

to

MNEs operations, and in

supporting

these with an array

of

practical infrastructure, legal, human resource and

social initiatives.

The

dominance of

the

People s Action Party and the

economy

Since its

independence

in 1959, Singapore has

been

ruled

by one

party:

the

People s

Action

Party. For

much of

the

t ime

it

was led

by

Lee Kuan Yew

(1959-

90),

who

took

the

political

position that

Singapore

could

not accommodate open political

contests like

more developed economies

such as

the United

States

and Britain . Lee

saw

political stability as an essential

requirement for

attracting

much-needed

foreign MNE

capital

and enterprise to the

island-state,

whic

h at

the

time

suffered

from

chronic

unemployment

. To ensure

that

MNEs

viewed

Singapore

as

a

politically

stable

environment

for all

manner

of investments, Lee was

more than prepared to

utilise

the

full

repressive

powers

of the

state (a legacy

of

British rule) against his political

opponents.

In

this

he was very successful, and Singapore

quickly

established

itself throughout the

1960s and

1970s as

the

premier location in Southeast Asia for

politically

risk-free foreign investment

. In

election

after

election,

the

PAP took an

even firmer grip on the

institutions

of

the

Singapore state,

to

the

point

where

the differentiation

bet

wee

n

the

PAP and

the

Singapore

government became

simply academic.

By

the

early 1990s Lee Kuan Yew was ready to hand

on

the prime

ministership to a selected successor,

Goh

Chong

Tong (1990-2004),

who proceeded to

maintain

and develop further Lee

s

work so that the 1990s

saw

Singapore firmly establish

itself as

a

global

city

within MNE planning

and

operations

.

Goh

came

to be

very much

admired within

the

in

ternational

business


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Chapter

7

Political and lega l systems

in

national environments 205

community

as

a steady governing hand, leading a

government

that

clearly

understood their

business

r

equirements, and

domestically

he was

seen as politically

less abrasive

than

his

predecessor.

In the political realm,

he maintained

the

PAP's take-no-prisoner approach to

political

opposition,

which had been firmly established

by

Lee, and in the

economic

realm led

Singapore

throughout

the

1997 Asian financial crisis and 2001

dot

com

downturn.

Goh , in turn, managed the transition in

2004 to

the

current

prime

minister, Lee Hsien Loong,

with what has

come

to be seen as typical

Singaporean

efficiency.

The

current prime minister is in

fact

the son of

Lee Kuan Yew and came to

the

position after a decade

long

apprenticeship

in

core

financial ministry positions,

in

cluding managing Singapore's banking and financial

sector th roughout the 1997 Asian financial crisis. As a

result, Lee Hsien Loong came to the prime ministership

well versed in international finance and MNE

operations,

and

the international business community

knew him

to

be a well-credentialled policy operative. Equally so, it

has come as little surprise that Prime Minister Lee has

maintained a firm grip on

Singapore's

political space.

His

actions

show clearly

that the

PAP

leadership

firmly

believes that Singapore cannot afford

even

the slightest

hint of political risk.

The

PAP's legitimacy resides in its

ability

to

govern

for

Singapore's

prosperity

through

domestic state-owned enterprises and by retaining

the

confidence

of

the leaders

of

MNEs, which

continue

to

de liver significant investment into

the

city-state across

a wide array of sectors, from finance to integrated

resorts.

The

global

financial crisis and Singapore's response

Singapore's S 248 billion economy scraped

in

a

1.1

per cent growth rate for 2008, compared to 7.7

per

cent growth in 2007 .

It

then shrank to -1.3 per cent for

the whole of

2009

(www.singstat.gov.sg/stats).

What

shocked most

observers was

the

speed

of the decline of

the

Singaporean

economy. Having grown 6.7 per cent

in

the first quarter of 2008, it then fell off a cliff, plunging to

-0.6

per

cent of GOP for

the

third quarter and to -3 .7 per

cent

in

the fourth quarter (Chong 2009: 291 ; Nicholas

2008). For a nation that had growth rates of over 7 per

cent for the previous year, the dramatic nature of the

economic decline was stark. Multinational and domestic

enterprises immediately

began

re-engineering

and

enacting

retrenchment as their

export

orders

evaporated.

Singapore's Creative Technologies Ltd, a large domestic

technology firm,

cut

its workforce by 2700 in 2008

as

international orders dried up .

Singapore's economic decline in 2008

and

2009

prompted questions

regarding the

country's economic

policy of ultra-globalisation . Even

at the

height of its

mid-decade

boom (2002-07

), some

were alarmed

at the

country's high levels

of

ex

posure

to

global

economic

fluctuations:

With a broad lens one can begin to identify

the

signs

of

a maturing capitalist economy. Structural

unemployment, the disappearance of low-skilled

jobs, the economic marginalization of the old and less

educated, and

the

widening income gap between

the

haves and the have nots, all

suggest

that the nee

capitalist

processes

are

deeply

embedded in the

national economy and

are

, consequently, making

the domestic workforce and industries vulnerable to the

capricious forces of globalization. (Chong 2006: 269)

Prior to

the global

financial crisis

policymakers

had,

at

different

times, made

their concerns o v r

the

economy's considerable exposure to a

US economic

downturn.ln

the

second half of

2008

Singapore slid into

recession and, with

no signs

of economic

recovery

in

early

2009,

Prime Minister Lee

warned that Singapore

would continue to suffer throughout 2009 . He

stated

:

The

recession is a global one ,

and

we

must

expect

to

see

exports

and

growth remain negative for more

months, and perhaps for the whole year. (Asean

Affairs 2009)

Lee responded

to the

crisis by

introducing

a

S 20.5

billion (US 13.7 billion) stimulus package equivalent

to 8 per cent of Singapore's GOP, within which his

government included S 5.8 billion to spur bank

lending, S 5.1 billion to help

save jobs, S 2.6

billion

in ta x measures and grants for

business,

S 4.4

billion in infrastructure

spending

and

S 2.6

billion

for households. Most notably, S 4.9 billion

of the

package came from government reserves,

the

first

time

Singapore's

policymakers

had ever resorted to

such a measure. It could be

argued

that the amount

was not significant when compared to Singapore's

massive

foreign

reserves and

Government

Investment

Corporation (GIC)

managed

funds, but the symbolism

was noted widely. The government had made it

known that it would intervene to

stem

the

economy's

decline.

In 2010 the Singapore economy roared back to life, with

globalisation proving that a city inextricably linked into

the process can recover as quickly

as

it can decline.

What

is

also clear is that Singapore's position on public debt is

in stark contrast to that of other developed economies,

particularly the

European

Union and the United

States

.

Singapore is

a net ex

porter

of capital, with savings levels


3/3

206 Part

he environment of

international business

equal

to

those

in

other Asian economic powers such as

Japan, Taiwan, South Korea

and

an emerging China.

This capital position, driven by government-initiated

savings regimes

and budgetary

strict discipline, can be

expected to provide Singapore with significant future

competitive

advantages.

Also notable has been the

Singapore

government s

willingness

to

use

its ample

reserves to invest

in

providing Singapore with a world

class infrastructure, from Changi Airport

to

high-speed

broadband,

which pays dividends

once the eco

nomy

reverts to a high growth trajectory.

ase questions

1. Can Singapore now be defined as a politico-global

state, one in which globalisation, and not one

domestic

political party, truly governs t he country?

2. Does Singapore s developmental experience prove

false the old dichotomy of the private sector being

inherently superio r

to

public enterpr ise?

Key terms

3.

Is

Singapore a val id model for other countries,

or

does

its status as a city-state make it relevant only to

other

small city-state entities (Hong Kong and Dubai being

two obvious cases)?

Sources: Singapore: Recession May Last Whole of 2009 , Asean

Affairs: The

Voice

of

Southeast

Asia, 25 Janu ary 2009;

T.

Chong (2006),

Singapore: Globalizing on its Own Terms , in

D.

Singh and L C. Salazar

(2006). Southeast Asian Affairs 2006, Singapore: Institute of Southeast

Asian Studies; H. Ghesquiere (2007), Singapore s Success: Engineering

EconomicGrowth, Singapore: Thomson; C.

Y Lim

(2009), Transformation

in

the Singapore Economy: Course

and

Causes ,

in

W. M. Chai

and

H.

Y

Sng,

Singapore nd

Asia

in a Globalized World: Contemporary

Economic Issues nd Policies, Singapore: World Scientific, pp. 3-24;

T. D. Ngiam, with introduction and edited by S. S. C.

Ta

y (2006),

A

Mandarin nd the

Making

of Public Policy: Reflections by

Ngiam

Tong

Dow, Singapore: NUS Press; K. Nicholas, Asian Tiger Begins to Lose its

Vitality , Australian Financial Review, 22 February 2008; Singapore FTA

Network, www.fta.gov.sg, accessed 2 April 2009; Singapore Statistics,

Government of Singapore, www.singstat.gov.sg/stats.

This case was written by

/a

n Austin, Edith Cowan University, Australia,

2010

country risk, p. 181

extraterritoriality, p. 201

in tellectual property, p. 199

legal system, p. 184

political system, p. 183

rule

of

law, p. 190

transparenc

y

p. 202

Summary

In

this

chapter, you learned about:

1 What is country risk?

International business is influenced by political

and legal systems. Country risk refers to exposure

to potential loss or to adverse effects on company

operations

and

profitabili

ty

caused by developments

in a country s political and legal environments.

2

What

are

political and legal systems?

A politic l system is a set of formal institutions

that constitute a government. A

leg l system

is a

system for in terpreting

and

enforcing laws. Adverse

developments in political and legal systems increase

country risk. These can result from events such as a

change

in

government

or

the creation of

new

la

ws

or

regulations.

3

Types

of

political systems

The three existing major political systems are

totalitarianism

socialism

and

democracy. These

systems are the frameworks within which laws are

established and nations are governed. Most countries

today employ some combination of democracy and

socialism. Democracy is characterised by privat

e

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Topic 5 Singaporean Good Governance(5)