Singapore Incorporated

It is a story that has been repeated into a cliché. A backwater fishing village turning into a Southeast Asian Superpower.  A country with a mere land space of 716 square kilometers and less than 4 million people for the most part of its history has grown into a financial superpower in this region. Its average GDP per capita is $61 046 making it the 3rd richest country in the world, at least on paper. Yet, it struggles with a high level of income inequality, most notably between its citizens and the expats who have sought greener pastures over here. So what it is that makes this country tick? What is the unique factor that makes Singapore so alluring, despite all of its supposed flaws?

The critics will tell you that Singapore’s success all boils down to geographical coincidence. They will let you know that our deep harbor and our strategic location as the Gateway to Continental Asia had long ensured our economic dominance, since the days of Raffles. They might have a point too. The government on the other hand will run its oft-repeated story that strong governance has been the key and that the fortune of Singapore is aligned to the fortunes of the ruling PAP and they will never pass up an opportunity to drill the slogans into the minds of unsuspecting pupils right from a young age. But, the fundamental question remains: Is their propaganda necessarily a falsehood?

I have a slightly different take on the reasons behind our success and the cracks that are appearing in our society now. It is important to remember, that Singapore was a thriving cosmopolitan country even in the early 50s with a strong colonial presence and professionals and traders arriving from all parts of the world. But the fundamental difference, between the PAP government of newly-Independent Singapore and fledgling governments from the other parts of the world at that time, was their ability to know the importance of a government being cash-rich.

The bus-services were taken over by the government, newspapers were brought under government control and basically every essential service was brought under the fold of the government by the start of the 70s. The publicly stated reason for doing so was to bring order. By the start of 1973, the government had merged three public-bus companies to form the SBS. The official reason: To improve the service standards of the buses and to prevent private companies from ever holding the country to ransom. The same pattern was repeated in every major essential services industry ranging from telecommunications to Power Services and even the school systems.

What this did was very unique. It automatically made the government the largest conglomerate in the market having an outright monopoly on several industries. Singapore had a slew of academics even in the 50s and they were the firebrands who wrote sharp editorials denouncing attacks on democratic ideals. To imagine them having kept silent on the government’s move to establish a monopoly is almost unthinkable. But that is exactly what happened, no doubt thanks to the strict curbs on free speech as well as the government’s newly established control over the nation’s media.

But then, something unthinkable in Western Democracies happened. The electorate did not react negatively to these measures. In fact, right till 1981, the government was returned to office with 100% of the seats winning several of the wards with embarrassing majorities. The people had not reacted to the government’s moves adversely. And there was only one possible reason. The government owned companies were actually doing a pretty damn good job. More traveling routes were added; telephones became more accessible; posting parcels and letters were soon becoming a breeze and the banks were becoming more accessible to the ordinary citizen. Singapore, the Government Incorporation, was uplifting the lives of its citizens. What was not seen by the people, is that the government was becoming extremely wealthy doing so. The reserves were growing in unprecedented numbers and even financial recessions elsewhere could not stop Singapore’s momentum, or rather the growing Government coffers.

To its credit though, this was an honest government. There was no outright corruption or shady scam deals. This was a government, which was paying its Ministers well and was also doing its part in keeping the poverty of its people low. It was a sure-win formula, where no matter what happens, the government’s coffers were definitely growing.

And then something strange happened. That, to me was the turning point in Singapore’s history. The start of the 90s bore the privatization boom. In a bid, to get accepted by their Western allies and to shake off the socialist/communist tag, the Singapore government began privatizing most of its assets. SBS became a private company as did SingTel, Singapore Post and the banks as well. The drive reached most quarters of the government-owned company. But this was done in yet another Uniquely Singapore way. All of these government-owned companies became government-linked companies that were owned partially or wholly by Temasek Holdings or the GIC in one manner or another.

It was not to end there; privatization usually brings the need for competition. And so competition was formed. Take the case of the telecommunications Industry. Two ‘new’ companies, Starhub and M1 were introduced into the market to offer their services to the consumers. More competition means, better value for the consumer right? No! There was only one glitch. Both Starhub and M1 are linked to Temasek too. This was the new strategy that the government would embark on. It started ‘creating’ competition to the companies that it already owned. SBS would soon face competition from TIBS and SMRT all of whom are linked to Temasek. TIBS would then be acquired by SMRT and they would still be under the umbrella of Temasek. Every single previously government-owned company would now become a government-linked company under the umbrella of Temasek and they will have a competitor who will also be under Temasek. Now this is when it starts becoming shady. If competition is meant to benefit the consumer, will the consumer be still benefited if the competing companies actually belong to the same owner?

The story starts taking a murkier twist, when Temasek starts delisting the shares of these companies to private investors, most of the time foreign consortiums. When we have all these essential companies, artificially privatized and held under the control of the Government’s investment arm, we could have rest assured that the country’s interests were still safeguarded. Can we really expect profit-minded corporations to have the same interest in our country?

This brings us to our present state. Buses are manned by China nationals, because the salaries paid are ridiculously low to cut cost.  Train tracks are not replaced as regularly as they should, because it is not cost-effective. Our satellite TV-channels are getting more expensive despite the competition, because, the price is fixed and controlled by the ‘competing’ companies. I could go on, but you get the idea.

Now, despite all of these, I am not overly alarmed. Despite the ‘competing’ Telco’s not offering competitive prices, our telephone and cable bills are still cheaper than most advanced countries. Despite our HDB refusing to reveal the true cost of building the flats, housing is still available and affordable by a huge segment of our population. Despite our transport fares continuously rising, we still continue to have a transport-system that is the best in the region. And despite the government playing a shadow game of Monopoly with our essential services, we still have a well-run country.
The only questions I have running in my mind are these. How long more will this last? What went wrong in the last 10 years? What are the government’s long-term plans? Are we going back to a state of full private ownership which was the very beginning of all of our problems in the 50s?

Putting Things In Perspective


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