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Why Singapore should act fast to retain investment— Singapore

Preface

Back in the mid-noughties, I used to laugh when people said that Singapore was expensive.

Singapore

20 January 2012

Back in the mid-noughties, I used to laugh when people said that Singapore was expensive. After a decade of living in London all I saw was stylish accommodation at a reasonable rate, a civilised and well thought-out transport system and fabulous food for the price of a Sunday newspaper. 



The other standard barb was to call the well-groomed city-state “sanitised”. Here in Cambodia – a country where only one in five rural people have access to a toilet – this doesn’t sound like much of an insult. And indeed, many Cambodians look to Singapore as a model for their own development. It’s the small country with big neighbours, punching well above its weight.
 


But somewhere along the line, Singapore decided it wanted respect, perhaps even love, from further afield. 



The governing party which has guided, cajoled and dominated the country since independence, identified high-value replacements for the declining manufacturing industries. Looking for success in private banking, biotech and tourism, they would need to attract companies and people from overseas. Sanitised simply isn’t sexy.

So the notoriously tight social controls began to loosen a little. A clubbing scene was allowed to flourish, films were less heavily censored and there were even mildly political plays at fringe theatres.

Then there were the mega-projects. The spectacular Esplanade arts complex, theme-parks and casinos, and perhaps most eye-catching of all, a floodlit Formula 1 grand prix on the city’s streets.

The strategy worked. Foreigners poured in and the economy boomed. But, so did house prices and inflation. Not to mention the income gap between Singaporeans in the suburbs and the mega-rich in the city centre. What’s more, the SGD soared against other major currencies, making those expat employment packages even more pricey.

A friend who works for a large international bank recently told me his company couldn’t take any more. They were pulling most of their expat staff out of Singapore and focusing on India instead. The mobile phone giant Nokia is making a similar move – but to Beijing rather than Bangalore. Once again, because of costs. 
 


It does feel like a watershed. Two-fifths of the population were born outside Singapore and the birth rate is one of the lowest in the world. Without foreigners, the country may not have much of a future. 
 


Time and again in its short history, the very well-managed state has made clear decisions about where it’s going and how it’ll get there. Now its own success may force another re-think.

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