KENYA VS SINGAPORE, SAME GDPs IN 1963. HOW THEN DID SINGAPORE BECOME A FIRST-CLASS ECONOMY?

The picture below illustrates Singapore in 1963 vs Singapore today 

In 1963 when Kenya got independence and Singapore seceded from the British crown to become independent two years later, Kenya’s GDP was $926.6 million while Singapore’s was $917.2 million according to Business Daily Africa.
The two stories are very much alike at the start, British colonies, almost same GDPs (with Kenya marginally richer), gaining independence around the same time, but the resemblance lasts only as far as the beginning. As they progressed, the two stories diverge as far from each other as night from day.

Singapore today is a first world city-state in Southeast Asia with a population of 5.66 million as of 2019. It is a global hub for education, entertainment, finance, healthcare, human capital, innovation, logistics, manufacturing, technology, tourism, trade, and transport. In Singapore, one out of every six households has at least one million US dollars in disposable wealth. This excludes property, business, and luxury goods which if included would increase the number of millionaires, especially as property in Singapore is among the world’s most expensive. According to Credit Suisse Global Wealth Report 2017, Singapore had 152,000 millionaires (in USD). The annual GDP of Singapore as of 2017 was 323.9 billion USD while that of Kenya was 74.94 billion USD. The GDP per capita in Singapore as of 2017 was 57,714 USD while that of Kenya in 2017 was 1,507 USD

Singapore's economy is known as one of the freest, most innovative, most competitive, most dynamic and most business-friendly. The City-state ranks highly in numerous international rankings:
·        Singapore is ranked number 1 in being the 2019 best business environment in the world
·        Number 5 in the world for the best global innovation: Global Innovation Index 2018
·        Number 1 in achieving human capital (knowledge, skills, and health) in the world: Human Capital Index 2019, World Bank
·        Number 1 in Asia for effective governance and enforcement of rule of law
·        Number 2 in the world for economic freedom: Economic Freedom Index 2018, Heritage Foundation
·        Number 2 in the world for the easiest place to do business: Ease of doing business index 2019, World Bank
·        Number 2 most competitive economy in the world: Global Competitive Report 2018, World Economic Forum
·        Number 2 in Asia and 7 in the world for best logistics supply chain performance: Logistics Performance Index 2018, World Bank
·        Number 2 in the world for best labor/employer relations: Global Competitiveness Report 2018, World Economic Forum
·        3rd in the world for the most motivated workforce: IMD World Competitiveness Yearbook 2018
·        Number 4 in the world for the least corrupt country: Corruption Perceptions Index 2018, Transparency International.

The man behind Singapore’s transformation was Lee Kuan Yew, the first Prime Minister of Singapore who served from 1959 to 1990. During the three decades in which Lee held office, Singapore grew from a developing country to one of the most developed nations in Asia. From the time he took office, Lee was focused on developing Singapore. He recognized that Singapore did not have any natural resources to claim as her own and that Singapore did not have sufficient capital and experience in the export markets. So together with his team, he encouraged foreign direct investments by introducing friendly business policies and took actions to raise the living standards of its people. Lee said that Singapore’s only natural resources are its people and their strong work ethic.

After gaining Independence in 1965, Singapore continued to experience problems. Much of the city-state’s 3 million people were unemployed, more than two-thirds of its population was living in slums and squatter settlements. Singapore lacked natural resources, sanitation, proper infrastructure, and adequate water supply. The most feasible solution to Singapore’s economic and unemployment woes was to embark on a comprehensive program of industrialization, with a focus on labor-intensive industries. Unfortunately, Singapore had no industrial tradition and the majority of its working population was in trade and services. Therefore, they had no expertise or easily adaptable skills. Lee and his colleagues knew they had to connect with the developed world and convince multinational corporations to manufacture in Singapore.

To attract investors, Singapore had to create an environment that was safe, corruption-free, and low in taxation. Anyone caught conducting narcotics trade or intensive corruption would be met with the death penalty. Individuals who threatened national, political or corporate unity were quickly jailed without much due process. The country’s draconian but business-friendly laws became very appealing to international investors. Moreover, with its advantageous location and established port system, Singapore was an ideal place to manufacture goods. As a result of Singapore’s steady climate, favorable investment conditions and the rapid expansion of the world economy from 1965 to 1972, the country’s GDP experienced annual double-digit growth.

As foreign investment money poured in, Singapore began focusing on developing its human resources in addition to its infrastructure. The country set up many technical schools and paid international corporations to train their unskilled workers in Information Technology, petrochemicals, and electronics. For those who could not get industrial jobs, the government enrolled them in labor-intensive untradeable services such as tourism and transportation. Lee knew for Singapore to compete with global giants, he needed to provide Singaporeans with housing and employment opportunities that would bring the nation economic stability. For this purpose, he established a housing board that transformed this space-constrained island into a world-class metropolis that helped its citizens to move out from the small ghettos into carefully planned mixed townships and provided superior living conditions for its citizens.

In the 1970s, Singapore was primarily exporting textiles, garments and basic electronics. By 1990s, they were engaging in water fabrication, logistics, biotech research, pharmaceuticals, integrated circuit design, and aerospace engineering.

Many Singaporeans have criticized Lee as an authoritarian and as intolerant of dissent, citing his numerous mostly successful attempts to sue political opponents and newspapers who expressed an unfavorable opinion. In 2010 reflecting his legacy, “I’m not saying that everything I did was right, but everything I did was for an honorable purpose. I had to do some nasty things, locking fellows up without trial” Also, during a National Day Rally in 1988, Lee said, “Even from my sickbed, even if you are going to lower me into the grave and I feel something is going wrong, I will get up.”

Today, Singapore is a modern industrialized society and the port of Singapore is the world’s second-busiest in terms of cargo tonnage handled, behind only the Port of Shanghai. In recent years, the country has been identified as an increasingly popular tax haven for the wealthy due to the low tax rate on personal income and tax exemptions on foreign-based income and capital gains. It is also very easy to do business in Singapore. You only take a day to register a company if you have all the requirements as Singapore is open to investors; some bragging that you can register a company in Singapore in only 3 hours. Out of the 5.6 million residents, 39% are foreign nationals. There are more than 3000 multinational corporations from all over the world. Over ten free-trade agreements have been signed with other countries and regions. Being a top tourist hub, it attracted approximately 18.5 million visitors in 2018 according to the Singapore Tourism board. Banking has grown significantly in recent years and many assets formerly held in Switzerland have been moved to Singapore due to new taxes imposed by the Swiss. The Biotech Industry is burgeoning with drug makers such as GlaxoSmithKline, Pfizer and Merck and Co. all establishing plants here, and oil refining continues to play a huge role in the economy.










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