Singapore's
getting ready to relax its approach
Financial Times, London March
12, 2000
By Peter Montagnon and Sheila McNulty
EVEN as he expounds his vision of Singapore's brave new future in the global economy, Goh Chok Tong, the island state's prime minister, is quite prepared to raise more mundane matters - such as his nation's obsession with clean public toilets.
"We talk about it all the time in parliament because we felt quite ashamed that we have a First World economy and Third World standards," he says. Clearly, economic liberalisation does not mean that Singapore is about to lift its ban on messy conveniences and litter.
Although seemingly flippant, the allusion cuts to the heart of the dilemma facing Mr Goh and his cabinet colleagues. Convinced that they have to make unprecedented changes if Singapore is to thrive in the new global internet age, they are also keen to preserve at least some of the ordered, communitarian spirit on which Singapore was founded.
From his airy office set in lush parkland that used to belong to the British colonial governor, Mr Goh seems to reflect old Singapore, his gentle courtesy masking a single-minded determination that brooks few obstacles. But change is in the air.
Not only has Singapore introduced radical reform of its financial markets over the past couple of years, opening its previously restricted domestic market to foreign banks, but it has also advanced its plans for liberalising elecommunications.
Over the weekend it announced a scheme to introduce competition into the power sector, with foreign ownership of its generators and the private sale of imported electricity to retail users.
Last week the government even said it was considering the need for competition in the media, where one company has an effective monopoly in each of the print and media sectors. Bankers say there is also talk of opening up some parts of the Port of Singapore - a world leader in efficiency - to private capital.
This is a big departure from the government's old interventionist approach to industry, and has prompted a widespread sense of the need for social and even political change. Mr Goh says the need to make Singapore more competitive was being considered before the regional economic crisis, but is even higher on the agenda thanks to the recovery.
Making a rare tribute to Singapore's rival, Mr Goh says Hong Kong has the capacity to bounce back because "there is much more flexibility, much more private sector initiative". Especially in the service sector, where Singapore lags behind in competitiveness, the island state needs a much more creative entrepreneurial culture.
The need for change has also been focused by the rebuff to Singapore Telecom after its attempt to buy Cable & Wireless HKT, the Hong Kong Telecommunications carrier. That left many feeling Singapore's companies were not culturally equipped to face the big wide world because of their government connections and rigid management style. The government needs to consider whether to speed up its disengagement from big companies such as Singapore Telecom, Singapore Airlines, DBS Bank, and Singapore Technologies.
"We have no choice," says Mr Goh. "This is becoming a smaller and smaller world, and if Singapore is to survive in this new economy, new world, it has got to embrace cultures from various places and influences." But does not this mean an end to the government's controlling role? "That is correct. The government should give more space to the private sector and to people who do things more for themselves. So we will create the framework and the rules for fair play. The rest we'll leave to the people, to the private sector."
At one level, says Mr Goh, the Singapore Telecom setback reflected the company's failure to understand the rules of the international game. It was approached by Cable & Wireless about the sale, and forgot about the possibility of competition. "The first lesson we have learnt is it doesn't mean that just because you have cash, you're big, you can succeed. There are other corporate entrepreneurs who can move much faster and can offer a better price than you."
But Mr Goh acknowledges that state involvement in the company may have been an additional impediment. The government has to remove the misunderstanding that, because it is a shareholder, it runs the management. Over time, he says, its roughly 75 per cent stake "will be diluted" partly through a process of giving shares to the public.
But if government willingness to relax its hold on the economic levers seems an obvious solution from a financial and economic viewpoint, it poses a problem for Singapore because the fostering of individual talent and other social consequences could be an affront to Singapore's communitarian spirit.
Deregulation will be divisive, Mr Goh admits, because those who are less adaptable and have fewer skills can get left behind. Singaporeans now divide into "cosmopolitans" and "heartlanders", says Mr Goh. The "cosmopolitans", who will lead the economic revolution, must still bear a responsibility for looking after the "heartlanders", who reflect the country's traditional values.
Part of this means finding ways of distributing the wealth generated in Singapore, he says. Also, at least some of those who have gone abroad must at some stage be persuaded to come back and contribute. The government has set up Singapore clubs overseas to remind expatriate citizens that nationhood exists beyond the geographic confines of the island state itself.
Mr Goh insists that Singapore is anxious to preserve its tight-knit social and political structure. There will be no Big Bang. Even so, some things will change.
The government must learn to consult the public more on policy matters. It still believes it is right about the basic thrust of policy, but at the same time knows it cannot arrogantly ignore other views. "We must allow ourselves to be challenged by other people and be prepared to listen."
Such a concession does not yet amount to willingness to allow full democracy, but in other ways Mr Goh points to political change that, in Singapore terms, seems profound. Within months, he says, Singapore may designate an open space, a kind of speakers' corner where people can disseminate their views in public. "You have got to involve the people in building the nation. You must allow for political activists who want more space for themselves."
It will take a while to see whether the country manages to combine an open economy with social and political cohesion, just as it has managed over the past 35 years to produce a rare combination of affluence and economic planning.
One thing that is forcing the pace of change is the internet. Mr Goh acknowledges that its spread is accelerating Singapore's transformation.
"There are many areas we are unable to control because of it," he says. "We have got to be practical. We've got to live with the internet and I have just got to move." .