Singapore goes back to its roots

John Burton
Financial Times
2 Aug 07

Gautam Banerjee is the type of foreigner Singapore wants to attract. The Indian-born accountant left London after university in the early 1980s and moved to the city-state, where he became a citizen in 1990.

Now the head of PwCAsia, he was appointed by the government to serve as a non-voting parliamentary member to promote the interests of Singapore’s growing immigrant population. “We need to get overseas talent to sink roots here,” he says.

Singapore wants a lot more people like Mr Banerjee. Its birth rate, once one of world’s highest, is flagging. Young, educated Singaporeans are emigrating to seek better-paying jobs or more freedom from restrictive rules at home. If present trends continue, the local population could begin to shrink by 2020.

Singapore’s leaders view the situation with alarm. A declining population would result in economic stagnation. Their solution is to admit many more foreigners with the goal of increasing the population to 6.5m from 4.5m in the next 20 years.

The main focus: attracting skilled workers from China and India, the countries that provided the waves of immigrants who helped to turn Singapore from a 19th-century swamp into the financial centre it is now.

If foreign-born permanent residents are included, Singapore has Asia’s largest population of foreigners as a proportion of its residents. They make up more than a quarter of its population and a third of the workforce. Since 1990 the foreign population has expanded by 7.4 per cent annually to 1.2m against a 1.1 per cent rise for all Singaporeans.

While Singapore seeks to lure skilled workers with an eye to the future and competing with rival Hong Kong, the reality is that most of those who have arrived in recent years are a rotating underclass of cheap labour from the Philippines, Indonesia and Bangladesh.

Of the 670,000 foreigners working in Singapore, 87 per cent are employed in low-paid jobs as construction workers or domestic maids.

As the government chases skilled workers, “state policy is opposed to long-term immigration [of unskilled foreign workers] and directed at ensuring that this category of migrants remains a transient workforce”, says Brenda Yeoh, a geographer at the National University of Singapore.

Maids and labourers normally receive work permits for one or two years, cannot bring in spouses or children, are forbidden from marrying Singaporeans and are deported if they are pregnant.

The government is hoping to change the foreign population mix by attracting more educated workers needed to fill jobs in service sectors such as private banking and finance, biotechnology and education. It wants many of them to become citizens or permanent residents, with the goal of having 240,000 of them gain this status in the next five years.

To do so, the government is trying hard to shed Singapore’s dull image in favour of a global city with buzz. It has eased strict rules governing nightlife and will soon open two of the world’s most expensive casinos. The development of cultural activities, is receiving attention after years of neglect. “Singapore is selling itself as a lifestyle centre” to attract more middle-class workers, says Christine Ong, the Singapore country head for UBS, the investment bank.

The focus on foreign talent has provoked a backlash, with the income gap widening to its greatest since independence in 1965. A newspaper poll found 43 per cent of Singaporeans believed the government cared more about foreign professionals than the local population, with their biggest worry the loss of jobs to outsiders.

Officials say the influx will help job creation by developing service industries and start-up companies that can hire local workers. But some economists suggest that Singapore should cut the number of low-skilled foreigners to promote local hirings and higher wages. As one of the most densely populated countries, the addition of 2m people threatens to strain resources.

It is likely to increase Singapore’s dependence on imported food and water, while raising prices for housing, transport and public services that would undermine the government’s strategy of making the city-state cost competitive. Housing prices, for example, are already expected to go up 30 per cent this year while rents for office space in the prime business district have doubled in the past year.

The biggest challenge that Singapore may face in the long term is to maintain the social stability that the government has always prized. “Foreign labour policies might be tightened if political stress emerges in the future,” says Chua Hak Bin, regional economist at Citigroup in Singapore. “Such a risk cannot be dismissed as foreigners could reach half of the total population

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