The Wall Street Journal recently wrote that Singapore’s “export-led economy is falling on its face” with the onset of the global financial crisis. The newspaper added that our economy would be more resilient if it were better balanced and this could be achieved by trimming back GLCs and allowing the domestic private economy to grow.
Prime Minister Lee Hsien Loong admitted as much in an interview where he acknowledged that Singapore might have to rethink its export-led growth strategy.
Way before the problem became dire, Dr Chee Soon Juan had already been warning that Singapore’s over-reliance on foreign multinational companies to manufacture goods to be re-exported may not be sustainable.
In Dare To Change published in 1994, he wrote: “Have we become overly reliant on the MNCs and foreign capital?…For the long-term well-being of the economy, Singapore must pay more attention to its private sector.” This idea was expanded in his latest publication A Nation Cheated, which continues to sell briskly at Kinokuniya and Select Books. The bookstores have placed yet another order despite the recession.
Perhaps, with the downturn, Singaporeans are waking up to the idea that things may not be quite the way the PAP has been telling them all these years. The excerpt below reveals how backward the PAP Government has been:
The truth of the matter is that Singapore cannot, or does not know how to, break free of its dependence on foreign investment. Analysts Walden Bello and Stephanie Rosenfeld summed up:
‘Despite its seeming prosperity, Singapore in 1990 is trapped in the treadmill of the export-oriented economics that it once so enthusiastically embraced. Having so completely open itself up to the world market and the multinationals with the illusion that it could influence the former and manipulate the latter, the PAP technocrats now see that their policies have reduced Singapore’s economy to a mere service economy, the fate of which is totally dependent on the calculations and whims of the multi-nationals.’
Singapore’s reliance on MNCs has remained deep. The attempts made by the government to “restructure” the economy served only to attract a different category of industries to the country and did little to lessen the economy’s dependence on external investments.
Even in 2001, economic analysts still point out that Singapore’s problems are caused by its heavy dependence on foreign capital, because “strong competition for FDI [foreign direct investment] has mounted, with cheaper centres in the region already drawing away investments from Singapore.”
The convenience of constructing an instant economy fed largely on foreign capital may have served the PAP’s interests well. Whether this strategy has helped the welfare of workers, however, remains another matter.