Lessons from Singapore’s Brief History for Indonesia and the Rest of the Developing World

– By Christopher Linnan –

Photo by Emily Masters

Photo by Emily Masters

The death of former Singaporean Premier Lee Kuan Yew on March 23 was felt all around the world, but most acutely in Southeast Asia. He is considered to be the chief architect of Southeast Asia’s only developed economy, which upon achieving independence from Britain in 1963, suffered from very serious unemployment issues and had a per-capita income (adjusted for inflation) that was less than ten percent of what it is currently.[i] Former Dutch economist and Singapore’s long-time policy advisor Albert Winsemius once labeled it as that “poor little market in a dark corner in Asia.”[ii] Yet, today it is a “world business capitol, where per capita gross domestic product is similar to that of the U.S.”[iii] Obviously, all developing countries face different challenges, but Singapore presents an interesting case study because it developed so well and quickly. Many of the Indonesians I have encountered during my grant year speak glowingly of Singapore as it offers an outstanding model for developing countries such as Indonesia. Thus, it is imperative to take a closer look at how Singapore has managed to achieve such growth by examining its economic policy, its political philosophy, and the Singaporean educational system. Moreover, this article will attempt to highlight features of the Singaporean model that are relevant to other Southeastern Asian economies, especially Indonesia.

The Heritage Foundation ranks Singapore as the world’s second-most economically free country.[iv] The country is well-known for being very free trade, a lack of cumbersome business regulations, and low taxes, as demonstrated by the chart below. If a country wishes to attract foreign investment, it obviously has to make itself more attractive than competing countries. This is especially true for long-term sustainable industries, e.g. banking, technology, etc. An overreliance on natural resources can lead to countries falling victim to the “Dutch Disease,” which refers to the Netherland’s 1959 discovery and exploitation of large natural gas fields, which subsequently hurt manufacturing and agriculture. While there is a significant debate over specifics, the logic behind it is that countries that have access to valuable natural resources, be it oil, natural gas, or precious metals have little incentive to upgrade their human capital. This is most obvious example is Venezuela, where the government’s attempt to redistribute oil wealth to the poor directly may have served as a short-term political victory, but long-term it would be more useful to improve human capital. Part of Singapore’s economic success may stem from the fact that it had to improve human capital since natural resources are so scarce, but for some of its Southeast Asian neighbors, whose economic growth has been fueled in part by unsustainable exploitation of natural resources, it serves as a lesson what governments have to focus on to achieve long-term economic development.

Screen Shot 2015-04-21 at 3.07.55 PM[v]

Furthermore, Singapore has long been famous for relying on foreign workers, especially skilled ones, in addition to its domestic workforce.[vi] While Singapore has pushed several measures to encourage the hiring of local workers over the past few years, it remains committed to meritocracy, which means that the most qualified person for a job will receive it, regardless whether they are Singaporean or expatriate.[vii] This is especially pertinent to Indonesia, which has actually made the process of attracting foreign investment much more difficult during the Widodo administration through various new regulations and rules for potential expatriate workers.[viii] For example, foreigners who wish to be English language teachers in Indonesia are subject to “the most stringent conditions that are applied for English teachers in the world…and chances are they will end up taking higher-paid jobs in other countries.”[ix]

Ideally, Indonesian companies would only hire Indonesian workers as this is cheaper and there will be no cultural barriers;[x] however, sometimes there is a lack of qualified domestic workers, so the best solution in this situation is to hire expatriate workers. Furthermore, protectionist policies are often reciprocated by other countries, which leaves both of them as losers. President Jokowi has emphasized the need to attract foreign direct investment, but if business is hampered by cumbersome regulations and there is a lack of skilled workers, either domestic or expatriate, it becomes much harder to justify an investment. This is crucial to economic development and rather than applying protectionist policies, developing countries need to focus on developing their domestic workforce’s skills, which is discussed in more detail below.

Singapore’s political system is a fusion of democracy and authoritarianism. The People’s Action Party (PAP) has dominated Singaporean politics for the last fifty-five years and “opposition campaigns have typically been hamstrung by a ban on political films and television programs, the threat of libel suits, strict regulations on political associations, and the PAP’s influence on the media and the courts.”[xi] To be fair, the PAP’s central role in Singapore’s industrialization would make it extremely difficult to defeat in elections, even if they were completely free. The country also restricts free speech about sensitive issues such as religion, race, etc. Furthermore, Singapore, like many of its neighbors, has a very harsh penal code, which includes the frequent use of the death penalty for drug traffickers.[xii]

The country is also well-known for its stringent anti-corruption laws. This has helped produce the world’s fifth-least corrupt country.[xiii] This is noteworthy because prior to its independence corruption was relatively common.[xiv] Professor John S.T. Quah noted that the eradication of corruption in Singapore came from the political will to pass strict anti-corruption laws and enforce them; the effective and independent Corrupt Practices Investigation Bureau; and a system that minimizes the incentives and opportunities for corruption by government officials.[xv] Frankly, the risks far outweigh the rewards of being a corrupt public official in Singapore, so unsurprisingly, corruption is relatively limited. This is relevant to Indonesia because it has taken significant steps to battle corruption over the past decade, and recently-elected President Jokowi made transparency and fighting graft a central part of his presidential campaign. However, there have been several high-profile challenges to his commitment, most notably the Komisi Pemberantasan Korupsi’s (KPK) ongoing battle with the national police. The KPK’s efforts to combat corruption among senior-level civil servants, especially in the national police have led to retaliatory actions including the arrests of KPK members, which obviously undermine its effectiveness. Tony Kwok, a former high-level official at Hong Kong’s noted Independent Commission Against Corruption (ICAC) argues that “when you want to start fighting corruption, first you should be seen to demonstrate you can deal with big fish. If you focus on education, prevention, you’re wasting your time.”[xvi]

While a lot of Westerners might disagree with these types of strict laws and policies, Singaporeans generally support them[xvii] and its thriving economy suggests that imposing Western-style democracy and ideals are not necessary for economic success. Rather, the key to Singapore’s economic success has been its strict adherence to the aforementioned meritocracy. Westerners sometimes advance the simplistic notion that democracy equals economic prosperity, when it often does not. The American stalemate in Congress illustrates some of the potential inefficiencies of democracy, even in countries with a long history of successful democracy. Thus, it stands to reason that developing countries need to prioritize economic opportunities over political freedom, which a good education system provides the best opportunity to do so. No developing country needs to or should try to imitate the West, rather they should focus on adopting successful policies.

The 2014 Pearson Education Index ranks Singapore as the world’s third best educational system.[xviii] The country is well-known for its stringent standards when selecting teachers, who are very well-compensated, but held to very high standards, which can include termination for continued unsatisfactory job performance.[xix] This is especially pertinent for places where becoming a teacher is not necessarily merit-based and where high job security may occasionally lead to substandard teaching. Singapore’s strict requirements and reverence for teachers,[xx] is a symptom of a system which encourages intense, yet efficient competition. While Singapore emphasizes education, it spends a significantly lower percentage of its GDP on education than many of its peer countries.[xxi] Moreover, studies have shown that a country’s educational achievements are not directly correlated to the amount spent on education, as it is much more important how the money is spent.[xxii] This is hardly surprising as it makes intrinsic sense, but it does signal that countries wishing to develop should focus on how to allocate money rather than just increasing education spending.

Singapore’s education system is also unique because of its bilingual nature, which promotes English as the country’s primary means of communication, but students are required to take classes in their mother tongue as well. Singaporean policymakers made learning English a priority after independence to better compete in the global economy,[xxiii] which is especially interesting because Singapore boasts a majority Chinese ethnic group and a mix of other ethnicities,[xxiv] none of which use English as their mother tongue. This is relevant for Indonesia because it boasts similar demographics, only the majority ethnic group is Javanese.[xxv] While I have been very impressed with my fellow English language teachers in Indonesia, there is obviously still room for improvement, which I detailed in an earlier Indonesiaful article. Obviously, the key behind Singapore’s educational success is the high drive exhibited by Singaporeans, who are well-known for pushing their children to excel academically, but its educational system has been very good at channeling this into long-term success

Obviously, Singapore is not a perfect country and there are significant differences between its Southeast Asian neighbors and itself. However, it is a fascinating case study, which provides a map to prosperity for developing countries. This is especially relevant for Indonesia, which has exhibited tremendous economic growth during the new millennium. However, some of its practices, such as a heavy reliance on commodities like oil, minerals, etc., may leave it vulnerable to fluctuating prices and there are serious doubts whether this is sustainable.[xxvi] Furthermore, it has to ensure that its economic policy is conducive to encouraging trade and growth if it wishes to develop at the phenomenal rate that it has during the twenty-first century. Indonesia is a wonderful country, which has the ability and opportunity to continue to thrive and grow, but adopting at least some of the lessons from Singapore’s meteoric rise will enable it to develop even faster.

[i] Joseph Stiglitz, “Singapore’s Lesson for an Unequal America,” New York Times 18 March 2013, http://opinionator.blogs.nytimes.com/2013/03/18/singapores-lessons-for-an-unequal-america/?_r=0, accessed 1 April 2015.

[ii] Shamim Adam and Sharon Chen, “Lee Leaves Legacy of Growth as Singapore Confronts Aging Threat,” Bloomberg 1 March 2015, http://www.bloomberg.com/news/articles/2015-03-24/lee-leaves-legacy-of-growth-as-singapore-confronts-aging-threat, accessed 1 April 2015.

[iii] John Bussey, “Singapore’s ‘Minister Mentor’ had a Far-Reaching Vision,” Wall Street Journal 22 March 2015, http://www.wsj.com/articles/singapores-minister-mentor-had-a-far-reaching-vision-1427082719, accessed 1 April 2015.

[iv] “2015 Index of Economic Freedom,” Heritage Foundation 2015, http://www.heritage.org/index/ranking, accessed 1 April 2015.

[v] Rina Chandran, “Singapore Still has Low Taxes, Even When It’s Charging the Rich More,” Bloomberg 24 February 2015, http://www.bloomberg.com/news/articles/2015-02-24/low-tax-status-intact-even-with-increase-for-wealthy, accessed 1 April 2015.

[vi] “Foreigners Still Welcome,” The Economist 15 January 1998, http://www.economist.com/node/110939, accessed 1 April 2015.

[vii] Ansuya Harjani, “For Foreigners, has Securing a Job in Singapore Just Gotten Harder,” CNBC 24 September 2013, http://www.cnbc.com/id/, accessed 11 April 2015.

[viii] Chris Brummitt et al., “Expat Squeeze Belies Widodo’s Invitation to Invest, Bloomberg 2015, http://www.bloomberg.com/news/articles/2015-02-17/expat-squeeze-belies-widodo-s-invitation-to-invest, accessed 11 April 2015.

[ix] Ibid.

[x] Ibid.

[xi] Graham Allison, “The Lee Kuan Yew Conundrum,” The Atlantic 30 March 2015, http://www.theatlantic.com/international/archive/2015/03/lee-kuan-yew-conundrum-democracy-singapore/388955/, accessed 11 April 2015.

[xii] Rachel Armstrong, “Singapore Lifts Death Penalty on Drug Trafficker for First Time,” Reuters 14 November 2013, http://www.reuters.com/article/2013/11/14/us-singapore-death-idUSBRE9AD0BG20131114, accessed 9 April 2015.

[xiii] Joshua Berlinger, “Why China Should Study Singapore’s Anti-Corruption Strategy,” Business Insider 6 December 2012, http://www.businessinsider.com/why-china-should-study-singapores-anti-corruption-strategy-2012-12?IR=T&, accessed 13 April 2015.

[xiv] Ibid.

[xv] Ibid.

[xvi] Sara Schonhardt, “Indonesia Faces a Crossroads in Corruption Battle,” Wall Streeet Journal Indonesia 16 February 2015, http://blogs.wsj.com/indonesiarealtime/2015/02/16/indonesia-faces-a-crossroads-in-corruption-battle/, accessed 13 April 2015.

[xvii] “You can Cage the Singer,” The Economist 4 November 2010, http://www.economist.com/node/17419873, accessed 12 April 2015.

[xviii] “Pearson Education Index,” Pearson Foundation 2015, http://m.thelearningcurve.pearson.com/index/index-ranking, accessed 7 April 2015.

[xix] “Strong Performers and Successful Reformers in Education: Singapore,” Pearson Foundation 2013, http://www.pearsonfoundation.org/oecd/singapore.html, accessed 7 April 2015.

[xx] Ibid.

[xxi] “Public Spending on Education,” The World Bank 2015, http://data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS, accessed 9 April 2015.

[xxii] James Marshall Crotty, “Why Asian Nations Dominate Global Education Rankings,” Forbes 21 May 2014, http://www.forbes.com/sites/jamesmarshallcrotty/2014/05/21/why-asian-nations-dominate-global-education-rankings/, accessed 7 April 2015.

[xxiii] Goh Chor Boon and S. Gopinathan, “The Development of Education in Singapore Since 1965,” World Bank June 2006, http://siteresources.worldbank.org/EDUCATION/Resources/278200-1121703274255/1439264-1153425508901/Development_Edu_Singapore_draft.pdf, accessed 7 April 2015.

[xxiv] “The World Factbook: Singapore,” Central Intelligence Agency 20 June 2014, https://www.cia.gov/library/publications/the-world-factbook/geos/sn.html, accessed 7 April 2015.

[xxv] “The World Factbook: Indonesia,” Central Intelligence Agency 22 June 2014, https://www.cia.gov/library/publications/the-world-factbook/geos/id.html, accessed 7 April 2015.

[xxvi] Novrida Manurung, “Ghost of Suharto Seen in Boomtowns Leading Indonesian Growth,” Bloomberg 11 April 2013, http://www.bloomberg.com/news/articles/2013-04-10/ghost-of-suharto-seen-in-boomtowns-leading-indonesia-s-growth, accessed 12 April 2015.

About the author: Chris Linnan is a Fulbright English Teaching Assistant in Palangkaraya, Central Kalimantan. He graduated from Emory University in May 2014.

One thought on “Lessons from Singapore’s Brief History for Indonesia and the Rest of the Developing World

  1. Pingback: The Lure of the Protectionist Sirens in The Age of Globalization | Indonesiaful.com

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