MAKING A LIVING, ENSURING GROWTH

Hard work, social stability and visionary economic policies made it possible for our small city-state to stay relevant and sustain growth in uncertain times.

Singapore's survival and success over the past 50 years would not have been possible without the fruits of economic growth. Our social stability and progress was sustained through a strong economy that provided good jobs and wages to most Singaporeans. With strong economic growth came healthier government revenues, better infrastructure and standards of living, greater resilience and security, as well as credibility in the international sphere.

Our economic progress has had a tangible impact on the lives of our people. Gross Domestic Product (GDP) per capita at market prices in 1960 was $1,310; by 2014, this had grown to $71,318 – among the highest in the world. The median monthly wage for trained employees in 1960 was only $120; in 2014, the median wage from work was $3,770. Broad-based economic growth transformed a young and relatively unskilled population into a nation of middle class homeowners.

These achievements did not come easily or naturally to a tiny island city-state with an uncertain future and no natural resources. Singapore’s economic story is one of grit, hard work and resourcefulness in the face of sometimes desperate circumstances, always against the odds. In today’s business-friendly, free and open economy, casual observers may not grasp the full extent of the Public Service’s role in guiding economic development, and the step that had to be taken to ensure that Singapore could make a living, grow and thrive.

Rich in potential – an aerial view of Jurong industrial estate as it began to attract new investment.

THE LATE 1950S TO 1970S: BUILDING A NATIONAL ECONOMY

When Singapore became self-governing in 1959, conditions were poor. While the economy had partially recovered from the ravages of World War II, the city centre was overcrowded and buildings were deteriorating. Over 70% of the population were squatters or slum dwellers. The Port of Singapore, with a disgruntled and poorly paid workforce, had a bad reputation for pilferage and strikes. ¹ The economy at the time was based on trade, with some income and jobs generated from the British military personnel stationed in Singapore. But unemployment was in the low double digits, with no agricultural sector to absorb jobless workers. It was a pessimistic time:

When my [People’s Action Party] government first assumed office on 3 June 1959… businessmen and industrialists, far from hailing this event as a happy augury for the future, felt for the most part that the end of the world was around the corner. The stock market collapsed and there was a flight of capital out of Singapore. Several people fled the country. ²
– Dr Goh Keng Swee,
Singapore’s first Minister for Finance

Singapore’s decision to join the Federation of Malaysia was based in no small part on economic need: a combined Malaysian market of around 12 million people could have provided a livelihood for local firms as they grew under the protection of import substitution policies and tariff barriers, providing jobs and incomes for Singaporeans. But worker unrest was frequent, and economic growth tepid.

Singapore’s separation from Malaysia in August 1965 dashed hopes of a Malaysian Common Market, and with it the fledgling city-state’s economic prospects – or so it seemed. But Singapore’s pioneer s would not be so easily daunted. To a query by noted American economist Milton Friedman in the mid-1960s on what Singapore now planned to do, Mr S. Dhanabalan, who would later become a cabinet minister, replied: “I’m sorry but the truth is, we have not the slightest clue what we will or should do. We just have the will and the determination. We will not only survive, we will prosper”. ³

While trade had been a good foundation for Singapore’s early prosperity as a British colony, it was limited as a national economic strategy for an independent state. Trade could not create sufficient jobs for Singapore’s rapidly growing population. Without manufacturing capabilities, Singapore would be largely limited to repackaging and re-exporting goods, without capturing the value from their design and production.

With the advice of United Nations-appointed economist Dr Albert Winsemius, Singapore’s leaders decided to take a bold step. They made the difficult decision to lift practically all import tariffs, welcome foreign investment, and expose Singapore to the winds of global competition. Many local firms that had been set up in anticipation of the Common Market were caught by this shift in policy, and closed down. ⁴

Dr Goh Keng Swee, the Singaporean leader most widely credited for driving Singapore’s early economic development, summed up the challenge of the day:

…we have to find the right economic strategy which will generate a fast enough rate of economic growth. But economic policies by themselves are sterile unless they are backed by an energetic implementation, and both policies and their implementation need a climate of confidence in order to yield results. ⁵

Creating Jobs, Improving Confidence

Singapore’s first and most urgent economic priority was job creation: to end unemployment, over 200,000 jobs had to be created within 10 years. This fell to the Economic Development Board (EDB), set up in 1961 to develop infrastructure and promote Singapore to foreign investors. The EDB, together with the Ministry of Finance, took primary responsibility for our early economic growth.

Our economic pioneers had to learn by doing. Times were tough and budgets lean in the 1960s. EDB’s development and investment promotion officers had to be frugal, sometimes subsisting on simple meals of salted eggs and rice porridge. Some EDB officers recalled being posted to New York in 1968 in the freezing winter, having never set foot in the United States (US) before, and with no experience in dealing with American multinational corporations (MNCs). Working feverishly from their premises in the Fullerton Building, other EDB officers cajoled prospective investors over the phone, met with senior executives from major international companies, and negotiated with visiting entrepreneurs from Taiwan, Hong Kong, Indonesia and elsewhere. ⁶

At the time, most prospective foreign investors had not even heard TDB of Singapore, let alone considered investing precious capital there. We could not afford to choose: we welcomed all investment that created jobs, foreign and indigenous, “low tech, high tech, or no tech”. ⁷ In an era of nationalist fervour around the world, Singapore stood out as a rare exception, welcoming both MNCs and Asian companies that produced everything from garments, textiles and toys to hair wigs, salted eggs and mosquito coils.

Concurrently, the Government set up a range of state-owned enterprises to pursue activities that the private sector either were not prepared or could not afford to take on, but which were considered necessary for economic and national development. These state-led firms included Singapore Airlines, National Iron and Steel Mills, Chartered Industries, Allied Ordnance, and Neptune Orient Lines.

Resolving Challenges and Nurturing Growth

Just as Singapore was beginning to find its feet economically, another shock hit: the British decided to withdraw their military forces from 1968, with completion by 1971. This was grim news for the economy: the British military presence accounted for 20% of Singapore’s Gross National Product and 40,000 jobs ranging from shipyard engineers to nursemaids, as well as business for shops and services that served the 56 British military facilities.

Once again, Singapore had to make the best of adverse circumstances. Building on agreements won by our political leadership after impassioned negotiations with the British government, ⁸ the Bases Economic Conversion Department was formed to convert former military facilities, including the naval shipyards at Keppel and Sembawang, for commercial use.

But buildings and facilities alone could not drive economic growth. As Singapore’s leading economic architect, Dr Goh identified four economic pillars – manufacturing, shipbuilding, tourism and trade – to shore up demand in the face of the British military withdrawal.

When asked much later if he had started out with an overall grand design in mind, Dr Goh replied, “I had no initial vision. You just start it and hope for the best.” Nevertheless, careful thought and study went into his decisions. From 1967 to 1968, he published robust and detailed justifications for his strategy in the press to bolster public confidence. Singapore’s economic agencies worked hard to sustain this precious confidence, which was then in scarce supply. Mr Ngiam Tong Dow, a former EDB Chairman, recalled how Dr Goh insisted on opening as many factories as possible in the 1960s and 1970s:

.…we welcomed any type of employment. There was a factory making joss paper. We called it a factory. [There were factories] making hair cream, making kaya, jam. He used to go and open. All he asked was: “You write me a one-page speech.” He just goes there, makes a short speech and then gets the TV to cover. Dr Goh was really a strategist. His whole idea was to create confidence. So the more people see the Minister opening factories, the more confidence there is in Singapore. ⁹

Developing Specialised Economic Institutions

In 1968, Dr Goh made the landmark decision to spin off the financing, real estate and trade promotion functions of EDB into the Development Bank of Singapore (DBS), the Jurong Town Corporation (JTC) and Intraco respectively. This allowed EDB to focus on investment promotion, and the newly created agencies to nurture specific aspects of Singapore’s economy.

For instance, Intraco proved useful in negotiating trade with communist countries such as the Soviet Union and the People’s Republic of China, which did not have open markets at the time. Like their EDB counterparts, the work of Intraco executives to promote Singapore-made products took them to countries as diverse as the US, Soviet Hungary, North Korea, Iraq, India, Angola and Australia. ¹⁰

Reaping the Gains of Education and Training

Early investments in education and training, to create a skilled workforce that could support a growing economy, soon bore fruit. Standards at the Rollei-Government Training Centre – set up in 1973 based on the German apprenticeship model – were high enough by the late 1970s to gain accreditation by Germany’s Deutsche Industrie und Handels Tag for providing training equivalent to German Facharbeiter (highly skilled craftsman) standards.

By the late 1970s, unemployment had fallen dramatically to about 3%. Total visitor arrivals – excluding Malaysians arriving by land – had shot up from 100,000 in 1965 to 1.3 million per year, and manufacturing had replaced trade as Singapore’s largest economic sector. Singapore had not only survived independence, but, as Mr Dhanabalan had promised earlier, was set to prosper.

MARKET DISCIPLINE
For Singapore to remain competitive, our economic institutions had to constantly seek to do better, and to do more with less. An Engineering Industries Development Agency (EIDA), set up in April 1968 with UN assistance, sought to train large numbers of unemployed and lower-skilled Singaporeans. This proved a major selling point for potential investors but it was also prohibitively costly. Then Finance Minister Dr Goh Keng Swee dryly noted that between 1968 and 1972, EIDA had trained 886 personnel at the cost of about $12 million in government subsidies, and that there were, “obviously, more economical ways of industrial training”. ¹¹ To ensure sustainability, EIDA was converted into a business enterprise that had to survive on its earnings in July 1973.

1980S TO 1990S: REFINING STRATEGIES; DEEPENING AND DIVERSIFYING OUR ENGINES OF GROWTH

The early 1980s were boom years for Singapore: GDP per capita grew from $8,868 in 1979 to $14,921 by 1985. As a proportion of employed Singaporeans, skilled workers doubled from 11% in 1979 to 22% in 1985.

By the mid-1980s, however, growth began to slow. Wages were rising sharply due to a tight labour market, even as businesses faced competition from lower-cost countries in the region. In 1985, a combination of factors, including wage hikes, a construction slump, as well as a global downturn in shipping and electronics, led to Singapore’s first recession since independence.

In response, the 1985 Economic Committee (EC) chaired by then Minister of State for Trade and Industry Mr Lee Hsien Loong examined the longer term challenges and prospects for the Singapore economy, and identified new areas and strategies for growth. Among the EC’s recommendations were a larger role for the private sector, reducing state involvement in the market through privatisation and corporatisation, and a more flexible wage structure that could be adjusted during an economic downturn. ¹² Once again, bold, broad changes were needed to lift Singapore’s economy to the next stage of growth.

Economic agencies were quick to adapt to these new demands. EDB stepped up its efforts to diversify and deepen Singapore’s economy, and to encourage more valuable activities. In the electronics industry, for instance, EDB moved from seeking investments in the assembly of hard disk drives and consumer electronics, to favouring investments in 8-inch wafer fabrication, personal computers and precision engineering. The services sector was also nurtured as a “twin pillar” of the economy alongside manufacturing.

For public officers in those lean times, working environments could be austere, even challenging. Mr Yee Min Chiat, who joined JTC in 1983, recalls:

I was deployed to a construction site when I joined. Armed with safety helmet and boots, I worked from a container office where the air-conditioning and lights were powered by a noisy diesel generator. The power tripped occasionally. The container office had basic necessities – a table, a chair and stationery. We didn’t have computers at our office back then! It was all paper and pen – computers were luxuries even at the head office. Back then, we relied on landline telephones, as pagers, mobile phones and emails were unheard of. ¹³

Collaboration and Partnership to Win Investments

The quest to diversify and upgrade Singapore’s economy could not be accomplished by any one agency alone. In the 1990s, MTI, EDB and JTC worked closely to grow the wafer fabrication sector, which was seen as an exciting new addition to the Singapore economy. However, to develop a critical mass of wafer fabrication parks, Singapore had to commit significant land and water resources. The Government decided that this trade-off was worthwhile. With a shared sense of mission, a consortium of public agencies, including the Urban Redevelopment Authority (URA), National University of Singapore (NUS), Public Utilities Board (PUB) and the National Science and Technology Board (now renamed A*STAR) pulled together to identify suitable land, train specialist manpower, manage water requirements and build the right technological capabilities, even as EDB promoted Singapore’s vision of becoming a wafer fabrication hub to companies such as Hitachi in Japan.

These challenges were not for the faint of heart: every deal won or lost might determine the fate of Singapore’s ambitions. In December 1995, EDB learnt to their disappointment that Hitachi and LG Semiconductor had decided to invest in a wafer fabrication plant in Malaysia. However, Hitachi was planning a second joint venture with Nippon Steel – a chance for Singapore. Taking the next available flight to Tokyo, EDB officials proposed a package to Dr Tsutomu Kanai, President of Hitachi Ltd, who responded: “You make me an offer I cannot refuse.”

Overjoyed at the positive outcome, EDB and JTC set to work immediately. But Hitachi’s chosen site in Singapore was filled with layer upon layer of rubbish, having been used for years as a dumping ground. Mr Lim Swee Say, then Managing Director of EDB, recalls the horror and dismay of our officials: “Singapore’s most modern fab sited on a rubbish dump? We almost fainted!” ¹⁴

JTC was determined to clear the rubbish in time for the ground-breaking ceremony. Digging went on day and night. The sheer number of trucks carrying the excavated rubbish filled the roads in that normally quiet area. Finally, the herculean task was completed in time, and Hitachi Nippon Steel Semiconductor (Singapore) sent out its first commercial shipment from Singapore in 1998. ¹⁵

Former JTC Director Ng Kok Ching recalls another episode that illustrates the can-do spirit of our economic agencies. ¹⁶ JTC decided to locate a large wafer fab plant at an industrial land site in Woodlands, but the land was already occupied by about 600 small factories. Relocating them using regular procedures would have taken about five years, but the investor needed the site in 18 months, in order to catch the next upswing in the market.

An inter-agency team set to work. Recognising that these small factories were also an integral part of Singapore’s industrialisation effort, financial assistance was provided to help affected firms relocate to new multi-storey ramp-up factories in Woodlands. Many dialogue sessions were held, but the existing tenants doubted whether JTC could deliver on its promises. In desperation, Mr Ng offered his “head on the chopping block” as a guarantee! ¹⁷ The companies took the spirit of his unconventional statement as a sign of JTC’s sincerity. The land was finally delivered on the dot, and the investment was successfully concluded.

The creation of the Jurong Island petrochemical complex, literally out of existing small islands and the sea, remains the Singapore government’s largest capital investment since independence. It has since been repaid many times through foreign investment and the creation of skilled jobs for Singaporeans.

Jurong Island also vindicated EDB’s strategy to cluster and entrench mutually supporting industries, which has since led to clusters in other sectors such as the electronics, engineering and biomedical industries.

By the 1990s, A*STAR – a public agency that spearheads economic oriented research to advance scientific discovery and develop innovative technology – and EDB had begun collaborating to deepen Singapore’s technological and research and development (R&D;) capabilities. Some $6 billion was committed to R&D; in the 1990s. ¹⁸ The number of research scientists and engineers more than tripled. ¹⁹ These commitments helped Singapore’s manufacturing sector to grow more skilled and diversified in the decade that followed. Newer high-value clusters such as wafer fabrication, clean energy, chemicals and biomedical sciences emerged alongside important job-creating industries such as electronics and precision engineering.

CREATING INDUSTRIAL CLUSTERS: JURONG ISLAND
For Singapore to remain competitive, EDB announced Singapore’s vision of a “Chemical Island Complex” in January 1990 to reap the benefits of connecting and integrating related industrial activities. This ambitious project demanded close collaboration between a range of government agencies and private partners.

Agencies studied petrochemicals complexes in the United States, Japan, Germany, the Netherlands and Belgium to determine which practices suited Singapore’s context. Their challenge was to convince companies that Jurong Island would offer cost savings and other benefits. Supported by the positive testimonials of companies like Hoechst Celanese which had invested in a plant in Singapore, EDB set out to attract major petrochemical companies. With time, a stream of potential investors came to Jurong Island. One of the land parcels, successfully promoted to a Japanese chemical company, was still underwater at the time.

Grooming Future Business and Economic Talent

As the economy became more dependent on highly skilled work, the need for trained workers and managers grew. While MNCs continued to play a significant role in our economy, capable local small and medium enterprises (SMEs) were also needed in niche roles to support the supply chains of MNCs.

On their part, MNCs who had benefitted from the long-term relationship they had built with Singapore wanted to help us succeed in our next phase of development. Former EDB Chairman Philip Yeo recalls his conversation with the Chairman of Glaxo, Sir Paul Girolami:

Sir Paul spent the evening telling me how happy Glaxo was with the Singapore operations. Sir Paul asked: “What can I do for the EDB and Singapore to show our appreciation?” I asked Sir Paul for Glaxo to sponsor a scholarship programme that would send 30 of Singapore’s brightest young students each year to the best universities in the UK and the US…” How much do you need?” he asked. I did a quick calculation on a dinner paper napkin. Thirty scholars per year for 10 years; that would take about $50 million. …Sir Paul immediately arranged for Glaxo to donate and set up a $50-million trust fund. ²⁰

Glaxo was not the only foreign investor that returned a favour to Singapore. Sunstrand was the first company to set up a scholarship programme; they were followed by Mobil (now ExxonMobil), Seiko-Epson, Takashimaya and others.

1998 TO 2000S: GLOBALISATION AND THE CHALLENGES OF SUSTAINABLE, INCLUSIVE GROWTH

Being a small and open economy helped Singapore thrive in the years since independence, but also left us more vulnerable to shocks from beyond our shores. By the late 1990s, globalisation had left the fates of the world’s economies intertwined like never before. Systemic weaknesses in regional banking systems resulted in the Asian Financial Crisis of 1997–1998; despite Singapore’s relatively strong macroeconomic and financial position, our economy was caught up in the crisis and suffered a deep recession. Further economic shocks followed the US Dot-com crash in 2000 and the 9/11 terrorist attacks in 2001.

Led by the Ministry of Trade and Industry, a new Economic Review Committee (ERC) set out in 2001 to address this volatile new environment. The Committee’s recommendations set the direction for Singapore’s economic institutions in the early and mid-2000s: embrace the reality of globalisation; tap global networks and markets; strengthen local entrepreneurs and SMEs; and redouble efforts to become a knowledge- and innovation-based economy.

Unable to sidestep the impact of globalisation, Singapore would participate in it fully. We continued to engage multilateral frameworks such as the World Trade Organization and regional groupings like the Association of Southeast Asian Nations (ASEAN), and concluded more Free Trade Agreements. Our economic agencies continued to guide industrial development. They nurtured new clusters with promise in the global marketplace such as clean technology, urban solutions, health and wellness, renewable energy and interactive digital media. Cultivating these new activities meant partnering with institutions and agencies in sectors not traditionally associated with trade and industry, such as healthcare and the arts. To support these emerging sectors, dedicated facilities such as Mediapolis@one-north, the Gillman Barracks arts cluster and JTC CleanTech Park were developed. Taking advantage of Singapore’s small but sophisticated urban environment, specialised facilities such as the Energy Market Authority’s micro-grid on the offshore island of Pulau Ubin and the Singapore Autonomous Vehicle Initiative (SAVI) helped test solutions that could be put to use in cities elsewhere.

To reflect a new emphasis on innovation, the Productivity and Standards Board (PSB) was given a broader mandate in 2002 and renamed SPRING Singapore – two years later, SPRING would be tasked to promote entrepreneurship and champion the development of SMEs in Singapore. Working together with EDB and A*STAR, SPRING spearheaded an array of initiatives to boost our local SMEs, including government-backed loans, grant schemes, access to R&D; facilities, link-ups with MNCs, and training. Industrial space was also configured to meet the needs of startups. ²¹

The Global Financial Crisis – Challenge and Recovery

Global markets continued to be volatile, with economic shocks becoming increasingly transnational in impact. The global financial crisis which originated in the US and Western Europe in 2007 to 2008 hit Singapore badly. Real GDP fell by 10% year-on-year in the first quarter of 2009. Responding swiftly, our economic agencies designed a $20.5-billion Resilience Package including a Jobs Credit Scheme, a financial risksharing initiative, and other measures to bolster confidence, ease business costs and preserve jobs. The Resilience Package was ready to be passed by Parliament by early 2009.

To finance the Resilience Package, the Government had to draw upon $4 billion of Singapore’s past financial reserves for the very first time – a move debated at length in Parliament, but welcomed by many companies and individuals. ²² The measures helped Singapore to weather an economic storm that had wrecked many other economies, with relatively little lasting impact.

A THRIVING BANKING SECTOR
Singapore’s intangible but critical strengths – integrity, low corruption, a sound regulatory framework, a reputation for competence and excellent connectivity with the rest of the world – contributed to the rapid growth of the financial and business sectors in the 1990s and 2000s.

Since the early 1970s, the Monetary Authority of Singapore has promoted the growth of the Asian Dollar Market. It set up a Financial Sector Promotion Department in 1997, and later liberalised the banking sector through the Qualifying Full Bank scheme to allow foreign banks more scope to operate in Singapore.

By the end of 2013, Singapore was home to over 200 banks with total assets of almost $2 trillion. Today, it is one of the world’s largest financial centres.

TRIPARTITE HARMONY: A PILLAR OF SINGAPORE’S ECONOMIC RESILIENCE
Stabilising Labour Relations
Singapore has overcome several economic downturns over the past five decades, only to emerge stronger than before. This resilience is due in no small part to the constructive tripartite relationship between employers, unions and the state.

But this was not always the way things were. From 1963 to 1968, Singapore lost some 35,000 to 45,000 manhours each year to strikes. There was a running joke that a new factory established on Monday would have banners protesting the exploitation of workers by Friday. This was highly disruptive to Singapore’s vulnerable economy at the time.

The passage of the Employment Act and Industrial Relations (Amendment) Act in August 1968 encouraged longer collective agreements, and prevented unions from striking on matters regarding promotion, recruitment, transfer, retrenchment and assignment of tasks. It also abolished certain discriminatory practices and abuses. The number of man-hours lost to strikes soon plummeted. A few years later, the National Wages Council (NWC) was set up in 1972 to promote better tripartite relationships.Public Service agencies help maintain a stable environment for businesses and workers. For example, the Ministry of Manpower’s labour relations officers mediate in disputes between employers and workers, failing which cases are referred to the Industrial Arbitration Court.Since 1980, almost no man-hours have been lost to strikes in Singapore.

Tripartite Response to Economic Crises
Over the years, Economic Committees have been convened to address major economic crises. Such Committees have always been tripartite in nature, involving unions, business associations and Government officials. The Public Service, trusted for being fair, impartial, balanced and effective, moderates the diverse and sometimes conflicting interests of different groups.

To bring Singapore’s economy back on track, tough measures have had to be taken – such as the cuts in Central Provident Fund (CPF) employer contribution rates in 1986 and 1998 to lower business costs. While similar wage cuts would have met with strong resistance from workers elsewhere, Singapore’s workers accepted the CPF cuts as necessary to preserve jobs and restore economic growth. This was because the tripartite representatives were able to reach a credible consensus on recommendations that would serve the long term interests of both employers and employees:

The alignment of interests projects a certain cohesiveness and is the biggest contribution of Tripartism to Singapore. It is this alignment and cohesiveness which distinguish us from other countries and which give us the nimbleness and the backing during a crisis to take firm steps and to move towards a generally aligned direction in a situation of normalcy.
– Mr Leo Yip, former Permanent Secretary,
Ministry of Manpower ²³

Raising Productivity for Quality and Inclusive Growth

As Singapore recovered from the financial crisis after 2009, it became clear that we were now a maturing economy, and no longer a low-cost venue. Growth had slowed to about 4.5% annually in the 2000s. Since Singapore’s labour force cannot keep growing indefinitely, continued economic growth would have to depend on raising productivity.

Productivity growth is important to Singapore for several reasons: it enables continued economic growth and sustainable wage increases, reduces dependence on low-skill and labour-intensive business models, and helps to address emerging challenges such as income inequality and an aging population.

In April 2010, a high-level National Productivity and Continuing Education Council (NPCEC) ²⁴ was formed to address this multi-faceted challenge. Our economic agencies have convened efforts across the public and private sectors – not just in the economic sphere but also in education and training, manpower, science and technology as well as infrastructure and development – to support new and innovative ways of doing business. In the last five years, this has led to major policy initiatives such as the Productivity and Innovation Credit, sector-specific productivity roadmaps, two new national centres for continuing education and workforce training, and the SkillsFuture movement to promote skills mastery and lifelong learning.

SINGAPORE’S ECONOMIC JOURNEY: 50 YEARS ON AND BEYOND

Fifty years on, certain realities remain constant. Economic growth remains as fundamental to Singapore’s destiny as a nation as it was at independence:

Without growth, we have no chance of improving our collective wellbeing... Slow growth will mean that new investments will be fewer, good jobs will be scarcer, and unemployment will be higher. Enterprising and talented Singaporeans will be lured away by the opportunities and the incomes they can earn in other leading cities. Low-income workers will be hardest hit, just as they were each time our economy slowed down in the last decade. Over time, our confidence will be dented. Thoughtful Americans have told me that a major challenge for the US after years of slow growth has been a profound loss of optimism. The same is true for Japan, and will be true of Singapore too if ever our economy stagnates.
– Mr Lee Hsien Loong, Prime Minister ²⁵

Throughout the decades, two tenets have guided our economic institutions. First, our economic agencies support and facilitate markets, rather than replace them. For instance, EDB’s suite of incentives guides investment choices rather than mandating lists of approved investment sectors. Agencies such as the Ministry of Trade and Industry and the Competition Commission of Singapore ensure that both private and government-linked companies are subject to rigorous market discipline and competition. Second, our economic institutions are fundamentally pragmatic and adaptive, not adhering strictly to any ideology, always seeking the best balance of measures to address the situation at hand.

Singapore’s economic future will be very different from our early decades of independence. As a maturing economy, GDP growth will stabilise, physical and social constraints will limit the pace of immigration, and the emphasis will shift to higher productivity, innovation- and ideas-based industries. We will continue to be exposed to global economic volatility, costs will rise over time, and the challenge will be to ensure that future growth is sustainable, inclusive and of a high quality. To attract global talent and meet the evolving needs of citizens, Singapore will need to look beyond economic indicators: to become both a distinct global city and an endearing home.

But the past five decades of development, hard work and partnership have earned Singapore a skilled workforce, cordial tripartite relations, political stability, sound business environment, good global reputation, well-developed infrastructure, a diversified range of firms in high-value sectors, and sizeable national reserves prudently saved and invested. Strong and active economic governance – supported by a responsive and responsible public sector – continues to complement an open and vibrant private sector. In an increasingly uncertain global economy, Singapore faces the future from a position of strength.