“There was no secret, we had no choice but to take chance and sail into rough waters”- Lee Kuan Yew
Singapore is an inspiration to Sri Lanka and other developing countries in terms of economic development, political stability, and good governance. Since 1967, it has increased its per-capita purchasing power (PPP) 10-fold to $44,600 in 2007, surpassing countries such as Switzerland’s PPP ($37,300) in 2007. Singapore also has high demographic development compared to Sri Lanka even though both countries were about even in 1960s. The President, Lee Kuan Yew, navigated the Singaporean economy after gaining independence in 1965. With a population of over 5 million, Singapore maintains a market driven guided economy with diversity in cabinet and government.
What was their secret to success?
At independence in 1965, the economy was met with unemployment problems, an unskilled workforce, few entrepreneurs, no domestic savings, wretched housing conditions, militant labour unions and racial riots. They devised a strategic economic plan; developing entrepot (commercial) trading, export driven manufacturing, and then creating a service based knowledge economy.
They targeted education in three phases; the early industrialization phase, the post-1979 industrial restructuring phase and the post 1997 Asian financial crisis era. They were also strategic in developing their infrastructure, creating efficient and innovative structures that were continually upgraded. In essence, they had a planned structural transformation from entrepot trading to manufacturing and then finally to service. As a result Singapore is now ranked as the 3rd in terms of overall competitiveness among 125 counties.
In terms of fiscal and monetary policy, government expenditure to GDP ratio is about 10% with a budget surplus. The Central Bank of Sri Lanka’s equivalent is the ‘Monetary Authority of Singapore’ which is considered among the 10 most sophisticated financial markets. The money supply is endogenous (from within) and exchange rate policy curtails imported inflation.
Singapore also has political stability and quality of governance is needed for the economy to grow. Singapore is managing a plural society, rule of law to maintain good governance. As a country with new born peace, Sri Lanka has key lessons to learn from Singapore.
One country cannot be a model of another country. But any country can be inspired by another. Singapore is a good example for Sri Lanka to open doors toward the success to overcome economic war since every problem provides an opportunity for the growth. I am truly inspired by Dr. Abesinge of National University of Singapore’s lecture at our University and Singapore’s journey towards development. The time and opportunity has come for Sri Lankans to emerge among developing economies and learn from the experiences of others.