11 Jan Is Singapore at risk of becoming a rentier society?
David Pilling, Africa editor at the Financial Times, was quoted in an editorial by Lee Su Shyan for The Straits Times on 11 Jan 2017. Mr. Pilling’s comments were made at a Future50 dialogue organised by the SIIA in conjunction with SG50. The editorial in The Straits Times was published in response to a recent commentary by Professor Tommy Koh. Prof Koh is also an honorary member of the SIIA and was one of the founders of the institute. An excerpt is below:
The term rentier is used to refer to someone who lives off savings or inherited wealth, rather than through productive work. Every society has its share of rentier activity, with people and companies making money off investments.
Indeed, speaking at a Singapore Institute of International Affairs event in late 2014, Mr David Pilling, then Asia editor for The Financial Times, said that going forward, he expected Singapore to put more focus on investment through companies like Temasek Holdings.
“To some extent, I think part of the Singapore economy will become what you might call a ‘rentier economy’. Singapore is very wealthy, it has a lot of savings, it also has a lot of know-how. So one of the ways Singapore can make money is by placing bets on other companies, other countries, other technologies. Just like how a big pharmaceutical company, for example, has all its R&D in-house and it takes stakes in and might even buy technology companies,” he said.
“This is a process of hedging, it is a processing of turning savings into a stream of income. This is already a part of what Singapore does and it would be my guess that they will continue to do it and it will become more important,” he added.
So what then was Prof Koh warning against when he used the phrase “rentier society” and why did it resonate with many? A plausible explanation is that Prof Koh and many other Singaporeans are worried that a disproportionate share of the fruits of economic growth accrue to rentier individuals or companies, at the expense of people and small businesses doing productive work.