The following is excerpted from a speech by Mr Ngiam Tong Dow to the Singapore Institute of International Affairs' Annual Members' Circle, held on January 28, 2010 at the St Regis Hotel, Singapore. The same excerpt featured in TODAY (Singapore) newspaper on January 28, 2010.
It amuses me whenever well-meaning friends declare that Singapore, a little red dot on the world map, punches above its weight. Though I hail from St Andrew's School, where boxing is almost a religion, I fail to figure out how a lightweight boxer, even if he were a Muhammad Ali, can floor a heavyweight.
As someone born and bred in Singapore, I often ask myself these two questions: How do we secure our economic future? How do we secure our political future?
To me, the road ahead to secure our economic future is reasonably clear. Since the 1960s, we have moved from a labour-intensive to a skill-based economy. Unemployment dropped from over 10 per cent to the full employment frictional unemployment rate of 3 per cent currently. So why do we worry about our economic future?
The great challenge is that we will soon be reaching the limits of our skill-based model of growth, and the only way is up. Mountaineers will tell you that when climbing a rock face, you cannot lose your nerve. If you look down, you will fall off the cliff. We have to move rapidly from a skill- to a knowledge-based economy.
Nothing stands still. China and India are rapidly catching up with the United States, Japan and Europe in the automotive industry. The manufacture of motor cars is basically skill-based. Japan and China are embarking on the design and production of commercial passenger aircraft. But it will take them considerably more time to succeed and compete with Boeing and Airbus. In particular, the design and production of the aircraft engine requires very much higher degrees of knowledge than the car engine.
In the last 10 years, I have heard more and more arguments from earnest young economists that Singapore should revert to being a pure service economy as we were a hundred years ago. We should just forget about manufacturing because it is too much hard work and we seek to be a wealth management centre.
I beg to disagree. First, I would like to point out that world scale wealth management centres like London, New York, Tokyo, and soon Shanghai, have taken over a century to become what they are today. More critically, they serve continental-size economies.
Singapore as an aspiring regional financial centre serves at best South-east Asia. In unstable times, Asian tycoons may migrate to the safe haven of Singapore where the rule of law applies more rigorously than in their home countries. But can we count on this narrow slice of international finance to secure our economic future?
We should not lose our nerve and revert to the old low-wage, low-skill industrial structure. The knowledge-based Jurong Petrochemical Complex continues to grow. Pharmaceutical companies continue to expand. They do so because Singapore offers not only skills but also knowledge-rich analytical minds.
To sum up, Singapore will secure its economic future if we persevere in the acquisition of knowledge. Knowledge is multifaceted. We need to remember that competition in a global knowledge-based world is all about knowledge not just skills and definitely not brawn. I have elaborated on different kinds of knowledge in my recent book Dynamics of the Singapore Success Story.
DANGEROUS SOCIO-POLITICAL FUTURE
I hope I am wrong but the rapid increase of permanent residents (PRs) over the last three years seems to be a knee-jerk reaction to our falling birth rates. Our population planners need to remember our failed experiments in social engineering, namely "the stop at two" and the "graduate mother" population policies.
I hope that they are not unwittingly embarking on what I term political re-engineering. Social engineering is fraught with risk. Political re-engineering is positively dangerous.
If we continue to admit permanent residents at the average annual rate of 50,000 as we have done over the last three years, it must surely change our political landscape. Most of the PRs who come from China and India will soon be pressing for citizenship and the vote. The recent rapid intake of PRs is disruptive and, to say the least, distracts us from our quest to be "One People, One Nation, One Singapore".
Minister Mentor Lee Kuan Yew in his epochal book Hard Truths has said that Singapore is a nation in the making. I cannot agree with him more. It may take us a hundred years to be "One People". This is infinitely better than being diminished to being a stranger in our own land.
As a Singapore born and bred Singaporean, I hope that the pre-1965 generation like mine who urge caution will not be dismissed as born losers.
Ngiam Tong Dow is the former Permanent Secretary of the Ministry of Finance and the Prime Minister's Office. He recently published Dynamics of the Singapore Success Story, a collection of his speeches, interviews, and articles delivered and written between 2004 and 2010.