THIS year marks the 50th year of self-government for Singapore.
Amid the plethora of bad news, it's easy to enter the New Year with a sense of gloom: world economies in lock-step recession, fears that Singapore will face its worst recession ever, and worries over wage cuts, job losses, bankruptcies and more.
The long view might afford us some perspective.
In 1959, when the new People's Action Party government was sworn in, Singapore's population was 1.6 million. Unemployment was rife. Each month, an average of 30,000 people registered at the job bureau seeking help to find work.
Each year, 62,464 babies were born - and there were not enough schools for them. Nearly 30 per cent of those aged six to 12 were not in school. Of the 320,977 lucky enough to be in school, one third received free education.
Average wages were about $6 to $8 a day or roughly 80 cents an hour - just about enough to buy one kati of pork or ikan kurau.
There were 40 strikes and lockouts, with 26,587 man-days lost.
The Budget was on a 'standstill basis', which meant the Government budgeted only for the essentials, to keep itself functioning. The deficit threatened to hit $42 million, 10 times more than was initially estimated.
Fifty years on, the economy may be heading for tough times again. But in the interim 50 years, what a transformation there has been in Singapore.
Peaceful industrial relations are now the norm. Compulsory education gives every child a place in school. Singapore's students routinely top international rankings in academic achievements. Financial reserves are strong.
As Singapore marks the 50th year of self-government this year, what might have been an unadulteratedly celebratory mood will undoubtedly take on a sober tinge.
Still, there is much to celebrate about Singapore's half-century journey from poverty to the bustling metropolis that it is today. The traits that helped it get to where it is today are precisely the same traits that will get it back on a firm footing in the current crisis.
First: Small and open is good.
Being small and vulnerable is an existential fact for Singapore. It has nowhere to hide in any recession. A global downturn provides zero sanctuary for an open, exports-driven economy like Singapore.
The Economist Intelligence Unit predicts that Singapore will be among the world's slowest-growing economies next year, with an estimated growth rate of -2.2 per cent, which is more pessimistic than Singapore's own forecast of -1 to 2 per cent. The World Bank predicts that Singapore and Taiwan will be among the worst hit as a result of the slump in demand for high-tech products.
But being small and open can also be a good thing in bad times. As UBS' Wealth Management Research outfit notes, Singapore could be the only Asian economy to show negative growth next year - but it could also be the first in the region to recover.
Singapore's open, flexible labour market gives it a work force that can contract and expand with economic cycles. Singapore's employers have leeway to trim the wage bill by laying off workers at the margin, especially foreign contract labour. A flexible wage system, developed painstakingly over the years, provides a buffer to trim the wage bill.
Singapore is open to capital movements. Hundreds of millions of dollars flooded into the country last year, boosting its property market. Property and portfolio investments may have slowed for now - but when things turn for the better, Singapore's macroeconomic fundamentals will become a draw again.
Another trait that is a positive for Singapore is its strong government.
In good times, people tend to lament the existence of a strong state. The state should step back and allow private enterprises and civil society a chance to grow, people say when things are going well. When things aren't, the very same people will turn to the state.
With the global economy headed for recession, no one region can be the locomotive pulling the rest of the world towards growth. In such circumstances, the state will have to be the buyer of last resort, shelling out billions in fiscal stimulus measures or pump-priming via spending on infrastructure.
The Singapore Government, with its healthy reserves, will come into its own in such times, pumping up spending to boost the economy. Witness its decision to bring forward some of the $4.7 billion worth of public sector projects put on hold earlier, as well as push forward on some other projects. It is also hiring. Industrial landlord JTC, meanwhile, is going ahead to redevelop the Jurong area to create more space for industry.
Widely anticipated for the Jan 22 Budget are assistance packages for households, help for the jobless and tax breaks and credit assistance for companies.
But with the downturn expected to last several quarters, and with revenue trending downwards, the Government will have to make sure its stimulus measures are sustainable over the medium term. And do not expect the Government to fire all its bullets on Jan 22, for it will want to phase in its relief measures so it keeps some firepower over the period of the downturn.
The current situation affirms the wisdom of the fiscally conservative approach to budgeting: Being kiam siap (Hokkien for tight-fisted) in good times allows one to be kang kai (Mandarin for generous) in bad.
Another trait of Singapore that has been evident over the last 50 years is resilience.
Fifty is mid-life in human terms, but 50 years as a self-governing state places Singapore among the youngest nation-states, a babe. Except that this babe has gone through quite a lot in its time: a short-lived merger with Malaysia, racial riots, separation and independence, a British military withdrawal affecting one-fifth of the local economy, global shocks, recessions, the 1997-98 Asian financial crisis, Sars.
The pessimist's view of 2009 is that more bad news lies ahead. The optimist, looking at the things that have gone right over the past 50 years, will be confident that this small, open economy with a strong government, will have the resilience to pull through in tough times.
Happy New Year.
Source: Straits Times - Jan 1 2009
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