August 9th is fast approaching, the day each year Singaporeans celebrate their independence, and success. But this time will be different. As Singapore enters its fifth decade as a sovereign state, the man with the grit and determination to turn it from an ex-colonial backwater with no natural resources, to a bustling metropolis capturing imaginations worldwide, is no longer with them. Lee Kuan Yew, Prime Minister of Singapore for over thirty years, died in March at the age of 91.
Yet his legacy lives on. His focus on good governance, in a region famed for backroom politics, combined with the attraction of significant foreign investment lie behind today’s unemployment rate of just 2 per cent, an education system that tops the global league tables, the most efficient healthcare system in the world, and 90 per cent of Singaporeans owning their own home. Singapore’s GDP growth has averaged 6.8 per cent a year since 1976, albeit moderating post-crisis to its current level of around 2-4 per cent. Despite these achievements, Singapore has to respond to a new set of challenges to retain its supremacy.
Lee Kuan Yew’s death followed an unprecedented fall in support for his People’s Action Party, which has governed Singapore since 1959. In the 2011 general election the PAP was re-elected with a clear majority, but suffered the party’s greatest loss of parliamentary seats and its lowest percentage of the popular vote. This was the most open election in a generation, with only one constituency uncontested, and saw the majority of Singaporeans being able to cast their ballots for the first time since independence. The opposition parties put on an unusually united front, fighting the election on the divisive issues of living standards and immigration. At the count, Lee Hsien Loong, son of the late Lee Kuan Yew and Prime Minister since 2004, immediately struck a conciliatory tone acknowledging the diminished mandate and pledging to change his government’s approach.
At some odds with the party’s right-wing policy platform, the PAP has historically favoured a pro-immigration stance. However, critics today argue the city-state hasn’t the infrastructure to cope with its current 5.3 million population, let alone the 30 per cent increase predicted in the government’s controversial 2013 population white paper. They also suggest that the government has been favouring foreigners at the expense of locals.
The PAP though can point to its recent rewriting of employment laws to favour locals, including higher minimum salary requirements for foreigners and encouragement for employers to hire local graduates and young local professionals. The government has also successfully cooled the property market and shows no signs of relaxing the punitive stamp duties applied to foreigners and local second-home owners.
Some argue that the government needs to do more. Raising the drawbridge further on immigration may be an attractive short-term populist option, but risks endangering the open economy and the attraction of Singapore to multinational corporations. To enable Singapore another chapter of success, it should follow its head not its heart. Dealing with deeper, structural issues such as the highly test-driven and selective education system in order to encourage greater creativity and individual opportunity would help to reduce Singapore’s dependency on immigration. This appears to be recognised by the PAP leadership, with Deputy Prime Minister Tharman Shanmugaratnam recently calling for courage to move away from education based on cut-throat competition, to a system putting a greater emphasis on “the spirit of individuality… free play of the mind”.
An announcement of redrawn constituency boundaries has surprised many, highlighting that the forthcoming general election, which analysts expect to be held as early as September, will be one of the most competitive in the country’s history. The opposition may again seek to stir emotion about immigrants and the rich. But the government has an undersold record. The 2015 budget’s modest raise of income tax for the top 5 per cent of earners will fund increased healthcare spending and social security benefits for low-income and elderly Singaporeans. This will help the government retain Singapore’s economic competitiveness whilst advancing its commitment to social justice. As pragmatists propose, welfare is the best form of work. Pledging an aggressively socialist vision inevitably implies higher taxes for all, greater welfare dependency and a weaker fiscal position.
Singapore should retain its balanced approach. Better marketing of the government’s achievements and vision, perhaps accompanied by a national minimum wage to share the proceeds of growth more equitably, should enable the PAP to confidently lead Singapore into its next 50 years.