Modern day Singapore is a perfect example of a success story. Despite being only being a city, and having no natural resources to its name, it manages to have the third highest GDP around three-hundred million dollars per year, one of the highest GDP per capita, and is one of the fastest growing economies.
But back in 1965, when it had just gained independence from the Malaysian Federation, this small country’s future was looking bleak, and in order to understand what makes Singapore so successful, we will take a brief look at its past to see where it truly came from and look at the factors that factored into its against-all-odds success
Singapore was a British colony for over a hundred years right up until World War Two, when the Japanese went on their conquest of the Pacific. When the British failed to protect their colony from the invaders, strong anti-colonialist sentiments rose up in Singapore and its surrounding countries after Britain and their allies won.
These continued until around 1963, when the British finally pulled out of Singapore. This was a mixed blessing however, as the British took with them all their resources and trade partners, leaving behind a massive vacuum in in Singapore’s economy. And it entered a federation with Malaysia, which quickly turned sour.
The country was in a massive fix. The standards of living were practically non-existent. Since majority of its population lives as squatters on the outskirts of the city. In addition, levels of unemployment throughout the state were extremely high, protests, riots and violence were prevalent all through the city.
In 1965, Singapore finally gained its independence and elected Yusof bin Ishak as president. And even more famously, Prime Minister Lee Kuan Yew.
The country they took over was plagued by issues such as poor sanitation and infrastructure and unemployment. To top it off, Singapore is between two very hostile countries, Malaysia and Indonesia.
But Lee Kuan Yew and his staff immediately got to work and begun laying the foundation for the great city that exists today.
Singapore’s first and most important advantage is its strategic location. Singapore’s location lets it serve as the gateway between the East and the West.
It’s located in the Malacca Straight, at the southern tip of the Malaysian Peninsula. Through which around 40 percent of the world’s maritime trade passes through. In addition to this, Singapore is surrounded by deep water. In addition, combine with the sheer volume of shipping that passes through, makes it the perfect spot for a harbour.
So a massive shipping port is build, which still stands as the second largest on earth. Second only that of Shanghai. Now around 130,000 ships pass through the port, which at any one time is holding around 1,000 ships.
Even though Singapore has few natural resources to itself, it imports resources such as crude oil, processes and / or refines them. Singapore then re-exports the finished products. The port also serves Singapore’s service and hospitality industry. This is because the ships that dock needs to resupply with food and water. Thus also providing a good income stream for the industry.
Singapore’s port is one of the largest reasons why, even though it has almost no natural resources to speak of, it continues to be one of the largest economies in the world.
Singapore strove to make their port more attractive than those of other countries in the region. In order to do that, they created a value based manufacturing system, an export based economy and signing free trade agreements. The free trade agreements is sign with around 31 different countries! That drive down the costs of importing and exporting, further encouraging trade with and within Singapore.
To bring in more entrepreneurs and foreign companies, running a business in Singapore is design from the ground up to be as easy as possible. It is often brag that it takes less than 3 hours to set up a corporation completely here.
In spite of this, many of the businesses are own by, or are branches of foreign corporations. These corporations are attracted by the almost ridiculously low tariffs and lax tax laws. Furthermore, its economy that is free from corruption, unions and taxation.
The city has very comprehensive social institutions which are put in place in place in the early days. Excellent healthcare, housing and education, especially for Singaporean natives. The reasoning behind this is if a person is contributing to the society and its progress, then the government should do all it can to ease all other burdens on them.
It also adopt as many successful policies from other countries as it can. The education system is custom tailor to create a professional workforce. They will give tax benefits to people as incentives to continue to give birth. This is also to try to curb the dwindling childbirth rates in other Asian countries.
It has extremely harsh penalties for crimes. Like the death sentence for importing drugs illegally. Or perhaps less drastic, but still extreme compared to the rest of the world. A jail sentence may happen for littering the streets!
Though Singapore started off as a massive underdog, especially with other Asian powerhouses such as Japan. Which was in a post war boom after World War 2. In addition, China as well has come to be one of the largest shipping economies on Earth.
It has come under a criticism a number of times from some groups for having an almost autocratic democracy and harsh laws. But all these sacrifices were seen as necessary by the government. They had the unenviable job of choosing whether to value freedom at the loss of control, or enforce strict control over as many variables as they could.
They chose the latter. Singapore now enjoys the fruits of the choice it made. It can be seen in that it has some of the highest standards of living and richest economies.
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