Were the people of Nandigram and Singur backward in resisting economic development? Even ultra-modern Singapore is disenchanted with what it now calls “growth at any price”, but can’t put the genie back in the bottle as the economy continues to swing from boom to bust, bust to boom.
After last year’s recession, when output fell 1.3 per cent, the economy is growing faster than ever. The government now says the economy will grow an astounding 13 to 15 per cent this year, almost twice as much as expected only two months ago. Only Qatar is expected to grow faster, reported Bloomberg, quoting the International Monetary Fund. The news was splashed across the front page of The Straits Times. Below it ran another story about the consequence of this boom: more than 100,000 foreign workers are set to enter Singapore this year.
That is the cause of the mixed feelings about rapid economic development in Singapore. The country is overrun by foreigners, complain Singaporeans, grumbling about overcrowding, rising property prices and wages depressed by foreign competition. Even Prime Minister Lee Hsien Loong has said a small island like Singapore can’t go on admitting so many foreigners. The catchphrase now is “sustainable development” after years of rapid economic growth, which also included three recessions since 1998.
But with the economy growing faster than expected and unemployment down to 2.2 per cent, there is no alternative to more foreign workers. “If we don’t allow the foreign workers in, you are going to have overheating,” said PM Lee. Wages will spiral out of control if there is a manpower shortage, chasing business away.
One reason for the runaway growth is Singapore’s export-oriented economy. Healthy global trade flows are pushing the economy forward just as Singapore was the first country in Asia to slide into recession in October 2008, a month after the Wall Street meltdown.
Singapore’s dependence on foreign markets is not limited to merchandise trade. Are you a Bharti Airtel subscriber? Do you have an account in ICICI Bank? Your patronage is appreciated by stockholders in Singapore.
SingTel, the Singapore telco, is Bharti’s single largest shareholder. And SingTel is majority-owned by the Singapore state investment firm, Temasek Holdings, which also has a stake in ICICI Bank. So India’s biggest private-sector bank and largest cellular service provider are both partly owned by Singapore companies. Bharti contributed S$245 million (more than Rs 8316 million) in pre-tax profits, reported SingTel, between January and March this year when SingTel’s net profits, from operations in Singapore, Australia, India, Pakistan, Bangladesh, Thailand, Indonesia and the Philippines, rose to S$1.02 billion.
Singapore is investing abroad for the same reason that Marwaris came to Kolkata. It offered them better economic opportunities. Singapore has to look abroad because its domestic market is too small to help its economy prosper.
The traffic is not one-way only. Indian companies are also flocking to Singapore. The Economic Development Board (EDB) reports: “Over the past nine years, the number of Indian companies in Singapore has more than tripled to 4,090 such that it constitutes the largest foreign business community in Singapore.”
They are attracted by a business-friendly government, a safe environment, good infrastructure and – reported EDB, quoting a director of the Indian IT firm, Nitya Infotech – “flexible immigration policies”. Singapore has the advantage of having what a local think tank described as the “on/off switch”.
Foreign workers, if they lose their jobs, have to leave Singapore. Even highly paid professionals holding Personalized Employment Passes are not allowed to stay unemployed for more than six months. I have seen no official figures, but the Washington Post reported in March last year: “Thousands of foreign workers, including London School of Economics graduates with six-digit salaries and desperately poor Bangladeshi factory workers, are streaming home as the economy in Singapore suffers the worst of the recessions in Southeast Asia.”
Now that the economy is booming, more foreign workers are needed whether the people like it or not.
But why is Singapore growing faster than almost every other country in the world? India and China, which posted healthy growth last year, appear to be growing more slowly than Singapore, which is rebounding from a recession, because we are comparing annual growth rates. But why is Singapore growing faster than other export-oriented economies like Hong Kong or the United Arab Emirates, which were also hit by the recession? I have seen no explanation for that.
Maybe these words of Hamlet apply to economics too:
There are more things in heaven and earth, Horatio,
Than are dreamt of in your philosophy.