So, I am in Singapore as part of the African Journalist Visit Programme (AJVP) organised by the Ministry of Trade and Industry (MTI) in Singapore and Enterprise Singapore. This programme brings in journalist from different African countries to Singapore ahead of the Africa-Singapore Business Forum which will take place in August.
BusinessDay is a media partner to the Forum. This is a 5-day programme and today we had the opportunity to meet with officials of the MTI as well as Enterprise Singapore, a special agency set up by the ministry to help grow Singapore businesses from Start-ups to Multinationals. We also met with some of Singapore’s key businesses.
Here are some take-away from the various meetings today
One of the biggest motivation that drove Singapore’s economic development was the realization that it was a small country with very big neighbours-Malaysia and Indonesia and located in an area with many countries that have huge population. Singapore is just about 23-kilometre-long and 42-Kilometre-wide or about half the size of Lagos, Nigeria’s smallest state.
Focus on growing businesses, Anthony Osae Brown reporting from Singapore
As an official of MTI noted, you can fit 400,000 Singapores into Africa. It also has a very small population of just five million people which also means that businesses located in Singapore have a limited market and room to grow. But instead of seeing these constraints as a challenge, Singapore turned into a motivation to grow. With limited internal market, Singapore realized that it must nurture its businesses to grow and compete internationally. So a limited internal market has become the incentive to grow externally.
The result is that, today, Singapore has various business nurtured in Singapore but which are now global giants, with some of them operating in Nigeria. The Tolaram Group, makers of Indomie, and now expanding into deep sea ports in Nigeria, Olam, the commodity giant, Indorama, the petrochemical giant, are all headquartered in Singapore. At independence in 1960, Singapore had a GDP of less than US$1000, today the country’s GDP stands at US$340 billion, almost the same size as that of Nigeria, Africa’s biggest economy.
The service sector remains the biggest part of Singapore’s economy. There is manufacturing but high value manufacturing and that is a deliberate policy based on the realization that the country cannot compete with its more populous neighbours on the cost of labour for low value manufacturing activities. So there is a focused approach to develop more knowledge intensive businesses driven by research and development. Officials say the country invested US$19 billion in research and development this year, an amount that is almost equivalent to federal government’s 2018 budget.
Public housing for development
In the 1960’s Singapore was congested, dirty and crowded. The government decided to embark on public housing as a development tool and convinced those living in the congested and dirty environment into neater public housing.
The philosophy behind this was to enable them feel that they have a stake in Singapore. What better way for people to feel they have a stake in in a country they have property they can call their own?
The government gave them highly subsidised public housing. The government builds the houses, hands them over to the people at highly subsidised rates which they pay back over about 30 years. Public housing has become an important tool for developing the country. Currently 80% of Singapore’s population leave in Public Housing and the remaining 20% live in more expensive private housing. But most young people live in public housing provided by the government which they pay for over 30 years or more.
The Housing Development Board is one of the oldest agencies in Singapore. The original idea was to ensure that all Singaporean residents have good affordable housing that meets their basic needs. This is also accompanied by access to basic amenities, public transport and recreational activities. Over the years, as the country has developed, public housing has shifted to meet the aspirational needs of Singaporeans. So instead of basic housing concepts, they are being equipped with more amenities, with more options, even though they are still public housing.
Private car ownership discouraged
Private car ownership is deliberately discouraged in Singapore. And this is because it is such a small city-country. So cars are very expensive compared to many other places. And then even when Singaporeans buy a car, they must also obtain a certificate of entitlement, which in most cases are as expensive as the car. So, if a Singaporean got a car for US$100,000, the certificate of entitlement will also cost about the same amount. And because private car ownership is actively discouraged, the government has invested heavily in public transport system to encourage everyone to get on the public transport. This is to ensure that the roads are not clogged with private cars. Creative use of taxation, you would say. Two other items that are heavily taxed in Singapore are cigarettes and alcohol.
Principles that guide economic development in Singapore
Singapore’s economic development is guided by four key principles. A believe in strong leadership. The need to anticipate global changes and ensure that the country’s workforce and students are equipped with relevant knowledge and skill sets that helps them remain relevant, the believe in reward for good work and work for reward and finally a believe that there is a stake for everyone.
There is a close relationship between businesses and government
The Singaporean government is focused on enabling businesses to succeed because it is a tax dependent government and the only way it can boost taxes is if businesses are profitable. So it takes less than three hours to register a business in Singapore. Officials say government and businesses are closely intertwined in Singapore. The government creates policies that enables businesses to thrive and not to impede them. The government has various industry transformation maps prepared that looks at the various industries asking “what are these industries, what are their challenges and how do we transform these industries to their next stage of development. The government has about 23 different industry transformation maps.”
Enterprise Singapore works to create the right ecosystem companies and also works with companies to improve productivity, and also find the right talent for their businesses. Officials say that in Singapore, there is a high level of trust between the government and business. Businesses share their concerns with the governments so that the government can effect meaningful policies that can help Singapore companies grow. The aim, according to officials, is to create, an open economy that is able to attract FDI. The philosophy behind this is that Singapore is a small economy and therefore the only way Singapore companies can grow is to go overseas. The aim of the government is to ensure that they have the right fundamentals to do so.
How the government promotes labour productivity
The Singapore government actively promotes labour productivity. The government ensures that what students learn in school prepares them adequately for the job market. The government therefore ensures that there is a lot of collaboration between schools and industry. The government also ensures that there is continuous education of the workforce through the encouragement of companies to send their workforce for training and upskilling.
