This month’s Newsletter looks at an example of one of the reasons why the ‘West’ has to look to the future to fully understand the combined emerging and transitional threats to the ‘West’s’ economic destabilisation and what this infers for the state of the world in 40 to 50 years time when our grandchildren will be middle aged and our great grandchildren will then be providing for their own children. When we look at the fundamentals which make great nations successful we will eventually determine that the economic control mechanism relies totally on ‘innovation’ and transforming that innovation into new technological industries and thereby providing jobs for all the future generations of mankind. The problem is that all different people of different nations strive to give ‘their’ children the best in life that they can possibly attain and that is where the real and overriding problem in world economics resides. As the economic world over the next four decades changes to be more or less unrecognisable to today's standards, there is now little doubt that we shall see the ‘Eastern’ economies take control of the global economy. The reasons are quite simple and fundamental, they believe totally in ‘Kaizen’ where we in the ‘West’ sit back on our laurels and think that it will never happen. The sad truth is that it will, taken the course of action that our industrialists and politicians have taken time and time again since the end of the Second World War.
The Nation of Singapore
A mere thirty years ago Singapore was part of the British Empire. In 1966 the city of Singapore was only a modest port ringed by slums and squalor. It’s economy had been regulated by the British authorities and produced only what it’s natural resources could contribute to economic Britain's prosperity, ignoring to a great extent the aspirations of the Singaporean people themselves. Commodities such as rubber and only the very basic industries were all that the economy of Singapore could offer at that time. The mass of the population were then illiterate, generally served as labourers and had little education (if any) or technical knowledge whatsoever. They had been subservient to imperial world power for nearly two hundred years. Independence although controlled by the new duly elected Singapore government brought a great change in this philosophy. Singapore has always been one of the most densely populated nations in the world, far greater than emerging China or any of it’s sister nations. What has happened in Singapore therefore will probably happen in China. There is no earthly reason why it should not! The difference this time is that China in size and capability is the haystack, and in comparison Singapore is only the needle which may be eventually devoured by the ‘Eastern’ economic dynamo that is now in motion. We are therefore on a huge combative economic road and facing an immense and formidable tidal wave of economic change and shift in power that the world has never seen since the dawn of the world’s first ‘Industrial Revolution’, created by Britain some 250 years ago. Singapore’s per capita 25 years ago was US$1,600 which included the remains of British colonialism and was in general terms an inflated figure as most of the Singaporeans were then still living on the minimum poverty threshold for sustainable life, today it is over US$33,600 , a twenty one-fold increase and now totally representative of the population. Between 1993 and 1997 the increase year-on-year per person was a staggering average of US$5,418. Therefore in a mere four years the GDP per capita has doubled itself. For more information and an even more in-depth and far more reaching analysis than this short article can hope to convey we refer readers to 'Living the Next Lap' by the Urban Redevelopment Authority of Singapore.
If we therefore project these facts into the future and based on what Singapore has done over the last 25 years, the industrialisation of Asia will create a theoretical global market 5 times larger than today's. That market is currently around US$125 trillion. If we therefore view a relatively continued stagnation in GDP growth in the 'West' as opposed to the Asian transitional growth rates, our piece of the economic pie in present worth terms will then be only on sixth (US$21 trillion) of the projected total and the Asian economies will dominate the five sixths (US$104 trillion) of the world's total GDP.
In their bid to determine just where they should concentrate their efforts for maximum economic advantage, Singapore has arrived at a solution - high-tech industries. Singapore was voted two years ago 'The best city for business' and is amongst other things investing in wafer fabrication plants that will manufacture semi-conductor microchips for businesses throughout the world. It can afford the vast investment - a country on it’s knees economically a mere 30 years ago now has reserves of over US$80 billion. In addition to high-tech plants Singapore has set aside US$2.6 billion to build a stronger and stronger indigenous science and technology base by training engineers and researchers. On top of this the government’s Economic Development Board (EDB) has launched an 'Innovation Development Scheme' to encourage Singapore companies more to develop 'innovative products, processes, applications and services'. Singapore is also busy building more industrial parks not just in the home country but in other parts of the regional world. Software production has been isolated as a strategic industry to exploit. Singapore is now ranked in first place by the World Economic Forum for global competitiveness and in second place by IMD’s Yearbook (1997). President of the Singapore Chambers of Commerce and Industry Mr Kwek Leng Joo says 'Singapore has much room left for the market to grow internationally. So the only way for our businesses and the economy to grow at the same pace is to venture overseas. I think first priority would be high-tech industries'. The government’s Productivity and Standards Board (PSB) is to set up South East Asia’s first telecommunication / information technology product testing centre. This centre according to PSB Chief Executive Lee Suan Hiang will help our manufacturers improve further their competitive edge by speeding up the time it takes their products onto the global market. He went on to say that 'the centre will strengthen the infrastructure for our industry and will substantially increase research and development in telecommunications'. When we also view what Lee Hsien Yang, chief executive of Singapore Telecom recently said what they presently had and we quote 'We have a sophisticated, highly developed telecommunications infrastructure where we have a 100% digital network and fibre optic links between our exchanges - and indeed down to almost every block and major building - which is probably more than you see anywhere else in the world' it makes one wonder just what advantages Singapore will have in the years to come. Another, executive chairman of one of Singapore’s booming electronics companies WBL says, 'Our business now is not so much capital intensive. It’s mainly built on brain power. Our managers, engineers and scientists - that’s really our lifeblood'. He goes on, 'When you try to turn an old agency house into a power-house, you cannot just bet on one horse....if you want to reshape an old company, you have to grab whatever niche you can get. In the immediate to medium term our best growth will come from technology and manufacturing, the reason being that we have invested a considerable amount in research and development. Now the products are coming on line and they are in world-wide demand'. Singapore Goldtron executive chairman S K Ong puts it another way, '...there are some products that we can produce much more cheaply and change faster here in Singapore compared to Europe'. One of the many now stated aims of the Singapore government is to make Singapore the 'semiconductor capital of the world...Singapore has outperformed a lot of other countries in the past 30 years. We are determined to go on from here.'
In the Singapore government‘s publication 'Living the Next Step' it states, 'The co-ordination of like industries...linked to nearby research institutions will encourage synergy and interaction. The 'Technology Corridor' will create a research and development 'force' that will help Singapore to become a leading centre of important advances and original thinking'. Compounding everything into a nutshell of Singapore’s all encompassing aspirations, a leading SE Asian industrialist recently on television blatantly stated, 'You have had your millionaires, your billionaires, we shall have the first trillionaire, that I am sure.'
Need we say more?
And the reason for this economic miracle?
At the beginning of the new change in philosophy someone within the new Singapore government made a momentous realisation - to develop they had to attract international business. After a great deal of thought and debate the Singapore government determined that the best way to do this was to develop a huge 5,500 acre industrial and manufacturing complex (sounds familiar). For a time, when it was muted and whilst under construction it was called Goh’s Folly, but after a few years this was quickly seen for what it really was, the immense economic engine that we see today. Many multinationals thereafter took up residence on the site, the Singaporean’s thought big and the rewards have been phenomenal for all to see. From rags to riches in 25 years - with low inflation, low interest rates and full employment even though their population has trebled in numbers throughout the last 2.5 decades. Singapore's story has not finished. In many ways they are just beginning. The problem for the 'West' is that they are now a powerful economic player. The rest of Asia will follow in the not too distant future. Those who think not, are not only deceiving themselves but are also deceiving their Nation and thereby most of all their children’s future. God save us all in the ‘West’ if ever the Singaporeans or a Major S.E. Asian economy develops an equivalent 'ORE'. We will then have reached the Abyss in western civilisation.