It is one of the world’s fastest-growing economies where people have an annual average income of $60,000
Singapore, a small city-state in the Malaysian Peninsula, was a third world country in the 1960s with more than two-thirds of its population living in slums and squatter settlements on the city's fringe. Singapore had few natural resources, it lacked sanitation, proper infrastructure and water supply. However, just in a few decades, they went from rags to riches.
In the 1960s, Singapore was an undeveloped country with people earning less than $320 a year. Today, it is one of the world's fastest-growing economies where people have an annual average income of $60,000.
Singapore's Gross Domestic Product (GDP) crossed $369.627 billion last year with a small labour force of three million. Over 3,000 multinational corporations are operating in the country. It has the second most powerful passport in the world which grants visa free entry to 190 countries. Life expectancy in the country is 83.75 years, the third highest in the world.
Their story started as one of many British colonies around the world. After seceding from British control, Singapore merged with Malaysia to form the Federation of Malaysia in 1963. However, the Malay majority Malaysia did not want to welcome the Chinese majority Singapore. Street riots and violence became very common.
Singaporean politician and Father of the Nation, Lee Kuan Yew always believed in a "Malaysian's Malaysia" where nationality comes before race, religion or ethnicity. But after only two years, the Malaysian parliament voted Singapore out.
On August 9, 1965, Lee addressed the press after Singapore officially separated from Malaysia as the first Prime Minister of the newfound country crying, "The whole of my adult life, I have believed in Malaysian merger and the unity of these two territories. They are people connected by geography, economics, and ties of kinship."
His voice broke with the sheer burden of challenges that came with running a new country which lacked natural resources. His eyes watered thinking how would Singapore fend for itself amid unfriendly neighbours.
However, by embracing globalisation, free-market capitalism, education, and pragmatic policies, the country has been able to overcome its geographic disadvantages and become a leader in global commerce.
This is the success story of Singapore.
The secret formula
Kishore Mahbubani, a Singaporean civil servant, a career diplomat and an academic, coins the secret of Singapore's success as MPH – meritocracy, pragmatism, honesty.
He explains, "Meritocracy means you select the best people to run the country. What brings many countries down, especially in the third world is that when it comes to selecting the finance minister or economics minister, they will give their jobs to their brothers or cousins or relatives and not the best people. And Singapore did the exact opposite. In Singapore, their jobs were given to the best people."
About pragmatism being the second pillar to Singapore's success, Kishore said, "It does not matter what your ideology is, if it works, use it. Singapore was very pragmatic. So it would take some policies that are capitalists, and some policies that are socialist, and even mix them up. You are not bound by any ideology."
"Honesty is the hardest to achieve. What has brought most third world countries down and what has led to their failures in development has been corruption. And so after Mr Lee Kuan Yew became Prime Minister, he made it a point to punish not the junior people, but the very senior people… So when a deputy minister is sent to jail then everyone says oops, I got to be careful. So that honestly factor is one critical reason why Singapore has been exceptionally successful," concluded the diplomat.
Rise to success
The separation left majority of the population unemployed and Singapore had to come up with a strategic plan quickly. As the territorial issues made it hard for the traders to do any business in the South East Asia, they brought business in from overseas.
That was the new beginning for Singapore.
In order to attract investors, Singapore had to create an environment that was safe, corruption-free, and low in taxation. Singapore decided to sacrifice the freedom of the people, for safety of the nation by building an autocratic government. The country's draconian, but business-friendly laws became very appealing to international investors. By 1972, one-fourth of Singapore's manufacturing firms were either foreign-owned or joint-venture companies, and both the United States and Japan were major investors. The country's GDP saw an annual double-digit growth in just these seven years.
With the foreign investment money coming in, Singapore started to develop its human sources in addition to its infrastructure. The country founded numerous technical schools and paid foreign companies to train their unskilled workers in information technology, petrochemicals, and electronics. Those who did not get industrial jobs, were enrolled in other sectors such as tourism and transportation.
Having foreign experts to train the manpower was a great decision on Singapore's part. In the 1970s, Singapore exported mainly textiles, clothes, and basic electronics. They were involved in wafer processing, logistics, biotech studies, pharmaceuticals, integrated circuit design, and aerospace engineering in the 1990s.
Some might disagree with Singapore's model as it compromises individual liberty, however, it is undeniable that the philosophy is highly effective in transforming a new nation into a first world country.