The Singapore Success Story and what your Business can learn from it
Updated: Nov 1, 2021
Singapore began its short history as a sleepy fishing village and logistics hub set up by the British for strategic access to the strait of Malacca. It was to remain under British control for over 200 years until its independence in 1963. After a tense 2-year merger with Malaysia, the city-state was ejected and forced to venture out alone in 1965.
Singapore of the 60's was just a tiny island that could be driven across within the hour, with no natural resources, lack of freshwater, not much land, a patchwork of Chinese, Indian and Malay people with no cultural, linguistic or ethic cohesion. Under the competent leadership of PM Lee Kuan Yew, the city-state used everything it did have to the fullest with the following strategies:
Location, location, location: being located at one of the world’s major shipping choke-points (the narrow strait of Malacca) gave Singapore its biggest asset. Capitalising on the location, the city state has been able to create one of the world's busiest ports with state-of-the-art facilities, the world's best airport (which itself has created a local tourism industry by attracting commuting passengers traveling between Europe, Asia, the Americas and Australia) and ironically, the world's 3rd largest oil refining industry despite having no oil of its own (which makes airline fuel much cheaper in Singapore than in many countries in the Middle East)
Education: quickly realising that human capital was all it had, the country invested heavily in education of all levels, setting up schools and universities with particular focus on STEM subjects. Singapore today boasts of some of Asia's best universities to this day, serving as R&D hubs that steadily hold Singapore in the top 10 most innovative countries. Top-class universities also breed and attract global talent that feeds the MNCs based in Singapore
Timely policies have allowed the government to stitch together a national identity despite there being no common grounds for one through unifying experiences like conscription and housing allotments that mandate cohabitation between Chinese, Indian, Malay and Eurasian populations in fixed quotas
encourage home ownership through a public housing program
encourage compulsory savings (20% of income) for education, medical bills and housing
encourage use of public transportation by making private car ownership prohibitively expensive
enacting policies that foster a better work environment, making the country a low-tax hub for MNCs rather than using suffocating protectionism practiced during the "License Raj" days in India (2nd globally on Ease of Doing Business Index)
become a private banking hub as Swiss banks have come under scrutiny in recent years
Spatial economies of scale: business attracts business. Having already become a business hub for south-east Asia, clusters of banks, technology and industry allowed the city to attract more businesses from all over the world. Having so many business in one place attracted world-class talent, that further attracted more companies in a virtuous cycle. They also created tax revenues and employment
Diversity: while this could have been the very catalyst for the nation's doom and division, diversity has played a powerful role in the nation's success. Being heavily Chinese (over 70% of the population) gives Singapore an upper hand at doing business with Hong Kong, Taiwan and China that share strong linguistic and cultural connections. Indian and Malay roots have attracted Indian and South East Asian businesses and wealth for the same reasons. English being one of the 4 official languages (besides Mandarin, Malay, Tamil) has made Singapore attractive to Westerners
Conscription: 2-year mandatory military service for all males remains in effect to this day, serving as a powerful equaliser that reinforces national identity through a shared experience regardless of ethnicity, wealth and religion, besides fuelling a competent self-defence force and a strong military-industrial complex
Key takeaways (these can be applied to individual companies at a micro-level):
A nation’s greatest resource is not its mineral wealth, size or level of pre-existing development, but its people. Investing in the education of citizens regardless of gender, age and ethnicity can have profound impacts on development by allowing them to become self-fulfilling resources that spurn growth over generations. An educated populous will not only create new economic and commercial value, but also be more likely to produce future generations that continue that trend. It is imperative that any country or company invest in relevant and transferrable skills that are more likely to be valid long-term
Understanding and harnessing the potential of geography, location and geopolitics can transform both the country and the opportunities for entities that operate within them
Freedom and democracy should be balanced out with the right level of disciplined governance particularly in highly diverse and complex environments that may lack natural cohesion. India's sluggish path to development remains plagued by a massive populous with considerable differences in language, ethnicity, religion and above all ,education levels. Functional democracy can only be earned through education
Creating an environment that fosters innovation and business is key to creating spatial economies of scale. Just as having several banks set up regional head offices is more likely to make the city a banking hub, similarly having a high-level pool of talent in your company with a conducive, inclusive work culture attracts more talent (eg. Amazon, Google)
Diversity is like the friction between flint stones that sparks the flames of innovation in any part of the world, be it Singapore or the silicon valley. Companies should aim to have not just educational and professional diversity, but also ethnic and cultural breadth for stronger ideation and creativity
Singapore is already much wealthier than economic juggernauts like the United States, Japan and South Korea, and is poised to become the world's richest country by 2050 GDP per capita estimates. As Hong Kong's attractiveness as Asia's banking hub is dampened by the rise of Shanghai and by Chinese curbs on democracy, Singapore remains a democratic and attractive alternative nestled right between the giants of tomorrow - China, India and Indonesia.
The case of Singapore proves that you do not have to be the largest, most resource-rich or well connected to be a success story, whether you are a country, a city or a business. Smaller size grants nimbleness and flexibility that larger incumbents cannot match, as long as strong policies and a culture of ideation and inclusion are in place.
Scarcity is often the mother of success; privilege the death of it.
For more information on city-state's rise: