Nation-Building: Challenges & Responses

Economic Problems faced in Singapore, 1965-1975

Overview

a) Nature of problemsb) Action taken by Government c) Results of these actionsd) Reasons for successe) Evaluate effectiveness of the action

taken by the Governmentf) Challenges and plans for future

Singapore

Nature of Problems

1) Lack of natural resources Singapore lacked natural resources

(eg. rubber, minerals like tin and gold)

These resources were essential for the economic development of Singapore

Nature of Problems

2) Economy was not well diversified

Because the economy was largely dependent on entrepot trade

However, neighbouring countries like Malaysia and Indonesia started developing their own ports entrepot trade was no longer sufficient to ensure Singapore’s continued growth

Nature of Problems

3) Unemployment High unemployment was a pressing

concern and a major challenge Due to the rapid population growth

during the post-war years

Actions taken by the Government

Provide incentives for Multi-National Corporations (MNCs) to create jobs for unemployed

Tried to transform Singapore into a more organised & efficient country by putting in place high standards of public service (eg. Security, health, education, etc.)

Actions taken by the Government

Supported industries- Port of Singapore Authority was set up in

1964 to supervise, manage, and develop- Government continued to expand the

international airport at Paya Lebar- In the late 1960s, a container port was

built to deal with container ships arriving from other countries

Actions taken by the Government

Consulted Dr. Albert Winsemius, a Dutch economist

- He recommended that Singapore focus on export-led industrialisation and concentrate on manufacturing of low-value products like clothes, textiles, and toys

Position itself as a stable & low-cost manufacturing export center to attract MNCs

Actions taken by the Government

Provide key infrastructure- Public Utilities Board (PUB) established to co-

ordinate the supply of water, electricity and gas to the people in residential and industrial areas in Singapore

- Telecommunications were improved so that the people in Singapore could contact others overseas enabled establishment of business contacts overseas

- Banking facilities of 35 major banks were improved, and money was lent to businesses to start new factories

Actions taken by Government

Economic Development Board (EDB) was set up in Aug 1961

- To encourage American, Japanese and European companies to set up businesses in Singapore

- Had branches set up in these countries to provide information and assist international companies to set up factories in Singapore

- Foreign companies were given tax holidays – did not have to pay taxes for a few years while they continued operations in Singapore

Other roles of EDB

- To develop and manage industrial estates, eg. Jurong Industrial Estate (JIE) role handed over to Jurong Town Corporation (JTC) in 1968

- To provide loans to new industries- To help small industries expand- To conduct studies on new types of

industries to be set up

Results of these actions

MNCs are attracted to set up companies in Singapore created many jobs reduced unemployment issues

Organization untaken in Singapore attracted foreign investors and professionals to invest and work in Singapore (attracted foreign talent)

Results of these actions

By 1971, American Electronics companies were already seeking people as employees unemployment is no longer an issue

Success in JIE (Jurong Industrial Estate) investment, leading to companies providing jobs for more than 21,000 people.

Reasons for success

P: The government plans for the future.

E: Providing suitable technical education for the masses

E: Prepare them for a diversified economy in the future with the export-led industrialization

educating more people = more people able to be employed + have a steady source of income

= social stability + high internal security

L: Manpower to help in the export-led industrialisation + social stability + high internal security = SG able to build a stable economy

Reasons for successP: The government assigned different

departments to tackle different aspects of problems.

E: Since the problems are interlinked, when the government set up departments to solve the problems at the same time, other aspects of problems could have been resolved or made easier to be resolved for another department.

E: Increase in home ownership = increase in social stability = increase in economic stability (with less crimes)

L: Assigning of different departments is efficient in solving the economic problem in SG.

Reasons for successP: S’pore has good leaders like Lee Kuan Yew.

E: Well-known leaders like LKY make the foreign investors feel assured of Singapore’s political stability and encourage them to invest in SG. Similarly for the MNCs to set up their factories in SG apart from the incentives given.

E: Esso and Shell are attracted to establish oil refineries in SG and by mid 1970s, SG became the third largest oil-refining centre in the world.

L: Superior leaders, like LKY, have an influence on the foreign countries’ image of SG.

Effectiveness

MNCs: EFFECTIVE- Long-term (once investment made, can

continue to flourish and expand, thus improving the economy and employment, even now)

- Gave Singapore recognition on global scale

- Different aspects of trade- BUT: requires money to fund; might be

sustained other methods?

Effectiveness

High standards: EFFECTIVE- Long-term; unique solution; distinguished

them from other countries- Universal and long-lasting appeal- Beneficial to locals as well- BUT: not immediately attainable Port & airport: EFFECTIVE- Organised structure; convenience- Opened doors to & from other countries and

industries

Effectiveness

Development of key infrastructure: EFFECTIVE

- Benefited many Singaporeans; greater convenience and stability

- Urgent need to be addressed anyway JIE: EFFECTIVE- Centralised, organised plan- Singapore as global diversified market- Long-term; convenient for further

expansion

Effectiveness

EDB’s measures: EFFECTIVE- Encourages global economy,

investors: meets goal- Tax holidays and incentives are worth

while investments, as company flourishes

- Studies conducted evidence of planning for future

Challenges faced in 1970s

Stiff competition from countries like Hong Kong, S Korea and Taiwan for low-value products

Therefore, we switched to producing high-value products (eg. electronics, aircrafts and oil rig industries)

Workers specially trained and educated to produce these products

Plans

Plans to build technology institutes like the Nanyang Technological University for even more people to produce high-value products

Build science parks in universities Expand tertiary education

Future Challenges

With neighbouring countries struggling with social and economic problems, increased responsibility on affluent Singapore

Slowing down economy due to America’s economy recession

Increasing labour shortage in low-skilled positions

Plans

Attract more foreigners to Singapore

Bibliography

http://en.wikipedia.org http://www.slideshare.net/mrsirvingl

ong/unit-10-singapores-economic-problems-in-1960s-and-1970s