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Our Economic Growth drop when PM and MM fully takeover PMO

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Will Singapore be judged by a different yardstick?
by Loh Chee Kong Updated 11:50 AM Jun 06, 2009AS FAMILIES huddled around their radio sets on June 5, 1959 - that momentous day when the first Singaporean Cabinet was sworn in - a jubilant voice belonging to then-Prime Minister Lee Kuan Yew pledged to bring about “a happier and better Singapore”.

Fifty years on - and after a short-lived, tumultous merger with its northern neighbour - the transformation of an island beset with a shortage of urban housing, widespread unemployment and backward economic conditions is strikingly obvious.

The Republic’s success story, as Institute of Policy Studies (IPS) senior research fellow Gillian Koh put it, goes beyond the material. “Our success is defined not by economic success but the fact that most people of the Independence generation and their children enjoy access to high-quality housing, healthcare, education at the standards that people from other post-colonial states talk about,” she said

Yet, to outsiders at least - and the Government has made no bones about it - “economic success has become the ideological benchmark for Singapore’s raison d’etre”, in the words of Australian scholars Ien Ang and John Stratton in their 1995 book The Singapore way of Multiculturalism: Western Concepts/Eastern Cultures.

Concurring, Singapore Management University law academic Eugene Tan felt that the economic imperative “has been so compelling as it is necessary, and provides the Government with tremendous performance legitimacy”.

“But such an abiding focus ... important as it is to our very survival, has given Singapore the shallow feel of being a mere economy,” said Assistant Professor Tan. “... to have national pride and success that stems primarily from economic prosperity would mean that we run the risk of our self-worth as a nation measured in economic terms as well.”

As Singaporeans look back on the last 50 years with pride, there is a clamour for a different yardstick. One that is arguably borne out of necessity as the country moves out of its nascent stage.



GDP A Byword for progress

Several economists whom Weekend Xtra spoke to pointed to the Government’s apparent focus on the economic growth rate.

Said Centennial Group economist Manu Bhaskaran: “In the early years, economic policy was not just about growth but ensuring that growth benefited everyone - the HDB programme to house people as well as to help them build wealth was a critical feature of economic growth. The emphasis then was also on jobs for Singaporeans.”

On its part, the Government had made its stance clear on using the Gross Domestic Product (GDP) as the chief measure of economic progress. Responding to a Today analysis on the topic, the Ministry of Trade and Industry acknowledged in February last year that GDP, which does not reflect externalities like environmental costs or income distribution, had its limitations as a measure of economic welfare or progress.

But it was “still the best gauge of an economy’s progress”, it said. “Knowing a country’s GDP per capita tells us a lot more about the economic well-being of its people than any other single measure. Other measures can complement GDP but cannot replace it.”

United States-based Singaporean economist Linda Lim pointed out that GDP growth was “obviously necessary to guarantee ever-increasing living standards for Singaporeans”.

But assuming Singaporeans “still want to see improved living standards in the next 50 years”, the definition of these standards might change, “with quality of life becoming more important than the quantity of material goods consumed”, suggested Professor Lim, who lectures at the University of Michigan.

“GDP growth can enable all of these. So it’s not going to go away, nor should it.”

Still, Nanyang Technological University economics professor Choy Keen Meng noted that it would be “sad indeed if Singaporeans ... continue to view consumption of goods and services as the ultimate objective of life”.

As the late American politician Robert Kennedy pointed out: “The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play ... It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.”

It is worth noting, though, that Mr Kennedy’s words in 1968 came almost 200 years after the founding of the United States. In that regard, Singapore has time on its side.



Beyond economic growth

SMU economics don Davin Chor has already noticed a “subtle shift”, in the last five years or so, in how success is being defined.

“There is also now a push to define ourselves as a global city,” he said. “As the economy matures and growth moderates ... I would argue that it would be helpful to redefine success in Singapore by whether we can build ourselves up into an attractive global city where businesses and talented individuals, both local and foreign, would like to live and work in.”

Away from the economy, observers felt that the political system has much scope for development in the decades to come. In recent weeks, the Government has already signalled that the political landscape has to evolve.

While some might use political freedom rankings by international think tanks as a gauge, IPS’ Dr Koh argued that the true test lies in how Singapore’s political system and institutions - and the people running them - respond to the competing demands and trade-offs, including greater liberty or “commitment to political and social fundamentals”.

For SMU’s Asst Prof Tan, the development of a national identity; how the society treats the underprivileged and disadvantaged; and even the “lessening importance” of Group Representation Constituencies in the electoral system might be among the measures of how the political landscape here is evolving.

Another indicator, he added, might be a Prime Minister from a minority race or a female President or Prime Minister.

But perhaps the ultimate gauge of Singapore’s future progress lies not in the country’s accolades or how it is viewed by outsiders.

Instead, true progress, argued Institute of South-east Asian Studies senior fellow Terence Chong, comes when individuals are empowered to define their own successes - independent of societal expectations.

“Until the individual reclaims the term ‘success’ and defines it according to his own personal values, we will always be saddled with conventional notions like ‘excellence’ and ‘being the best’.” WEEKENDVTRA
 

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From factory workers to students and their parents, they were all there at the Padang on the evening of June 3, 1959, determined to be part of a momentous occasion in the island’s modern history.

For that was the day when Singapore ended its status as a British colony and became a self-governing state.

“Merdeka!” as the 50,000-odd people assembled at the Padang would shout in unison several times later.

No doubt, the British presence and influence in this island of 1.5 million people remained strong. It had control of defence and foreign affairs and the first Yang diPertuan Agong, or head of state, under self-rule was a Briton, the erstwhile Governor Sir William Goode. But for the first time, Singaporeans now had total control of their destiny over domestic matters, such as health, education and housing.

As Prime Minister-elect Lee Kuan Yew told the crowd later, it was not often that one was a witness to “a moment of great change”.

And that day on June 3, 1959, was “such a moment”, said Mr Lee, speaking from the steps of the City Hall at the Padang. With him on stage were 42 other newly-elected members of the Legislative Assembly.

The PAP MPs at City Hall were all dressed in white that evening. Why white? To symbolise clean government, said Mr Lee.

While the evening at the Padang was an occasion to celebrate, the 35-year-old Prime Minister-elect, aware of the great challenges awaiting his new team, decided to make “a serious, almost sombre speech”.

After all, pressing problems of housing, education and unemployment awaited the new PAP Government.

Mr Lee described self-governance as a step towards merger with neighbouring Malaya and merdeka ( independence) from Britain.

Calling on the crowd to work with his Government, Mr Lee said: “The good things of life do not fall from the skies. They can only come by hard work and over a long time. The Government cannot produce results unless people support and sustain the work of the Government.”

In what would become the PAP’s article of faith in years to come, Mr Lee offered a glimpse of how his Government would work: “There may be times when, in the interests of the whole community, we may have to take steps that are unpopular with a section of the community. On such occasions, remember that the principle which guides our actions is that the paramount interest of the whole community must prevail.”

Fifty years after that historic evening at City Hall, Mr Lee and his successors, by and large, have succeeded in delivering a better tomorrow for Singapore. Or, as Mr Lee himself put it, taking Singapore from Third World to First.
 

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IF THE cornerstone of Singapore’s success over the last 50 years hinged upon a highly centralised and effective system of governance, the next 50 years could entail a gradual reversal of roles - with the Government “letting go” and empowering a more sophisticated and demanding population.

As political observers point out, the challenges ahead are aplenty, not least an increasingly fragmented middle ground.

Said Institute of South-east Asian Studies senior fellow Terence Chong: “It is not hard to see society breaking up into different constituencies based on the issues of the day.”

If any evidence of this was needed, the recent Association of Women for Action and Research (Aware) leadership tussle amply provided it.

For Singapore Management University law academic Eugene Tan, what the protracted public spat also threw up was the fact that Singaporeans, it seems, “have not learnt to resolve difficult issues without the need for ... subtle Government guidance”.

From ministers’ public comments urging restraint to the statement from the National Council of Churches distancing the churches from the controversy, Assistant Professor Tan believe that much work went on behind the scenes even though the general perception was that the Government had largely stayed out of the saga.

Said Asst Prof Tan: “More often than not, (government intervention) was through third parties.”

Yet, a more diverse and complex society would make such an approach to governance increasingly untenable.

Dr Chong argued that it is perhaps in the best interests of both the Government and Singaporeans in general for the former to gradually reduce its influence.

He said: “Studies have shown that paternalist systems tend to homogenise or result in uniform opinions... Unless the system can accommodate mavericks or dissent, such a system will only produce cookie-cutter solutions.”

However, for a Government that is, in Dr Chong’s words, “big on governance”, letting go is perhaps hard to do.

But Asst Prof Tan argued: “The question is not why should the Government ‘let go more’ but rather how to let go more such that it enhances our governance.”

And it could very well be the individual who finds it harder to adapt. “To be sure, Singaporeans have to take ownership of their ability to cope with a reduced Government presence in many facets of Singapore life,” added Asst Prof Tan.

But as Institute of Policy Studies senior research fellow Gillian Koh pointed out, a responsive political system and institutions attuned to the people’s aspirations and daily needs would still lie at the heart of good governance.

Said Dr Koh: “If citizens begin to feel that there isn’t such a system, will they uphold the key principles and systems of democratic rule and constitutionalism to find ways to channel their aspirations and concerns?

“Will there be political leadership that acts responsibly and wisely in responding to this far more pluralistic political scene?” she asked. WEEKENDVTRA
 

fivestars

Alfrescian
Loyal
AS FAMILIES huddled around their radio sets on June 5, 1959 - that momentous day when the first Singaporean Cabinet was sworn in - a jubilant voice belonging to then-Prime Minister Lee Kuan Yew pledged to bring about “a happier and better Singapore”.

Fifty years on - and after a short-lived, tumultous merger with its northern neighbour - the transformation of an island beset with a shortage of urban housing, widespread unemployment and backward economic conditions is strikingly obvious.

The Republic’s success story, as Institute of Policy Studies (IPS) senior research fellow Gillian Koh put it, goes beyond the material. “Our success is defined not by economic success but the fact that most people of the Independence generation and their children enjoy access to high-quality housing, healthcare, education at the standards that people from other post-colonial states talk about,” she said

Yet, to outsiders at least - and the Government has made no bones about it - “economic success has become the ideological benchmark for Singapore’s raison d’etre”, in the words of Australian scholars Ien Ang and John Stratton in their 1995 book The Singapore way of Multiculturalism: Western Concepts/Eastern Cultures.

Concurring, Singapore Management University law academic Eugene Tan felt that the economic imperative “has been so compelling as it is necessary, and provides the Government with tremendous performance legitimacy”.

“But such an abiding focus ... important as it is to our very survival, has given Singapore the shallow feel of being a mere economy,” said Assistant Professor Tan. “... to have national pride and success that stems primarily from economic prosperity would mean that we run the risk of our self-worth as a nation measured in economic terms as well.”

As Singaporeans look back on the last 50 years with pride, there is a clamour for a different yardstick. One that is arguably borne out of necessity as the country moves out of its nascent stage.



GDP A Byword for progress

Several economists whom Weekend Xtra spoke to pointed to the Government’s apparent focus on the economic growth rate.

Said Centennial Group economist Manu Bhaskaran: “In the early years, economic policy was not just about growth but ensuring that growth benefited everyone - the HDB programme to house people as well as to help them build wealth was a critical feature of economic growth. The emphasis then was also on jobs for Singaporeans.”

On its part, the Government had made its stance clear on using the Gross Domestic Product (GDP) as the chief measure of economic progress. Responding to a Today analysis on the topic, the Ministry of Trade and Industry acknowledged in February last year that GDP, which does not reflect externalities like environmental costs or income distribution, had its limitations as a measure of economic welfare or progress.

But it was “still the best gauge of an economy’s progress”, it said. “Knowing a country’s GDP per capita tells us a lot more about the economic well-being of its people than any other single measure. Other measures can complement GDP but cannot replace it.”

United States-based Singaporean economist Linda Lim pointed out that GDP growth was “obviously necessary to guarantee ever-increasing living standards for Singaporeans”.

But assuming Singaporeans “still want to see improved living standards in the next 50 years”, the definition of these standards might change, “with quality of life becoming more important than the quantity of material goods consumed”, suggested Professor Lim, who lectures at the University of Michigan.

“GDP growth can enable all of these. So it’s not going to go away, nor should it.”

Still, Nanyang Technological University economics professor Choy Keen Meng noted that it would be “sad indeed if Singaporeans ... continue to view consumption of goods and services as the ultimate objective of life”.

As the late American politician Robert Kennedy pointed out: “The gross national product does not allow for the health of our children, the quality of their education, or the joy of their play ... It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile.”

It is worth noting, though, that Mr Kennedy’s words in 1968 came almost 200 years after the founding of the United States. In that regard, Singapore has time on its side.



Beyond economic growth

SMU economics don Davin Chor has already noticed a “subtle shift”, in the last five years or so, in how success is being defined.

“There is also now a push to define ourselves as a global city,” he said. “As the economy matures and growth moderates ... I would argue that it would be helpful to redefine success in Singapore by whether we can build ourselves up into an attractive global city where businesses and talented individuals, both local and foreign, would like to live and work in.”

Away from the economy, observers felt that the political system has much scope for development in the decades to come. In recent weeks, the Government has already signalled that the political landscape has to evolve.

While some might use political freedom rankings by international think tanks as a gauge, IPS’ Dr Koh argued that the true test lies in how Singapore’s political system and institutions - and the people running them - respond to the competing demands and trade-offs, including greater liberty or “commitment to political and social fundamentals”.

For SMU’s Asst Prof Tan, the development of a national identity; how the society treats the underprivileged and disadvantaged; and even the “lessening importance” of Group Representation Constituencies in the electoral system might be among the measures of how the political landscape here is evolving.

Another indicator, he added, might be a Prime Minister from a minority race or a female President or Prime Minister.

But perhaps the ultimate gauge of Singapore’s future progress lies not in the country’s accolades or how it is viewed by outsiders.

Instead, true progress, argued Institute of South-east Asian Studies senior fellow Terence Chong, comes when individuals are empowered to define their own successes - independent of societal expectations.

“Until the individual reclaims the term ‘success’ and defines it according to his own personal values, we will always be saddled with conventional notions like ‘excellence’ and ‘being the best’.” WEEKENDVTRA
 

fivestars

Alfrescian
Loyal
EVEN without the global downturn, it was only a matter of time - and a matter of course - before Singapore’s days of stellar economic growth were behind it.

But even as the Government reviews the Republic’s economic strategy, experts believe there is still ample scope for Singapore’s maturing economy to grow in the decades beyond.

The key, they say, lies in how quickly and effectively the economy can move into the services sector, away from its traditional manufacturing pillar.

Based on statistical simulations, Singapore Management University (SMU) economics don Davin Chor pointed out that it was questionable whether Singapore can sustain a real GDP growth rate of about 6.5 per cent over the next 10 years - the same as the average achieved from 1985 to 2006.

While world income could still grow at a rate equivalent to that over the last two decades, given the rise of China and India, it would be doubtful whether Singapore could maintain the same level of foreign direct investment amid increased competition and a supply of labour far exceeding the natural growth rate of the resident population.

Besides a moderated growth rate brought on by the maturing economy, US-based Singaporean economist Linda Lim believes Singapore’s economy would have to contend with the “internal forces” of an ageing population, which reduces the country’s savings and investments, and an increasing preference among its domestic consumers for services over goods; leisure over work; and quality of life over “quantity of consumption”.

Economists whom Weekend Xtra spoke to reiterated that a slower rate of growth does not necessarily mean that Singaporeans would be worse off - and that is not even taking into account the negative externalities generated by rapid economic growth, including environmental degradation and inflation.

Said Prof Lim: “For example, if we have lower growth but more of it is in wage and profits to locals, we might even be better off than we would be with higher growth that is much more dependant on foreign labour, capital and markets.”

In fact, the economy’s vulnerability to external shocks would be reduced further by moving into the services sector, said NTU economics professor Choy Keen Meng.

Specific services sectors that Singapore could establish a foothold include financial wealth management, media, marketing and design services, tertiary education and medical treatment, he added.

Said Asst Prof Choy: “Due to its very nature, services are less dependent on foreign capital and tend to be influenced to a smaller extent by business cycles.”

Servicing the pan-Asian region, with China and India and the burgeoning middle classes, would provide the next goldmine for Singapore as it builds up its domestic market to cater to “an ever-growing and increasingly more sophisticated local population”, he noted.

With the Republic possessing competitive advantages, including its connectivity to the rest of the world, and the latest technological and fashion fads, Asst Prof Choy said: “The potential markets for services are always bigger than those for manufactured goods as countries around the world grow richer due to a higher income elasticity for services.”

In the meantime, SMU’s Asst Prof Chor believes the Government is moving in the right direction by expanding the education sector, in particular the tertiary education sector.

“Expanding our human capital and talent base is a robust strategy that should help position Singapore to be able to identify and leverage on global growth opportunities as and when these emerge in the future,” he said. “This will also help to enhance Singapore’s attractiveness as a hub of business and inventive activity, to build up Singapore into a global hub.”

Prof Lim, though, reiterated her belief that there is no better time for the Government to roll back its intervention in the economy.

Said Prof Lim: “We are at the top of the technological ladder and there is no visibility as to future technologies and markets. At that stage, it is best that our scarce resources (including our apparently abundant capital) be invested by private investors and entrepreneurs who can take the risks with their own or other private savers’ money.” WEEKENDVTRA
 
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