THE TEMASEK REVIEW

By Eugene Yeo, Senior writer

With the economy expected to remain in doldrums in 2009, Singaporeans are bracing up for another round of wage cuts and posssible retrenchments.

The spin doctors of SPH have quickly moved in to offer a silver lining in the midst of the gloom which has developed to enshroud the entire island.

In an article published on page 2 of The Straits Times on the first day of 2009, the incorrigible PAP spin doctor Chua Mui Hoong waxes lyrical over the PAP’s accomplishments for the past 50 years which transform Singapore from “poverty to the bustling metropolis that it is today”.

She went on to illustrate why Singapore will survive the downturn because “the traits that helped it get to where it is today are precisely the same traits that will get it back on a firm footing in the current crisis.”

The comparison is both inappropriate and irrational as past accolades were never an ingredient for future successes. The nature of the crises Singapore face is completely different then and now.

50 years ago, Singapore is a developing economy where plentiful cheap labor enables it to attract MNCs to invest on the island with the electronic and manufacturing sector leading the way to double digits growth for more than a decade in the 1970s and 1980s.

In recent years, the government had diversified the economy to reduce its reliance on manufacturing, branching on to new sectors such as the pharmaceuticals and gaming industry which are closely linked to the global economy.

The traits of our parents and grandfathers which propel Singapore from a Third to First World country today – namely thrift, industriousness, stoicism and tenacity to endure hardships are not reproducible in a younger generation brought up in the midst of material comfort.

Chua Mui Hoong’s explanation that Singapore’s economy could be the first to recover because it is “small and open” is even more baffling. The reason for Singapore being the first Asian country to enter recession cannot be applied on the converse because it will take some time for us to feel the impact of a global recovery.

Some economists at Wall Street have already predicted that this current crunch may rival the Great Depression in the 1930s and it may take more than a few years for the world economy to see positive growth again.

Though Singapore’s macroeconomics are strong, our heavy dependence on trade and foreign direct investments will see us lagging behind the United States and Europe. Unless conditions improve over there, we are unlikely to see an influx of expats and FDIs anytime soon which will have trickle-down effect on the retail industry, property sector and labor market.

Lastly, Chua quoted Singapore’s “strong” one party state government as a positive “trait” to bail out the flagging economy with its “healthy reserves”.

The problem is, we aren’t quite sure how much of our much vaunted reserves we still have after reports of Temasek and GIC losing in excess of S$40 billion dollars in ill-time purchase of foreign banks.

A strong government may be an asset in ensuring social stability and spurring the fledging nation on during early years of independence, but it is now an hindrance to our developed economy.

State -owned companies such as SingTel, DBS, Capitaland, SIA and NTUC Fairprice dominate the domestic economy leading to the stifling of the growth of private enterprises.

The lack of meaningful competition at home has curtailed the potential of Singapore companies and brands making a name for themselves in the world. Finland with a population of 3 million, has “Nokia”, what about us ?

Again, recycling the track record of the PAP isn’t going to help feed the mouths of those who have been retrenched. Just as Singaporeans are blessed to have a good government when it gained independence, the PAP must be gratified to have such an easy-going, docile and hardworking population to govern for they will not last so long in office had they been in Thailand or Taiwan instead.

The pessimist’s view of 2009 is that more bad news lies ahead. The PAP spin doctor, looking at the things that have gone right over the past 50 years, will be confident that this small, open economy with a strong government, will have the resilience to pull through in tough times.

The pragmatist’s view, however, is that Singaporeans need to be more proactive and contribute to nation-building instead of leaving the governing solely in the hands of the government which as its past records as shown, is not infalliable after all.

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