Booming Port : Singapore Thrives as Commercial Hub That Someday May Outrank Hong Kong
A ride on a cable-car to the tiny islet of Sentosa reveals a sight that’s hard to imagine from the spotless streets and sterile buildings on shore: Stretched out below is a vast container port, and crowding Keppel Harbor are too many ships to be counted.
The commercial armada stretches to the horizon beyond Sentosa, lying at anchor in silent parking-lot formation, waiting to refill their holds and set sail.
About 700 ocean-going vessels are in port at any given time, according to officials who have counted. The ships all come to trade, and to trade in a big way. The port handled 188 million tons of cargo in 1990, the largest volume on the globe.
Singapore’s imports and exports with the rest of the world totaled $137 billion last year, not bad for a population of 3 million. In the words of Robert D. Orr, American ambassador to the city-state, “Singapore is a trade machine.”
So powerful is Singapore’s performance as a center of commerce and finance that some observers speculate that it may someday overtake its nemesis, Hong Kong, as the top trade hub in the South China Sea--a scenario bolstered by uncertainty surrounding Hong Kong’s reunification with Mainland China in 1997.
For now, however, Singaporeans are thriving with business from their back yard: the booming economies of Malaysia, Thailand and Indonesia. Hong Kong has its own bailiwick serving the rapidly developing areas of Guangdong province and coastal China, making the rival cities more complementary than competitive.
But if growth trends continue in Southeast Asia, Singapore’s fortunes can only rise. A regional free-trade zone planned by the Assn. of South East Asian Nations--whose six member states have a combined market of 333 million consumers--would likely enhance Singapore’s importance as a provider of financial and business services. Those sectors already exceed manufacturing and account for about 30% of Singapore’s economy--double the share of two decades ago.
At a glance, Singapore is the quintessential Pacific Rim city.
Since its origins in the late 19th Century as a strategic outpost for the British Empire, it has survived on “entrepot” trade--taking a margin out of commerce passing through its port, storing and re-exporting imported commodities, lightly fabricating raw materials from one country to ship to another, and otherwise playing the role of middleman in regional economic activity.
When it became a nation in 1965, the country embarked on an aggressive program of industrial development under the autocratic leadership of former Prime Minister Lee Kwan Yu, which made Singapore a successful platform for light industry. Again, the pattern was essentially that of entrepot trade: Singapore’s workshops imported components and added value, then exported products to the world at large. It got rich doing so.
Singapore’s per-capita income was $12,700 in 1990, slightly higher than that for Hong Kong’s 5.8 million people and second only to Japan in East Asia. The city has become a magnet for investment, and it is one of the few places in Asia where Americans still lead the Japanese, with more than 800 U.S. companies investing $9 billion so far.
Although Singapore is often the butt of jokes for its antiseptic urban environment, with campaigns admonishing citizens not to spit on the sidewalk or urinate in elevators, it still attracted 5.3 million tourists in 1990--nearly twice the island’s population. They eat, shop and go to places like Sentosa, the islet across the harbor with a theme park and wax museum. The big draw on Sentosa is the Hall of Surrender, where wax figurines depict Britain’s infamous surrender to invading Japanese troops during World War II.
Comparisons to Hong Kong can be instructive. Three of every four Singaporeans trace their origins to China, and they exhibit the entrepreneurial energy and family networking associated with overseas Chinese everywhere. But stable, prosperous Singapore has not drawn immigrants from Hong Kong in advance of the British colony’s 1997 reversion to Chinese “one country, two systems” rule. Hong Kong evacuees prefer Australian or Canadian passports.
“Singapore is viewed in Hong Kong as a Chinese island in a Malay sea,” said Lee Tsao Yuan, deputy director of the Institute of Policy Studies, an independent think tank in Singapore. “And Hong Kong people are used to a free-wheeling business environment. They might consider Singapore to be over-regulated.”
Indeed, the modern trade hub that Lee Kwan Yu built maintains a large degree of state control over the economy--and society. The government mandates savings through its social security system, controls the housing market (it built three-quarters of the stock), plays a key role in setting wages and keeps a tight fist around the financial industry, to the chagrin of foreign bankers.
Lee’s political rule was so absolute that his successor, Prime Minister Goh Chok Tong, practically admitted defeat last year when his ruling People’s Action Party retained control over all but four seats in an election for Parliament. Previously there was only one opposition seat in the chamber.
Chewing gum is the latest social evil targeted by Goh’s government, which banned its manufacture, import and sale last month to keep the subways clean. Gum-chewing critics questioned whether the prohibition threatens civil liberties, and even the pro-government newspaper Straits Times asked whether there might be “deeper political significance to the move, far beyond that of having a gum-free Singapore?”
The atmosphere is poles apart from chaotic Hong Kong.
“Social and political restrictions differentiate Singapore from its sister city-state, Hong Kong, which is probably the only truly laissez-faire economy in the world,” said Michael G. Plummer, analyst at the East-West Center’s Institute for Economic Development and Policy in Honolulu. “Yet, for all practical purposes, Singapore is an open economy for international traders and investors.”
The contrast between Hong Kong’s free-wheeling capitalism and Singapore’s restrained, Confucian order might be seen as the two faces of the Chinese character, opposing but part of the Taoist whole. Perhaps what unifies them is an abiding interest in wealth.
With fears rising that Mainland Chinese corruption is already gradually encroaching on Hong Kong’s unregulated economy, threatening to choke the life out of it after 1997, Singapore’s Spic-and-Span reputation becomes a selling point.
“Singapore has a corruption-free, pro-business regulatory environment,” Orr, the U.S. ambassador, told a gathering of American businessmen. “You will find it a very good place to make money.”
Meanwhile, Singapore’s new program of privatization will eventually make the city-state more like Hong Kong and less like Japan, the traditional model for capitalism in Asia, said Lai Seck Khui, deputy secretary of the Ministry of Trade and Industry.
“I think what we are trying to do is get away from government intervention, in certain strategic areas of industry, with privatization,” said Lai, one of the top policy-makers in the trade ministry. “We’re moving in the direction of transparency and letting pure market forces take effect.”
Lai, however, does not foresee the day when Singapore would ever replace Hong Kong. The crown colony has nearly twice Singapore’s gross national product, and it has a strategic position--not only on the coast of China, but in a jumping-off point for transpacific passenger flights and air cargo.
“Even if Hong Kong falls apart, I don’t see that Singapore will pick up the pieces,” he said. “I’m sanguine about what will happen after 1997 in Hong Kong--I believe it will continue to be a powerhouse for southern China. Singapore has its own region to serve.”
Trade Machine
Singpore is the quintessential Pacific Rim city, flourishing as a trade hub in its corner of East Asia and gaining on rival Hong Kong as the premier financial and business center in the South China Sea. The United States is the largest foreign investor, pouring nearly $600 million into the city-state in 1991.
Economy, 1991 (estimated)
Gross National Product: $41.2 billion
Real Economic Growth: 7.5%
Per-Capita GNP: $13,135
Major Industries: Petroleum refining, rubber processing, electronics, food processing, ship repair, garments
Population: 3.06 million
Ethnic Makeup, in percent of total population
Chinese: 76.4%
Malay: 14.9%
Indian: 6.4%
Other: 2.3%
Source: Singapore Ministry of Trade & Industry, U.S. Embassy in Singapore, Heritage Foundation Asian Studies Center
