Is Singapore properly equipped and confidently prepared to overcome challenges they may face in the future?
Singapore is reasonably prepared to face the future economic challenges. However, the sociopolitical challenges may prove more difficult than perceived.
Let us look at the key challenges that Singapore may face and analyze if it can overcome these:
As Lee Kuan Yew (the founding father & the longest-serving Prime Minister) fades into sunset, his larger-than-life influence on Singapore politics has started to weaken.
Consequently, both the ruling PAP party and the opposition parties are re-calibrating their approaches.
The PAP is trying to open up to the ideas of social upliftment & economic inclusiveness against an earlier, dogged, focus solely on meritocracy. The current PM, Lee Hsien Loong, is making sincere efforts to change the pro-rich & pro-business image of his party & the government.
He has also developed good working relations with Malaysia & Indonesia, two large Muslim neighbors who were not very welcoming of Singapore initially.
The opposition, emboldened by unprecedented gains in the last general election, is becoming more vocal in its criticisms of government policies; it is also aided by young Singaporeans longing for an alternative force to emerge.
The new generation of Singaporeans don’t want to dwell on the past hardships through which Singaporean society passed and are clamoring for more liberties than ever. Consequently, many are cynical of the ruling party and identify themselves more with the opposition, perceived as more pro-Singaporean & pro-poor.
Unfortunately, LKY has been a polarizing figure in Singapore. There are die-hard supporters of his style of administration as well as those who viscerally hate him for his benevolent dictatorial / authoritarian rule. The fault lines are becoming more visible as the time passes.
Prognosis: The Singaporean politics may see more turbulent times ahead and the country may not be able to handle the transition as smoothly as everyone hopes for.
Singaporean society is a mix of three main races – Chinese, Malay, Indian – in decreasing order of population size.
Throughout its 48 years of independence, the Government has strove hard to maintain racial harmony.
The reason for this lies in the circumstances in which Singapore became an independent nation & separated from the present-day Malaysia.
The Chinese & the Indian people have had more economic success than their Malay brethren, due to the sociocultural issues faced by the latter, such as, large families, low education levels, etc.
Also, for some time, Singapore government was wary of the loyalty of Malays (mostly Muslims) and this resulted in an undercurrent of alienation and racial tension.
Thankfully, the society has moved on & there are sincere efforts to improve the lot of Malays. Singapore is unique in this sense that all the stakeholders are acutely aware of the need to maintain racial harmony even as the individual cultures and ways of life are preserved.
The unknown here is religious fundamentalism that may come from Malaysia or Indonesia, two large and (hitherto) moderate Muslim countries that are facing the threat of increasing extremism & intolerance.
Prognosis: The Singapore society is currently well capable of maintaining religious and cultural harmony. However, racial dynamics will continue to demand extreme vigilance, especially in a world that is becoming more polarized on religious lines. Singapore also has to be mindful of any external influence that may try to destabilize the delicate racial balance.
There is a unanimous agreement among everybody that Singapore is an economic miracle, an example of what visionary leadership can achieve with the help of hard, honest, workforce and a corruption-free, efficient, administration.
The government has excelled at successful, long-term, economic planning.
Singapore has ridden the waves of maritime, petrochemicals, electronics, and pharmaceuticals earlier; it is now working to become an Asian leader in banking (especially, wealth management), tourism, & biotechnology.
By all accounts, Singapore is an enviable economic position. It has huge reserves that are well managed by GIC and Temasek; it continues to attract businesses from across the world, and more & more rich Asians are parking their funds here.
However, there is a dark side to this. And, it is the unequal distribution of wealth. Singapore has one of the highest Gini coefficients among the developed countries, representing significant income inequality.
So, while it has the highest number of millionaires (as a proportion of the total population), a large majority of Singaporean earn only moderate income & can only afford public housing, albeit a world-class one.
The reason for this dichotomy is the extremely pro-business stance of Singapore government.
The trade union movement is widely perceived as very weak in its ability to protect the low-skilled & semi-skilled workers.
The government, hitherto, allowed business to easily bring in (low-cost) foreign workers and this led to suppression of wages among the weaker sections of the society.
Further, economic growth, a low-interest regime, and ample liquidity led to rapid price hikes and increase in the cost of living.
This led to a lot of resentment among people and the government saw a significant drop in its share of the popular vote in the last general election.
Since then, the government has re-calibrated its policies to address these issues. However, it has also warned that this will result in slower growth rates over the coming decades.
A very important, internal, challenge to Singapore’s economic progress will come from its skewed population distribution.
The total fertility rate has fallen below the replacement levels for quite some time now and the proportion of senior citizens in the workforce is steadily increasing.
This will lead to significant changes in the way the businesses are run.
The external challenge to Singapore’s continued economic success will come from a host of countries, most notably, China & India.
China is developing Shanghai as a major financial center, in addition to the existing Hong Kong.
Singapore’s electronics component industry is already facing severe challenges from many countries, most notably, Taiwan & China.
Its leadership position in shipping is also under threats from countries as far as Sri Lanka & Pakistan.
Prognosis: Singapore’s continued economic success is not guaranteed and some of the adverse factors are beyond its control. Of course, Singapore’s planners are already working at identifying all these opportunities and challenges and preparing the proactive, calibrated, responses that have turned this country from third-world to first-world in a record short span of time.
Note: The above question and my response first appeared on Quora (https://www.quora.com/Singapore/Is-singapore-properly-equipped-and-confidently-prepared-to-overcome-challenges-they-may-face-in-the-future)