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  • Pranav Patvardhan

The Singapore Success Story and what your Business can learn from it

Updated: May 8, 2023

The Singapore Success Story and what your Business can learn from it

Singapore's history began as a sleepy fishing village and logistics hub set up by the British for strategic access to the Strait of Malacca. It was to remain under British control for over 200 years until its independence in 1963. After a tense 2-year merger with Malaysia, the city-state was ejected and forced to venture out alone in 1965. So how has Singapore developed from a modest village into a global business hub? Let us delve into this remarkable success story of Singapore.

Singapore of the 60s was just a tiny island that could be driven across within the hour, with no natural resources, lack of fresh water, not much land, and a patchwork of Chinese, Indian, and Malay people with no cultural, linguistic, or ethnic cohesion. Under the competent leadership of PM Lee Kuan Yew, the city-state used everything it did to the fullest with the following strategies to drive Singapore's economy to where it is today:

  • Location, location, location: Being located at one of the world's major shipping choke-points (the narrow strait of Malacca) gave Singapore its biggest asset. Capitalizing on the location, the city-state has been able to create one of the world's busiest ports with state-of-the-art facilities, the world's best airport (which itself has created a local tourism industry by attracting commuting passengers traveling between Europe, Asia, the Americas, and Australia) and ironically, the world's 3rd largest oil refining industry despite having no oil of its own (which makes airline fuel much cheaper in Singapore than in many countries in the Middle East)

  • Education: Quickly realizing that human capital was all it had, the country invested heavily in education at all levels, setting up schools and universities with a particular focus on STEM subjects. Singapore today boasts of some of Asia's best universities to this day, serving as R&D hubs that steadily hold Singapore in the top 10 most innovative countries. Top-class universities also breed and attract global talent that feeds the MNCs based in Singapore.

  • "Good" governance:

  1. Timely policies have allowed the government to stitch together a national identity despite there being no common grounds for one through unifying experiences like conscription and housing allotments that mandate cohabitation between Chinese, Indian, Malay, and Eurasian populations in fixed quotas.

  2. Encourage home ownership through a public housing program.

  3. Encourage compulsory savings (20% of income) for education, medical bills, and housing.

  4. Encourage the use of public transportation by making private car ownership prohibitively expensive.

  5. Enacting policies that foster a better work environment, making the country a low-tax hub for MNCs rather than using suffocating protectionism practiced during the "License Raj" days in India (2nd globally on Ease of Doing Business Index)

  6. Become a private banking hub as Swiss banks have come under scrutiny in recent years.

  • Spatial economies of scale: Business attracts business. Having already become a business hub for Southeast Asia, clusters of banks, technology, and industry allowed the city to attract more businesses from all over the world. Having so many businesses in one place attracted world-class talent, which further attracted more companies in a virtuous cycle. They also created tax revenues and employment.

  • Diversity: While this could have been the very catalyst for the nation's doom and division, diversity has played a powerful role in Singapore's success story. Being heavily Chinese (over 70% of the population) gives Singapore an upper hand in doing business with Hong Kong, Taiwan, and China, which share strong linguistic and cultural connections. Indian and Malay roots have attracted Indian and South East Asian businesses and wealth for the same reasons. English is one of the four official languages (besides Mandarin, Malay, and Tamil) has made Singapore attractive to Westerners.

  • Conscription: 2-year mandatory military service for all males remains in effect to this day, serving as a powerful equalizer that reinforces national identity through a shared experience regardless of ethnicity, wealth, and religion, besides fuelling a competent self-defense force and a strong military-industrial complex

Key takeaways from Singapore's success story (these can be applied to individual companies at a micro-level):

  • A nation's greatest resource is not its mineral wealth, size, or level of pre-existing development but its people, and Singapore's history has demonstrated this very well. Investing in the education of citizens regardless of gender, age, and ethnicity can have profound impacts on development by allowing them to become self-fulfilling resources that spurn growth over generations. The educated populous of the nation has not only created commercial value and taken Singapore's economy to new heights, but they are also guiding future generations to continue that trend. It is imperative that any country or company invest in relevant and transferrable skills that are more likely to be valid long-term.

  • Understanding and harnessing the potential of geography, location, and geopolitics can transform both the country and the opportunities for entities that operate within them.

  • Singapore's success story showcases that freedom and democracy should be balanced out with the right level of disciplined governance, particularly in highly diverse and complex environments that may lack natural cohesion. India's sluggish path to development remains plagued by a massive populous with considerable differences in language, ethnicity, religion, and above all, education levels. Functional democracy can only be earned through education.

  • Creating an environment that fosters innovation and business is key to creating spatial economies of scale, and Singapore’s history is a testament to that. Just as having several banks set up regional head offices is more likely to make the city a banking hub, similarly, having a high-level pool of talent in your company with a conducive, inclusive work culture attracts more talent (e.g., Amazon, Google)

  • Diversity is like the friction between flint stones that sparks the flames of innovation in any part of the world, be it Singapore or silicon valley. Companies should aim to have not just educational and professional diversity but also ethnic and cultural breadth for stronger ideation and creativity.

Singapore is already much wealthier than economic juggernauts like the United States, Japan, and South Korea and is poised to become the world's richest country by 2050 GDP per capita estimates. As Hong Kong's attractiveness as Asia's banking hub is dampened by the rise of Shanghai and by Chinese curbs on democracy, Singapore remains a democratic and attractive alternative nestled right between the giants of tomorrow - China, India, and Indonesia.

The Singapore story proves that you do not have to be the largest, most resource-rich, or well-connected to be a success story, whether you are a country, a city, or a business. Smaller size grants nimbleness and flexibility that larger incumbents cannot match as long as strong policies and a culture of ideation and inclusion are in place.

Scarcity is often the mother of success; privilege is the death of it.

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