By Daniel Moss
(Bloomberg Opinion) -- In the mid-1960s, Singapore was a poor island that had to go it alone, without natural resources in a region buffeted by the Vietnam War and political tumult in Indonesia. When Lee Kuan Yew established the city-state in 1965, he used a take-no-prisoners approach to carve Southeast Asia’s most successful container port and a regional business centre from inauspicious beginnings. His son, who became the country’s third leader, was barely a teenager at the time.
Now Prime Minister Lee Hsien Loong runs a very different Singapore, one with secure borders and multinational companies in a region buoyed by decades of robust growth. The republic guards its prosperity with utmost caution. Yet the People’s Action Party, founded by Lee’s father, goes into an election Friday with a slate of challenges that require outside-the-box solutions: containing the coronavirus while restoring the economy, maintaining growth amid low birth rates and an aging society, and navigating the fraying relationship between major economic partners, China and the U.S.
Lee, 68, has signalled he will step down in a few years to make way for a fourth generation of PAP officials, known across the city as “4-G.” This rising cohort is mostly composed of ministers who were either small children or unborn when Singapore divorced acrimoniously from Malaysia, and share little or no memory of its founding as a sovereign nation. They also know no administration other than their own party, which was formed in the mid 1950s and has governed since independence. The perils and potential promise of the pandemic era mean another wrenching reinvention. Future leaders may need the pluck, ruthlessness and readiness to break old models in order to create opportunities and head off catastrophes that lie ahead. Managing success is necessary; it may not be sufficient.
The coronavirus has brought the worst recession since the heady and desperate days of independence. Lee said Monday he wants to see a path to revival before passing the baton: “I am determined to hand over Singapore, intact and in good working order, to the next team.” Heng Swee Keat, 59, his deputy and finance minister, is widely seen as Lee’s successor. Band members include Chan Chun Sing, 50, minister for trade and industry, and 47-year-old Lawrence Wong, minister for national development and one of the main faces of the struggle against the disease.
The most pressing item on the 4-G agenda will be containing the pandemic. The economy is gradually reopening after two months of lockdown, which curtailed the spread of the disease and limited deaths, but took a heavy toll. Gross domestic product will shrink as much as 7% this year, according to the government.
Initial plaudits for Singapore's handling of the virus gave way to concerns about outbreaks in dormitories housing migrant workers, which account for the vast majority of the country’s 44,983 cases as of Monday. The surge in this community has resurfaced the longstanding debate about immigration and the role of foreigners in the economy.
Headlines at the end of last week were dominated by claims and strenuous rebuttals that Heng, the deputy prime minister, had toyed with the idea of boosting Singapore's population to 10 million. The country has grown about 40% since 2000 to 5.7 million, and residents already complain about crowded public transport, foreigners taking jobs they say ought to go to locals, and housing costs. Heng denied that the government targeted this figure, and said the population is likely to be below 6.9 million by 2030.
The Singapore Democratic Party, which linked Heng to the 10 million headcount, defended the raising the issue and said figures like that had been “floating around,” the Straits Times reported. Last week, another opposition group, the Progress Party Singapore, pressed the government on how many white-collar employees and technicians had jobs displaced by foreigners.
Singapore doesn’t allow opinion polls. Most analysts anticipate the PAP will again win; the focus of attention is on the size of the margin. In the 2015 election, the PAP garnered about 70% of the vote. For only the second time, all 93 parliamentary seats will be contested by at least two parties.
Squabbles about population are, to a degree, debates about how to manage a win. Like most countries with a first-world standard of living, Singapore's fertility rate is at a record low. Citizens have the longest life expectancy in the world at nearly 85 years. Demographic pressures like these help explain why the country relies on hundreds of thousands of migrants to keep the place running, as I’ve written.
Assuaging voters while maintaining the openness that has served Singapore so well is a tricky balance. After the PAP’s showing in the 2011 election dipped, the government took steps to pare back foreign workers. During this year’s campaign, ministers have emphasised their attention to the domestic labor market, but appear loath to pull up the drawbridge. More tinkering, rather than a broad brush solution, seems likely.
The 4-G leadership will also have to reconsider whether geography, once a trump card, can still be leveraged with globalisation at a standstill. Two icons established by Lee Kuan Yew, Changi Airport and Singapore Airlines Ltd., face threats exacerbated by Covid-19’s restrictions. Both rose to prominence in the era of the Boeing 747 that democratised air travel. Singapore was well situated as a stop on the “kangaroo route” between the U.K. and the antipodes. Now, that supremacy is challenged by Middle Eastern carriers and revved up hubs in places like Dubai and Qatar.
Meanwhile, Singapore’s advantages as a port and trading centre in the Straits of Malacca might diminish because of melting polar ice and commercial conflict between Beijing and Washington. Throw in curbs on travel and border restrictions owing to the pandemic and it’s a very tough brew — all of which raise the question of what comes next. In recent years, the government has tried to position the city-state as a hub for advanced technology, investing in robotics, artificial intelligence and biotech.
In a 2018 book, “Singapore, Singapura: From Miracle to Complacency,” Nicholas Walton, a former journalist, recognises the country's achievements but questions whether the incentives are big enough for a thorough reinvention: “Like a dinghy facing a storm on the high seas, this small country had to feed off a sense of vulnerability to survive,” he wrote. “That was easy enough when the roof was made of attap palms and you had every reason to mistrust the neighbours. But now, cossetted by air conditioning and rain-proof walkways… it is harder to retain that hunger and vulnerability.”
The coming era presents challenges of a different kind and magnitude than 4-G officials faced when they were youngsters. History suggests they will try to find a technocratic and pragmatic way to finesse or defuse them. Lee Kuan Yew moved fast and broke things; he was unafraid to challenge the status quo. The heirs to the Singapore he created may need more of his moxie to navigate the world the coronavirus.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.
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