What is so special about Singapore?
You can tell how much an economist knows about the Singaporean economy by how (s)he feels about the city-state. If (s)he is raving about the country’s economic policies, such as its business climate and rule of law, they probably do not know much.
I was in this category when I shared with you my first impressions of Singapore on Monday [June 8]. Since then, I’ve spoken to several Singaporean economists and the picture I now see is much less than perfect. While one cannot deny the country’s impressive growth, as well as other statistics, this is not a flawless economy.
I could give you the details, but basically, the economy is run on opaqueness. For example, if you think the Turkish monetary policy is convoluted, you should see Singapore’s: The Monetary Authority of Singapore (MAS) targets a weighted crawling exchange rate, but they do not reveal what the weights are. Similarly, the size of the country’s total reserves, which are probably several times of the MAS reserves, is not published.
Singaporean policymakers have made their share of mistakes. They have caused a couple of self-inflicted recessions in the last three decades, and more recently, their aim of boosting productivity by letting in more immigrants backfired, causing all sorts of distortions. But in the end, they usually get it right because they learn from their mistakes - mainly because this is a government run on the principle of meritocracy and paying high wages to lure talent.
That’s why, I believe, they have been so good in attracting foreign direct investment (FDI) and spotting new opportunities, whether it be medical tourism, gambling or private wealth management, before everyone else. What other country, after all, has a “Center for Strategic Futures,” which reports directly to the prime ministry?
On the other hand, if you are appointed to the head of a country’s investment promotion agency and then to the chairmanship of its airline, just because you are willing to die for the president, you’ll think that you can attract FDI by setting the password in airport lounges as “investinTR”, which I had to type in a zillion times on Thursday [June 11].
But there is one area in which Turkey is superior to Singapore. Turkey’s citizens proved this past Sunday [June 7], by saying a resounding no to the danger of autocracy and showing democracy is more or less working. Actually, we knew that even before the elections: As fellow Daily News columnist Güven Sak pointed out, in real democracies, you do not know election results beforehand.
Thanks to gerrymandering, the ruling People’s Action Party won 81 out of 87 seats, with only 60 percent of the votes at the last Singaporean elections in 2011. On the other hand, the 10 percent threshold could not prevent the Peoples’ Democratic Party (HDP) from making it to the Turkish parliament. Maybe there’s a positive side to having incompetent policymakers, after all :).
Singapore is facing important structural challenges such as ageing, inequality, dependence on foreign labor as a main growth driver, rising competitiveness and threats to its status as a regional hub. But I believe the main test for the Lion City will be to satisfy the demand for more democracy and rights without sacrificing growth.
As for Turkey, we definitely need better policy makers, a culture based on meritocracy, not nepotism, and, of course, rule of law to become the next Singapore. We may have taken the first step on June 7.