Il n'y aura jamais un autre Singapour | L’Économie Expliquée

Summary

Singapore, a small island nation, transformed from a poor country in the 1960s to one of the world's wealthiest economies. Despite its small size and lack of natural resources, Singapore capitalized on its strategic location and government-led initiatives, such as affordable housing and compulsory savings, to foster economic growth. It attracted multinational companies, particularly in the oil and manufacturing sectors, benefiting from its favorable position in global trade. However, the country’s success is largely due to a unique combination of factors, making it nearly impossible to replicate elsewhere. Today, Singapore remains an economic powerhouse, with a thriving, diversified economy.

Takeaways

• 😀 Singapore is a small island nation located at the tip of Malaysia with a population of 5.6 million people, making it one of the world's wealthiest economies despite its modest size and workforce.
• 😀 In just five decades, Singapore transformed from a desperately poor country into the 33rd largest economy globally, surpassing larger nations like the UAE, Vietnam, and Malaysia.
• 😀 The economic success of Singapore is often attributed to factors like a strategic location, low taxes, and a strong government, but its unique combination of factors cannot be easily replicated in other countries.
• 😀 The government of Singapore played a pivotal role in its success, implementing a form of 'benevolent authoritarianism' that enabled them to make decisive decisions, such as acquiring land for affordable housing.
• 😀 Despite having low personal income taxes (24% for high earners), Singapore has a mandatory savings scheme that forces citizens to save 36% of their income, fostering high savings rates.
• 😀 Singapore’s geographical advantage, located at the crossroads of global trade, particularly the Malacca Strait, helped it become a major global port and fueling station for shipping industries.
• 😀 The country attracts multinational companies, including oil companies, by offering freedoms and guaranteeing security, ensuring that foreign investments are encouraged and protected.
• 😀 One of Singapore’s secret advantages is its strong legal system, based on English common law, which is widely understood by international companies, making it an attractive destination for business.
• 😀 While Singapore is often cited for its low taxes and free-market policies, it also has high property taxes and costs associated with car registration, giving a different picture from the typical low-tax, high-business-attractiveness image.
• 😀 The nation's small size contributes to lower infrastructure and service costs, making it easier for the government to manage and providing an advantage for economic efficiency.
• 😀 Despite challenges, such as the inclusion of foreign workers in the economy and complications arising from its political system, Singapore's growth has been consistently strong, and it remains one of the most successful economies in the world.

Q & A

What factors have contributed to Singapore's rapid economic success despite its small size?

Singapore's success is attributed to a combination of factors, including its strategic geographic location, a highly efficient government with strong decision-making abilities, significant investments in public housing and education, a thriving oil industry, and a legal system that attracts international businesses. The government's ability to implement swift policies and attract foreign investment played a critical role.

Why is it difficult for other countries to replicate Singapore's success?

Replicating Singapore's success is difficult because the exact combination of conditions—such as its location at a global trade crossroads, a stable government, the willingness of international companies to invest, and a highly educated workforce—are unique to Singapore. Other countries may not have the same geopolitical, historical, and political advantages.

How did Singapore’s government manage its housing crisis after gaining independence?

After independence, Singapore's government took control of vast stretches of land and private properties at below-market rates to build affordable public housing. This approach was combined with a system of forced savings, where 20% of workers' salaries were put into a community fund that could be used for housing, healthcare, and retirement.

What makes Singapore’s taxation system different from other advanced economies?

Singapore’s tax system is considered favorable for both individuals and businesses. The country has low personal income taxes, with the highest rate of 24% for those earning over 750,000 SGD annually. However, it still collects substantial revenue through other means, including high property taxes and fees for things like car registration. These funds are used for infrastructure and government services.

What role does Singapore's geographic location play in its economic success?

Singapore’s geographic location at the southern tip of the Malay Peninsula, bordering the Malacca Strait—the busiest maritime trade route in the world—has been a critical factor in its success. This strategic position has made it a key global shipping and oil trading hub, attracting multinational companies and enabling it to dominate global trade in these sectors.

How did Singapore’s oil industry contribute to its economy?

Despite having limited oil reserves, Singapore leveraged its strategic location to become a major oil trading hub. The country developed significant infrastructure for importing and refining oil, catering to global shipping needs. Singapore's large-scale oil facilities, especially for bunkering (fueling cargo ships), made it a crucial part of the global oil supply chain.

What are the key differences between Singapore's approach to governance and other democracies?

Singapore's governance is characterized by a one-party system, where the ruling party has held power since independence. This system allows for long-term political stability and consistent policies, but it also limits political pluralism. While technically a democracy, the system provides less political competition compared to other countries.

How does Singapore's workforce contribute to its economic success?

Singapore's workforce plays a vital role in the country's economy, with a high level of productivity. The government invests heavily in education and skill development, ensuring that the workforce is highly skilled and adaptable. Additionally, the country benefits from a daily influx of foreign workers, primarily from neighboring Malaysia, which further enhances its productivity.

Why is the legal system in Singapore attractive to international businesses?

Singapore's legal system, based on the British common law, is well-regarded globally for its clarity and reliability in resolving business disputes. This makes it a preferred location for international companies, offering a stable environment for commerce and trade, especially compared to other regional legal systems.

What impact does Singapore's tax structure have on its citizens and businesses?

While Singapore’s taxes are relatively low for individuals, with a top rate of 24% for high earners, businesses still pay significant taxes. In addition, Singapore has high property taxes and other charges, such as fees for car ownership, which help fund public services. The combination of low taxes on individuals and high charges in other areas balances the government’s revenue needs.