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Are Foreign Investors Scared?

The Prime Minister Weighs in on Pragmatism v Populism


Hot on the heels of ESM Goh’s comments about the need for Singaporeans to be “pragmatic”, the PM has decided to go for the old scare tactics of warning Singaporeans that foreign investors are scared off by an Opposition presence.  To quote:

Speaking at the National Day Rally at the National University of Singapore last night, he said: ‘They have asked us directly whether Singapore is changing course fundamentally, because our society is changing, our economy is changing, our politics is changing.

‘But what new Singapore will it be? Will we respond to the pressures of the day and become like so many other countries, short-term and reactive, or will we maintain our strengths? As (Emeritus Senior Minister) Goh (Chok Tong) put it, will our politics remain pragmatic or will we become populist? And that is a very direct question, important, which they have asked us.’

Mr Lee said he had met with concerned CEOs of multinational companies at the Economic Development Board’s 50th anniversary dinner earlier this month. ‘I reassured them that we are determined to keep our strengths, that we know what Singapore’s prosperity depends on… We will maintain the policies that are important to us, and therefore useful to them.’

But they will wait to see if the actions follow the words, he added.

‘If I were them, I would also wait to see what Singapore does. So make sure we do the right thing so they continue to invest, we continue to have good jobs and Singapore continues to prosper.’*

Several observations spring to mind.  Firstly, I would question the assertion that our politics is changing. If by changing it is implied that it is becoming more open or democratic. In fact the executive branch of government has held off from convening Parliament till October. So despite all the hype about this being a watershed election and the fact that WP might want to ask some questions about the Elected Presidency, the PAP have complete control. In place of the live televised debates of yesteryear the PAP uses the State controlled (and mostly State owned media) to conduct the business of being accountable to the people and Parliament is just a nice container for the rubber stamp. Despite the 6 seats we are arguably less open and less free than in the 1980s.

Next, this type of PM speak engenders a strong sense of déjà vu because precisely these arguments were advanced, though in blunter terms, by his father when JBJ was elected in 1981. Then there were dire warnings along the lines that the sky was about to cave in if more Opposition MPs were elected to Parliament.  Not those exact words obviously. (But Hey, sue me ! ) These economically nonsensical warnings were repeated in GE 2011, when Mr. LKY warned that property values would be destroyed if the Opposition parties gained too many seats in Parliament. With the added push that you would all be daft. (But you weren’t daft were you? You all followed the perfect media lightening rod, GMS’  Tampines campaign struggled to get visibility and Tampines remained in PAP control. As  for MBT – well that’s another story.)

It is absurd to say that the loss of six seats out of 87 in any way dents the power of Singapore’s overweening executive. Legislation can still be rushed through Parliament without effective scrutiny and the Workers’ Party do not have any ability to hold up its passage. Even if twenty seats had fallen to the Opposition in this election this would still be the case. Or 30.

Most of the foreign investors and multinational companies come from countries that are considerably more democratic than Singapore. Surely they cannot be alarmed at the prospect of a bit more democratisation in Singapore especially if this increases political stability. Despite the complaints about “gridlock”, based largely on misunderstanding about how separation of powers works, the US system is extraordinarily stable because of democratization at all levels, from the election of town mayors and police chiefs to the President himself.

My experience with financiers and Industrialists, ambassadors and politicians here and abroad is that their concern is that unless there is more democracy Singapore may be storing up stress like a pressure cooker. In the global political arena (excluding Sovereign States such as The Congo or Myanmar) politicians are beginning to exert pressure on The PAP to open up.  That is except for Robert Mugabe. I hope he has been given every assurance by our Government that his shopping trips will not be hindered by the presence of 6 opposition seats out of 87.  In fact he had so many body guards when I bumped into them (they bumped me more accurately) at the Sheraton on Scotts Road, that I’m sure he is quite relaxed.

In the Singapore context, more “populist” policies aimed at boosting domestic consumption and reducing saving may be welcomed by foreign governments. The US, and multinational companies would embrace any move that promises a bigger potential market for their products. While the small size of Singapore’s domestic market reduces the importance of this factor, it does not diminish the principle if it was applied to large economies such as China. In the US and Europe, all the supposedly business-friendly policies of cutting government deficits immediately through slashing spending while avoiding raising taxes -may not end up being good for business! Particularly if the resultant lack of demand means a big reduction in sales.

But is it even the case that an Opposition party, if elected to power, would be likely to adopt business-unfriendly policies? Here the PM and the PAP are adopting the old trick of lumping all the Opposition together in an effort to try and confuse their audience, whether the public or foreign investors, into looking at the lowest common denominator.  And yet we know that previously I was attacked for my policies being out of step EVEN with the rest of the Opposition parties (so The PAP lump us as one when they feel like it and pick RP out as distinct when they feel like it.)  That is because The Reform Party is not anti-business. We have called for maintaining a low-tax environment and welcoming foreign investment.

Back in 2009, I advocated the privatization of Temasek and GIC and the distribution of shares to Singaporeans coupled with the sale of many of Temasek’s stakes in GLCs. This policy caused quite a buzz at that time with many people misunderstanding it including the YPAP website who seemed to think listing equated to disbanding (see our press release in response below).  Concurrent with that policy I advocated the opening up of government monopolies in public transport, housing, mobile telecoms, broadcasting and power and other utilities to competition. I also put great stress on the fact that in order to be attractive to investors we needed to focus on productivity and not empty GDP growth mostly fuelled by an increase in imported foreign labour.

This became part of our Election Manifesto for GE 2011 and now appears to be moving into the mainstream of political discourse in Singapore. Hooray! At least one other Opposition Party is now singing from the same hymn sheet as us (in fact they don’t seem to have many ideas that didn’t originate with us)  and one presidential candidate is proposing my policies on Temasek Holdings and now has jumped on the call for greater productivity. At the same time though,  at least one prominent member of the same Opposition party has warned of the dangers of populist policies post-election in language that is uncannily similar to the PM’s!**

It does seem that there is a trickle-down effect. Clearly Opposition parties such as RP can be pro-business. It is actually incredibly arrogant of the PAP to think that they have a monopoly on economic and business competency. If that was ever true, it has certainly been exposed by the last election, with the most economically competent member of their dwindling talent pool being forced to double and even triple up. And I would suggest that even when an Opposition Party appears to be anti-business so long as they are pushing for and achieving democratic reforms; it is also a positive sign for investment. To answer the CEOs who asked the PM whether Singapore is changing course fundamentally.


But we are starting to see a few new ideas being thrown into the arena along with a new breed of credible candidate. Now we need to start recognising the double speak rhetoric when it comes at us (and from wherever it comes) and to ask the PAP to put a different record on (or indeed shuffle that track!).



“Moving forward, greater political participations should not lead to populist policy and the Ruling Party should stop using “Grow & Share package” and “Estate Upgrading Plans” as means of creating popular support for their party. Such behaviour promotes the move towards populist policy, which many would agree is detrimental to the development of Singapore politics at this stage. “

PRESS RELEASE 02/03/2010

The Reform Party


Response to YPAP

Today Temasek Review (TR) published an article (“YPAP activists attack Reform Party’s proposal to privatize Temasek and GIC as “squandering” Singaporeans’ future away”) responding to earlier comments by a group of YP activists from the North (Singapore) on The YP activists are conspicuously silent on whom they are responding to, but as TR says their comments appear to be aimed at our proposals.

While grateful to TR for defending the Reform Party’s response to Budget 2010 (the link is:

I thought it was appropriate to respond directly so as to clear up any misunderstandings. Taking the YP points in order:

(Points 1 ,2 and 4 edited for the point of this blog)

3.    “We should privatise Temasek and GIC and give the equity to Singapore citizens.”

 The YP accuse us of wanting to squander Singapore’s reserves and leave us defenceless.

This is based on a misunderstanding of our proposals or a basic lack of knowledge of the meaning of equity. The Reform Party has said that one option of ensuring that Temasek and GIC directly benefited Singaporeans would be to give Singapore citizens (who had either been born here or been citizens for a certain length of time, say ten years) equity in our sovereign wealth funds. This would occur as a result of a process of privatization and the listing of the shares on the stock exchange. As everyone knows, shares can be traded without requiring the liquidation of the underlying assets and this is one of the fundamental innovations of a capitalist economy. Just because shares in Singapore Airlines or General Electric of the US can be traded does not meant that the company itself has to be liquidated. A market listing would put a valuation on Temasek and GIC and put an onus on both companies to be more transparent and accountable. In addition it would put greater pressure on management to perform or risk a shareholder revolt and their ousting. A Reform Party government could retain a “golden share” so as to prevent a foreign takeover of those assets deemed strategic.

Control over sufficient reserves to defend Singapore’s currency would be retained by the Monetary Authority of Singapore.

Released by Kenneth Jeyaretnam on behalf of the Reform Party, February 25th 2010


  1. My ‘problem’ with the SG model is that it relies so heavily on MNCs. At the rate at which our neighbours are developing, MNCs can always uproot when operational cost becomes too high (labour + rental), hence they’ve got our government on a tight leash. We need to grow local businesses to create jobs for Singaporeans, promote entrepreneurism, push the young to dream, to create. I think the nordic european countries serve as a good model seeing that they too have a small population. And they have weathered the economic crisis very well as a result of strong domestic economy. I suspect I’m looking at this too simplistically but I stand by the fact that we need to rely less on MNCs, not more.


  2. What is your view on the PAP’s take that we need foreigners to attract MNCs and other foreign companies to set up base here in Singapore which in turn helps create jobs for Singaporeans? Is this the only method of attracting foreign companies? Are the MNCs not as dependent on us for the SEA region with our port and airports? Is cheaper labor the only option? If that is so how are the MNCs surviving in developed countries with higher labor costs such as the U.S.?


    • Exactly. Our model should be high-wage Switzerland rather than attempting to compete directly with other low-wage European countries. Providing jobs for Singaporeans that are high value-added and pay high salaries should be the objective rather than GDP growth fuelled by cheap labour which ends up pushing up property prices and other costs thus eroding our own workers’ wages.


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