Leninism, Asian Culture and Singapore (Part 5) posted on Monday, December 20, 2004
A government trying to juggle money between military and civilian
expenditures is figuratively said to be deciding between guns and
butter, a choice the surplus-laden government of Singapore rarely had
to make. Its problem is usually how to handle more of both. The
economic development of Singapore has followed two parallel tracks.
First, multinational companies were encouraged to set up operations
here, initially in manufacturing components and products for export
back to their own countries, and later in regional servicing and
production based on a Singapore hub. This cooperation with foreign
corporation has the advantage of generating technology transfers, and
of minimizing the risk of raising protection barriers. Second,
government- owned companies were established in certain key
industries, such as those related to defence, and for infrastructure
investments that may take long to produce a return and are thus
unattractive to or beyond the abilities of private companies.
Many of the investments have paid off handsomely. Singapore Airlines
is now one of the largest airlines of the world and for year after
year the most profitable as well as the most highly rated in customer
satisfaction. Its turnover accounts for nearly 2% of the Gross
National Product. While retaining control in the hands of the
government, its shares were sold to the public and current market
capitalization is $10 Billion. Similarly, the Development Bank,
shipyards (originally started by the British Navy), and the telephone
service have all been floated, and electricity, gas, port, office
buildings, airport ground services, etc. are to follow suit soon.
The government finger is, literally, in every pie. The Singapore
Technology Group, originally known as Chartered Industries because it
had a special charter to manufacture weapons for the army, has a
subsidiary called ST Automobiles, which runs an Opel car dealership
and a taxi company. It originally started as part of a unit for
maintaining military vehicles. Another subsidiary, ST Computers, runs
a Hewlett- Packard computer agency and a software house, which started
as a small unit handling computer purchase and installation projects.
Two other subsidiaries handle aircraft maintenance and installation of
large scale electronic equipment.
The ownership of a large number of government office buildings has
just been transferred to the ST Group, with the expectation of
floating the shares on the stock exchange one day. The company that
controls all that valuable real estate, Pidemco, was itself an
offshoot of the Urban Redevelopment Authority, the government body
that handles the sale of public land to property developing companies
for constructing residences, factories and offices, and the granting
of permissions to re-develop private land.
Another listed offshoot of URA, Resource Development Corporation,
operates stone quarries and ready-mix concrete plants, whose land
would in due course also be developed for residences. The government
finger extends well beyond mere ownership. The largest taxi company,
Comfort, and the largest supermarket chain, Fairprice, plus an
insurance company, some holiday resorts and other properties, are
owned by the National Trade Union Congress, which is nominally
separate from the government and the PAP, but always has a Minister
Without Portfolio as its chief executive.
Singapore Press Holdings, the only company with licenses to publish
daily newspapers, has most of its equity owned by the banks and
private individuals through shares traded on the stock exchange, but
its chief executives have always been persons with extensive working
experience in the government, taken from their regular positions to
manage the newspaper company. In fact, assignment of senior civil
servants to run commercial corporations provides an additional
mechanism for rewarding loyal performers. While they continue to
receive their pay from the government and have to hand over their
business salaries and director fees to the treasury, they are allowed
to retain the benefits of share option schemes. The assignments also
provide them with experience to start second careers after retiring
from the public service.
The episode of the Turf Club, the only body with a license to run a
large scale gambling operation in Singapore, shows the difficulty of
escaping government control. Over the years, the Club built up a
betting surplus large enough to warrant government attention as to the
proper use of the fund. A retired minister, Eddie Barker, was
courteously nominated to be a member of the Club committee, but in a
show of perverse independence he was rejected in the committee
election. In swift reaction, a Totalization Board was formed by the
government and given authority to oversee horseracing, and the old
Turf Club lost its racing license, its use of the race course
occupying many acres of prime land, and the existing surplus. A new
Bukit Turf Club, with Eddie Barker as chairman, was given the license
and the premises (but the surplus fund stayed with the Totalization
Board). Everything went on as before, except that the old club
committee lost control. In another episode, the Island Club, which
operates four 18-hole golf courses around the water reservoirs of the
Public Utilities Board, was at risk of losing its land leases until it
agreed to accept Board nominees on its management committee.
It is easy to look upon this pervasive control with a sinister eye,
but that would be rather unfair. The government involvement in the
various economic activities arose because for long it had the best
educated personnel of all the organizations and the best means of
accumulating capital. For example, it was natural that the defence
ministry acted as the technology watcher and venture capitalist,
because its particular needs were vitally involved, and because others
were not sufficiently trained in technology to assess new
developments. Ownership and supervision both arose, as well as other
kinds of involvement that occur in the course of business, such as
joint ventures with private businesses that receive certain incentives
and subsidies, or organizations in trouble coming under government
management, analogous to insolvent US savings banks taken over by the
deposit insurance agency in the late 80s.
What is more interesting is the effect on the behaviour of the people,
both those in control and those under the system. For the former, the
taste of business success and corporate decision making is difficult
to give up once acquired. Whereas in US or Hong Kong, government
control is seen as inevitably inefficient and disruptive to normal
market mechanisms, hence something to be minimized at all cost, the
commercial success of the Singapore public corporations tends to
foster a completely different set of beliefs. In fact, it is usually
agreed that nothing much can be done without government approval,
support and coordination to marshall the necessary resources.
Businesses require land from URA, building construction permits from
Public Works, electricity and water from Public Utilities Board, phone
and data transmission lines from Singapore Telecoms, plane trips with
Singapore Airlines, capital from banks that operate with licenses
granted by the Monetary Authority, advertising space in newspapers
that operate with licenses from the Ministry of Culture, and so on. By
granting tax breaks and subsidies, establishing particular training
programmes, permitting the import of certain types of foreign labour,
or simply depositing its budget surplus with a particular bank, the
government can make certain businesses more profitable almost
overnight. Once an idea like this takes hold, it is self-fulfilling:
any proposal not backed by the government, or by people known to be in
favour with the government, would be given little support by everyone
else and are consequently likely to fail.
For the individual Singaporean, the government is not merely the
guardian of his rights, but the very source of it. Lee Kuan Yew was
the person who brought the country into being; he and his associates
formulated the economic policies that brought the people prosperity,
just when nearby countries like China, Viet Nam and the Philippines
were following slippery paths to near disasters in the 60s and 70s;
the Housing Development Board established by him provides low cost
accommodation to the majority of citizens; government schools provide
cheap education and strict, though perhaps not very enlightened,
discipline to the children.
The government directly provides employment in ministries, statutory
boards, and increasingly, its numerous corporations. Even when one is
not directly employed in the public sector, one has to work with it: A
cooked food hawker needs a license to operate a stall; a foreign owned
investment bank or currency trading unit needs a permit from the
Monetary Authority. Various government rules and regulations must be
observed lest one risks losing one's livelihood, while offers of
shares in government companies to the public provide opportunities for
capital gains. And so on.
This results in a natural tendency to conform: wherever one might go,
one remains "in the system", and everyone seems to be working for the
same ultimate boss. Despite it being a city of four million people,
Singapore feels like a very small place, one single Singapore Inc.
Everybody knows it is wise to always tread very carefully, since the
peer you offend today, or someone connected to him/her, might turn up
as your boss long after you have gone to work somewhere else. In
reverse, given the monolithic system, bosses are not skilled in
dealing with dissent and disagreement, most organizations do not have
well developed machinery or traditions for consensus building and
collective decision making, and people who speak their views
forthrightly tend to jar the system and so are given rather little
indulgence from above and little support from peers. So we have
another "positive" feedback: because people conform, the risk of not
conforming becomes higher, making conformity all the more necessary.
But again it is not as simple as just that. Yet more factors are at
play here.
--
5. From Guns to Butter
A government trying to juggle money between military and civilian
expenditures is figuratively said to be deciding between guns and
butter, a choice the surplus-laden government of Singapore rarely had
to make. Its problem is usually how to handle more of both. The
economic development of Singapore has followed two parallel tracks.
First, multinational companies were encouraged to set up operations
here, initially in manufacturing components and products for export
back to their own countries, and later in regional servicing and
production based on a Singapore hub. This cooperation with foreign
corporation has the advantage of generating technology transfers, and
of minimizing the risk of raising protection barriers. Second,
government- owned companies were established in certain key
industries, such as those related to defence, and for infrastructure
investments that may take long to produce a return and are thus
unattractive to or beyond the abilities of private companies.
Many of the investments have paid off handsomely. Singapore Airlines
is now one of the largest airlines of the world and for year after
year the most profitable as well as the most highly rated in customer
satisfaction. Its turnover accounts for nearly 2% of the Gross
National Product. While retaining control in the hands of the
government, its shares were sold to the public and current market
capitalization is $10 Billion. Similarly, the Development Bank,
shipyards (originally started by the British Navy), and the telephone
service have all been floated, and electricity, gas, port, office
buildings, airport ground services, etc. are to follow suit soon.
The government finger is, literally, in every pie. The Singapore
Technology Group, originally known as Chartered Industries because it
had a special charter to manufacture weapons for the army, has a
subsidiary called ST Automobiles, which runs an Opel car dealership
and a taxi company. It originally started as part of a unit for
maintaining military vehicles. Another subsidiary, ST Computers, runs
a Hewlett- Packard computer agency and a software house, which started
as a small unit handling computer purchase and installation projects.
Two other subsidiaries handle aircraft maintenance and installation of
large scale electronic equipment.
The ownership of a large number of government office buildings has
just been transferred to the ST Group, with the expectation of
floating the shares on the stock exchange one day. The company that
controls all that valuable real estate, Pidemco, was itself an
offshoot of the Urban Redevelopment Authority, the government body
that handles the sale of public land to property developing companies
for constructing residences, factories and offices, and the granting
of permissions to re-develop private land.
Another listed offshoot of URA, Resource Development Corporation,
operates stone quarries and ready-mix concrete plants, whose land
would in due course also be developed for residences. The government
finger extends well beyond mere ownership. The largest taxi company,
Comfort, and the largest supermarket chain, Fairprice, plus an
insurance company, some holiday resorts and other properties, are
owned by the National Trade Union Congress, which is nominally
separate from the government and the PAP, but always has a Minister
Without Portfolio as its chief executive.
Singapore Press Holdings, the only company with licenses to publish
daily newspapers, has most of its equity owned by the banks and
private individuals through shares traded on the stock exchange, but
its chief executives have always been persons with extensive working
experience in the government, taken from their regular positions to
manage the newspaper company. In fact, assignment of senior civil
servants to run commercial corporations provides an additional
mechanism for rewarding loyal performers. While they continue to
receive their pay from the government and have to hand over their
business salaries and director fees to the treasury, they are allowed
to retain the benefits of share option schemes. The assignments also
provide them with experience to start second careers after retiring
from the public service.
The episode of the Turf Club, the only body with a license to run a
large scale gambling operation in Singapore, shows the difficulty of
escaping government control. Over the years, the Club built up a
betting surplus large enough to warrant government attention as to the
proper use of the fund. A retired minister, Eddie Barker, was
courteously nominated to be a member of the Club committee, but in a
show of perverse independence he was rejected in the committee
election. In swift reaction, a Totalization Board was formed by the
government and given authority to oversee horseracing, and the old
Turf Club lost its racing license, its use of the race course
occupying many acres of prime land, and the existing surplus. A new
Bukit Turf Club, with Eddie Barker as chairman, was given the license
and the premises (but the surplus fund stayed with the Totalization
Board). Everything went on as before, except that the old club
committee lost control. In another episode, the Island Club, which
operates four 18-hole golf courses around the water reservoirs of the
Public Utilities Board, was at risk of losing its land leases until it
agreed to accept Board nominees on its management committee.
It is easy to look upon this pervasive control with a sinister eye,
but that would be rather unfair. The government involvement in the
various economic activities arose because for long it had the best
educated personnel of all the organizations and the best means of
accumulating capital. For example, it was natural that the defence
ministry acted as the technology watcher and venture capitalist,
because its particular needs were vitally involved, and because others
were not sufficiently trained in technology to assess new
developments. Ownership and supervision both arose, as well as other
kinds of involvement that occur in the course of business, such as
joint ventures with private businesses that receive certain incentives
and subsidies, or organizations in trouble coming under government
management, analogous to insolvent US savings banks taken over by the
deposit insurance agency in the late 80s.
What is more interesting is the effect on the behaviour of the people,
both those in control and those under the system. For the former, the
taste of business success and corporate decision making is difficult
to give up once acquired. Whereas in US or Hong Kong, government
control is seen as inevitably inefficient and disruptive to normal
market mechanisms, hence something to be minimized at all cost, the
commercial success of the Singapore public corporations tends to
foster a completely different set of beliefs. In fact, it is usually
agreed that nothing much can be done without government approval,
support and coordination to marshall the necessary resources.
Businesses require land from URA, building construction permits from
Public Works, electricity and water from Public Utilities Board, phone
and data transmission lines from Singapore Telecoms, plane trips with
Singapore Airlines, capital from banks that operate with licenses
granted by the Monetary Authority, advertising space in newspapers
that operate with licenses from the Ministry of Culture, and so on. By
granting tax breaks and subsidies, establishing particular training
programmes, permitting the import of certain types of foreign labour,
or simply depositing its budget surplus with a particular bank, the
government can make certain businesses more profitable almost
overnight. Once an idea like this takes hold, it is self-fulfilling:
any proposal not backed by the government, or by people known to be in
favour with the government, would be given little support by everyone
else and are consequently likely to fail.
For the individual Singaporean, the government is not merely the
guardian of his rights, but the very source of it. Lee Kuan Yew was
the person who brought the country into being; he and his associates
formulated the economic policies that brought the people prosperity,
just when nearby countries like China, Viet Nam and the Philippines
were following slippery paths to near disasters in the 60s and 70s;
the Housing Development Board established by him provides low cost
accommodation to the majority of citizens; government schools provide
cheap education and strict, though perhaps not very enlightened,
discipline to the children.
The government directly provides employment in ministries, statutory
boards, and increasingly, its numerous corporations. Even when one is
not directly employed in the public sector, one has to work with it: A
cooked food hawker needs a license to operate a stall; a foreign owned
investment bank or currency trading unit needs a permit from the
Monetary Authority. Various government rules and regulations must be
observed lest one risks losing one's livelihood, while offers of
shares in government companies to the public provide opportunities for
capital gains. And so on.
This results in a natural tendency to conform: wherever one might go,
one remains "in the system", and everyone seems to be working for the
same ultimate boss. Despite it being a city of four million people,
Singapore feels like a very small place, one single Singapore Inc.
Everybody knows it is wise to always tread very carefully, since the
peer you offend today, or someone connected to him/her, might turn up
as your boss long after you have gone to work somewhere else. In
reverse, given the monolithic system, bosses are not skilled in
dealing with dissent and disagreement, most organizations do not have
well developed machinery or traditions for consensus building and
collective decision making, and people who speak their views
forthrightly tend to jar the system and so are given rather little
indulgence from above and little support from peers. So we have
another "positive" feedback: because people conform, the risk of not
conforming becomes higher, making conformity all the more necessary.
But again it is not as simple as just that. Yet more factors are at
play here.
--