Industrialization in Singapore

140 Pages·1973·18.903 MB·English

by  Lee Soo Ann

STUDIES IN CONTEMPORARY SOUTHEAST ASIA
INDUSTRIALIZATION IN
SINGAPORE
LEE SOO ANN
LONGMAN
Longman Australia Pty Limited
Camberwell Victoria Australia
Associated companies, branches, and representatives
throughout the world.
Copyright © 1973 Longman Australia
This book is copyright. Apart from any fair dealing for
the purposes of private studyy, research, criticism, or
review as permitted under the Copyright Act, no part
may be reproduced by any process without written permission.
Enquiries should be made to the publishers.
First published 1973
ISBN 0 582 71055 3 (Cased}
ISBN 0 582 71056 1 lLimpl
Typeset by The Universities Press Pty Ltd Melbourne
Printed in Hong Kong by Dai Nippon Printing Co., { Hong Kong) Ltd
CONTENTS
Preface vii
Introduction 1
1 The State of the Political Economy 5
2 Planning for In.d.us1;rialization 1 D
3 State Development Plan 35
4: The Economic Development Boa-rd (1) 47
5 The Economic Development Board (2) 59
6 Pattern of Industrial Growth 78
7 Recent Developments 92
8 Assessment and Conclusions 111
Bib Zioqraphy 129
Index 131
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PREFACE
In this book, industrial growth has been treated very largely as the
process of economic growth itself, as the many facets of a city- state
economy cannot be discussed in isolation from each other. The fact
that Singapore became an independent country only fairly recently
must be considered. In a country which is well-established politic-
ally, it is possible to talk about economic growth with scant reference
to political and administrative changes. In g. small country like
Singapore, the interplay between politics, administration., and
economics is so vital and close that one cannot explain the success of
one without explaining the mechanics of the others.
At the time of writing (1971) the Singapore economy has 1_.__
growing at the rate of 12 per cent per annum for the past four years
and has every expectation of continuing at this rate in the immediate
furn re. The shape.of the industrial stmetnre is thus being rapidly
transformed and no text can succeed in capturing on paper the
changes that are continually taking place.
It should be possible, however, to go back and how the plans
and institutions for more rapid industrial growth were formulated
and implemented, and to assess from the pattern of growth that has
taken place, the key factors that have lain behind success. I important
factors to be to-ken into account when anal\='zing cause-and-effect
relationships in the Singapore economy are the small size of the
country, the purposefulness in the institutional framework, and the
tendency for national policies to swing from one extreme to another.
Over the passage of time, however, as innovations and' new insti-
tutions become more deeply entrenched, it will be harder for Singa-
pore to secure the wide options and a<»té1IT,»I'iIlty available to
countries tracing out new paths of growth. The future course of
vii
viii INDUSTRIALIZATION IN SINGAPORE
Singapore's economy, as indeed for any economy, is still unpredict-
able, but definite trends and patterns set in the past and present will
govern the range of probable choices in the future.
This book emphasizes governmental policy as a stir-lant of
industrial growth, so that initial governmental measures which have
evolved into independent, private activities, are not described in
great depth. The focus is on how government authority and inno-
vations have combined towards securing industrial growth.
Chapter One sets the postwar background for the Singapore scene
in terms of the particular political, constitutional, economic, and
leadership aspects during the last twenty or so years. Chapter Two
carries on from these to the different economic plans prepared, with
particular reference to industrial development. Special emphasis is
placed on the Winsemius Report, which has only recently been made
public and which played a strong role in economic policies. Official
policy was published in the State Development Plan of 1961-4, which
is the subject of Chapter Three, and embodied the expenditure and
financing of government ministries and statutory bodies. Within
-
the framework set by the Development Plan, the Economic Develop
men Board played a most impressive role, described in two chapters
Chapter Four, on the work of the projec II industrial estate, llllli
.---
Jurong project divisions, and Chapter Five, on the work of the tech-
nical consultant services, finance, and orion
i1l111ll111E
divisions. Special attention is placed on the evolvement of many
functions into the operations of full-fledged institutions or autonomous
agencies, such as the Jurong Town Corporation, Development Bank
of Singapore, Singapore Institute for Standards and Industrial
Research, Singapore Institute of Management, National Productivity
Centre, Engineering Industries Development Agency, and the
International Trading Company.
Chapter Six attempts to sum up the pattern of industrial growth
as it took place in the sixties and Chapter Seven gives a record of
recent developments as far as they can be ascertained. Chapter
Eight completes the picture by giving my personal assessment of the
industrial process in Singapore.
INTRODUCTION
Singapore is a small island, about sixteen kilometres from east to
west and fourteen kilometres from north to south, located at the tip
of the Malayan peninsula {West Malaysia) in South-east Asia.
Including a few small islands scattered around the noth-eastern
and southern parts of the main island, the country of Singapore has
an area of only 87 square lzilometrcs but possesses, owing to its did
mood shape, a 133 kilometre coastline. On the northern part
of the island a causeway 1~2 kilometres in length links Singapore to
Malaysia. The port and main city are situated on the southern part
of the main island.
Located only 136 kilometres north of the equator, Singapore is
flanked by `West Malaysia to the north, East Malaysia and the
Philippines to the more distant north-east, and Indonesia t-o the
south, west, and east (the islands Cr? the-Rhio Archipelago are quite
close to Singapore). Of the total land. area, in 1970 about one-third
had been developed for residential, commercial J= sIi§ Tnduslrlal
usage, and another one»fifth for agriculture. The balance consisted
of cultivable waste, forest reserves, marsh, and other non-built up
areas. At the latest census in June 1970, a total of 2,074,500 persons
were counted, compared with 1,445,900 persons in 1957, and 938,200
.
persons in 1947. Population density therefore rose from 1,607
persons per square kilometre in 1957 to 3,546 persons per square
kilometre in 1970, making Singapore the most densely populated
country in South-east Asia today.
The population is, however, relatively young, with about 51 per
cent being under twenty years of age in 1970. Since the end of the
Second World 'War there has been increasing provision for primary,
secondary, and tertiary education and in 1970 there were 527,668
1
2 INDUSTRIALIZATION IN SINGAPORE
full time students, half a million of whom were under twenty years
a.
of age in primary and secondary school In the 1966 Sample
..
Household Survey, only 22 per cent of those in the twenty to thirty-I
four age group were found to have had no formal education.
proportion of uneducated people over thirty-five years of age was
naturally higher, as these people grew up as children before the
Second W'orld \Var, when there werepoorer educational facilities.
Although too small to provide the natural resources to support its
population, Singapore was strategically located and large enough to
provide valuable services for international trade, tran sport and
communications. Since early history Singapore has been a trading
centre. Some evidence takes the foundation of Singapore back to
the seventh century A.D. when it was a trading centre of the Srivi-
jaya Empire based on Sumatra. By the thirteenth century, Temasek,
as Singapore was then called, was the capital of one of the three
Srivijayan Kingdoms. In the later fourteenth century, when passing
from Srivijayan (Sumatran) to Majapalxit (Javanese) hegemony it
may have acquired the name Singapura, leaning in Sanskrit 'Lion
City'. Singapore became a pivot in the struggle between Java and
Siam for regional dominance and was destroyed in tlle frequent
battles. The once great city was reclaimed by the jungle and the
Dutch, Portuguese and British fleets which began to appear in the
South-east Asian seas in the sixteenth century sailed by, ignorant of
its past glory. _
In 1811 about a hundred Malaya from Johore were led by their
chief, or Tomenggong, to a new settlement at the mouth of the
Singapore river. Tog_eth er with a few surviving Orang Laut boat-
people and & handful of tenacious Chinese growing pepper. and
gambler, they were the only inhabitants of Singapore in 1819 when
Stamford Raffles began the modern era of Singapore by selecting-it
as a British maritime base. The position of Singapore as the main
British colony in the area was consolidated in the early 1830s. The
-
three British posts in the region of the Malayan peninsula Penang,
Malacca, and Singapore --- were incorporated as the 'Straits Settle-
ments' and ruled as an extension of British India. From 1832 the
Governor sat at Singapore which thereafter was the headquarters
of British imperialism in the region. In 1867 the Straits Settlements
became a Crown Colony whose administration was directly respond
sible to London.
Singapore quickly became the great international mafliet-place
of South-east natural resources (the niagnihcant deep;
water harbour, sheltered anchorage, and plentiful fresh water) and
position, together 'the far-sighted free tr at policy of the
British administration, 11 sured that Singapore would develop as a
INTRODUCTION 3
progressive commercial centre. The arrival of steam-powered boats
in 1845, the Australian gold rush of the early 1850s, the opening of
the Suez Canal in 1869, and the advent of the telegraph in the 18'70s
contributed to the growth of the port. The growth of the tin and
rubber industries in the late nineteenth and early twentieth centuries
made Singapore the largest commercial city in the region. The
population grew from 150 on the day Rattles landed to 80,000 by
1860, to almost 150,000 by 1880, and to 558,000 by 1931, the last
census to be held by the British before the Japanese occupation.
After the British re-occupation in 1945 came a new set of problems .
The 1947 census showed a population of 938,000, containing a fairly
equal balance of males and females, with many young, local-born
people, as opposed to the predominantly male adult and foreign-
born population of earlier censuses. The problems now were those
of an immigrant society finding its roots in an island-state and facing
the task of shaping their own economic destiny, at a time when
political and economic nationalism was making an impact over much
of Asia, Africa, and Latin America .
The British economist Bonham estimated the national income of
Malaya (now West Malaysia) and Singapore in 1947 to have been
about $3,491 million' , of which about one-third, according to Sileock ,
another British economist, was concentrated in Singapore2. This.
would have given a per capita income figure for Singapore of SL241.
In 1956, Bentham, again using pioneering statistical methods' ,
estimated the national income of Singapore at about $1, 800 million
:.
giving a Per capita income of over $1,200 & year. Population growth
during the decade 1947-57 was at an annual rate of 4-3 per cont,
one of the highest for any country in the world. It was made up of a
3-5 per cent natural increase per annum, and a 0-8 per cent increase
per annum through movement of people to Singapore from the then
Federation of Malaya. Since 1959, however, national income has
grown more rapidly than a slowly growing population, resulting in a
per capita income in 1970 of $2,682. Gross domestic product by
industrial origin at factor cost rose from $1,968 million in 19594 to
$5,565 million in 19705, while the estimated population rose from
1-58 million to 2-07 million, Apart from the reduction of the popu-
lation growth rate (as this can be attributed among other things to
the rising income), the growth of the Singapore economy in the six-
ties is something to be envied among the developing nations of the
world.
"That is most striking is the increase in the contribution of the
manufacturing sector to gross domestic product at factor cost.
The contribution went up from 8-6 per cent in 1959 to 20-2 per cent
in 1970. The manufacturing sector accounted for 28 percent of the