Which way GDP?

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Orchard Road pedestrians

By Thusitha de Silva

Orchard Road pedestriansThe Singapore government’s economic focus is likely to remain on continuing to grow the gross domestic product.

When Myanmar opposition leader Aung San Suu Kyi recently said that Singapore should learn from the more relaxed way of life in her country, it affirmed what many in the city-state were thinking. While optimistic about the future, the majority of Singaporeans want a slower-paced life, for which they are willing to compromise on economic growth.

This is one of the findings of a survey of 4,000 citizens conducted in January as part of the Our Singapore Conversation exercise.

That Singaporeans now generally want a slower place of life is not particularly surprising.  Things have been hectic in recent years. While Singapore’s economic development since the 1960s has been remarkable, things really started to accelerate from early in the new millennium. Between 2002 and 2012, Singapore’s population expanded from 4.18 million to 5.31 million, according to government data. Over the same period, the gross domestic product (GDP) more than doubled from S$162.3 billion to S$345.6 billion.  That is some pace of growth but it has come at a price, including a high cost of living, lofty property prices and a wide income gap.

Three basic areas of Singapore’s economy, namely healthcare, education and transport, are all facing the strain of this phenomenal run.  This, in turn, puts strain on many Singaporeans who are struggling to get by.

 New challenges

Going forward, Singapore faces new long-term challenges as the global economic environment changes. In the past, the city-state could perhaps rely on at least one of the world’s biggest economies, the US, Europe and China, to take up some slack, but now all three are working out their own problems.

A sustainable recovery doesn’t appear to be on the cards for any of them in the medium term, though in China’s case, it’s more about a downgrade in growth expectations. As such, Singapore will likely have to look closer to home to enhance its growth prospects in coming years.

Prime Minister Lee Hsien Loong alluded to some of these growth drivers within the city-state in his National Day Rally Speech in August. This includes plans to shift one of the world’s busiest ports to Tuas, freeing up land for property development in the Keppel area. More property development means more GDP.

Another obvious source of growth opportunities for Singapore is South-east Asia. Singapore has actively sought to improve ties with members of the Association of Southeast Asian Nations (Asean), and bilateral relationships with the likes of Malaysia and Indonesia have been ok, even with a few hiccups along the way. Further, despite Ms Suu Kyi’s gentle reservations about the path that Singapore has taken, Myanmar remains a strong economic ally.

In a speech at the opening of the inaugural Network Asean Forum in Singapore in August, Finance Minister Tharman Shanmugaratnam articulated something of a rallying cry to the region in his concluding remarks.  “We are at a good starting point. We are also in the right part of the world where there are significant growth opportunities not just domestically but also to be achieved through greater regional integration. While our external environment has gotten tougher, it is a useful reminder that our domestic and regional fundamentals have to be enhanced if we wish to offset negative spill-over effects, and in fact improve our growth performance,” he said.

The Network Asean forum got business leaders from the region to brainstorm solutions to some issues that are holding back the creation of an integrated Asean Economic Community (AEC).  The roadblocks are understandable considering different countries in the region are at different stages of their economic development.

Also, not all countries are likely as focused on growing GDP as Singapore is, even though their respective governments may harbour such views. So, it’s only natural that there have been delays.

In the meantime, lessons have also been learnt from the mess that is the Eurozone, where countries like Greece, Spain and Portugal are on different economic gears compared to the likes of Germany and France.

Mr Shanmugaratnam’s comments at the forum were directed at business leaders from the region, and he would likely not have heard any dissenting voices. Business leaders tend to have gone to the same schools and all are trained to think in a similar way. But how is the Singapore government going to cope with the growing view that people’s lives should not be compromised by GDP growth?

Singaporeans are not blind to the negative effects of the unbridled growth in the last decade that is evident in Singapore. Things are getting a bit more edgy in the city-state and because of the internet, people have a place now to vent their frustrations. The internet also enables them to closely scrutinise every policy that the government comes up with, much to the latter’s chagrin.

 What Robert F Kennedy said

This trend of growing awareness is only likely to gain traction and the next general election in Singapore, which has to be held by 2016, could become a sort of a referendum about whether Singaporeans think that the government is navigating a sustainable path for the country.  Will its focus on GDP be too much to bear by then? Perhaps we should remind ourselves of what then US presidential candidate Robert F Kennedy said about the gross national product (the market value of all the products and services produced in one year by labour and property supplied by residents of a country) at the University of Kansas in March, 1968.

“The gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”

Mr Kennedy was assassinated three months later, and never became US President. We’ll never know if his thoughts on the economy would have been put into practice. Things could have been different if it did, because the US was the global thought leader in those days.  Still, the likes of Ms Suu Kyi may have been inspired by Mr Kennedy’s words.

However, there are few other global leaders these days who would publicly say the same–the corporates behind the scenes will have none of that type of nonsense. Nonetheless, one gets the feeling that Mr Kennedy’s words are likely to resonate even more today as the gap between the rich and the poor widens across the world, including in Singapore.

Thusitha de Silva has been working in financial media for the last 20 years.