Economic Maturity


Had the chance for a break back ‘home’ to UK and spent some time thinking about the economy back home in Singapore – the apparent lack of ‘growth drivers’, the preliminary attempts to ride on waves in the world made by China and the current short term lifting done by the US economy for our tiny island-state one. We are in the midst of shifting steady states or rather the movement from one potential steady state to another. There are some thoughts i had about our economy, about the economic system, where we are and some of the key things we need to set our sights on for the next couple of decaes – where we might have done right and where we may have gone quite wrong.

Current Status 

In short run, our economy is still well-positioned to capture growth coming in from established institutions based on prevailing ‘world order’ but as the transition starts taking more form, we are left wondering if we should have thought about transformation earlier. The truth is we did but no one really had answers yet. There is an anxious scramble to get into ‘position’ but we really need to consider more deeply what this positioning is about and how we need to make use of the earlier generation’s thought-followership success and move towards genuine thought-leadership in economic development.

External vs Internal Positioning

There are 2 dimensions one could think about businesses, economies, or just plain economic entities – one is external positioning, and the other is internal organisation. External positioning is important because the place you are at would determine the universal set of opportunities available for grabs. Whether those opportunities can be well-exploited will depending on your internal organisation. There are lots of economic entities that have great internal orgnisation and I’m thinking about much of the Western European economies. But they might not be in a good external position. Perhaps it’s because of the demographics of the country, the circumstances, the industrial mix. But all these are ‘external’ to the extent they can be seen. When I refer to ‘internal organisation’, I’m thinking about the rules, the institution created in the economy. And institutions have the tendcy to be multi-equilibria systems. Which is to say that you can end up being very stable in a not-so-good institutional set-up and have absolutely no impetus or path of low-resistance towards the better, known institutional artrangement. So this is actually much harder to get right than external positioning.

Consider the Chinese businessmen who built his initial empire up through opportunistic entry into basic cornerstone sectors at the points when China moved towards a market economy. His external positioning is excellent and he might be able to milk it for a while but if he does not take that opportunity to clean up matters relating to corporate governance, improve internal structures and framework that allows the organisation to continue humming without his personal relationships or connections then the viability of the business empire beyond his time is in question and so is the economy of the village he resides in. Singapore can be detroit during an auto-boom, but the wealth generated must be used to buffer and strengthen its internal structures such that it relies on more than just the auto-boom for growth. In the earlier stages of growth, the economy can rely on the government to build frameworks and structures to help the economy ‘lean’ on something like an auto-boom. But in the long run, the government will have to hand this back to the market economy to make a choice on which sector to develop and grow. In other words, the extrnal positioning, the easier part of the job needs to be handed over. The government then must launch itself to deal with the issues of internal organisation relentlessly.

The Right Stuff

That is where our recent attention towards productivity and manpower development becomes so important and right. We definitely need to raise productivity. This is can only be done through a mixture of soft incentivisation for greater adoption of machines and equipment that reduces the need for unskilled labour as well as to create hard structures that are tied to these  actual technological products in order to curb the use of such labour. In other words, work permits that are made available to companies must be tied to demonstration that the company has seeked out other ways of accomplishing the required tasks without labour but failed. A formula or way of valuing the labour vis-a-vis the capital has to be worked out so that companies unable to demonstrate reliably that they are using the overall more efficient approach willl have to be disallowed from hiring more unskilled workers.

The question of manpower development is more tricky as it has more to do with manpower that are local Singaporeans than foreigners in the country. Our manpower quality has been suffering and I should caveat this statement with the fact that I did not conduct any research relating to this other than speaking to a handful of business owners and I think (again, speculatively), that this is largely a combination of increasing emigration as well as the change in structure of economy resulting in the irelevance of some of the skills of our older workers. The overall gene pool of workers with positive working attitudes is further eroded by a corporate culture that emphasize KPIs over individual workers’ well-being, often to the extent that well-being has to be measureable before it is something to be worked upon. This sort of evidence-based resource allocation optimisation, while beautiful in theory and on paper, generates immense dissatisfaction at working level. Again, I caution that I’m overgeneralising and potentially exaggerating the degree the problem manifests in reality.

Skills upgrading has been peddled around for decades but have not been ramped up as much as recently. But even then, I believe the existing measures are a little too broad and not targeted enough.  The soft skills of Singaporeans are more lacking than hardskills. And I’d go further to argue that good work ethic makes up for more than lack of skills. The willingness to learn, to advance in the work without necessarily having to go through n’certification’ and arbitrary ‘courses’

The Not-so-Right Bits

Here’s when merely working on building skills without improving attitudes and work ethics cannot go very far in developing our local manpower. The injection of competition through bringing in ‘foreign talents’ can continue but needs to be tempered with a proper mechanism that allows our local workforce to gradually phase those ‘foreign talents’ out. The more I work with MNCs, the more I realise how bringing in talents from their home country or countries they already operate in is indeed much easier than trying to hire locally. A mechanism that allows the local talent pool to be tapped and then freeing the the local talents to go into the private sector and ‘do their own things’ needs to be  created. We are doing a lot of startup-mentor matching and that is a great move.

Corporate culture and governance is something we tend to overlook when assisting local industries. I don’t know how we can assist in this aspect especially since junior Stat Board account managers don’t often have the insights into organisational behaviour the way bosses of bigger corporations do. The question is whether we can do something that provides cross-pollination opportunities with the end goal of improving the gene pool of the labour force.. This would likely be done by bringing people people with experience in places with great corporate culture into ‘poorer’ places and lead a transformation.


The above discourse is meant to kickstart some more thoughts in this area of economic development of Singapore towards a true first world stage, where the quality of our workforce is truly comparable with countries of the first world and definitely with productivities that are comensurate. To a certain degree, I have let out the underlying variable I hope Singapore can start developing as a unit of driver for our internal organisation that will enable our market economy to better settle the issue of ‘external positioning’ – improving corporate cultures and building genuine first-world enterprises.