Singapore is a small island nation in Southeast Asia. The country is so small that it’s not easily noticeable on a map. With an area of 734 square kilometers, it’s just over twice the size of Dhaka (306.4 square kilometers). Yet, over 6 million people live in this small country. In other words, with more than 8,400 people per square kilometer, Singapore is the third most densely populated country in the world. With 30 times more people, Bangladesh ranks 10th among the most densely populated countries globally. Given the high population density in such a small country, one might assume the living conditions would be poor. However, in the Quality of Life Index, Singapore ranks 21st, ahead of countries like Saudi Arabia, Qatar, UAE, China, South Korea, and even the USA. In fact, not only in terms of living standards but also in terms of purchasing power parity, the country’s GDP per capita is over $127,500, making it the second-highest in the world.
Overview Since the beginning of the 14th century, Singapore has been used as a trading port. Before the British arrived, the rule of the island changed hands many times. Understanding the potential of this small island as a trading port, Sir Stamford Raffles purchased the island from the Sultan of Johor in 1819 and declared it a free port. This allowed commercial ships from various parts of the world to dock in Singapore without paying any docking fees. As a result, Singapore’s popularity as a commercial port increased, and the island experienced an economic boom, attracting people from different religions, races, and ethnicities from surrounding regions to come to Singapore in search of livelihood. However, the island was not only used as a trading post but also as a manufacturing hub. During that time, opium was cultivated in Bengal under British India, processed in Singapore, and exported to China in exchange for imported tea. This is how the island became an important hub for maritime trading.
In 1941, the Japanese army invaded the country and captured the island by defeating the British in the Battle of Singapore. During the Japanese rule from 1942 to 1945, many Singaporeans were brutally killed. After Japan’s defeat in World War II, control of the island returned to the British, but due to their failure to defend Singapore from the Japanese during the war and with other colonies under British rule also demanding independence, the people of Singapore began to call for a separate state. Although the British rejected this demand, in 1946, instead of granting independence, they gave the island administrative autonomy by declaring it a Crown Colony under the control of a governor. In 1955, David Marshall became Singapore’s first Chief Minister, and the following year, he made a diplomatic visit to London to negotiate autonomy for Singapore. However, when the British rejected his demands, he resigned, and his successor, Lim Yew Hock, continued negotiations for Singapore’s autonomy. As a result, the British accepted Singapore’s demand for autonomy in 1958, and from June 3, 1959, Singapore emerged as an independent state, except for defense and foreign affairs.
Meanwhile, to form a government for the newly independent state, a general election was held in 1959, where the People’s Action Party won, and Lee Kuan Yew was elected as Singapore’s first Prime Minister. In 1963, he declared independence from the British and subsequently joined Singapore with the Malaysian Federation. However, due to the differences in religion, race, and ideology between the Malay majority in Malaysia and the mixed population of Singapore, a bill was introduced in the Malaysian parliament in 1965 to separate Singapore from the Malaysian Federation. Consequently, Singapore was separated from Malaysia, leaving the country entirely on its own, causing uncertainty about its future among the people.
At the time of separation, Singapore’s socio-economic condition was very poor. The country had no natural resources that could be exploited. Furthermore, due to the British cultivation of opium, many workers had become addicted to opium, and it was estimated that between 13,000 and 20,000 people were heroin addicts. This was later exacerbated by alcohol and gambling addiction, along with serious problems like unemployment, poverty, and riots. When Singapore was established as an independent state, the British also announced the withdrawal of their troops from the island in 1967. Prime Minister Lee Kuan Yew was deeply concerned about how to revive Singapore from such a critical situation. His government’s officials took on the challenge of rebuilding a broken Singapore.
Over the past six decades, this country, which is smaller than Bangladesh, has become an economic powerhouse and one of the four Asian Tigers in the region, as well as one of the richest countries in the world. Currently, nearly 6 million people live here. According to the World Bank, the country’s current GDP is approximately $501,428, ranking 31st in 2023, while Bangladesh’s GDP is around $437,415, ranking 35th, and Malaysia’s GDP is about $445,519, ranking 36th. Additionally, according to the World Bank’s 2023 data, Singapore’s GDP per capita is $141,500, ranking 3rd, whereas Bangladesh’s GDP per capita is $9,066, ranking 126th, and Malaysia’s GDP per capita is $37,248, ranking 53rd. Singapore’s geographical location is not in its favor as the country has no natural resources. According to World Banking, the country’s total foreign reserves in 2023 were $359.83 billion, compared to Bangladesh’s $21.86 billion and Malaysia’s $113.44 billion. Additionally, the average salary in Singapore is about $5,783, while in Bangladesh, it is $275, and in Malaysia, it is $681. On the other hand, in the world’s top Liveability Index, Singapore ranks 26th, Bangladesh ranks 166th, and Malaysia ranks 94th. The country’s life expectancy is 83 years, while it is about 76 years (74.8) in Malaysia and 74 years in Bangladesh. Moreover, Singapore’s literacy rate is 97.6%, while it is 95.71% in Malaysia, and Bangladesh’s rate is much lower compared to these two countries, at 76%. Singapore’s current development status is quite remarkable, but how did such a poor country become so wealthy?
Economic Reform
Prime Minister Lee Kuan Yew and his government played a crucial role in Singapore’s turnaround. In 1967, to bring geopolitical stability with neighboring countries, Singapore, along with four other Asian countries (Indonesia, Malaysia, the Philippines, Singapore, and Thailand), formed an organization similar to SARC called ASEAN, with the aim of increasing mutual cooperation in economic, technological, educational, social, and cultural fields to establish peace and prosperity in the entire region.
In the case of rebuilding the economy in a newly independent country, agricultural production and natural resources usually play a crucial role. However, Singapore had neither natural resources nor enough land for agricultural production. The only advantage the country had was its geographical location. Being used as an international trading hub since the colonial rule, this was maintained even after independence. Moreover, global trade continued to grow, and to cope with this situation, the capacity of seaports was also increased. To fix poverty and unemployment issues, the country moved towards rapid industrialization by focusing on its manufacturing sector and trying to attract global multinational companies for business. For this, various manufacturing plants were established, and investment firms were encouraged to invest in manufacturing-based industries by offering tax holiday benefits. In the 1960s, matches, fish hooks, mosquito coils, and textile products were exported from these factories. Additionally, an airport was built after independence to support business. A flight connecting hub was created here to facilitate international trade for businessmen. Furthermore, special arrangements were made for businessmen to travel to Singapore from different parts of the world, including the surrounding region, through the establishment of Singapore Airlines.
However, instead of being limited to low-end products, the country gradually started manufacturing high-value products by developing workforce skills, including petrochemicals, electronics, and precision engineering products from the late 1970s, and by the 1980s, Singapore became the world’s leading hard disk drive manufacturer. However, after the recession in 1985, they reviewed their economic policy and realized that to maintain growth, Singapore needed to move towards globalization, and finance, telecommunication, and utilities services were liberalized, making Singapore an attractive place for international business by offering tax relief incentives to foreign companies. To increase foreign investment, not only were foreign businessmen invited, but the entire process was made easier by removing bureaucratic red tape. Since there was a potential to fill the time zone gap in the global economy in the country, many international banks opened offices in Singapore to operate from there during the gap between the closure of the American market and the opening of the European market under the Asian Dollar Market with the Asian Currency Unit. According to the World Bank, Singapore ranked 2nd on the Ease of Doing Business scale, proving how business-friendly the country is.
Additionally, a corruption-free environment is necessary to keep a business successful and ongoing, so Singapore imposed strict regulations to reduce corruption in various government institutions and established the Corrupt Practices Investigation Bureau before independence, which is still operational today. This agency was given operational autonomy to take action against any corrupt officials, even the Prime Minister’s Office couldn’t interfere with their work. As a result, various sectors of business and infrastructure began to grow in Singapore. Meanwhile, Singapore’s tourism sector began to develop in the 1960s and 1970s, and several campaigns were launched to attract tourists from around the world, including the publication of a monthly newsletter. The ‘Merlion’ logo was created as the face of Singapore’s tourism, and there is a statue in the Merlion Park. As a result, in 1977, approximately 1.5 million tourists visited the country, generating about 628 million Singapore dollars in revenue. Additionally, to make the country tourist-friendly, the ‘Keep Singapore Clean’ campaign was launched, which has been conducted several times under different names with the aim of keeping Singapore clean. Moreover, laws were enacted to restrict certain human behaviors, such as chewing gum, smoking, spitting, and littering, with fines for each offense.
Additionally, the F1 Grand Prix was introduced in Singapore, which at the time was generated $79.5 million revenue. Moreover, Temasek Holdings, a state-owned conglomerate in Singapore, owns several international companies including DBS Bank, Singapore Airlines, Port of Singapore Authority, and Singtel. As a result, the net portfolio of the company was 389 billion Singapore dollars as of March 2024. To encourage the public to use public transportation, it was made very cost-efficient, and private car usage was discouraged by imposing the highest tax on cars globally. Not only that, the number of cars in Singapore is very limited, so if someone wants to buy a new car, they have to take an existing car off the road to replace it with a new one. Additionally, a certificate is required to own a private car, for which buyers must bid. According to Reuters, the bid price for a Certificate of Entitlement to own a car is $106,000, which is equivalent to the price of four Toyota Camry Hybrids in the USA.
Social Reform
On the one hand, Prime Minister Lee Kuan Yew brought regional stability through geopolitics, but every country has its defense needs. To address the national security requirements, he introduced ‘National Service’ in 1967. Under this policy, every Singaporean male citizen aged 16 and a half was required to register for National Service, and upon reaching 18, they would be obligated to join any division of the Singapore Armed Forces as needed for the country’s defense.
Additionally, if a country wants to reform quickly, it needs to prioritize its education sector, and that’s exactly what Singapore did. Starting from January 1, 1996, primary education was made compulsory for all children born after that date, and no one could be exempted from this without special government permission. Moreover, the country’s education standards were raised to international levels, with significant improvements made to the infrastructure of schools, colleges, and universities, and public education fees were kept very low, almost free.
Beyond the differences in education between developed and developing countries, another key factor is practical skills, and Singapore placed special emphasis on this sector. To ensure that every Singaporean citizen gained practical skills through technical schools and internships, the government made it mandatory for all employers to contribute to a monthly Skills Development Levy for their employees, which goes into a Skills Development Fund used for workforce upgrading in the country. Through this, necessary knowledge and skills were developed in Singaporean citizens, enabling workers to find employment in industries where no natural resources were required.
Since people of different religions, races, and ideologies lived in the country, the government took the initiative to make it a multi-racial country to prevent the recurrence of riots and unrest, presenting itself as an example to the world of a state where people of all kinds could live peacefully. To keep Singapore from being centered around any particular nationality, religion, race, ethnicity, language, or culture, secularism was introduced into the constitution. However, simply adding secularism to the constitution doesn’t automatically foster brotherhood among people, as humans are naturally prone to suspicion. In a country where such diverse communities live, communal tension inevitably grows, and distances between them increase. To solve this problem, the government introduced the Ethnic Integration Policy (EIP), deriving a unique solution where, starting in 1989, each public housing unit was allocated to people based on a fixed ratio of their ethnicity, as determined by the Housing & Development Board established in 1960. Under this policy, in a given property, 22% of residents would be Malay, 84% would be Chinese, and 10% would be Indian and other ethnicities, aiming to ensure that the diverse ethnic representation of the country was reflected in each public housing project as well.
This government housing project had two advantages. First, it solved the housing crisis among Singaporeans, bringing homelessness close to zero, and second, it taught people from different communities to live together under one roof. Additionally, in 1990, the Maintenance of Religious Harmony Act was passed, leading to the formation of the Presidential Council for Religious Harmony, which included representatives from each major religion, making up two-thirds of the council. The purpose of this council was to maintain mutual harmony among religious communities. Moreover, a Racial Harmony Day is observed, and in schools, students are taught how to uphold the ideals of secularism, diversity, and unity.
Furthermore, efforts were made to address the country’s informal economy. Many people in Singapore used to set up various stalls on the streets to sell goods or services, which were reorganized and relocated to enhance the beauty of the city, with many industries also being relocated. Additionally, to improve the quality of life, healthcare was introduced, which was very affordable. Under the Ministry of Health, hospitals provided beds, and systems like MediSave, MediShield, and MediFund were introduced. Overall, with a strong and growing economy, a clean city, a business-friendly environment, proper money management, education system, and social and human development, Singapore is in a very advantageous position globally. Many who once thought Singapore would remain impoverished have been astonished by its transformation into one of the richest countries in the world.
Given the potential to fill the time zone gap in the global economy, several international banks opened offices in Singapore to operate during the gap between the closure of the American market and the opening of the European market under the Asian Dollar Market with the Asian Currency Unit.
After being closed for several decades, the F1 Grand Prix was reintroduced, drawing millions of visitors to Singapore each year. In 2023, over 250,000 people attended the event, and in 2019, just before the pandemic, the event generated a record revenue of nearly 2 billion dollars.
According to the Monetary Authority of Singapore, the total asset management in the country was approximately 2.4 trillion dollars in 2017, compared to 239 billion in India. By 2022, Singapore’s asset management had grown to about 3.6 trillion dollars, while in 2024, India’s asset management amounted to approximately 702 billion dollars, still lagging behind Singapore. But how did such a poor country become so wealthy?
The British used local Singaporeans for this work. Working with opium, and with most people not being financially well off, they lived in slums.
In 1822, Raffles established various districts here, such as the Commercial Square Business Hub and Residential Area, which were divided based on religion and race. For example, Chinatown for the Chinese, and Kampong Glam for Muslims and Arabs. Although it was established as a trading post in 1819, it wasn’t until about 50 years later, in 1869, that an economic boom as a trading post was observed; this was recognized by the unveiling of the Raffles Statue in 1887 and the celebration of Queen Victoria’s Golden Jubilee. However, all of this changed during World War II.
As a result, the first general election was held in the country in 1959, where the country’s first Prime Minister Lee Kuan Yew won. After winning the election, Singapore was liberated from British colonialism in 1963.
According to the 2023 ranking of the Transparency International Corruption Perceptions Index, Singapore was ranked 5th as the least corrupt country among 180 countries worldwide, and it has maintained its position among the top ten in Asia. To maintain this environment, Lee Kuan Yew took several measures, including increasing the salaries of government employees and officials, as he believed that if salaries were sufficient, there would be no reason to engage in corruption. According to World Population Review, the country’s current Prime Minister’s predecessor, Lee Hsien Loong, who is Lee Kuan Yew’s son, was the highest-paid prime minister in history, with an annual salary higher than that of US President Joe Biden or Russian President Vladimir Putin. Along with a hefty salary, all government employees and officials were also given performance bonuses. Nevertheless, if anyone was involved in corruption, the punishment was severe.
Temasek Holdings, a company under the Singapore government, owns several international companies, including those in the transport, power, and media sectors. The company also has several subsidiaries and invests in various companies worldwide, with profits going to the Singapore government, benefiting the country’s citizens. These companies and their subsidiaries are managed very efficiently by the Singapore government. In contrast, in neighboring India, many multinational companies are privatized due to mismanagement, with profits going to private ownership rather than the government, leaving citizens less able to benefit from those companies.
Additionally, the corporate tax is set at 17%, non-resident income tax ranges from 15% to 24%, property tax is set at 10%, which may increase depending on the property’s annual value, and GST tax is determined at up to 9%. However, upon reviewing overall factors, it’s observed that Singapore’s national budget is usually in surplus, meaning their earnings are more than their spending, which is also written as a fiscal discipline rule in their constitution.
Singapore has a Central Provident Fund where citizens deposit a portion of their income. As of 2023, this fund had nearly 450,000 members, resulting in Singapore having the highest savings rate in the world. According to the World Bank, it’s around 58.46%, making it one of the top countries globally. Thus, not only does the government remain careful about their earnings and spending, but the citizens are also very conscious of savings and money management.
However, fearing that Singapore might become entirely defenseless through this, Prime Minister Lee Kuan Yew requested some time for transition from the British, leading to the withdrawal deadline being extended to 1971.
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