Wednesday, December 15, 2010

Singapore-Malaysia economies: Size doesn't matter

Dec 15, 2010

By Pan Xing Cai

AS THE year draws to a close, we look back on two major occurrences that have taken place this year:

After three decades of reform and opening up, China has outshone Japan, a country that is 4 per cent the size of the former, to become the second largest economy in the world - thus proving what many have forecast before.

Singapore, 'sacked' in 1965 by Malaysia, a country 520 times its size, is set to surpass the latter economically after 45 years of hard work, thus refuting the prediction that the 21st century belongs to continental-sized countries.

Singapore's economic miracle is not only an insult but also a terrible blow to Malaysia. Despite being smaller in size than New York City, the only nation in South-east Asia devoid of natural resources, and with a population one-fifth that of Malaysia, Singapore's economy has grown 189-fold since independence on Aug 9, 1965, with its per capita income rising from US$512 in 1965 to US$36,537 (S$47,830) last year.

Malaysia, by contrast, had a gross domestic product per capita of US$6,975 last year, up from US$335 in 1965.

Singapore's GDP was expected to grow by 15 per cent this year to US$210 billion, its fastest growth rate since independence, while Malaysia's economy was predicted to grow by only 7 per cent to US$205 billion.

The city-state, once considered a 'poor little market in a dark corner of Asia', is now ranked by the World Bank as one of the easiest places to do business, has the world's second-busiest container port, and boasts the highest proportion of millionaire households.

Then Singapore Prime Minister Lee Kuan Yew cried during a televised interview on the day Singapore was driven out of Malaysia, but he vowed to make a success of Singapore.

After being driven out, Singapore was disparaged by Malaysian ministers. One of them, speaking to me (a reporter then) off the record, said: 'It will not be long before Lee Kuan Yew crawls back (to Malaysia).'

Another minister said: 'Once a Singapore aircraft takes off, it will infringe onto our airspace but we will not shoot it down.'

If these ministers are still around, they will have mixed feelings.

With Singapore's economy poised to overtake Malaysia's, former Malaysian prime minister Mahathir Mohamad, who ruled the country for 22 years, attributed it to 'Malaysia's social restructuring policy and its equitable distribution of wealth between the races'.

Dr Lee Hock Guan, a senior fellow at Singapore's Institute of Southeast Asian Studies said incisively: 'Malaysia was struck by the curse of resource-rich countries: It didn't optimise its human capital.'

Singapore leaders have remarked that the city-state has recruited many foreigners to fill the top of its population pyramid, while their neighbour (obviously referring to Malaysia) brought in foreigners to fill the bottom of the pyramid.

By offering scholarships to 61 independent Chinese schools in Malaysia, Singapore has recruited a large number of bright students who did well in the Unified Examinations (UE).

Yet, the Malaysian government has refused to recognise the UE certificate and continues to discriminate against talents (on the basis of race).

Malaysian Ambassador to the United States Jamaluddin Jarjis revealed that 200,000 Malaysians have opted to become citizens of America but continued to send money home annually, amounting to an estimated US$2 billion or 10 per cent of their income.

A nation's or an enterprise's assets are its talent, not its natural resources. How can Malaysia not be surpassed by Singapore, which cherishes talent? Let's see if if Malaysian Prime Minister Najib Razak's Economic Transformation Programme can turn the country around.

This commentary first appeared in Nanyang Siang Pau, a Malaysian Chinese newspaper, last Friday.

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