Singapore: Staying on Course with Continuity amidst Change

2004

Eugene Tan

Singapore is on the threshold of the second change in the Prime Ministership in 45 years. Incumbent Prime Minister Goh Chok Tong will step down later this year. He has expressed interest in the office of Senior Minister, a portfolio presently occupied by founding Prime Minister Lee Kuan Yew. Although it is a foregone conclusion that Deputy Prime Minister Lee Hsien Loong will succeed Goh, PM Goh has explained that MPs from the ruling People’s Action Party will get to endorse the next Prime Minister as he must command the confidence of the party’s MPs, and not just the Cabinet’s inner circle. The intent is to enhance the new Prime Minister’s legitimacy, which is important given that DPM Lee is Lee Kuan Yew’s son. DPM Lee will also have to carve his own niche and leadership style while seeking to establish rapport and popularity with the electorate, a hallmark of PM Goh’s tenure.

Relations with Malaysia have warmed up considerably in the first hundred days of Malaysian Prime Minister Abdullah Badawi’s term. Nonetheless, DPM Lee will have his hands full in this regard as the obstinate points of contention have to be intricately managed. He will also have to quickly nurture fluency in bilateral relations with Malaysia as well as Indonesia, both of which are in an election year. The possibility of a new Indonesian leadership will add to the diplomatic flux.

India is now being carefully and robustly courted, notwithstanding the vivid memory of ambivalent Singapore-India economic cooperation relations in the mid-1990s. The Economic Development Board will open its first Indian office in Mumbai later this year and will seek to attract Indian investment, especially in the IT and services sectors. Singapore hopes to seal the free trade area agreement (FTA) with India in April 2004, before the Indian general elections. Renewed confidence in Asia is being bolstered by plans by Temasek Holdings—the government’s key investment vehicle headed by DPM Lee’s wife, Ho Ching — to aggressively invest in Asian companies.

Singapore’s FTA network continues to enlarge reflecting deep doubts with the progress of multilateral organisations, such as ASEAN, APEC, and the WTO, in liberalising trade. Singapore’s FTA with Jordan is scheduled for completion by July 2004. FTA negotiations with Bahrain begin this month and talks with Egypt and Panama are on the horizon. The rapidly growing FTA network with small trading partners provides indeterminate opportunities and does not distract Singapore from its traditional trading focus on the US, Japan, and China. While the FTA bandwagon enhances Singapore’s trading linkages, success hinges on broad-based economic complementarity between Singapore and its FTA partners and the ability of business communities at both ends to capitalise on these inroads.

Furthermore, Singapore needs to go beyond viewing the Indian and Chinese economies as mere factories and markets; it needs to quickly abandon its limited and ineffectual middleman role too. Indeed, Singapore needs to gain leverage from these two powerful economies to enhance its own attractiveness as a vibrant, competitive and cutting-edge business hub.

WATCHPOINT: In the lead-up to the change of leadership, a climate of sustained confidence, graduated openness and policy continuity will be maintained. With forthcoming Indonesian and Malaysian elections, Singapore will monitor regional developments even more closely.

 

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