Singapore: Of Free Trade And Freedom


Chee Soon Juan

In the era of globalisation where signing free trade agreements has become the rage, does it matter to democratic governments that the PAP is one of the most undemocratic regimes in Asia?

Consider the following: During the Asian financial crisis, monthly wages for low-skilled workers fell up to 34 percent from S$746 in 1998 to S$492 in 1999. This was a result of the PAP government decreeing a 10 per cent across-the-board wage cut. As workers’ pay shrank, tax collection hit a record S$17.6 billion in 2000, an increase of 24 per cent from 1999. Between 1998 and 2000, the average monthly income of the lowest 10 per cent of households fell by 75 per cent whereas the top 10 per cent saw theirs rise by 11 per cent. Nearly 30 per cent of households do not earn enough to afford the minimum standard of living. The subsistence level in Singapore is estimated to be S$1,000 a month for a household of four persons. All this in a city that is consistently ranked as one of the most expensive in the world. Tens of thousands of workers are still unemployed despite the announcement that GDP grew by 10.1 percent in 2000. (S$1.74 = US$1.00)

Consider also that there is no labour movement in Singapore. Following the mass arrest of trade union leaders in 1963, the government set up the National Trades Union Congress (NTUC). In 1966, it outlawed strikes. Two years later, it introduced the Employment Act which increased the hours of work in a week, reduced the number of public holidays, cut the number of rest days and sick leave, decreased the number of days for paid annual leave, limited the amount of bonus payments, and curtailed retrenchment benefits for workers. At the same time the Industrial Relations (Amendment) Act – which ruled that unions are not allowed to intervene in promotions, transfers, dismissals, retrenchments, transfers, etc. of workers - was thrown in for good measure. In the late 1970s, the government rewrote the NTUC charter to enable non-members to assume key posts in the organization. Today with a cabinet minister as its secretary-general, ably deputized by People’s Action Party (PAP) MPs and members, the NTUC has all the independence of a baby in diapers.

Increasingly, however, the Western corporate world is willing to ignore the undemocratic nature of the PAP government in exchange for investments that can tap exploited labour in this country. The Bush administration wants to remove clauses in the FTA it is about to sign with Singapore that would ensure that labour and environmental standards in the city-state are upheld.

Politico-economic order in Singapore has been the raison d'etre for the PAP's authoritarian brand of government. It has also done wonders to convince Singaporeans that discipline, not democracy, is the key to economic development. Unsurprisingly keeping the flow of foreign capital into the country unabated has been at the core of the government's policy considerations. This is most efficiently achieved by ‘keeping costs low’ (by continuing to suppress wages). While this strategy may help prop up the GDP in the short-term, it masks long-term problems that could be deleterious for Singapore's economy. With a workforce that has been conditioned more to conform than reform, economic growth has been largely fuelled by increases in capital investment without a corresponding increase in quality output from worker efficiency. Such an economy will, in time, have tremendous difficulty in regenerating itself.

WATCHPOINT: : Even for pragmatic, hard-nosed, free traders the quality of industrial output must surely be an important consideration in the long-term interest of their investments.


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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

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