Lessons from Singapore

I recently visited Singapore and Kuala Lumpur.  It was my first trip to Asia and a great opportunity to see first hand two cities at the heart of the booming emerging markets touted to lead world growth and development in the coming decades.  I was lucky to have been granted access to some very senior government and business leadership and I learnt a number of lessons that can be applied to the development of Cape Town and South Africa.

Every city seems to have one thing that defines it more than anything else.  In Singapore it is undoubtedly smallness.  Everyone mentions how small Singapore is at least once in any conversation.  When it separated from Malaysia in 1965, the country had no fresh water supplies of its own, no agricultural land to speak of, in fact pretty much nothing other than its people (14% of whom were unemployed) and its small port.  The country has since grown in size through reclaiming land from the sea.  Today it is roughly 42km by 24km in size, an area about the size of the Cape Flats.

Since independence, Singapore has taken a very strict, orderly and centrally planned approach to its development, going from an underdeveloped to developed nation in around 30 years.   The political stability under Lee Kuan Yew, who remained prime minister for 31 years, meant that long-term plans were made and based on strategy rather than populism. The same party (PAP) is still in power, with Lee’s son being the current prime minister. Despite recognizing that Singapore has essentially been a benevolent dictatorship for 45 years, no one seems to mind.

The characteristics of the place at the time – poverty, inequality and the population demographics being fundamentally different to the surrounding region (in his memoirs, Lee Kuan Yew describes Singapore as “a Chinese island in a Malay sea”) – are reminiscent of Cape Town today.  In order to keep the peace and survive in a hostile environment, the government set about getting its people busy so that they could live a better life.  They opted for a strategy consisting of four prongs; Connectivity, Openness, Reliability and Enterprise (known by the acronym CORE).

They realised that to have the support of the rest of the world, they had to be relevant to the rest of the world.  Therefore they needed to be connected and indispensable as a stopover point for anyone wishing to interact with South East Asia.

They have subsequently built what is today the world’s largest transshipment port (mostly on reclaimed land), handling one fifth of the world’s transshipment traffic, with 85% of the containers passing through destined for somewhere else.  Even containers going from Australia to Japan pass through Singapore because it can be done faster that way than by a more direct route.  The same thinking around connectivity was applied to the airport and the national airline.  This thinking has since been copied by other cities around the world, most notably Dubai.  Singapore has, as a result, truly become a South East Asian hub.

I couldn’t help but think that this idea of connectivity must be a no-brainer as a core part of Cape Town’s growth strategy. We really aren’t currently on Singapore’s radar screen in terms of doing business; they’re far more interested in South America.  Yet we are perfectly positioned as a stopover point between Asia and both the fast growing regions of South America and the rest of Africa.

However, I was told by senior government officials that they had been trying to convince the South African government of the opportunity to become a transshipment hub and stopover point for Singaporean exporters and travelers, but had not received any real interest. As a result, after not being able to secure fifth freedom rights from South Africa, Singapore Airlines has recently announced that it will be flying to South American destinations via Europe.  A missed opportunity that will lead to us being left out of the growing South/South trade unless we remedy this situation rapidly.

Singapore also realized that for its connectivity to be fully utilized by the rest of the world it needed to be an open society, tolerant and welcoming to all those who live there as well as those from elsewhere.  Red tape has been minimized to the bare bones, especially when it comes to opening a company or getting work permits.  As a result, more than 7000 multinational companies have set up offices in Singapore, with many of them using it as the base for their entire Asian operations.  More than 30% of Singapore’s current population of 5 million is foreign.

If Cape Town and South Africa as a whole are to succeed in the increasingly competitive global business environment, openness to attracting talent from around the world must improve. It must be recognized that bringing foreign companies, along with their expatriate managers, to Cape Town will actually create jobs for locals rather than take them away. Red tape associated with setting up businesses and attracting skills must be cut back, as must foreign exchange controls.

It was clear that Singapore needed to produce products for the rest of the world, especially in industries that would absorb labour, since it had no domestic market to speak of.  The leadership realized that customers wouldn’t stick around long if they were known for producing cheap junk, so consistent quality and reliability became key.  This meant that the people needed to be educated, and education has been a cornerstone of the Singapore success story ever since.  Over the years the focus has moved from manual labour to capital-intensive heavy industry and most recently to knowledge production, especially R&D.

Competition in the workplace is intense, since people are identified for their talent and promoted on merit alone.  As a result, there is a huge focus on getting degrees and a culture of knowledge is built into the place.  This is certainly something that South Africa can learn from and aim to emulate. The government pays for graduates to study further overseas in order to improve their own competitiveness, especially their own civil servants (who are paid as much or more than those in the private sector).

The final leg of the strategy was to ensure that Singaporeans were “enterprising”. It was recognized, however, that it is very difficult to create enterprising businesspeople out of a population that is hungry and doesn’t have a roof over their heads. People must have a stake in the place to make it succeed. Therefore the provision of public housing became another cornerstone. Today between 80% and 90% of the population lives in public housing, subsidized to differing degrees by the government according to household income.

The Housing Development Board (HDB) is a very professional outfit, with an exhibition hall and offices based at one of the main underground stations.  The rules governing public housing are strict, but there is no hint of corruption in the process. Married couples get priority and singles must be at least 35 to qualify for subsidies.  All property is bought on leasehold, and subsidized low cost housing cannot be sold for at least five years.  People are deliberately mixed up according to race to promote racial harmony. All public housing is high rise, as there simply isn’t the space for single plot houses. Only the wealthiest Singaporeans own houses, which even then are on small plots.

Housing estates are self contained areas. The HDB’s motto for these projects is “Live, Work, Play”.  Every housing project has several restaurants (all contributing to the existence of 10,000 restaurants in the city) and significant public amenities like netball courts or swimming pools, which are “policed” and maintained by neighborhood committees.

If there is just one thing that we should learn from Singapore it would be how to provide subsidized housing. Everywhere I’ve been around the world, low cost housing goes upwards, not sideways. It really highlights the insanity of South Africa’s policy of providing one matchbox house per family per plot.

The use of public transport is encouraged, not only through the easy access to it and its low cost, but also because duties on imported cars (i.e. all cars) are around 200%, making them two to three times more expensive than in South Africa.

Densification, mixed use property developments and the taxing of cars to improve public transport are all lessons we can learn.

In all, Singapore is somewhat reminiscent of a large Disneyland, from the strict organization to the cleanliness, the frenetic consumerism, the consistent levels of good service and even the comical 1950s jingles encouraging commuters to stand back and queue as the train approaches.  The government’s approach to how it has developed is probably best encapsulated in Lee Kuan Yew’s view that if you want to relieve poverty the worst thing you can do is focus on poverty relief; you must focus on wealth creation.

While there are many aspects of life in this fascinating social experiment that simply cannot be transplanted into our own society, there are many lessons that we can learn from Singapore and we should be reaching out to them.  They’ve all heard of Cape Town and speak of wishing to visit this place, although very few have really considered it as a business destination.  We must be proactive in working with them to learn those lessons while becoming their city of choice as a business partner in Africa.

Guy Lundy is the CEO of Accelerate Cape Town, a business think-tank and catalyst representing 45 major corporations that brings together key stakeholders in the Cape to develop and implement a long-term vision for sustainable, inclusive economic growth.  He is also a Director of several organisations, including Wesgro, where he is Deputy Chairman, and Cape Town Tourism.