Singapore not alone in having little or no natural resources

I refer to the Straits Times letters “Don’t rock the boat” by Mr B.H. Melwani [1] and “Planning ahead to avoid a bleak future” by Mr Sonny Ng [2].

Mr Melwani and Mr Ng reiterate what we have been told from young: that we are different from other countries in that we have no natural resources to rely on so we must rely on our people and our government.

The following is a chart of natural resources rent as a percentage of GDP since 1970 for 23 developed economies [3]. It shows that apart from Norway and perhaps Canada and Australia, all other developed economies derived less than 5% of their GDP from natural resources for much of the past 40 years. The majority of these economies derived less than 2% of their GDP from natural resources. So it is not just Singapore but nearly all developed economies have very little natural resources they can depend on so they must primarily depend on people too. It is strange that of so many developed economies with little or no natural resources, it is only here in Singapore that we commonly find people saying that we depend on the government for our success. If all the other developed economies with little or no natural resources can do well without having to depend on the government, why should we be different? It can’t be that Singaporeans are so singularly hopeless that we alone depend very much on our government’s ‘wise’ policies.

Natural resources rent as percentage of GDP

Although Singapore has no natural resources, many books lend support to the view that we are gifted by nature with a most precious geographical location which our economy and prosperity continues to depend on [4], [5], [6], [7]. It would have been quite impossible for us to achieve a level of trade that is 285% of our GDP [8] had we been tucked away in some far flung corner of the earth. Our service industries collectively account for 65% of our GDP [8] and many sub-categories of the service industry such as wholesale & retail, transportation & storage, finance & insurance and business services have links to our port [7]. Directly and indirectly, Singapore derives more than 2% of our GDP from our excellent geographical location, more so than most developed economies derive from their natural resources.

The fact that the majority of voters voted for PAP doesn’t mean they automatically endorse every single PAP policy. If voting for PAP means voting for all its policies, why do we still need parliament debates? Why do we need conversations to get buy in? Why not just pass every bill without consultation, without debate since the PAP holds the majority of seats in parliament? Whether or not we are merely satisfying the minority can be determined by holding a national referendum. In fact, a live poll on Channel 8’s Frontline Connects TV programme saw 92.5% of viewers happy to accept lower rate of economic growth if foreign population is reduced.

The people are not rocking the boat; they are the rightful owners of this boat and are merely telling the boatman where they wish the boat to be steered towards. Hiring a boatman doesn’t mean giving up our right to tell the boatman where we want the boat to be steered towards.

[1] Straits Times letter, Don’t rock the boat, 8 Feb 2013

[2] Straits Times letter, Planning ahead to avoid a bleak future, 14 Feb 2013

[3] World Bank data, Total natural resources rent as percentage of GDP

[4] Mun Heng Toh and Kong Yam Tan, Competitiveness of the Singapore Economy: A Strategic Perspective, page 101

The port of Singapore is located along the Straits of Malacca, which is the main shipping route between East and West. It was estimated by the Oil Companies International Marine Forum that over 600 ships transit the straits every day. The importance of this shipping route has not diminished over time with the introduction of new technology and improvements in air travel.

In terms of geographical features, the port of Singapore is fortunate to enjoy natural deep waters and harbours, which have allowed it to service ships with deeper draughts without necessarily resorting to extensive and expensive dredging operations. The waterways serving as entrants to Singapore allow even the larests ships to use them. Singapore does not have typhoons and other natural calamities which mae port operations and freight movements safe and reliable.

[5] Teofilo C Daquila, The Economies Of Southeast Asia: Indonesia, Malaysia, Philippines, Singapore and Thailand, page 183

Singapore’s economic viability depends on its geo-strategic position as the port of call in the Asia-Pacific linking Europe, the Middle East, the African continent, the South Asian continent, through to the Pacific islands and the Americas. It is important to view Singapore’s status as a bustling port of call.

[6] Swee-Hock Saw and John Wong, Regional Economic Development in China, page 224

The prosperity of Singapore is largely dependent on its excellent port resource. Singapore lies on the vital transport link between the Pacific and Indian Ocean. The Singapore port connects 200 shipping corporations and more than 600 ports of 123 countries, and manages 60 ships, 8,000 trailers and 50,000 containers each day. It could be said to be the world’s busiest port.

[7] Lawrence B. Krause and Ai Tee Koh and Yuan Lee Tsao, The Singapore economy reconsidered, page 2

Although lacking both natural resources and a hinterland of any sort, Singapore does have two powerful assets – its people and its geography. It was its geography, characterised by a large natural habour and a location astride the most important shipping route between Europe and the Pacific, that gave Singapore its original economic rationale as an entrepot for the entire Southeast Asian region.

Historically, the entrepot trade began because nature made Singapore a perfect transshipping point between the Indian Ocean and the South China Sea and beyond. However, with the development of rubber estates and tin mining in Peninsula Malaysia, Singapore ultimately became a full-fledged primary port and commercial city for a rich producing area.

Furthermore, entrepot activities such as trading, processing, storing, banking, insurance, repackaging, marketing, transportation and communication, provided much useful preparation for wider economic achievements. They led to the creation of certain physical facilities such as the port, to the development of certain worker skills, and to the encouragement of risk-taking by entrepreneurs. It may well be that the entrepot function, modernized and expanded into sophisticated business services, remains the backbone of the Singapore economy, and was only temporarily eclipsed for a brief period by the rapid growth of manufacturing.

[8] Singapore Statistics

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