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Singapore’s iconic Merlion statue harkens to the high-tech city’s fishing origins. (Edwin Koo/Edwin Koo for The Globe and Mail)
Singapore’s iconic Merlion statue harkens to the high-tech city’s fishing origins. (Edwin Koo/Edwin Koo for The Globe and Mail)

Canada Competes

How Singapore creates its economic miracles Add to ...

With many of the world’s leading multinationals already setting up shop, research and development is the next major focus. In 2006, the government set aside more than $10.5-billion for R&D over five years, aiming to have it increase to 3 per cent of GDP. Today an estimated 1 per cent of the country’s expenditure on R&D is government-funded, with another 1.5 per cent backed by private industry.

Much of that has gone into a steel-and-glass planned development whose construction is still under way, buildings with fanciful science-fiction names like Biopolis and Fusionopolis, housing the research institutes of the Agency for Science, Technology and Research, or A-Star. Inside its labs and office towers, an estimated 5,000 researchers and other employees work in areas ranging from aerospace research to genomics, to developing a more effective razor for men. Here, a private multinational can access government-subsidized research labs for product development, technology transfer and marketing; some costs are recouped through joint projects and patent purchases.

In a major coup for Singapore’s R&D efforts, Procter & Gamble is installing a $97-million research lab here to develop new skin and hair care products mainly for the Asian market.

Other big names operate here, too: Dairy giant Danone researches advances in maternal and child nutrition. China’s Baidu has opened a research centre for language-processing technologies specializing in Southeast Asian languages. Pharmaceuticals company Roche is researching cancer and infectious disease treatments here, and wind technology company Vestas is establishing a global research and development centre.

Keeping Singapore’s economic miracle going, argues A-Star’s infocomm institute’s executive director Tan Geok Leng, is going to come down to cutting-edge, world-leading science.

“We think talent makes the big difference,” said Dr. Tan of the institute’s scholarship programs to send Singaporeans abroad for study, as well as efforts to attract international researchers. Their staff come from about 80 countries, and the institutes have drawn more than 60 companies from around the world.

However, nations looking to Singapore’s example might also heed the weaknesses in this planned economy as it matures.

At first sight, Singapore is a utopia of high-end shopping, clean streets and greenery. World-class restaurants accompany luxury hotels; even the street hawker stalls that dish out Singapore’s legendary melting-pot cuisine have been moved indoors into clean, modern surroundings. Its resort centre, Sentosa Island, draws an estimated 19 million visitors a year to its luxury hotels, water parks and Universal Studios theme park. A lovingly created botanical garden, city parks and the new $800-million first phase of the Gardens by the Bay parkland complex are all feeding Singapore’s reputation as the Monaco of Southeast Asia.

And expatriates have embraced the lifestyle: an English-speaking, safe and modern city in a tropical climate.

But there are cracks appearing in Singapore’s breakneck pace. Inflation in March sat at 3.5 per cent, a drop from earlier monthly averages that have hit 5 per cent and higher. By necessity reliant on the performance of its trade partners, weakness in the U.S. and Eurozone contributed to Singapore’s slowed GDP growth of 1.3 per cent in 2012, down from 5.2 per cent in 2011, and a contraction of 1.4 per cent in this year’s first quarter.

And for the first time, open political dissent erupted last year with the release of a white paper on population, which predicted Singapore’s population would have to expand from its present 5.3 million to 6.9 million by 2030 to sustain economic growth.

It was a breaking point, with housing prices already skyrocketing and public transit stretched under pressure from both increasing numbers of poorly paid migrant workers hired into manual labour jobs from places including mainland China and Indonesia, and at the other end of the scale, high-flying expats whose rich corporate packages are driving up the costs of housing and schools.

The government has responded to the dissent by tightening foreign labour quotas and increasing wage subsidies for companies that hire Singaporean nationals instead of expats. But it’s clear Singapore’s recipe for success over the past five decades is now in need of adjustment.

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