Asian Perspectives

Singapore Baffled by Brexit

SINGAPORE - JANUARY 01: School Children wave flags during a VIP visit by Queen Elizabeth II to Singapore.
School children wave flags during a visit by Queen Elizabeth II to Singapore.
  • Why it matters

    Why it matters

    Singapore is an example of how a small country can thrive by being open to the world, but Singaporeans would be the first to say it would be much easier for them to be part of a large free trade area like the European Union.

  • Facts

    Facts

    • Singapore is the third richest country in the world by per capita GDP, behind Qatar and Luxembourg.
    • The country has four official languages: English, Mandarin, Malay and Tamil, and a large foreign population.
    • Singapore is an enthusiastic member of ASEAN, the Association of South East Asian Nations.
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    Audio

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A small island, with a world class financial center, sense of superiority over its neighbors, that left an existing political and economic union. No, not Britain, but one of its former colonies: Singapore.

Some 10,000 kilometers away from Britain, Singaporeans are watching the debate over whether Britain should leave the European Union with some bafflement. Several people who argue that Britain should leave the European Union have used Singapore as an example of how a small country can thrive alone.

Peter Hargreaves, a British businessman who made his money with financial advisory firm Hargreaves Lansdown, and one of the biggest donors to the Vote Leave campaign in Britain, has said he believes Singapore provides the best business model for Britain outside the European Union.

In an interview with British newspaper, The Guardian, in May, he claimed Singapore is “a bit clinical, but it shows what a small country with limited resources can do.”

Singapore, which is indeed a bit of a clinical place with limited resources, has built itself up to be the third richest country in the world based on GDP per capita, behind Qatar and Luxembourg, But it has done this by striking up strong regional relationships with its neighbors, signing free trade agreements wherever possible, and crucially, accepting immigration. Singapore is tiny, with a population of just 5.6 million – smaller than London. But even within this, non-Singaporean citizens make one around one-quarter of Singapore’s total population, and this figure is set only to rise.

“We like to say we punch above our weight, but we know that it is always better to be part of a strong partnership,” Lional Tan, a Singaporean lawyer, who lived in Britain for six years, told Handelsblatt Global Edition.“ “We have managed to carve a niche for ourselves serving many parties, remaining neutral and relevant in the business ecosystem. But Britain is a very different kind of country.”

Indeed most Singaporeans are bemused at the idea that Britain may want to copy it.

The British essentially created modern Singapore, when they took control of the rather swampy island of Singapura in the Malay peninsula in 1819. Its first governer, Sir Stamford Raffles, built it up as a multi-ethnic city serving a modern trading port. The white colonial Raffles Hotel, serving Singapore Sling cocktails it claims to have created, is still a favorite place for visitors to stop.

It became a major port under British rule, but was always considered part of an administrative block that included what is now Malaysia. When the British began to retreat from the empire, it granted independence in 1963 to the Federation of Malaysia, made up Malaya, North Borneo, Sarawak and Singapore.

But after two years of tensions between Chinese-dominated Singapore and the rest of the Malay-dominated federation, Singapore was ordered to leave Malaysia. Modern Singapore’s founding story begins with tales of how its first prime minister, Lee Kwan Yew, wept as he broke the news of Singapore’s expulsion at a press conference.

Life is much better now, and Singaporeans don’t believe things improved because they went it alone, but because they realized how to build ties with their neighbors.

Since then the story Singaporeans tell about themselves is that they survived because they had to, because larger, powerful countries had options they did not.

The Brexit campaign has often pointed to the fact that Singapore thrived after leaving the Malysian Federation as evidence that Britain can do the same after leaving the European Union.

Yeo Lay Hwee, a Senior Research Fellow at the Singapore Institute of International Affairs, an academic think tank, and director of the European Union center in Singapore, also points out the circumstances behind the separation were also very different.

“I think the Brexiters’ argument that Britain can be better off on its own by using the analogy of how Singapore did much better after being ‘kicked out’ of Malaysia is rather disingenious,” she said. “Singapore entered into the Malaysian federation in order to gain some sort of economic hinterland, and foster greater economic integration. But this did not materialize. The ‘divorce’ between Singapore and Malaysia was therefore not as painful and disruptive because there was little integration between the two entities and the ‘marriage’ was short.

“Should Britain choose to leave the E.U. after more than 40 years of integration – not only will it be much more complex and difficult and acrimonious, in an environment where the global economy is sluggish, and political fragmentation, the consequences of Brexit for both Britain and the E.U. would be terrible,” she said.

And despite having succeeded as a small entity, Singapore recognizes there are limits to what it can do alone. It is one of the most enthusiastic members in the Association of South East Asian Nations, or ASEAN. Singapore wants the regional body to be more unified in terms of trade, defense and politics: it needs the cooperation of its neighbors to stay prosperous and stable. And indeed it spends much of its time persuading ASEAN’s larger members which include Indonesia, Thailand and Malaysia, to pour more energy into the union. Certainly Singapore has little chance of defending itself without the support of fellow ASEAN members.

“Singapore is deeply embebbded into ASEAN,” David Skilling, director of Landfall Strategy Group, a Singapore based geo-political consulting group told Handelsblatt. “Its entire structure is built on the fact that it is a regional hub, and it wants ASEAN to act with one voice because it understands how difficult it is to build bilateral ties with countries. It is much easier to act as a bloc. It believes in pan Asian agreements not as a constraint but as something you need to be globally engaged.”

Mr. Skilling is originally from New Zealand, a country also given as an example by pro-Brexit campaigners as a country that has managed to forge trade links with the world. But Mr. Skilling points out trade agreements at the moment are being negotiated on a regional basis. People arguing in favor of Brexit say Britain will be easily able to negotiate trade agreeements.

The first substantial free trade agreement New Zealand managed to negotiate with the United States was through the Trans Pacific Partnership, signed only this year.

“Negotiating bilateral trade agreements is hard, and it takes a long time to negotiate,” said Mr. Skilling. “The idea that the U.K. could choose to back away from a regional bloc that already has these links strikes us as strange.”

Singaporeans are also deeply baffled by the British habit of nostalgia. The glory days of Singapore are now: the older generations remember the brutal Japanese occupation in World War II and the lean years after independence, where there was little food and little certainty about the country’s future. Life is much better now, and Singaporeans don’t believe things improved because they went it alone, but because they realized how to build ties with their neighbors.

Indeed Joel Ng, a Singaporean studying for a doctorate at Oxford University, wrote in Singapore’s main newspaper The Straits Times this week: “It is a strange experience for a citizen of a small trade-based economy such as Singapore to see ardent Leave campaigners arguing against the E.U. In our experience, our small economy has always been more like a strait jacket than a flexible asset because globally, the world looks ever more like a game of massive trading blocs and supersized economies.”

 

Meera Selva is an editor for Handelsblatt Global Edition, based in Singapore. To contact: selva@handelsblatt.com

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