Singapore’s authorities believe the crowded island nation still has the room to grow.
Photo: Getty Images
Each year, Singapore, a country with limited land and natural resources, tops the list of the nation with the highest number of millionaires.
Louis Vuitton bags and Ferraris have become a norm in the south-east Asian country where nearly every one in every six households has a disposable private wealth of over $US1 million.
According to a report by Boston Consulting Group, Singapore had 188,000 millionaire households in 2011 , a full 17 per cent of its resident households. Only the oil-rich countries of Qatar (14 per cent) and Kuwait (12 per cent) came close.
Singapore has made a huge effort to attract the world’s wealthiest business people to its shores. Locals say there is a unit within the government that goes out and looks for the mega-rich.
Business identities and multinationals are lured with generous tax incentives, a very low personal income tax and no capital gains tax. Singapore also makes it relatively simple to get residency.
The Helix Bridge, Marina Bay Sands, ArtScience Museum and CBD skyline in Singapore.Photo: Getty Images
The government continues to market the nation as regional financial hub where it’s easy to do business and tap into the rest of Asia. They work with foreigners to open posh casino resorts like Marina Bay Sands, and attract big events like the world’s first evening Formula One race.
It’s reasons like this that Facebook co-founder Eduardo Saverin renounced his US citizenship to move to Singapore. A number of wealthy Australians including Brett Blundy, Nathan Tinkler and Joseph Gutnick have also recently packed up and moved there.
Australian companies including BHP Billiton, Rio Tinto, ANZ and Visy Industries are taking advantage of Singapore’s regional location and increasingly leveraging the high Australian dollar to source materials from Asia. BHP now has more people in its Singapore office than its Melbourne head office.
“Singapore, more than any other country, relies on internationalism,” says Australian expatriate, now well-known Asian entrepreneur Michael Ma). (See our Michael Ma profile in the Entrepreneurs section, p32).
“Without it Singapore would not be where it is today.”
Singapore’s ruling political party, the People’s Action Party (PAP), has won every major election since 1959. This is largely because the party transformed Singapore from a third world basket-case to a first world “Asian tiger”. It has done this through a number of carefully executed strategies and a strong reliance on foreigners.
For the most part this strategy has served the PAP well. Its diverse population, made up of Chinese, Malays and Indians, has been generally accepting of its strict and often-mocked laws, such as a ban on chewing gum.
The problem is that like most nations that grow rapidly, and largely from foreign investment, there’s a segment that hasn’t shared in the riches.
Singapore is now among the world’s most expensive cities to live in. While there’s not acute poverty, the cost of living is rising and inequality is rising along with it.
Singapore does not have a minimum wage or a welfare system. The government believes such policies discourage competition. But the cost of everything, from the price of food in hawker centres to apartments and condominiums, is going up.
Wealthy Chinese businessmen arriving in their private jets are being blamed for buying up the best apartments and condos in town. The number of Chinese property buyers has tripled over the past five years and nearly a third of all home buyers in the city are foreign.
About 40 per cent of Singapore’s population of 5.3 million is foreign-born, and this number is rising. There’s a view that for every foreigner that comes in, a Singaporean national potentially misses out on a job or a place to live. There are also concerns about overcrowding in the streets and on the subways.
For an authentic view of Singapore, some visitors go to a kopitiam: old-school coffee shops that dot almost every neighborhood, serving up cheap breakfasts and unique local coffee. Photo: NYT
The PAP won the 2011 general election by its slimmest margin ever, and the main opposition party, the Workers’ Party, is now gaining support by painting foreigners as eroding the quality of life fo locals.
One Workers Party candidate says on the party website: “The speed of immigration in the last 10 years has taken many of us by surprise.”
According to the candidate, the “PAP government has opened the floodgate”.
Singapore’s Prime Minister Lee Hsien Loong says Singapore can keep growing and can accommodate 6 million people. Despite this, he’s addressed growing anti-foreign sentiment, bringing in new a range of new measures to control the inflow of foreigners such as capping the number of foreign workers companies can hire, and introducing bigger taxes on foreigners buying property.
The government has also tightened requirements for the global investor program – the main scheme for foreign entrepreneurs and investors wanting permanent residency in Singapore. The new rules include higher revenue thresholds for all sectors and stricter residency requirements.
Ma, who is a big fan of the PAP (except for its death penalty policy), says the nation’s political leaders have learnt from their mistakes.
“Until now the government’s thinking was, ‘we were a nation without anything ... and everybody has to work hard and make money’,” Ma says. “But today Singapore is very rich and they [the government] left the bottom behind and they pissed off a lot of voters, especially the younger generation. The government’s been forced to recognise that.”
For Ma, who runs his IndoChine restaurants, bars and hotels in Singapore and across Asia, finding workers is hard. “We have huge labour shortages,” he says. “The cost of rent is more and human capital is more.”
Ma also struggles with all the anti-foreigner rhetoric. He left Australia over a decade ago because of racism, and says voices against foreigners in Singapore are becoming vehement.
“I guess this sort of thing happens everywhere in the world,” he says. “It happened in Netherlands and Australia. And now it’s Singapore’s turn.”
But in the end what matters to Ma, like most other Singaporeans, is the ease of doing business. “Singapore has good security, good taxation law and good corporate governance,” Ma says. “There’s predictability in doing business here. It’s the only place in Asia where you know things will work. The rest of Asia is not predictable. But in Singapore, if you want to set up a business, there’s rules and regulations that you follow, and you can do it. There’s no grey area. It’s all very straightforward.”