The Lee Hsien Loong Report and the Singapore economy

This thesis examines the Lee Hsien Loong Economic Committee Report and the circumstances that led to its commissioning. It also outlines the evidence and the central argument that the Lee Hsien Loong Report has succeeded in facilitating a reorientation in International Investment involving an emphasis on the regional market and the use of Singapore as a Regional Operation Headquarter (RHQ). It also outlines that Singapore has entered a new phase in its export oriented industrial strategy. This article outlines the move by Singapore in 1979 to upgrade its position in the New International Division of Labour (NIDL). Singapore was out to test the limits of its capacity to upgrade from a low wage industrialization strategy to that of a high wage value added technologically oriented industrial programme within the logic of the NIDL. Singapore was attempting to resolve the problem of threats of tariff barriers posed by the United States and that of the European Community, to Singapore’s First Export Oriented Industrialization Programme. It was also an attempt to scale down the number of guest labour in Singapore, increasing productivity and phasing out labour intensive industries. The introduction of the "Corrective Wage Policy" was a high Singapore to phase out labour intensive industries. The introduction of the "Corrective Wage Policy" in combination with the substantial increase in Central Provident Fund contributions increased the cost of doing business in Singapore. This caused many international based capital, especially the Japanese, to rethink their industrial investments in Singapore. Many Japanese groups relocated their labour intensive industries to Hong Kong. The mis-timed Second Industrial Revolution in Singapore, in a period of the downturn of the world economy, compounded the problem of the severe recession in Singapore in 1985. The Singapore government called for immediate remedial strategies and actions to identify the causes of the downturn of the economy. This resulted in the commissioning of the Lee Hsien Loong Report which identified the defects in the Singapore economy in 1985. The report recommended immediate intervention to rectify the various loss of competitive advantages in Singapore, vis-a-vis its world trading partners and competitors. In the conclusion, this thesis analyses some of the future directions of the Singapore economy into the 1990’s. The major contribution by the Lee Hsien Loong Report was its success in achieving the aim of facilitating a reorientation by international investors to use Singapore as a major regional manufacturing and service centre. Singapore today has entered a new phase of its export oriented industrial strategy