Singapore Sacrifices Growth For Fewer Foreigners

06 Jan 2012

They mow the lawns, prune the trees and man the busy construction sites all over town. They are maids, waitresses and office assistants. And then there are the white-collar workers in finance, business and shipping.

For decades Singapore has been dependent on a massive recruitment of foreign brains and brawn to keep up the growth rate. Few if any countries outside the Middle East have such a high percentage of the resident population from abroad.

Of the 5.2 million inhabitants, only 3.2 million hold a Singaporean passport. The rest are 600,000 permanent residents and 1.4 million workers on various contracts and short-term work permits from countries like India, Bangladesh, China, the Philippines, Malaysia and Indonesia.

Four out of five people in the construction industry have families abroad to send remittances to, half of those in the service industry are from overseas and there are hundreds of thousands of foreign domestic helpers, with more than 150,000 from the Philippines alone.

But lately politicians have come under pressure from Singaporeans concerned that the foreign workers are competing for their favourite jobs, putting a ceiling on their salaries and crowding streets, buses and metros. Not to mention pushing up housing prices.

In December, Singapore overnight introduced 10-per-cent stamp duty on foreigners buying landed property. In his New Year message Prime Minister Lee Hsien Loong underscored the policy shift when he said that he was ready to accept lower growth rates for fewer employment passes.

The author of How Asia Can Shape the World, Professor Joergen Oerstroem Moeller from the think-tank Institute of South East Asian Studies says: 'It seems that Singapore finally like everybody else has been caught by the pressure from the population.

'The working population's anxiety over globalization is directed against foreigners they encounter in their daily life, just as it is seen in Europe and everywhere else.'

The subject was high on the agenda during the parliamentary election last year. It was seen as one reason for the relatively bleak performance of the ruling party at the polling booths, although it was still re-elected with 60 per cent of the votes. Now the government is reacting to popular concern.

In his message for 2012, Lee Hsien Loong acknowledged that the new policy might slow growth and cause some inconvenience for a city heavily dependent on its unskilled labour force. But he emphasized that the country has to 'accept the unavoidable trade-offs.'

'We are tightening the influx of foreign workers to a more sustainable rate. Companies are already feeling the pinch, especially the SMEs [small and medium-sized enterprises],' he wrote.

'Individual Singaporeans will feel it too, because many foreign workers do jobs that serve citizens. Admitting fewer foreign workers also means forgoing business opportunities and accepting slower growth.'

He pointed to this policy shift as a factor behind lowered expectations for 2012.

'This is one reason we only expect 1-per-cent to 3-per-cent growth next year (2012) and why we must do our utmost to raise productivity, to make up in quality what we will miss in quantity.'

Lee said that 'the population issues affect us all' and promised to 'discuss them over the next year' to better understand what is at stake and which choices the nation has to make.

The clear message is a profound move away from the policy that has brought Singapore close to the top of the global economic food chain.

But there is no sign of a massive slash in the foreign workforce. As Oerstroem Moeller says: 'Singapore is not becoming xenophobic. But it will no longer be an open-door policy. There's a heartland which has to be taken into consideration.'