How Singapore Got So Crazy Rich

This tiny island nation is smaller than New York City, but it's the wealthiest country in Asia and one of the richest in the world. Its GDP per capita itself has surpassed the likes of the UK, the US, France and other developed countries. Over six decades, Singapore has transformed itself from a colonial trading port to a buzzing financial center that's envied the world over.

And it's held up as an example for any country seeking to grow a robust, high-tech economy. Its wealth is the product of decades of planning by a party that's been in power since independence. So what's Singapore's formula for success?

And as its leadership changes for the first time in 20 years, can it continue to prosper? When Singapore became independent in 1965, the first prime minister, Lee Kuan Yew, and other founding leaders recognized it had an economic problem: It had no natural resources. So if they wanted to develop an export-led economy and attract foreign capital, they would need to build up the country's manufacturing industry.

Its location gave it an edge. It has access to the Strait of Malacca, to the Indian Ocean, to the South China Sea, which makes it a pivotal shipping hub. So it did this initially by transforming Singapore into a manufacturing base with a focus on labor-intensive industry at first to wipe out the high unemployment.

But Lee only ever intended manufacturing as a stepping stone to a more developed economy. He laid the fundamentals, which is a solid financial and legal system, stable and largely clean government, making sure that the public transport system is efficient, has world-class health care infrastructure. In the 1980s, Lee started laying the groundwork for what is now Singapore's biggest source of wealth, finance.

Following the lead of places like the US and UK, he liberalized the financial services industry with lighter touch regulation. The legacy of that approach is evident today. 4200 multinational companies have regional headquarters here.

Low taxes are a big reason for that. Singapore's corporate tax rate is just 17% and can hit 13. 5% or lower for some activities.

That's also because Lee's successor, Goh Chok Tong, continued to lean into attracting big business. Singapore shifted emphasis to a knowledge-based economy that relies more on creativity and growing Singapore's entrepreneurs. In 2004, Lee Hsien Loong, Lee Kuan Yew's eldest son, took over the premiership.

And he realized to retain the flow of businesses and wealth, it needed to be an even more attractive place to live in. With its prime location, Singapore had to become a destination in itself. That's been key to Singapore success.

It had embarked on an ambitious land reclamation project in the 1970s. Over the years, that space was filled with not just offices and apartment buildings, but entertainment hubs, changing the city skyline in the process. One example was bringing in the F1 night race.

The government also welcomed casinos or integrated resorts, as they're called in Singapore. And the timing was impeccable because the Chinese and Indian economies were booming. Singapore was ideally situated to attract the region's ultra-wealthy, who could then enjoy the casinos and nightlife, but also park their money.

The results - the total value of assets under management in Singapore jumped from $420 billion at the start of Lee Hsien Loong’s tenure to 3. 6 trillion in 2022. While Singapore has been an economic success, its leadership is criticized by some for the restrictions on civil liberties and the media.

Freedom of the press, freedom of the news media must be subordinated to the overriding needs of the integrity of Singapore. Under Lee Kuan Yew's governance, one of the chief criticisms is that there was this climate of fear in Singapore. People were afraid to criticize the government.

Subsequent governments also faced criticism for maintaining a tight grip. Protests are still largely illegal. The government is defiinitely cognizant that its population is changing.

It is much more diverse. It is much more vocal. At the same time, Singapore needs to stay competitive as other countries learn from its model of growth.

And climate change is becoming a threat to national security. This is the Singapore that Lawrence Wong is inheriting as the country's new prime minister. Wong, who grew up in public housing, earned praise for his leadership in the country's COVID-19 response.

He is seen as having more of a common man's touch. We should build on what we have today. We should affirm and reinforce what works well for Singapore.

While the People's Action Party still forms the ruling government, its popularity is declining. There will be that politicking that will happen much more intensely in the years to come than there was ever before. The build-up of wealth has brought problems of its own.

Housing prices have increased. The cost of living has gone up. Part of Singapore's growth model has been to attract foreign labor.

But too much foreign worker inflow raises concerns by the citizens that the foreigners are taking too many of the good jobs. If you just look at the numbers, inequality has been reduced, but that's not how some residents feel. The country's rapidly aging population is also going to add pressure to workforce growth and government spending.

So whether it's managing discontent or guiding Singapore's continued evolution into a tech hub, Wong's job is to sustain the city-state's hard-earned success.