From Rags to Rugged

In Singapore Prime Minister Lee Kuan Yew's view of Asian economics big fish eat little fish, and little fish eat smaller ones--but none are about to get his 225-sq.-mi. island nation. The reason is that, small as it may be, Singapore is more than strong enough to keep its economic independence.

Long a major Asian banking, insurance and warehousing center, Singapore last year moved ahead of London into fourth place among the world's ports. Its gross national product rose by 11% to an estimated $1 billion, making the tiny republic (pop. 2,000,000) the third richest on a per capita basis in Asia, after Japan and Hong Kong. Recently, Singapore applied for full currency convertibility under the rules of the International Monetary Fund. That means that its dollar is healthy enough to be freely exchangeable with other currencies, and that Lee is succeeding in his program for survival by building what he calls "the rugged society."

Massive Effort. A ragged society seemed more likely not so long ago. As recently as 1965, political squabbles got Singapore booted out of the then three-year-old Malaysian Federation, and factories built to serve the federation's 10 million population fell on hard times. Then, rising unemployment among Singapore's 585,000-member labor force raised fears of a Communist takeover.

To top that, Britain announced that by the end of 1971 it would withdraw its forces and close down the elaborate naval base, a city within a city that has long been one of Singapore's largest employers.

Singapore's answer to such problems has been a massive effort to convert it self from Asia's largest warehouse to Southeast Asia's largest workshop. To attract industry, the government has channeled millions over the past three years into expanding power and water supplies, building roads and clearing factory sites. School graduates who would have followed family tradition by going into clerking or shopkeeping are being urged to train as technicians and engineers. To preserve responsible wage scales, the government this year passed laws trimming certain fringe benefits and reducing the unions' voice in management. It did so with the cooperation of labor, which realizes that Singapore could never survive with British-style union practices.

As a result, foreign investment has increased sharply. Mobil has completed a $23 million facility, starting a rush of private investment by U.S. companies that is expected to reach $275 million in three years. All told, more than 320 modern plants are active in metal fabrication, electronics, optical instruments, diesel engines and other fields. Along with low labor costs, they get easy access to Asian markets from Singapore's key location at the tip of the Malay Peninsula. Swan Hunter International, a British shipbuilding and repairing firm, is using that geographical fillip to advantage. Noting that no fewer than 127 mammoth tankers of more than 200,000 tons are on order throughout the world, the company is expanding repair facilities at the naval base to handle the ships that will pass by Singapore en route from Japan to the Persian Gulf.

Some Unwanted Advances. In a characteristically Oriental reversal of fortunes, Singapore has also been benefitting from ill winds on other shores. Last year's Communist-inspired anti-British demonstrations in Hong Kong prompted a flight of capital from the rival crown colony to Singapore. Recent anti-Chinese riots in neighboring Indonesia have sent still more cash to Singapore's banks. Such prosperity has, however, brought on unwanted advances from one big customer, the Soviet Union. As a big purchaser of rubber from Singapore, Russia has been using its centralized buying power to force a market for its exports among small Singapore firms. Resisting, Singapore last week set up Intarco Ltd., a joint government and private trading agency that will handle all trade with the Russians and keep them at arm's length by forcing them to do business on the same basis as other customers.

For all its emphasis on industry, Singapore is also trying to sell its virtues (and vices) as a sort of easily accessible "instant Asia" for tourists. To handle the growing number of visitors (mostly Americans, Australians and New Zealanders), who last year left $43 million in foreign exchange, some 25 hotels are planned or under construction around a downtown renewal project that is called the Golden Mile. Tourists, in fact, may be somewhat disappointed with the mysterious East. Posters urge citizens to "keep Singapore clean," and the government is clearing away squalid, century-old hovels for brassy shopping complexes and high-rise apartments, which now house 30% of the population.

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