Singapore’s strategy after 1965, why open markets won.

As Singapore was a brand-new independent state expelled from Malaysia in 1965, it had no key resources–it was poor, with no natural resources, high unemployment, a housing crisis, and only a small island. They had nowhere else to go or anywhere to seek help. Now, the small state has evolved into a vital commercial hub for trade and commerce in Southeast Asia and into one of the wealthiest nations globally, becoming a crossroads between the West and the East. Many companies have decided to establish their headquarters in Singapore because of the country's advanced status, as its government has built a first-world physical, legal, and financial infrastructure to entice global companies to locate their Southeast Asian headquarters within the small state (A Modern History, Bloomsburg Collections, 2019). Today lies the story of Singapore’s triumphal march to exponential economic growth, as it became one of the world's leading economic powerhouses. 

The state’s emphasis on security and the future always lies in the hands of its early and present political leaders’ cleverness and benevolence in prioritizing economic openness to integrate its small domestic market into the international economy. Yet, with so many vulnerabilities as a small state amid larger powers, they have achieved much success since their leaders didn’t need to bear so many high-impact problems. Their leader, Lee Kuan Yew, and, with the help of economic strategist Goh Keng Swee, had early on emphasized the key importance of infrastructure investment and a central system reform. One of their successful economic changes was a rapid industrialization program to address the large unemployment crisis in 1965. The state’s leaders proposed that the state’s workforce would be dominated by trading firms and the entrepot trade, whilst aiming for over 200,000 jobs to be created within the next 20 years post-independence (SG101, 2025). 

Even though Singapore had always been a global entrepot since its colonial era by the British, the aftermath had left the state with soaring global prices of tin and rubber. Therefore, the entrepot trade wasn’t able to generate enough jobs in order to compensate for the number of unemployed workers. The Economic Development Board, which was the lead agency in implementing the industrialization plan, had a “much larger remit and capital base..[and] was armed with $100 million over the period of 1961 to 1964,” to ensure Singapore’s industrialization succeeded. One of its first steps to improving the state’s infrastructure was to develop what’s known today as Jurong into an “industrial estate,” in order to push for a labor-intensive industry around Singapore for job creation. Its early factories involved producing items for leisure, including undergarments, wigs, and toys.  

In addition to Singapore’s political leaders trying to create a pro-business environment, the state’s Foreign Direct Investment increased exponentially as it advocated free trade and economic openness. Moreover, Singapore continued its historical role as an entrepot through its free-port status from the British colonial period, along with establishing “very low tariffs and minimal import/export restrictions” and fewer restrictions on property rights and capital flows than other surrounding states (Medium). Furthermore, the state had heavily invested in its now world-renowned airport, Changi, to improve and facilitate trade flows and foster a pro-business environment, as foreign businessmen and businesswomen alike would travel to Singapore to conduct business. Singapore’s key strategy for creating numerous free trade agreements, transparent regulations, and stable, investor-friendly policies to become an overnight attractive global entrepot for companies to establish their headquarters within the state. As the numbers clearly shown their strategy worked, as Singapore’s “trade-to-GDP ratio is over 300%, reflecting how trade became a powerful engine of growth” (the Medium). 

Going back to Jurong, building “top-notch infrastructure” in order to support the state’s growing early industries and population was essential. Therefore, the government directed much of its spending towards physical infrastructure, a strategy that is still used today due to its success. It all started with Jurong, as mentioned before, with developing industrial parks, adding specialized hubs–like the Changi Business Park and Jurong Island for petrochemicals–, expanding port capacity, and constructing one of the best airports in the world, Changi Airport. Moreover, improving its transportation was essential, so its leaders built modern highways and a highly advanced urban Mass Rapid Transit (MRT) rail system. Additionally, in order to solve the housing crisis, the state had embedded a housing development board called the HDB, which provided domestic workers with decent shelter near their jobs. 

By ensuring proper infrastructure in telecommunications, transport, and water, the state had successfully removed any “bottlenecks to growth” and had become a sensational commercial hub attractive to international investors. Recently, the state has been pushing for enhanced digital infrastructure, including “nationwide high-speed internet and digital government services,” to boost productivity and contribute to its pro-business environment by easing business settlement. Singapore is the perfect case study to encapsulate how a world-class infrastructure can exponentially “propel economic growth,” as it did for its helpless state at the start, which was job creation and long-term competitiveness. Surrounding larger powers often struggle with funding infrastructure domestically, but Singapore clearly shows how early investment yields high returns.