Singapore's long-buoyant economy is starting to wallow. The tiny island republic of 2.5 million people appears to be in the midst of a major business shakeout, stemming from a slowdown in economic growth. Business bankruptcies are on the rise, and many companies are cutting back staff and operations to survive.
For years, Singapore has enjoyed double-digit economic growth, but last year it fell to 8.5 percent. Government experts see it dropping to 5 or 7 percent and remaining low until the mid-1990s.
Corporate bankruptcies rose from 210 in 1982 to more than 400 last year. This year hardly a day goes by without a company's throwing itself on the mercies of the official receiver.
At the same time, many workers, once wooed by local and foreign companies, now find themselves unwanted. Trade union leaders were shocked when General Electric, the biggest employer in the private sector, laid off many hundreds of its 10,000 employees. Similarly, Smith Corona, Fairchild Electronics, Honeywell, Bata, Union Carbide, and others have laid off workers and cut back operations in the past year.
Lim Teng Kwee, a senior engineering supervisor at Union Carbide, saw the writing on the wall some months ago and planned accordingly. In his late 40s, he didn't fancy undergoing major job retraining in another field. Fortunately, he had paid off his house and had a nice nest egg in the Compulsory Central Provident Fund (CPF), set up by the government to provide security in old age. So with a considerable drop in salary, Mr. Lim has started helping a friend in a portable food stall in a ``hawker's center,'' a cheap, outdoor eating market.
But for many others, the job prospects aren't even as good as that. At one newly opened hotel, 4,700 people lined up outside to interview for 400 menial jobs the hotel was offering.
The strength of the Singapore dollar, higher wage costs, and depressed United States and European markets for Singapore's goods are all contributing to the economic decline.
Singapore is no longer a haven for cheap labor. Wages have shot up almost 90 percent since 1979, and companies face the additional costs of a contribution equivalent to a quarter of the employee's salary to the CPF mandatory retirement fund, a 2 percent payroll tax, and high corporate taxes. But Finance Minister Tony Tan has rejected any quick-help solutions involving reduction in taxes or CPF contributions.
Electrical and export industries, faced with shrinking markets, particularly the US, are under severe strain. The oil refining industry is in trouble. And shipbuilding and ship repairing industries face stiff competition from the lower prices offered in places like Taiwan and South Korea. Hitachi Zosen Robin, a Japanese joint-venture shipyard, laid off 52 workers in January and has announced 104 more layoffs by year's end, out of a total work force of 1,000.
Competition with nearby Malaysia is also heating up. The Woodlands shopping complex, overlooking the causeway that crosses the Johore Strait, used to attract customers from Malaysia, but the Malaysian government slapped a 50 percent import duty on everything brought back into the country. With the growing disparity between the currencies of the two countries, Singaporeans are now flocking over the causeway to Malaysia to shop. Malaysia is also trying to divert trade that traditionally passed through Singapore to its own ports, ports the Malaysian government is eager to develop.
To counter these problems, Prime Minister Lee and his aides have been trying to make Singapore into Southeast Asia's equivalent of Silicon Valley -- selling the country's ideas rather than transistor radios. But given the tough world competition in high-technology industries, even that holds little guarantee for Singapore's future.