For years, Hong Kong has been the world’s freest market economy. Singapore recently overtook him. Do European countries have to become “police” models again to catch up with fleeing Asian tigers?
Why is a country smaller than Berlin in Southeast Asia now the world’s freest market economy? Where does such a liberal approach to free market doctrines come from in a country where the vast majority of society supports the death penalty? In a country where society is so obedient to the government, why is it possible to have such a wide range of economic freedom, unlimited with unnecessary taxes?
From this point of view, it makes no sense to compare Singapore with European countries. Cultural differences should be considered a key determinant. In the context of the philosophy of thought of both the individual and a larger group of people. Dissonance at the cognitive and mental levels. European and Asian societies are completely different. Despite widespread globalization, cultural exchanges, and openness to certain issues, we will probably not be able to find a common denominator any time soon. Over the years, solutions and mindsets have allowed Singapore and Hong Kong to constantly evolve.
Asian work ethic and European free market doctrine – the perfect marriage
If there were no Europeans, there would be no Singapore today. Due to the favorable geographical location in the Strait of Singapore, another city / city-state will probably be created. But it was the Europeans who laid the foundation for Singapore’s power. Thanks to the British East India Company, one of the strongest and first corporations in history, Singapore has been given amazing opportunities for development.
It became one of the most important ports in the entire British Empire. Given that it is the largest empire in the history of the world, this is a very important detail. Singapore gained full autonomy in the late 1950s. How can a country over the age of 60 develop so fast?
Undoubtedly, the main thing that distinguishes Singapore from European countries is the preservation of sustainability. During its 60 years of existence, the state has ruled it only three prime ministers. The first head of government was Lee Kuan Yew, who was replaced by Go Chok Tong, and for 18 years the fate of Singapore was decided by the son of the first prime minister, Lee Hsien Loong. The continuity of this dynasty in the most important positions of the state was a guarantee of its dynamic development.
Political stabilization has allowed for long-term relations with foreign partners and for the harmonious development of business. It is also a consistent pursuit of international policy, the constant modernization of strategic industries, and is particularly important for the region – the city’s spatial planning has affected Singapore’s position in the world economy.
Singapore’s economic model demonstrates the diversification of the country’s development strategy. Developed and constantly modernized industry plays an important role in the development of the whole country. In addition, Up to 70 percent of the gross domestic product is revenues from services. Singapore is the largest financial center in this part of the world. Although its share has been very small in the last two years, tourism is also an important sector of the economy. The impact has been significantly reduced due to the pandemic. But so far every year About 10 million tourists visited the country, home to 5.6 million people. Singapore also has the second largest seaport in the world – a real legacy British company East India, which is currently being rebuilt and modernized so that the development of the region does not affect the quality of life in the neighborhoods.
Simple and low taxes, no language barriers and legal inertia – the recipe for Singapore’s economic success
The above-mentioned political stabilization is the most important factor contributing to Singapore’s positive perception of foreign investors. Although the Singaporean government did not have a very liberal approach to tax issues, this long-term strategy would certainly be useless.
Tax rates are extremely competitive. VAT is only 7%. Singapore’s entire tax system is based on the principle of territoriality. Thus, only income earned in Singapore is taxed. Income tax is a progressive tax (3-20%) although people with an income of less than 50,000.00 PLN per year do not pay taxes at all.
Singapore cares not only for local entrepreneurs, but also for entrepreneurs. In addition, rulers are working hard to fight corruption. If we want to start a business in Singapore, we can do it without leaving home. Given that the official language is English, which is also the first and natural language for the people of Singapore, this could be a really interesting alternative to relocating your business.
In fact, the country has been ruled by technocrats for years. Not only the education of potential candidates is checked during the elections to higher state positions. They are selected in accordance with a strategy developed over the years.
In addition to a clear, liberal and stable tax system, Singapore has a tax system that is extremely strict, but above all, respected and supported by society. legal regulations. Mandate tariffs are really high. Drug storage can even end … death and flogging are still legal. However, in addition to some archaisms, Singaporean law is also a guarantee for the entire economy. Bureaucracy has been minimized, and legal regulations – unlike many Polish laws – take longer than a few months / year. It seems to be the implementation of a long-term vision and strategy that is the strength of Singapore’s economy.
Can the Singapore model be possible in Europe?
We will probably never learn about it, but probably not. It is one thing to pursue a city-state policy, it is another to rule a multi-million country with a tradition of several thousand years. The issues discussed above, namely the geographical location, the historical context, and – perhaps most importantly – the long-term implementation of the strategy developed years ago – meant that Singapore’s economy was located here.
Will it be possible to transfer a package of solutions that works well in Asia to Europe? I think not. However, custom solutions are worth watching.
Surprisingly, the teachings first developed by theorists for Western countries can be implemented in so many different and diverse societies. It turns out that the most liberal economic solutions are probably the Asian mentality, philosophy of life and subordination to the government. Does this mean that free market slogans and solutions can be implemented more easily and quickly in a larger social environment? If we apply them at different levels, will ultra-libertarian economic solutions have the same effect? Or perhaps it is an overly authoritarian approach to social issues that drives them to do so?
None of the above questions can be answered unequivocally. There are so many unknowns and so many variables that it would not be possible without highly developed prophetic abilities. Although there is a technocratic approach to the election of rulers, the implementation of a long-term and sound strategy would undoubtedly be beneficial for any existing regime.
The article is part of a series “Economic Freedom“It is a project funded by the Foundation for Economic Freedom, which was established in 2021. Its pillars are economic liberalism, modern education, Poland’s membership in the European Union and the rule of law. Read more about activities and current events on this site. you can.