High Speed Rail Impact

WHILE a high speed rail (HSR) link between Singapore and Kuala Lumpur has been talked about since the 1990s, it is no coincidence that the project has finally taken substantive shape only now.

Singapore’s economy has grown so big for a little dot of an island that one obvious way that it can be sustained is if the city-state makes serious efforts to engage its hinterland. In the years to come, similar HSR projects linking Singapore to Indonesia may also be announced, and this may include some island-hopping towards populous Java.

We expect that the HSR will reflect the ongoing integration of ASEAN economies. It cannot happen as quickly as some people want because the economies of the region are at different gears.

For now, Singapore is at the highest gear in the region, economically speaking. However, countries like Thailand, Malaysia and Indonesia are catching up. Further, a comparison with Singapore is not really fair to these countries, or to Singapore. It is fairer to compare Singapore with cities like Kuala Lumpur, Bangkok and Jakarta.

Many of the things that made Singapore stand out in the last four decades are losing their gloss as neighbouring countries develop their own transportation, port, healthcare, education, security and other services infrastructure.

Moving Quickly

The HSR will help to drive Singapore’s services producing industries and the gap between these industries and goods-producing industries will likely widen in the years to come.

There will be fewer manufacturing jobs in the future and more services jobs. Singapore will also likely need more people, and the government’s aspiration for 6.9 million people should become a reality. As at June last year, the population stood at 5.6 million.

If Singapore’s cost of living remains high and their CPF funds continue to feel the weight of a complex, ever-expanding regulatory web, more people will look overseas to their retirement. They will have to be replenished by incoming migrants. Singapore seemed to be relying on the Trans-Pacific Partnership to draw foreign workers from new countries, but that initiative which excluded China, is now dead in the water. It’s not a surprise that the HSR was announced so quickly after Donald Trump was elected as US President.

Indeed, if the Singapore dollar remains strong, it makes sense for older Singaporeans to leave the country and retire in cheaper places like Johor Bahru, Batam, Bintan, Pattaya, and so on.

In the case of Johor Bahru, the massive residential projects are not necessarily only targeting Chinese nationals. They are likely also anticipating a steady inflow of Singaporeans who want to exchange their pigeonholes in the sky (HDB) for landed property at roughly the same price based on current Singapore dollar/Malaysian ringgit exchange rates.

The HSR makes such moves more palatable for Singaporeans. In the meantime, the government can more freely reopen the immigration floodgates, just like it did in the mid-2000s after Lee Hsien Loong became Prime Minister.

The Presidential Race Card

One question that underpins recent developments is how close can bilateral ties between Singapore and Malaysia get? It could be closer than most Singaporeans or Malaysians think. A case in point is the relatively new understanding as espoused by the government that the next President of Singapore has be Malay.

The role of President has always been symbolic with a government-favoured man at the helm. Many believe that a Malay President is a way of keeping former almost-President Tan Cheng Bock out of the picture. But there could be more than meets the eye to this. Essentially, if Tan were President, he would just be a nuisance that can be handled by the government and its media. For instance, any requests Tan makes to assess the government’s books can be delayed at every turn and eventually he will not have much of an impact.

Imagine that the installation of a Malay President is a gesture to show Malaysia that it wants to integrate even more closely with its nearest neighbour. A show of good faith in return to continued and expanding access to a huge hinterland.

When asked by the local Chinese media what Singapore’s permanent interests are, Foreign Minister Vivian Balakrishnan replied that the city-state’s number one permanent interest is to remain a sovereign, independent country. This is an amazing statement made by a country that is already sovereign and independent. Is Singapore in danger of being taken over? Are we missing something?

While this could be in reference to its now much-diminished role as a middleman between the US and China, it is also possible Singapore is positioning for an extraordinary move vis-à-vis Malaysia. But Balakrishnan and the government need to test the waters. Since he was made Foreign minister about 15 months ago, the country that Balakrishnan has visited the most is Malaysia. He has been there seven times.

Thus It Was Unboxed by One-Five-Four Analytics presents alternative angles to current events. Reach us at 154analytics@gmail.com

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