Malaysia and Singapore: Common Past Different Future

It was August 9 1965. Lee Kuan Yew announced that Singapore would separate from Malaysia. It was a momentous announcement that left him in tears on national television. LKYSingapore, the only Southeast Asian country with no natural resources, has had to contract for water from its neighbor, Malaysia until this very day. In such a poor and desperate state, Singapore had an economic outlook that seemed bleak and uncertain. No one dared to imagine what its future held. Albert Winsemius, Singapore’s economic advisor from 1961 to 1984, said these words: the general opinion of Singapore in the early 1960s was a country “going down the drain.”

However, forty-nine years after its separation from Malaysia, Singapore has overtaken its hinterland to become one of the richest and most developed countries in the world.

Singapore and Malaysia share common roots–both countries have similar demographics, use the same languages, and share deep cultural values.

Screen Shot 2014-10-04 at 4.05.07 PMToday, while the two countries still share a similar population makeup of Malays–described as Bumiputras (sons of the soil)–, Chinese, and Indians, they have taken divergent paths that have determined their economic and social progress. What set Singapore and Malaysia apart are the distinct economic and social policies implemented by the governments of the two countries.

In 1965, when Singapore was expelled from Malaysia, its per capita GDP was $512 whereas Malaysia’s was $335. Lee Kuan Yew, who became Singapore’s first prime minister, adopted a series of policies that favored meritocracy and zero corruption. The government of Malaysia, on the other hand, introduced affirmative action to provide economic assistance to the Malay Muslim-majority, who were poorer than the ethnic Chinese and Indians. For instance, even today, the Malay-Muslim-majority still enjoy a 7% discount on new home purchases and a university admission quota of 55%–the rest of the population is allotted an admission quota of 45%.

Singapore practices a meritocratic and corruption-free government model, which spurs efficiency and strong growth; Malaysia runs a government system that provides affirmative action, which contributes to a lack of economic competitiveness, racial polarization, and significant brain drain. Given Singapore’s lack of natural resources and Malaysia’s ample natural resources such as palm oil, rubber, and petroleum, Malaysia has always been in a much better position than Singapore to achieve economic progress and develop sustainably.

Screen Shot 2014-10-04 at 4.03.26 PMHowever, the two separate approaches taken by Malaysia and Singapore have yielded two very different outcomes. In 2013, Singapore recorded a per capita GDP of $62,400 while Malaysia generated $17,500 in per capita GDP. Table 5.2 shows GDP–per capita data from 1970 to 2005 for three of the four Asian tigers–Singapore included–and Malaysia.

Malaysian Diaspora

Source: Professor Eric Roberts of Stanford University

Today, Singapore boasts an open market economy, a corruption-free government, a per capita GDP that is remarkably high, and a clean environment. On the contrary, the Malaysian government is riddled with corruption and has in place economic and social affirmative action programs that favor one race over the others. Malaysia has a middle-income economy that targets to become a high-income nation in 2020, but the goal of achieving high-income status will be in vain if there are no equal opportunities for every Malaysian. Affirmation action plans have led to the serious issue of brain drain in the country. In 2011, there were approximately 1 million Malaysians living abroad. In 2000, 46% of the Malaysian diaspora lived in Singapore. The number is believed to be higher today.

As a Malaysian, I speak with experience; experience sourced from stories told by my family and friends at home and abroad. Malaysians believe that democracy will prevail and apartheid of sorts will bid us farewell. Every Malaysian wants to be hopeful that one day, meritocratic policies will be exercised and free handouts to the privileged sons of the soil will discontinue. Unless all that happens, Malaysia will always trail the once-barren land it abandoned.

Here’s a 1965-clip on Malaysia’s Prime Minister Announcing Singapore’s Separation:


Here are some links that pertain to the topic discussed in this post:

http://www.bloomberg.com/news/2010-11-10/singapore-seen-overtaking-malaysia-45-years-after-split-left-lee-in-tears.html

http://cs.stanford.edu/people/eroberts/cs181/projects/2010-11/BrainDrain/Malaysia.html

http://online.wsj.com/news/articles/SB10001424052748704422204576129663620557634?mg=reno64-wsj

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