On February 6th 1819, 200 years ago today, Singapore was founded by Sir Stamford Raffles on behalf of the British East India Company. The islands became a crown colony in 1858, achieving independence as part of Malaysia in 1963, and as an independent nation two years later.
Under Lee Kuan Yew’s free market, low tax governance, Singapore made the transition from developing country to developed one in a single generation. Although it consists only of a group of islands lacking natural resources, Singapore became an Asian ‘tiger’ economy, relying on external trade and the talents of its peoples. It is now one of the richest countries in the world, and scores highly for the quality of its education, healthcare, life expectancy, quality of life, personal safety and housing. Income inequality is high, but 90 percent of homes are owner-occupied.
It is very business-friendly and enterprise-friendly. Its top income tax rate is 22 percent, and its top corporate tax rate is 17 percent. It has no capital gains tax and no inheritance tax.
Its spending on social welfare as a percentage of GDP, is among the lowest in the world. There are no unemployment benefits. Healthcare in largely financed by Medisave, a compulsory national medical savings account system that covers about 85% of the population, and public hospitals make independent management decisions, and compete for patients. A subsidy scheme helps low income people. Singapore has the world’s lowest infant mortality rate, a high vaccination rate, a low obesity rate, and life expectancy is 80 for men, 85 for women.
Singapore has been an economic success story, and one based on sound policy. Other nations, rich in natural resources, have been ruined or held back by inappropriate, anti-business policies, but Singapore has moved up the world rankings of economic freedom to be among the top few. It has been, and still is, an example to the world of what can be done. It is a pity there are not more like it.