Why is Singapore so Rich and why will it continue to be so ?

What is the one thing which comes to your mind when you think of money and Asia? Does the phrase 'Crazy rich Asians' ring a bell? Well you could be either thinking of China, one the best economies in the 21st century with huge land, labour and capital or you might be thinking of Singapore, a tiny island in south Asia. The richest of the richest in world can be seen buying properties and land on this Asian Tiger.

Singapore is one of the four Asian tigers along with Hong Kong, South Korea, and Taiwan. All these counties have maintained high economic growth rates and are one of the wealthiest countries. The tigers have such strong economies that have to withstand major crashes like the Asian financial crises of 1997 and credit crises of 2008. But what makes Singapore stand out?

Before analysing let's look at Singapore's population and their GDP per capita which shall show an in the image of how rich Singapore and all its residents actually are. Singapore only has about 6mil citizens but its GDP is nearly 340 million dollars which makes GDP per capita 58,500 dollars. Which makes it richer than prominent countries like Germany etc. It all started with its property rights system and its smart economic choice after independence which we shall look into. Before that let's talk about its size and location.

Lets talk about family offices. What are family offices? Family offices are what some would call advisory firms or companies for the wealth management of the super rich. Basically, if you are really really rich and have lots of extra money which you might not need any time in the future or your current life you can park this money here for either long-term future or your next generations. It would be nearly impossible to imagine the money or precisely the assets managed by these offices.

Why would anyone choose Singapore for such an office? Well the answer can be as easy as it gets. Imagine you are really rich and can buy anything you wish for. What would be the most important aspect for you to consider while parking your money? Give it a thought. The answer is very simple.

The answer is money. If you guessed it right, well congratulations. Singapore has the best in class sovereign credit rating. The highest score possible for this rating is the 'AAA' rating and guess what Singapore has this rating not from one but all the influential agencies which are handling out the ratings to other countries. Do you know India's sovereign credit rating? It is 'BAA3'. You can already see how much more safer Singapore is when compared to India.(This is according to Moody's) U.S.A, Sweden and Switzerland are some other countries to have a 'AAA' rating.

Singapore is a very small country. So small that you can go from one end of Singapore to another end in less than an hour. It does not have any natural resources like oil or coal. But all of this can be compensated with what give Singapore a head start. The location. Located between Europe and Asia it connects the trade between both these major trading continents. This is the main reason why the British found Singapore attractive back in the 19th century. However, location is not everything and there are various other islands and big countries nearby so what makes Singapore stand out? 

It all started way back during independence when most of its colonial neighbours wanted to get rid of the British and get an independent state, Singapore kept close ties with the British. This is not all, even after independence Singapore had a close bond with the British. This meant only one thing that Singapore is a country that would love to do business with everyone instead of starting from fresh which most countries that got independence from the British did. Okay...so how did this help? Well, it's quite simple British had resources and expertise which both combined help in talking good decisions as well as grow and expand the economy at a rapid rate. This fuelled industrialization in the new Singapore. But  Singapore was not always this rich! Back when Singapore got independence labour strikes, unemployment and housing crises was very common. Half of Singapore in the 1960s was no less than a slum. But the Government policies had changed this forever to the beautiful Singapore we all see today.

To address this problem, One of the first government agencies set up was to build affordable places where people can stay. And how do they solve unemployment? It was easy they make them work to build their own homes. This tackled both issues at once. The government also provided a lot of tax benefits and incentives to attract foreign companies and countries to Invest in Singapore but we will talk about that later. Coming to the Singapore housing developments, it was managed by the HDB or housing and development board and it is generally regarded as a successful example of national housing. Singapore went from only 9% people living in public houses to about 80% or more people living in public houses now. This shows how they solved the problem of slums and unemployment in just a decade which is insanely amazing.

Quick Fact. Yes, Singapore is a tax heaven. But there are a ton of other countries which offer really good tax services in the world. What makes Singapore stand out? Not only is Singapore a tax heaven but it is also a financial hub. This means that various giants in fields such as asset management, insurance and financial markets is already set there. This makes it really easy for companies to get aid over there.

Another factor is regarding the share of GDP owned by each sector. Initially, to kick start the economy Singapore was a manufacturing hub and a leading producer of certain items. However,  this did not last long as slowly the focus of the government moved from manufacturing to the service sector. This is further boosted by the 1985 recession which forced the government to privatize state-owned companies and during later stages, the finance and service sector was liberalized. This reduced the share of manufacturing drastically and increased the share of the service industry from nearly 20-25% in the 1970s to more than 70% now. And a good service and finance sector with tax benefits only means one thing - More big players and companies in town. This resulted in Singapore being the regional headquarters for a lot of big companies.

These are some of the factors which made Singapore so rich and one of the most expensive cities. But simply saying that Singapore is rich and all its citizens are really rich does not make sense since there is high inequality and the cost of living in Singapore is really high as well. However, the number of millionaires in Singapore is astounding as well. Also, did you know Singapore is the most expensive place to buy a car! The Singapore government also reduces the purchasing power by creating an account where 20% of your income goes and it can be used to paying for education and health which I believe is one of the policies and should be implemented all over the world to make people more focused on a sustainable way of spending money rather than spending all of it branded items or the flex culture.

Hey, I am glad you came at the end of this article written by Vaibhav Agarwal. Want to share your opinions? Comment them down below. Want to check out other content by us? Click on the YouTube or Instagram links at the top of the sidebar.

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