chapter four - Saving, Investment and Entrepreneurship

Summary

Singapore has often been described as a high-savings, highinvestment society. As a country with the highest savings rate in the world, a natural question that arises relates to what is the optimum savings rate that is compatible with its development strategy, and has Singapore surpassed it? Behind this high savings scenario is the issue of forced private saving which has taken up an increasing share of private-sector saving. Can forced savings be a sustainable feature for the future? Until the recent liberalization in the use of CPF (Central Provident Fund) funds, much of privatesector savings were either channelled into housing or shipped abroad for investment in foreign assets. How should one characterize the merits and demerits of this pattern of fund utilization? Is the efficiency of fund utilization somehow improved with the liberalization of the CPF? What are the costs and benefits of investing Singapore's assets abroad?

While Singapore may be a high-savings, high-investment society, it is not generally noted to be a society characterized by a bountiful supply of private local entrepreneurs, quite unlike one's impression of Hong Kong or South Korea, for example. If anything, the general impression of Singapore is that of a society characterized by two features: firstly, domination by foreign entrepreneurs, often credited for the transformation of the economy from that of an entrepôt outpost to a manufacturing centre, and secondly, pervasive presence of government in economic activities. Given this, some important questions need to be asked. Are private local entrepreneurs being “crowded out” by foreigners? Should they be encouraged and if so, how? Is there a case for the infant industry argument in the strive to help develop indigenous entrepreneurship? To what extent should Singapore continue to rely on foreign investment? What would the cost-benefit score-sheet of continued dependence look like and how can this ratio be minimized? What is the effect on local business of government encroachment into economic activities?

In adopting the above agenda, no attempt is made to relate the subject of saving to that of entrepreneurship.