It’s rare for a member of the sober, spreadsheet-loving tribe of central bankers to venture into the realm of science fiction, so I can only applaud the willingness of the Monetary Authority of Singapore to offer a speculative vision of how their country evolves over the next 50 years. The occasion, of course, is Singapore’s weekend celebration of the 50th anniversary of its divorce from Malaysia and birth as an independent nation. My only real complaint is that I wish Ravi Menon’s speech was actually more playful and speculative–it reads a bit too much like a boring central bank report from 2065 (which, to be fair, is what it pretends to be).
Two big themes for the future emerge from his talk: 1) Singapore becomes even more specialized in exporting services, 2) Singapore benefits from economic reform and the lowering of trade barriers across Southeast Asia. On the first theme, medical tourism indeed seems like quite a plausible strategy for Singapore:
By 2025, Singapore had become a multi-faceted medical hub hosting the world’s top medical professionals and multi-national healthcare companies. This led to a vibrant ecosystem that created jobs in areas from research and training to conventions for medical professionals both locally and abroad, in addition to the large and diverse number of good jobs in hospitals.
But higher education seems less plausible as a big future export market, given Singaporean universities’ reputation for turning out rather dull and conformist students. The scenario he envisages may require more than just technocratic top-down reforms:
Singapore positioned itself as a choice location for quality education for a growing Asian middle class. By 2025, international students studying in Singapore could be awarded joint degrees from 10 of the top 20 universities in the world. Singapore was well on its way to become the premier educational hub of Asia.
The second theme is even more speculative. People have been waiting for Indonesia to finally get its act together and become an Asian tiger for a few decades now. That doesn’t mean it can’t happen in the next decade, but it hardly makes the following more likely:
Perhaps most significant for Singapore was the emergence of Indonesia as the fastest growing economy in the world, following far-reaching economic reforms in the early 2020s.
The politics of Asian integration are even harder to predict, but I think it’s clear that Asian economic integration is supported by nothing even close to the amount of political will and cultural similarity that drove European economic integration. So it is not at all obvious that ever-closer cooperation on trade and economic is indeed a long-term macro trend for Asia generally or Southeast Asia in particular. But if it is, then Singapore could probably be expected to do pretty well out of it:
In 2028, Malaysia and Singapore got together to set up the Iskandar-Singapore Economic Zone or ISEZ: one economic system spanning two sovereign countries. The experiment succeeded beyond expectations, providing global and regional investors an integrated production and services base that was unmatched in Southeast Asia.
In 2030, the most ambitious blueprint of the ASEAN Economic Community process came into being, with the establishment of the ASEAN Free Economic Zone, or AFEZ. Unlike traditional economic zones like the ISEZ which were contiguous entities, the AFEZ was a network of the major cities across ASEAN connected by extensive road, rail, air, and sea links, not to mention advanced digital communications. There was free movement of goods, services, capital, and people between these cities, which become vibrant hubs for trade and enterprise.
I don’t want to be overly critical of the thought experiment here; provoking disagreement is really part of the point. Menon is probably right in identifying two big macro trends that would be favorable for Singapore if they continue–the tradability of services and Asian economic integration. In closing it is probably worth repeating the disclaimer that he was obliged to attach to these speculations:
Everything about the future said here is pure imagination. It does not represent in any way a forecast or projection by MAS or by me. My intention is merely to paint a plausible scenario for Singapore. I can only be sure that someone reading this in 2065 will view it as totally lacking in imagination or realism or both.