Lee Kuan Yew does a Mintoff

Up to some time ago, using Singapore as a 'role model' for Malta's economic development was a popular game - economists, politicians and commentators thought it was good sport arguing that Malta can achieve the same economic miracle performed by this Asian tiger.

There are, of course, a number of parallels: two islands with practically no natural resources situated in strategic geographical positions in the centre of important maritime trading routes. Both started from scratch in the mid-sixties but Singapore's meteoritic economic rise under Lee Kuan Yew - who officially ditched socialism by withdrawing from the Socialist International - can never be compared to Malta's efforts for economic development that were hampered by 16 years of Mintoffian mismanagement and outright economic folly.

I always found this comparison a hard nut to swallow, not least because there are three critical inherent differences between the two countries. Singapore has the 'luxury' of a disciplined population for whom observing rules (and a number of draconian laws) is practically a cultural tradition; a democratic deficit with a lack of a strong political opposition and hence a total lack of dissent; and a meagre annual outlay on social services - three factors that preclude Malta from being able to play the economic game by the same rules.

Yet, the effects of the current global financial crunch on Singapore have proved to be devastating. Exports are falling at their fastest rate since records began, down 24 per cent in February and 35 per cent in January. Singapore's economy is in fact expected to contract by up to 10 per cent this year. Singapore Airlines has even had to ground 17 of its aircraft.

Almost everything Singapore produces - from electronics, to pharmaceuticals, to oil rigs - is exported. It is the world's busiest container port - one fifth of all container shipments pass through its state-of-the-art facilities. The empty ships lying at anchor offshore, show that trade is grinding almost to a halt.

In recent years Singapore had also become a regional financial services hub, attracting hundreds of thousands of foreign bankers. Many of these jobs have now vanished and many expatriates are leaving. Observers are now asking what impact the record levels of unemployment will have on the government's popularity in Singapore where there is no effective political opposition and public demonstrations are banned.

A cursory look at what is happening now in Malta leads to the obvious conclusion that our country has had the last laugh: it is withstanding better the ravages of the current global financial tsunami.

There is yet another development that has added to Singapore's current economic woes. Temasek Holdings - owned by the Government of Singapore Investment Corporation (GIC), one of the world's biggest sovereign wealth funds, suffered a 31 per cent fall in the value of its assets between April and November 2008.

According to a report in a recent issue of The Financial Times, the GIC chairman 'explained' that when the market fell, Temasek invested in UBS and Citibank "too early" as the value of shares in these two banks kept falling. The chairman of the GIC is none other than Lee Kuan Yew who was Prime Minister of Singapore from 1959 to 1990 and is credited with its extraordinary economic rise.

I immediately recalled what happened in Malta in the mid-eighties when, under a Labour government, the then retired Prime Minister, Dom Mintoff, took over the management of Malta's external reserves.

Mintoff put excessive faith in the dollar, in spite of the fact that all authoritative financial opinion was pointing towards a massive devaluation. He decided to rely on the historic trend of the dollar going strong in a US Presidential election year and continued to pile Malta's foreign reserves into it. The result was that he was caught exposed in the Reagan dollar devaluation and this cost Malta a loss of external reserves of about Lm90 million in a few days.

The Ministry of Finance had then obligingly softened this disastrous move by revaluating the Central Bank's gold holdings that had been acquired at a relatively low price by the Borg Olivier government when the Central Bank was set up in the sixties.

So Lee Kuan Yew has done a Mintoff. This goes to show that retired prime ministers and former party leaders have no business giving a 'helping hand' to their successors.

I understand that the Central Bank's external reserves have survived the global financial turmoil, practically unscathed. This, of course, is good news. But good news nowadays is apparently no news.

I am sure that no one will get excited about this positive news. Not when there is so much hysteria because of the African boat people ending up in our country. For people opposing the administration in one way or another, playing the racist card is more convenient than expressing satisfaction because we are faring so much better than other developed countries in these turbulent times.

micfal@maltanet.net