While this is the starting point for this essay, my discussion here isn't really about Section 377A, for the same assessment can equally be applied to all other areas where the Singapore government refuses to relax its grip, be it the media or electoral arrangements.

Young's argument is generally valid: in many areas, the government has to see the prospect of economic gain or pain before it is prepared to reconsider its policies. After all, it measures governance by economic yardsticks.

But the point of this essay is that just because the government does not see economic cost or benefit doesn't mean there is none. I would suggest that it's more because we have not made an effort to look for it and measure it. And good luck to you if you're waiting for our mainstream media to explore this angle.

In the absence of data, it's impossible for me to prove to you that there are economic consequences. I can only proceed on logic and analogy to demonstrate to you a prima facie case that Singapore is probably paying a price for our bad reputation ("bad rep"). How much, is another question, of course, which needs a quantitative investigation (somebody's PhD research, perhaps?).

The starting thesis -– which you may dispute -– is that the Singapore government has a bad rep overseas. It is seen as harsh, authoritarian, illiberal, manipulative and now increasingly nepotistic. Through various government-linked companies, not least wholly-owned Temasek Holdings Ltd, it is also seen as acquisitive.

On what terms would others do business with a partner that they may find distasteful? Logic tells you that Singapore government-linked companies that are politically tainted may have to pay a premium to get their foot through the door in overseas acquisitions, to compensate for that distaste and the possible political complications that may later arise for getting into bed with "dictators".

The premium that is paid may not be directly reflected in the purchase price. It's probably quite rare for a seller to say bluntly, "pay me handsomely to hold my nose while I do business with you", because large companies are valued in fairly objective ways. However in some negotiated deals, e.g. Temasek's bank stake acquisitions in China, you have to wonder, especially as Chinese banks can have pretty opaque accounts and dodgy valuations.

More likely, the premium is in the form of added cost as Singapore government-linked companies spend time, effort and money fending off unusually intractable opposition, or complying with special demands.

For a lesson in such dynamics without being coloured by our emotive relationship to Singapore, take the example of DP World's acquisition of P&O Ports, the fourth largest ports operator in the world. This took place earlier this year, for which DP World paid £3.9 billion Sterling.

Immediately, it ran into opposition from the US Congress because P&O owned a number of port terminals in the United States, e.g. at Baltimore, New Jersey and Miami, and because DP World was owned by the government of Dubai. The Americans did not like the idea of an Arab government controlling ports of entry. They made a big political case out of their fears of security risk, even though the risks were hardly real. Arab governments have a bad rep too.

Picture - Gulf news archive

The upshot was that DP World had to promise to divest its American operations to a US buyer within 6 months. It is now 6 months already and as far as I know, they are still trying to flog it off. You can imagine what price they're going to get from a forced sale like this.

Fortunately, the US assets formed only about 10% by value of P&O's total, so the loss, if any, should not be too terrible.

 
Temasek Holdings and Shin Corp

See the difference that bad press makes?

It's not just in overseas acquisitions where a price premium is exacted out of us. We over-pay within Singapore for what benefit we want to obtain.

In my article Tell the people that others are singing our praises, I explained the concept of efficiency through the example of hosting the IMF/World Bank annual meetings. We spent, I am told, over a S$100 million, only to get all sorts of negative headlines around the world because we wouldn't let up on our authoritarian habits. That's not very good Return On Investment (ROI), to put it mildly.

In the late 1990s, the hype was about making Singapore a news and media hub. Building on investments in communications hardware, we would lure companies such as CNBC, Disney, Associated Press to base their Asian operations here. A section of the Science Park was set aside for media companies. You don't hear about this anymore. The censorship rules, the onerous licensing requirements for foreign journalists, the ever-present fear of being sued for defamation has put paid to that fancy scheme. The money spent on that idea has been flushed down the drain.

Singapore is building a state-of-the-art research park called Biopolis for the bio-sciences

Now watch what's going to happen to stem cell research. In the last few years we've been pouring money into this, in an attempt to make Singapore one of the key R&D centres for this promising field of research. We're building state-of-the-art laboratories and throwing money frenziedly in the hope of attracting scientists to relocate here.

But frankly, it is an opportunity only because the George W Bush administration has outlawed most forms of stem cell research to please its evangelical voter base. The moment a Democratic administration comes in (or even another Republican one) the law is going to be repealed, and then many of the scientists we've spent a fortune attracting are going to head back to America.

Why? Because the cultural and intellectual climate of Singapore is more deadening than vitalising, which in turn can be traced to the  deadweight of political authoritarianism and social conformism. Honestly, who wants to live and work here when America beckons?

The United States is in almost the exact opposite position compared to Singapore. It enjoys a discount on the price it pays for its standard of living.

For years now, it has run a trade deficit. Lately, this has reached unprecedented levels. By conventional economic logic, the US Dollar should crash and individual Americans should be paying stratospheric interest rates for living beyond their means.

But it's not happening because the rest of the world is all too ready to lend Americans their money. With so much money flowing in to the US, whether from the Chinese trade surplus or the Arab and Russian oil revenues, interest rates are held steady and the trade deficit is financed.

Why do people put their money in America, thereby subsidising American consumption? Firstly, because it is safe from political risk, and secondly, because foreigners continue to believe in the long-term creativity and dynamism of the American economy.

To what do they owe this? The deep roots of democracy, the independence of the judiciary, a free economy with few government interventions, a free press, an ethos of individual liberty, all coming together to produce a social and intellectual climate that is unparalleled in fostering creativity and drawing migrant talent from around the world.

People have faith in America. The country gets a free ride because of the nature of its politics and society.

I hope I have demonstrated how countries pay an economic premium or enjoy a discount as a consequence of global public opinion. For this reason, I do not believe that Singapore pays no price for our government's bad rep.

The sad thing is that our government, in their unshakeable belief that they know what's best, may not even see it, and they go on believing that their unyielding policies are cost-free.

But logic tells us it cannot be.

When the proposed Penal Code amendments came out, Reuters, Associated Press, CNN and others carried news of them around the world. All their reports had as their lead angle one thing: that the Singapore government continued to discriminate against gay men. [4] The message was that it was unrelentingly stuck-in-the-mud, defying norms of modern, liberal governance.

It shouldn't be too hard to imagine that bad rep like that comes with an economic cost. It may be meaningless to put a number to how much a single instance like that costs us, but bad press adds up all the time.

© Yawning Bread