"Singapore risks becoming a 'Taiwan story' and will lose its competitive edge globally if it closes its doors to foreign talent, said Deputy Prime Minister Tharman Shanmugaratnam on Wednesday night.
He cited a recent survey on talent migration in Taiwan that shows the stark consequences on the wages of its people from pursuing a closed-door policy against foreigners.
At the same time, its best and brightest were leaving the island, particularly for China as well as the United States and other countries.
As a result, the nominal income of the average Taiwanese has flattened for more than a decade, according to the survey done by the East Asian Institute at the National University of Singapore (NUS)."
- Straits Times, "Draw lessons from 'Taiwan story"
Taiwan faces a brain drain for one simple reason - its graduates get an average pay of NT$24,000 per month[Link]. This is one third the pay in Singapore and one-quarter the pay in USA. The reason why their top graduates are leaving the country is because they can get better pay elsewhere. The reason why you're not applying for a job in Taiwan is because you can get a better pay in Singapore. If Taiwan swings open its doors fully like Singapore, they can attract workers from countries where the pay is lower - Philippines, India, Bangladesh These workers will further depress the already low wages there causing more talented Taiwanese to leave for greener pastures.
Using Taiwan to justify Singapore's large foreign influx is wrong and Minister Tharman better start getting his facts straight otherwise he loses more credibility. His earlier assertion that people earning $1000 can own a HDB flat has raised many eyebrows and fallen flat under close scrutiny.
For those in the electronics sector, hearing a Singapore minister say that Taiwan will lose its competitive edge globally sounds ridiculous. Why? Singapore has lost to Taiwan competitively in almost all areas in the electronics industry. Temasek owned Chartered Semi-con took in billions in taxpayers' and shareholders money but lost out to Taiwanese competitors like UMC and TSMC. Chartered was later sold off to a foreign company. Chartered Semi-conductor hired "foreign talents" massively at all levels -from the CEO all the down to production engineers while TSMC & UMC hired mostly Taiwanese except in a few selected posts. If Tharman's theory is true that we have become more competitive by importing foreign talent, how did we end up losing so badly in the head on competition in the semiconductor industry? Today, Taiwan holds its own against much larger countries in the electronic sector - many of their companies are truly world class - HTC, Acer, Asus, Via Technologies, Realtek etc. After importing so many "foreign talents" into the electronics sector to make us 'competitive' , where do we stand today vs Taiwan?
Tharman again cites nominal income as a measure of govt success. But we know that too many tricks can be played with this number. A country can raise GDP and nominal income by importing rich individuals to bump up the number without benefiting their own citizens[Link]. You can also trade-off income equality to get growth through deregulation and financialisation of your economy. One example is allowing wealth management sector to expand as a result of regulatory arbitrage or allowing banks to expand unsecured lending. Such moves will create a lot of wealth concentrated in a small segment of the populace with the rest of the people paying the price later [Link]. You can also expand your GDP by building casinos ...and the really silly thing to do is let the casinos make billions and allow them to hire non-locals because they can pay them lower salaries and dish out less benefits. Taiwan is known for its ability to maintain high economic growth yet keeping income inequality low[LInk] while Singapore has the higest income inequality among all developed countries.
There are many things that improve the lives of ordinary citizens that does not show up in nominal income. One example is the universal healthcare system in Taiwan. While every lower middle and lower income bread winner in Singapore still has to worry about healthcare and have night mares about uninsured aged parents, siblings or new born getting seriously ill, Taiwan has already implemented a universal healthcare system that covers everyone in the country since 1995:
After some testing times, Taiwan is now a vibrant democracy with free press, a multi-party system and where people have the right to assembly and hold peaceful protest. I was in Taiwan in 1990s and, as a Singaporean, found the country politically backward. They were under emergency law (martial law) governed by a single dominant party, the media was state controlled and country was boxed in by the ideas of a dead dictator - the propaganda surrounding their dictator leaders found at the museum I found incredibly hilarious. Taiwan has made a lot of political progress since the 90s amd the political system they have today is completely different from what they had in the 80s and 90s. Today, the Taiwanese find our less democratic system amusing to say the least : Taiwan Current Affairs Programme on Singapore.
If there is anything to be learnt in the area of immigration, it is the lessons Singapore has for Taiwan. Always put the interests of your own citizens on top of everything else. Don't over do it to the point that your country become dependent on foreign labor. Quality of life of your citizens comes first not GDP growth. Be very transparent and accountable to your people when you implement such policies. Be mindful of the negative impact of such policies in your cities and strains on your healthcare, housing and transport system. Never belittle your own people's capabilities to justify importing foreign talents. Be very clear about how the policies benefit people at all levels of society and never brush away the genuine concerns of ordinary citizens as xenophobia or small mindedness.
A good policy on immigration can create diversity, enhance competitiveness and improve the quality of life of your people. Simply opening the floodgates to get higher GDP growth is not a good policy...just look at what happened to ordinary Singaporeans and the growing divide caused by the PAP govt approach to immigration. The end result is overcrowding, rising income gap, and seething anger towards this govt policy.