The Singapore Syndrome

Last week, I was hit again by the Singapore syndrome. Let me explain….I returned home after a short visit out and after a brief stay in Singapore on the way back. Every time I cross Singapore, its quiet efficiency never fails to amaze you. And after that, when you enter India – especially through Bangalore airport - you almost feel like you are in a third world banana republic; the contrast hits you hard - very hard, in spite of all the recent optimism about growth.

The first thing that strikes in the woefully small Bangalore airport is the baggage handling system that has been “upgraded” recently. It does not seem to have been designed by an engineer at all. It must have surely been a joint effort by a bureaucrat of the civil aviation ministry in technical collaboration with a local mechanic, and of course, purchased at lowest price after getting three quotations. It gets struck, spews out luggage all around, every corner is a bottleneck - nothing but smooth. Eventually the luggage arrives – ever so slowly. You may walk through the green channel; but your luggage doesn’t. In due course of time, they are let out into the baggage handling system after being checked by an ever suspicious customs staff through X Ray machines for god-knows-what they look for. No other country seems to do it - a green channel is a green channel. The scarcity mind set was over I thought !

After a long wait, I get out of the terminal. My son, who is standing in as a chauffer, has not made fast progress either. Now he and I try to solve a puzzle. He is on the airport road just 100 meters away trying desperately to find a way into the airport, with all entries jammed and I am struck at the terminal exit. It is 11:00 PM. Every spot is occupied. With a couple of international flights having just landed and people reaching the airport for all the mid night departures, it is a total mess. The roads inside are completely grid locked. There are cars as far as eye can see. It was a marathon effort just to get out of the airport. And when I eventually reach home, the power is not there. It keeps going and coming. Apparently, it was like that the whole day.

In the meanwhile, my mobile phone works well. I check my emails. I see good progress all around. My office seems to have done the job I wanted them to do. I get a good update on the new business we had started. The new bank we spoke to has come back fast offering funding. Venture investors are keen to invest in some of the new companies I am involved in. I cheer up.

But, everything that has something to do with the Govt. and its decision-making seem to be struck. The airport, roads, power, primary education, the list is long…. As often stated, we are a first world capability trapped inside a third world system.

Now, back to the Singapore syndrome… I often wonder if we could run our country like Singapore. It is run by a bunch of problem solvers rather than politicians. They run it as efficiently as they would run a company. Lee Quan Yew is a great visionary. He guided his city-state very well to where it has reached. Singapore is in a big boom again. The big Casino initiative is pumping confidence and billions of $ investments into the economy. Try talking to the Taxi driver; he will talk knowledgeably about everything - including the IT boom in Bangalore; he is well read and well mannered.

Most other Asian Tigers learnt from Singapore and built their own economies in a similar way – like a corporate, export led, foreign funded and manufacturing oriented; and all of them grew at a good pace in the last few decades while we grew at a much lower “hindu rate”. And the biggest copycat of Singapore was China. They just replicated the Singapore format in a massive scale, building a cumulative trade surplus exceeding $ 1.2 Trillion.

They are all, to varying degrees, “authoritarian” systems - mostly benevolent. The key is a set of people at the top with clear vision and with a mind to solve problems – Lee Quan Yew, Deg Xiao Ping, Mahathir Mohammad and others like them. Now and then one such leader gets tough and cracks the whip a bit hard. But, largely they have lifted their economies to new heights and their teeming millions out of poverty much faster than India. Putin’s autocratic Russia seems to have done far better than Yeltzin's free Russia. Yes, none of them cared much for democratic niceties. They exploited effectively and successfully the most fundamental characteristic of these cultures – the hierarchical system. Capitalism seems to get built faster in a hierarchical, disciplined population - easy to take tough decisions. Most ironically, capitalism seems to be thriving very well in a communist nation today. And the newest star is Vietnam.

We, on the other hand are very heavily influenced by the western notion of democracy and freedom. And, freedom and democracy in the hands of an argumentative Indian seems to result in a handicap. We are one of the very few countries in the world seriously building democracy before capitalism. It’s a much tougher option. When it takes 10 years for deciding the location of an airport, it is very frustrating. China’s SEZs rolled on relentlessly fast – far and wide. Our SEZs are sputtering along – struck at the anvil of difficult decision making. Indian power sector is getting liberalized for ages. Corruption is still rampant. And, how come after 50 years of democracy, 600 Million of our population can’t read the newspaper headlines and are practically illiterate. What is all the democracy worth if in 50 years, we could not give basic education for our masses? Nearly every one of the Asian countries seems to have done far better than us – many totalitarian ones better than others.

So, yeah, why not the Singapore way?

But, when I seriously consider it, I am not sure I want it that way.

We may be a chaotic nation. We may seem to move ever so slowly. But we have started moving. The East Asian Tigers copied much of the Singaporean growth model. By the mid 70s, the Chinese implemented the Singapore policies successfully. And, eventually, in 1992, pushed to the wall, we did copy a few of the concepts and finally discovered capitalism. Today, we are only 15 years old as an entrepreneurial nation. But now, we have tasted the power of entrepreneurial energy. We are not a homogeneous country like many others. We have a disparate nation. Multiple castes, religions, languages, cultures…. People need outlets, and democracy does give that. And all the chaos is finally leading somewhere. Pete Engardio of Businessweek in his engaging book CHINDIA points out what many are suspecting. India may just eventually overtake all others – China included. China grew at a 10% growth rate for two decades – but it was achieved with a massive infusion of funds. We have achieved growth at a far lower level of fund infusion – in other words we have been more capital efficient. India’s growth is in spite of the Government. The people drive it from below – far more sustainable. The quality of Indian entrepreneurs and companies are impressive. Indian industry has shown higher ROI and ROCE. India’s 16.8% is much better than China’s 12.8% for 2004. Indian savings rate is growing faster giving more funds for development. There are many who are ready to bet on India growing at a sustained steady rate of 6 to 7% far longer than any other country in history. The Tortoise has a good chance to overtake the Hare. Thousands of years of caste divided society has to go through the churn to get rid of that old baggage. It may be difficult without democracy – however unpalatable it may sound in the short term.

But Entrepreneurs hold the key. And there are less and less constraints on them today. And a recent Harward Study on business competitiveness rates India high. India has gone up to 27the Rank while China has been rated down to 64. The First world capability can’t be held back too long by a third world system. Singapore and China can wait and watch. Well, may be the tortoise is really getting ready to catch up after all !