For many years, Singapore’s ruling People Action’s Party (PAP) has advocated a liberal immigration policy to offset the country’s falling birth rates and support its booming economy. But with the the influx of immigrants coinciding with strains on infrastructure, inflation, and rising income inequality, public opinion turned against this policy.
Many citizens took to the ballots to register their growing resentment against immigration and the party suffered its worst ever showing in the 2011 parliamentary elections. In response, the government has raised barriers to restrict the inflow of immigrants.
I recently spoke to Jim Rogers, co-founder of the Quantum Fund with George Soros and one of Singapore’s most recognizable immigrant faces, about Singapore’s immigration issue and the impact on Singapore’s economy.
When Rogers uprooted his family from New York and moved to Singapore in 2007, he famously declared, “If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia.” Six years later, he says he remains very happy about this decision and his daughters enjoy going to Chinese schools in Singapore.
While he describes Singapore as being “extraordinarily well run,” Rogers believes that limiting immigration will be detrimental to its future development. “One of the reasons why Singapore has been successful is because it encouraged immigration and nearly everyone in Singapore is an immigrant or family of an immigrant,” he says, before adding that “Lee Kuan Yew [Singapore’s founding Prime Minister] is a second-generation immigrant.”
With its low taxes, low unemployment rate, and good rule of law, Singapore has always been an appealing immigration destination.
In recent years, it has also become a haven for the world’s rich and famous. Besides Jim Rogers, Singapore’s new residents include Chinese celebrities Jet Li and Gong Li, as well as several members of Forbes Asia‘s Singapore rich list: New Zealand-born investor Richard Chandler (No. 5), Facebook FB -1.27% co-founder Eduardo Saverin (No. 8), and property tycoons Raj Kumar & Kishin RK (No. 11), among others.
Although Singapore is ranked the third-richest country in the world, not all its citizens have benefited from its economic successes. While its super-rich parties at Pangaea, the world’s most expensive club, and sips its $26,000 cocktails, wages have only marginally increased for Singapore’s low-income groups and housing prices have reached record highs. Rogers, however, argues that limiting immigration will only worsen Singapore’s problems, “if Singapore cannot get enough labor, it will have to raise wages.
Inflation will rise and Singapore might price itself out of the market over the next few years.” Drawing from historical examples, he adds that citizens in every country have always blamed immigrants for their problems.
At the root of Singapore’s immigration policy is its worrying demographic structure. With a fertility rate of only 1.2, far below the replacement rate of 2.1 and one of the lowest in the world, Singapore will face a shrinking workforce and aging population if new immigrants are not brought in.
Rogers warns that if Singapore tightens its immigration policy too much, it will become “an old age home in 10 to 20 years.” Given that more resources will then have to be expended to support the elderly, he thinks Singapore will find it “very difficult” to develop and compete with its neighboring countries.
“Every country in history that has a backlash against foreigners,” says Rogers with air of conviction, “is going to go into decline.”