The results of Singapore’s 13th general election have drawn a lot of attention. The People’s Action Party (PAP) managed to win, securing 83 seats. But the opposition Workers’ Party (WP) put up a sterling performance, winning 10 seats, as against only 6 seats in 2015. 

The PAP’s vote share fell from nearly 70% in the 2015 election to a little over 61% in the current polls. This year’s election was significant because it was held in the midst of the COVID-19 pandemic, and was also being viewed as a referendum of the PAP’s handling of the same – not just in terms of controlling the pandemic, but also of economic steps taken to reduce the economic damage.

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The government had earmarked a whopping 93 Billion SGD  (which is nearly 20% of its GDP) in stimulus for businesses and households to deal with the economic impact of the pandemic and to minimise retrenchments.

Singaporean Prime Minister, Lee Hsien Loong, who is supposed to hand over the baton to Heng Swee Kiat, has reiterated on numerous occasions that he will steer the city-state through the pandemic. During his swearing-in on 27 July, he again made the point that he would like to hand over the country “intact and in working order.”

Economic challenges 

Forecasts for the city-state’s economy are gloomy – in 2020 the Singaporean economy is estimated to contract between 4% and 7%. Year on year, the economy shrank 12.6% in the second quarter of 2020. 

While the construction sector dropped by a massive 55%, services also dropped by 14%. The drop in the service sector, which includes hospitality and civil aviation, can clearly be attributed to the pandemic. The city-state’s service sector has been dependent upon the tourism sector and this has severely been impacted due to travel restrictions. The overall employment rate also went up from 2.4% in March, to 2.9% in June.

Dependence upon the world

The ASEAN city-state is generally dependent upon trade and services that are closely linked with the global economy and are contingent on geopolitical stability. For the time being, its problems are not limited to the pandemic.

The last thing the city-state, with a majority Chinese ethnic population, would want is exacerbation of geopolitical tensions in Asia. It has been repeatedly batting for reduction of tensions between China and the US. Singapore has close ties with both Washington DC and Beijing, who also happens to be its largest trading partner.

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Prime Minister Loong had spoken about the need for stability in Asia before the election. In a commentary for Foreign Affairs, he argued that ties of Southeast Asian nations with China and US were not ‘zero-sum’ and countries could not be compelled into making choices between the two.

Even in the aftermath of the election, he has pitched for more harmonious US-China ties. Like many other countries, it is not just stability in Asia, which Singapore is seeking, but also stable US policies. In a recent interaction with the Atlantic Council, an American think-tank, the Prime Minister spoke in favour of US-China ties, also reiterating the need for a more predictable US policy.

Loong said: 

“If you can establish a stable, predictable policy with bipartisan consensus, I think it would be a great help to all your friends and partners who want to be able to depend on you and to rely on you, without the risk that one day the big power may suddenly decide its interests lie elsewhere […]” 

Singaporean Prime Minister, Lee Hsein Loong, at the World Economic Forum Annual Forum 2012, Davos | Photo: WEF, WC

Days after his win, Loong spoke with Chinese President, Xi Jinping, and both discussed the need for cooperation in fighting the pandemic, and also strengthening economic cooperation. The Singaporean premier and the Chinese President also discussed the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity-New International Land-Sea Trade Corridor, and the Belt and Road Initiative (BRI). 

Singapore and China have also opened a travel bubble, which will facilitate essential travel between the former and six Chinese Provinces. This agreement, which enables travellers to cross borders with minimal or no quarantine, has been in place since 8 June.

Difficult choices ahead

Singapore’s case clearly reiterates the point that geopolitical tensions between Washington DC and Beijing are being watched closely and have far reaching consequences for the ASEAN region.

So far, countries in the region have managed to strike a balance between the two, and in recent years, the bilateral relationship between the US and China has never been as turbulent as in the past few months.

Singapore has its task cut out not just with regard to getting its economic back on track, but also dealing deftly with external challenges.

Views expressed are the author’s own.