BRUNEI VS SINGAPORE: A CASE STUDY FOR DEVELOPING NATIONS

There are two countries that are always going to be linked in the Southeast Asia region due to their similarities, and the key choices that turned one into an economic powerhouse. Brunei and Singapore are the two smallest and wealthiest Southeast Asian nations, and have a currency interchange agreement. Sixty years ago, both set out to diversify their economies and become leaders in the region. The result is a real-world model lesson for developing nations.

1950s

In the aftermath of WWII both nations were hit very hard. Brunei’s oilfields had suffered massive damages from bombs and occupation by the Japanese, and the danger of the region led platforms to fall into extreme disrepair. It led Brunei to realize that it needed to diversify its economy away from oil. There had only been one field found around Seria, and the country was fearful oil would run out. In 1953, they started their first National Development Plan. The plan was to build infrastructure between the districts, provide hospitals and education to create a forward thinking workforce. Singapore was in awful shape following WWII, as the British boasted their fortress on the island could “withstand any attack.” That caused the Japanese to blockade the entire island and bombard it on a daily basis, until they surrendered. The island was in physical ruins during the 1950s with a huge homeless population. It was noted by the British Housing Committee that they were a disgrace to the civilized community. By 1959, the British had done little to solve any of the issues facing the small island, and granted both Brunei and Singapore their independence (more or less, Brunei was not fully independent until 1984, with the British taking care of all foreign affairs and defense officially until then).

1960s

In 1963, Singapore joined the newly formed nation of Malaysia, along with Malaya, North Borneo, and Sarawak. However, very soon after the new state was formed, Singapore began having issues due to its mostly Chinese population, and federal government regulations providing significant benefits for ethnic Malays. In two short years there were race riots and awful violence all over Singapore due to the tensions. By 1965, they were kicked out of Malaysia, causing Singapore to be one of the only countries that exists to have gained its sovereignty unwillingly. Lee Kuan Yew leader of Singapore famously said after the 126-0 vote to expel Singapore “For me, it is a moment of anguish. All my life, my whole adult life, I have believed in the merger and unity of the two territories.”

 

Singapore in the 1960s

Singapore 1960s

Brunei opted out of joining the Malaysian Federation, due to its rising success in the region. It had a GDP per capita nearly three times that of Singapore due to the discovery of a new oil field in the early 1960s. By simple statistics, Brunei was well ahead of the Lion City at this point in history (exports of 3,800 USD per person in Brunei vs 331 USD per person in Singapore), but oil was still well over 90% of the exports from Brunei. Many were predicting that the island of Singapore would fail with its new independence, huge unemployment, and lack of natural resources to fall back on. 70% of the Singaporean economy was based off the port, which could be taken away at any time by rival ports in Malaysia or Indonesia, should prices rise.

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