Designing and Developing Singapore : The Economic Development Board

Before the People’s Action Party (PAP) took power in 1959, Dr Goh Keng Swee announced its economic policy during a mass rally at Dhoby Ghaut on 22 March 1959. The policy mentioned the establishment of a statutory agency to be known as the Economic Development Board (EDB). Dr Goh proposed that the EDB would be comprised of scientists, engineers, trade union leaders, industrialists and other specialists to develop and appraise economic projects. The board would receive a capital sum of $100 million as well as annual grants and advances from public revenue to encourage and assist the establishment of factories and other investments (Goh, 1959, p. 25). Upon winning the elections, the new PAP-led government quickly announced plans to establish the EDB (The Straits Times, 21 Jul 1959, p. 1). By end-1959, the first draft of the Bill to establish the EDB was completed (The Singapore Free Press, 26 Nov 1959, p. 6).

 

Role of Albert Winsemius

However, this Bill was only read in Parliament more than a year later because of the extensive study and preparation work required. In this interim, Dr Albert Winsemius, a Dutch economist, led a United Nations Development Programme Survey Mission to Singapore. He drew up a blueprint called the Industrialisation Programme for Singapore, or the Winsemius Report, which helped to set the direction for EDB (SEDB, 1991, p. 14). Lee Kuan Yew, who became Singapore’s first Prime Minister, acknowledged Winsemius’ involvement. Lee recounted that “Winsemius had recommended a one-stop agency so that an investor need not deal with a large number of departments and ministries. This agency would sort out all an investor’s requirements whether relating to land, power, water or environmental and work safety. EDB’s main efforts were in investment promotion, concentrating on the four industries Winsemius had named in his report - ship-breaking and repair, metal engineering, chemicals, and electrical equipment and appliances” (Lee, 2000, p. 77). Dr Winsemius later became Singapore’s long time economic advisor from 1961 to 1984.

 

Role of Singapore Industrial Promotion Board

The precursor of the EDB was the Singapore Industrial Promotion Board (SIPB). The latter had been established on 25 January 1957 for the promotion and development of industries in the then British colony of Singapore (Supplement to the Laws of the State of Singapore, Ord. 21 of 1961, pp. 148-158). The SIPB had been tasked with the promotion, assistance, financing and management of economic and commercial undertakings that were seen as beneficial to the economy of Singapore (Supplement to the Laws of the Colony of Singapore, Ord. 4 of 1957, pp. 1-6). However, the SIPB’s capital resources and the organisation of the board had been “too small to make any impact on the problems of industrialisation”. With only a nominal capital of $1 million, a mere one-hundredth of what the EDB was to have, its activities were limited to “making small loans to a handful of very small industrial operators” (The Straits Times, 4 Apr 1961, p. 5). Its lack of funds led to calls for it to be scrapped by David Lee, its first chairman, after he resigned from the chairmanship (The Straits Times, 21 Nov 1958, p. 9). In addition, the SIPB was notoriously inefficient as in its first eight months of operations, it had only provided two applicants with financial aid totalling $70,000 (The Singapore Free Press, 21 Oct 1957, p.2). Consequently, the EDB was “to replace the SIPB because a total revamp of the image and function of the old Board was needed in order to attract industrial investments to solve the unemployment problem” (Tang, I. F., 2002, p. 20).

 

Making of the EDB

As the Minister for Finance at the time, Dr Goh put forth the Economic Development Board Bill for its first parliamentary reading on 26 April 1961 (Debates: Official Reports, 26 April 1961, Vol.14, col. 1427). On 24 May 1961, he presented and defended the Bill before Parliament in the second reading. In that second reading, reference was made to PAP’s 1959 economic policy plan. The board would comprise five members to represent banking, manufacturing, commercial, labour and professional interests. This was to make sure that the whole nation could industrialise together (Debates: Official Reports, 26 April 1961, Vol. 14, cols. 1516-1531).

 

As the proposed EDB would inherit all the powers, liabilities and obligations of the SIPB but with much larger capital resources and organisation, Dr Goh proposed to repeal the Singapore Industrial Promotion Board Ordinance of 1957 and vest all of SIPB assets in the new EDB. The new EDB would then have a “hundred-fold more resources at its disposal than its predecessor” (Debates: Official Reports, 26 April 1961, Vol. 14, col. 1520). After the third reading and subsequent passing of the Bill by Parliament on 14 June 1961 (Debates: Official Reports, 26 April 1961, Vol. 14, cols. 1531-1545), the Economic Development Board Ordinance, 1961 came into operation on 1 August 1961 (Government Gazette. Subsidiary Legislation Supplement, 28 July 1961, Sp.S 184/1961, p. 797). The SIPB and all its assets, liabilities and obligations were transferred to and vested in the EDB (Supplement to the Laws of the State of Singapore, Ord. 21 of 1961, pp. 158).

 

On 16 August 1961, Dr Goh appointed several persons to the EDB (Government Gazette, 25 August 1961, G. N. 1887, p. 1168). The chairman was Hon Sui Sen, who till then was holding the post of Permanent Secretary of the Finance Ministry. The other members were Lien Ying Chow, Managing Director of the Overseas Union Bank; Lim Chee Swee, Deputy Chairman of the Singapore Manufacturers’ Association and Managing Director of Timber Industries, Ltd.; Runme Shaw, a film magnate and Managing Director of Shaw Brothers, Ltd.; G. Kandasamy, trade unionist and Deputy Speaker of the Legislative Assembly; and F. C. Yap, an accountant and company director. The five latter members represented banking, manufacturing, commercial, labour, and professional and academic interests respectively (The Straits Times, 17 Aug 1961, p. 1).

 

EDB began operations

The EDB began operations in August 1961, located and crammed into the third and fifth floors of the Fullerton Building at Raffles Place (EDB, 1962, p. 4). Apart from the chairman, “the Government seconded a number of its ablest youngest officers to the Board” (Economic Development Board (EDB), 1962, p. 3). By the end of the year, it had a skeletal staff of 81 in total (EDB, 1962, p. 3). This number rose to 192 by the end of the following year (EDB, 1963, p. 9). Most of the senior officers were Singaporeans with some fresh graduates, like S. Dhanabalan who became the first Deputy Chief of Projects. As Dhanabalan recalls, EDB’s first Director Eric J. Mayer affirmed that EDB could have all the foreign technical experts it needed to support and advise on its operations, but Mayer showed unflinching conviction that the people empowered to make decisions on Singapore’s economic future should be Singaporeans. Thus, Mayer went on to appoint Singaporeans as chiefs and deputy chiefs for all of EDB’s key divisions. “We the young “rookies” were given the big titles and put in charge of foreign experts who were much better-trained and more experienced than us. The only consolation for the experts, I suppose, was that they were always paid much better than we were, in spite of our lofty designations” (Dhanabalan, 2002, p. 24).

 

With the establishment of the EDB, the government’s four-year plan for 1961 to 1964 could be carried out to create jobs and boost the national income (The Straits Times, 3 Apr 1961, p. 16). The plan was to inject $871 million to develop the industrial sector in Singapore. The high rate of population growth in Singapore was then the highest in the world at 4.3% between 1946 and 1957. This combined with a migratory surplus of 75,000 people from the Malaysia Federation between 1948 and 1959 added to the unemployment problem in Singapore. Aside from the obvious issues of health, education and housing, the most pressing problem was the need for jobs creation (The Straits Times, 3 Apr 1961, p. 8). A projected 78,000 jobs would have to be created by 1970 for full employment to be realised in Singapore, (EDB, 1963, p. 2). Hence, industrialisation was seen as a remedy for unemployment (The Straits Times, 28 May 1961, p. 11). To accomplish this task, the government granted the EDB an initial capital fund of $40 million (EDB, 1962, p. 2).

 

The EDB assisted private industry in promoting industrial expansion. Expert personnel, capital, and the results of market research were at the manufacturers’ disposal (The Straits Times, 28 May 1961, p. 11). The EDB also had the authority to grant incentives, set up industrial estates, and invest directly in new and expanding enterprises (Van Elkan, 1995, p. 12). Its initial task was to develop virtually from scratch a framework for Singapore's industrialisation (Singapore Economic Development Board (SEDB), 2011, p. 11).

 

Role of EDB’s other divisions

The Board’s Investment Promotion Division (IPD) encouraged the private sector to establish new industries or to expand existing plants (EDB, 1963, p. 11). Its Projects Division was responsible for identifying industries suitable for establishment in Singapore, and for providing information to investors as well as assisting them with their queries.

 

The early days of EDB’s IPD were not easy. The challenges IPD faced exemplify the problems that confronted the newly established EDB. The first IPD chief, Ngiam Tong Dow recalls, “being the first and only officer in the IPD, I was made the ‘Red Indian chief’ without ‘Red Indians’. As the chief, my job was to solicit and organise factory openings, as many as we could in a week. So on one morning in a week, Dr Goh would set out and officiate the opening of a hair cream, peanut butter or joss paper manufacturing plant located cheek by jowl next to each other in our standard factories in Tanglin Halt. In those early days, the Minister was just glad to have a factory, any factory, to open” (Ngiam, 2002, p. 180).

 

Dr Goh had set himself the task of inspiring confidence in Singapore’s industries and so decided to generate publicity by officiating at these factory openings. Chan Chin Bock, who was to become EDB’s chairman, recalls his first assignment from Dr Goh in 1964 as organising a plant opening ceremony every day for three months (Chan, 2002, p. 34). He accomplished this task by persuading Dr Goh to participate in ceremonies. For example, those marking the investor’s commitment to the project; the foundation stone laying ceremony; and the opening ceremony to mark the factory’s commencement of production (Chan, 2002, p. 34). This was done even for the smallest factories, like one making mothballs (Lee, 2000, p. 80).

 

Furthermore, the EDB had other divisions. The Finance Division was responsible for loan negotiations involving financial analysis and assessments of the credit worthiness of applications; and for the disbursement and recovery of loans granted by the Board (EDB, 1963, p. 16). In 1962, an estimated $19.7 million was disbursed or committed in the way of loans and equity subscriptions (EDB, 1963, p. 7). This division eventually became the Development Bank of Singapore (DBS) in 1968 (Ang, 2002, p. 233).

 

In addition, the EDB’s Technical Consultant Services Division saw to the rendering of technical consulting services to the industry, while the Industrial Facilities Division was concerned with managing suitable areas for development and industrial estates (EDB, 1963, p. 21). The latter, which would eventually become the present-day Jurong Town Corporation (SEDB, 1991, p. 21)  was heavily involved in the development of Jurong industrial estate, and then Jurong New Town, a self-contained industrial estate that would serve as the forerunner of Singapore’s push for industrialisation (SEDB, 1991, p. 23).

 

In the fifth decade since its establishment in 1961, the EDB today has a recognised role in attracting investments, developing and enhancing of business environments, as well as catering to the specialised needs of niche markets (SEDB, 2011, website).

Sources

The information in this article is valid as at 2011 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Economy