What Can Be Learned from the Singapore Development Model? (My Article for CIFA Trusting Magazine)

CPF Transparency and Accountability

I have co-written the article below with Leong Sze Hian which was published in the TRUSTING, The Independent Financial Advisor magazine. The article can be read at the magazine here.

The Sustainable Development Goals: What Can Be Learned from the Singapore Development Model?

The Singapore development model has been widely-acclaimed for its ability to springboard a nation from the Third World to the First World – but arguably what exactly are the pivotal points to its success may not be well understood.

The Singapore model can be explained by two key principles – first, the uniqueness of the treatment of cash flows in its fiscal policy and second, the conceptualisation of its economic and social development policies.

But first a warning – that the adoption of the Singapore model needs to fulfil several criteria in order for it to be replicated for long-term success. Otherwise it may lead to certain undesirable outcomes. This will be discussed in the later part of this essay.

An Alternative “Fiscal” Model?

The fundamental difference between Singapore and other countries, and what arguably allowed Singapore to leapfrog its contemporaries – is a migration from a traditional tax-based system towards a self-sufficient “savings-investment” model.

Right after its independence in 1965, Singapore was aware of the need to create a huge pool of capital in order to fund the development of key infrastructure in the country.

Taxation as a tool was inflexible as a high tax rate is seemingly unattractive to foreign investment and immigrants. So, a Singapore eager to attract investments reduced tax rates gradually to one of the lowest in the world. But this, in theory, would mean that the funds necessary for infrastructure development may also be reduced due to lower tax revenues.

The Government would therefore have to look for alternative funds domestically, or to look externally to borrow from other countries or international organisations.

The Government did both, but with the aim of reducing the reliance on external debt eventually.

Within less than 10 years, by the mid-1970s, the Government was able to do so.

Today, it has hardly any external debt as almost the entire public debt is domestic.

For a country with no natural resources which could be exported and had difficulties attracting foreign capital investment at that time, where did the alternative funds come from domestically?

By 1968, the Government recognised that the social security pension funds of Singaporeans, the Central Provident Fund (CPF) had accumulated a huge pool of funds.

The CPF was a self-generating pool of money, unlike taxes which would normally be used up year after year and in a time where Singapore was still an under-developed nation, there was hardly any surplus left over annually for development goals.

The decision was made to allow the Government to borrow and use the CPF funds. The Government began pumping the CPF into infrastructure development, in public housing, airports, ports, etc. Arguably, Changi Airport (formerly the world number one airport) and the Port of Singapore (formerly the world number one port) were all financed to some extent in the early years by the CPF.

By the mid-1970s, Singapore had managed to build up its key infrastructure, and was also able to wean off international funding and started to accumulate annual Budget surpluses.

From the late 1990s, the Government also began to keep part of the annual returns from the investment of the CPF funds to build up the country’s reserves. The reserves, at an estimated $900 billion, are estimated to be the largest in the world today on a per capita basis.

The above are arguably, one of the key reasons that made the Singapore model tick.

The use of a stable pool of pension funds thus enabled infrastructural development and economic growth.

In this scenario, a viable replication of the Singapore model would be for a government to liaise with its citizens to keep a small portion of the annual returns of the pension funds, say 1 per cent – to fund development, so that the route towards achieving development goals may be smoother.

The pension contribution rates can be gradually adjusted upwards if desired, to allow for more funds to be set aside in the pension fund, and this is arguably easier to do than increasing taxes.

An Alternative “Taxation” Model?

The key to differentiating the Singapore model with that of the traditional “high” tax-based system in other countries is that instead of a singular pool of tax revenue which is spent in a year with little left, a second constant pool of funding is available for longer term objectives.

Where a singular pool of tax revenue can result in the perpetual problem of fiscal deficits, a secondary pool of funding which is not constantly sapped away may help to mitigate this issue.

In Singapore’s case, this came from the people’s labour and mandatory contribution of their income into the CPF. In another country, it could be the discovery of oil, for example.

The Singapore “Public Housing” Model: Pricing is the Key to Its Success?

Notably, one key use of the CPF in Singapore is to also fund the development of public housing, via the borrowing of it by the Government to fund the construction, and the borrowing of it from the citizens’ own CPF accounts to fund the purchase.

By the early 1980s, more than 80 per cent of the population were living in public housing.

However, after the 1985 economic recession, several economists warned against further excessive usage of the CPF for the development of public housing, as Singaporeans could then only use the CPF for the purchase of public housing, other than for retirement, as this could distort demand, and lead to inflationary pressures and a housing bubble.

Eventually, the use of the CPF for public housing did lead to escalating home prices. The CPF thus became a double-edge sword because of its dual use for public housing and retirement. The money funnelled towards paying for the increasing prices of the homes meant lesser funds for retirement.

But the Singapore public housing model may still be adapted if public housing is pegged on a “cost” basis instead of Singapore’s “market pricing” basis.

A different approach to attaining the Sustainable Development Goals?

In conclusion, the Singapore model stands out in its identification of a secondary pool of domestically-available funds which could act as the jumpstart for infrastructural development, and also continuing Budget surpluses and accumulated reserves for longer term use.

However, it bears repeating that for this model to be effective, transparency and accountability should act as strong foundations, especially in the light of the issues related to using the citizens’ pension funds.

Finally, a balance has to be maintained particularly for such a model, for as long as wages, the contribution rates to the pension fund, interest returns on the pension fund to the citizens and retirement adequacy are well-coordinated, it may make the path to sustainable development a smoother one.

Roy Ngerng and Leong Sze Hian


Linda Low, “Central Provident Fund in Singapore,” HKCER Letters, Vol.41, November 1996, http://www.hkcer.hku.hk/Letters/v41/rllow.htm

Edward Ng, “Central Provident Fund in Singapore: A Capital Market Boost or a Drag?,” A Study of Financial Markets, http://aric.adb.org/pdf/aem/external/financial_market/Sound_Practices/sing_cpf.pdf

Sock-Yong Phang, “The Singapore Model of Housing and the Welfare State,” Research Collection School Of Economics, 2007, http://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1595&context=soe_research


  1. Network

    Roy, that is an interesting article. I am currently telling my family and friends about PAP’s scam in layman’s term.

    Don’t lose hope. Look at Malaysia now, everybody knows its government is corrupted beyond hope and perhaps within a few years later, its people will kick them out. PAP will probably shit their pants knowing that its fate will be similiar to them.

    Their power to rule is ending soon.

    • Hardeep Saini

      Hi R
      You are right there.
      The difference is:
      1. No transparency.
      2. The pecuniary interests of the PM and wife is being blatantly exercised in their control of Temasek and GIC.
      3. Suing any one who has an alternative idea to the point that all opposition in the country has been stifled. This has caused an exodus of Singaporeans from Singapore leaving very few capable people.
      4. Spending more time “fixing” the opposition than in running the country.
      5. paying themselves ridiculous salaries which tantamount to outright corruption.
      6. Always singing praises about there fantastic policies even though there are plenty of screw-ups.
      7. Losing billions of dollars of CPF monies and trying to hide this fact.
      8. Using peoples CPF to use as they please as a source of cheap funds.
      9. Interfering and manipulating the people through social engineering.
      10. Control of the media, police, grassroots organisations and the justice system.
      11. Creating government owned companies in all sectors to artificially manipulate the economy.
      12.Denying that poverty is becoming a big problem but not articulating a poverty line.
      13. Refusing, time and time again, to introduce a minimum wage.
      14. etc, etc…..

      The PAP made Singapore from a third world country to a first world country and back into a third world country.
      If the 60% of Singaporeans who voted for the PAP in GE2011 do not or cannot realise the damage that the present generation of PAP is doing to Singapore than all will be lost for the present generation of Singaporeans.

      • lolz

        stop saying Singapore is a third-world country and grouping us together with countries like Ethiopia Swaziland etc. It’s disrespectful to both us and them, and completely ignores the definition of what a third-world country is.


    趁現在吃午餐時間, 給女秘書留言:

    你敬他人一分,他人會回敬還你 一億,反之, 根據華人禮尚往來的習俗, 當別人收到你的『禮物』後, 將會加倍償還 『 禮物 』, 不然, 這個世界就沒有規矩 !這就是為什麼世界和平的同時也必須要有核武器 !

    等今晚回到家以後, 再給你另一份比較長的留言。

  3. Norman Wee

    Roy, your commentators except Jason don’t seem to know how to read and started barking madly at the wrong tree.
    As a heckler your part is in the “transparency and accountability”. You should elaborate on this with evidence and details.
    If you article is what it is that Singapore’s financial and economic approach is model enough for others to follow, then it would mean that those following must whack any heckler in order to succeed. Looks like you are now trying to curry flavour with you know who…

  4. Someone

    All bullshit stories Roy wrote. Think he everyday sit in front of the computer n find all the information on the net that is anti govt. he din even establish if it’s real. Just copy n paste for his STUPID follower. Esp the hard Deep or something. Dunno hard what. From Australia. Think he better shut his cock up cos been using it to talk. Maybe it’s a pussy cat. Hehe


    for PAP & all political parties

    In brief, PM’s secretaries cursed a visceral shaming to try to prove the form of those activities included such “dirty tricks” as bugging the offices of political …

    No solving defuse the public anger from PAP civil servant regulation law… no does the legislation conduct … workers ( such as Roy and other 5 Singaporeans ) had been trying to negotiate with the PAP, however there is no management had take into account of their demands.

    There is a tendency to demand a strict PAP political officers from the social … like smell a pair of dirty underwear and simply concluded, these places are doomed . ….

    without the right compositional strategies and antennae for the socially significant, PM himself hired those endanger’s secretaries, had being into a ‘bad smell’ in the place .

    if 50% Singaporeans supporters after election conflict that led to the Compromise of 2016, that was bit late.

    “One people, one empire, one leader ” — this was Nazi Germany ‘s slogan,

    Sound familiar ? it does, ” one people, one nation, one Singapore ” !

    in that case, Singaporeans deserves better, bread and roses, labor rights , means work sets you free, each for all and all for each.

    Don’t let anyone take Singapore back to the 1980s,

    Now… The next steps, next four years of the full dinner pail everybody shall be included . There’s No Indispensable Man . Life, Liberty, bread and rose !

  6. Norman Wee

    I have gone through the article at source and my conclusion is that it was a masterpiece by non economist Roy at the time of his popularity peak.

    However it was heavily edited by past President of the Society of Financial Service Professionals of Harvard University Leong Sze Hian that the magazine had to include him as coauthor.

    The original article gives prominence to Leong with mention of Roy only towards the endtail.

    The article is no more than a regurgitation of what Linda Low, Edward Ng and SockYong Phang.
    One cardinal principle for writers is that one must attribute if its not his own ideas. Otherwise it’s plagiarism and copyright infringement. There are 3 references but not a single attribution.

    If Roy and Leong were guilty of plagiarism, then the magazine, by giving them space, could be an accessory.

    The merit and highpoint of the whole article is the call for “transparency and accountability” in managing such strategies, but it is so scampy in evidential details that anyone it may be excused for thinking it’s PAP stuff.
    Transparency and accountability should be the main thrust of the article, as afterall Roy is famous for such clamoring.

    As it is the article based on the writings of the 3 previous authors give credence to the PAP government to the extent that Singapore’s development strategies provide a model for other developing countries.

  7. Ibrahim

    If you glance through Roy’s postings, if you just discern it for a few minutes, you can tell he is writing rubbish. Just searching the net and plucking words here and there to make up stories. Anyway, beside the few supporters he has left, no one even remotely bother. Roy has no reputation and credibility , everyone knows it. Just go read any forum and even the most ardent opposition supporters also scorn him. What a shameless scum Roy is and his handful ass licking looney tunes supporters.

    • to gangs

      Roy in his own blog , he did not come to your ” home “.
      now you come to the owner’s ” home” gesticulating,
      if you are not his fans, why your looney ass licking here for last one year ?

      actually , Roy’s blog not attract me .
      the most reason from crazy followers comments from your gangs
      the more dirty means you used , the more attractive us ……

      we don’t care CPF something , we care about the bad people who work inside the PM office
      why PAP still hire them ?

  8. Singapore Citizen Mr. Teo En Ming (Zhang Enming)

    Subtle Denial of Medical Treatment by the Singapore Government for Mr. Teo En Ming (Zhang Enming)

    Mr. Teo En Ming (Zhang Enming)
    Singapore Citizen
    Targeted Individual
    5 July 2015 Sunday Singapore Time

    Random Number Generator:

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