Singapore cannot afford to allow foreign workers to come into the country and compete on an equal footing with the local citizens. Even if Singaporeans can reciprocally compete for jobs in the other countries, Singapore cannot afford to do so. The reason is because in terms of per capita GDP, Singapore has the richest economy in the region AND the highest cost of living.
This means that salaries in Singapore are higher than anywhere else in the region and as a result, there will be an inflow of workers from other countries looking for higher salary jobs in Singapore. Singaporeans on the other hand, cannot go abroad because salaries offered in those countries will be lower than in Singapore and will be insufficient to maintain their Singaporean lifestyle.
A recent article in TRS has brought to the notice of readers the intention of the ASEAN Economic Community to achieve a single market and production base with five core principles, that is the free flow of goods, the free flow of services, free flow of investment, free flow of capital and the free flow of labour. No doubt aspects of these kinds of open border agreements are modeled after that of the European Union which have attained these five principles to varying degrees of success depending on who you ask. However, the attainment of these five principles by the EU did not occur in isolation and neither are these five principles the ultimate aim of the EU. This is only the second half of their story. The prerequisite is that any country trying to gain entry into the EU must first commit to economic union.
The Treaty of Maastricht in 1992 establishes criteria for their economies like inflation, budget deficit, debt-to-GDP ratio, exchange rate and long-term interest rates. The net result of all these is to bring the economies of all EU members on to the same footing. With economies on an equal footing, the cost of living in each country, prices, salaries etc., would be more or less compatible.
As it is, even with Economic Union as a keystone about which the EU is built, the more developed EU members still suffer from the issue of workers from less developed EU states competing on cost. None of the EU states have such a disparate per capita GDP as Singapore and some of the other ASEAN members. Putting numbers to words, in 2012 the IMF lists the highest and lowest per capita GDP of the EU as that of Germany and Malta at US$38,666 and US$26,851 respectively. In the same list, the figures for Singapore, Philipines and Burma are $60,799, $4,380 and $1,612 respectively!
So if ASEAN wants to attain these five principles, it must first stringently hold each member state to the same kinds of Maastricht criteria in order to reduce the disparity amongst the economies of the respective ASEAN members. If this is not first attained, open borders will only result in disaster for one or all of the countries.
Take for example Singapore’s 3/4 tank rule when visiting Johor. A free trade agreement would mean that there can be no 3/4 tank law and Singapore drivers will be free to purchase as much petrol as they can put in their tanks or any other containers that they bring along. This means that petrol prices in Singapore would need to fall in line with the prices over in Johor, or perhaps prices in Johor and then the rest of Malaysia, would need to rise to the price of petrol in Singapore. Whatever the case, in this situation alone, one can see many intractable choices that need to be made.
Concerning the example of petrol, one possible solution would be to make petrol an exception. This in itself would be considered anti-competitive in the EU, and could well be brought before the European Commission. But why stop at petrol? Singapore is a small country and Johor is easily accessible from anywhere in Singapore. If Singaporeans could go to Johor to buy anything, then shops in Singapore would again have to respond and generally, the economy in Singapore would converge with that of Johor and in the long-term, the rest of ASEAN, and I don’t mean only in terms of prices.
Jobs like goods and services would be open to competition from job seekers from all of ASEAN. This firstly means that local Singaporeans would lose out on job opportunities as applicants from lesser developed countries with lower costs of living, will be willing to come to Singapore and compete on lower salaries so that they can send money home.
Living standards of Singaporeans would fall because of their inability to secure jobs whilst at the same time being accosted with one of the most expensive cities in the world. Proponents of the free movement of skilled workers would counter that the job opportunities created by such a trade agreement would result in the creation of more jobs. Any business venture is dependent on a large amount of luck so no one can say that any venture in particular can be successful.
Similarly, none of the proponents can guarantee that any particular venture would be successful. If there is no guarantee that the venture will be successful, then how can there be a guarantee of jobs? One thing CAN be guaranteed though, and that is if this kind of agreement is ratified, there will be job seekers from all corners of ASEAN, together with job seekers from India and China already here, competing with Singaporeans for whatever jobs there are, existent or not!
AiYoYo