Singapore vs Malaysia

Malaysia and Singapore separated 45 years ago. Back then, Singapore’s GDP per capita was $512 while Malaysia’s was $335. Fast forward 45 years, Singapore’s GDP per capita has leapfrog to $36,537 compared to Malaysia’s $6,975. In the same period, Singapore’s GDP has risen 189 times but Malaysia’s only managed about a third of that rate.

By the end of this year, Singapore’s GDP is expected to overtake that of its northern neighbor. The former should chalk up a figure of about $210 billion whilst the latter about $205 billion. This is despite Singapore being only 2.1 % the size of Malaysia and has no natural resources. They make up for the disadvantage by optimizing their human capital.

On the currency front, the currencies of the two nations were at par at the time of separation. 45 years later, the Singapore dollar is worth about RM 2.40. What a world of difference. Singapore’s foreign reserve is $220 billion whilst that for Malaysia is $100 billion. In addition, Singapore has two sovereign wealth funds with a combined asset value of about $480 billion. Khazanah Nasional, Malaysia’s sovereign fund, has a net worth of $25 billion.

Dr. Mahathir has an explanation for this contrasting growth rate. He reasoned that Malaysia lacked behind because it has a social restructuring goal to fulfill. By this, he meant the fair distribution of wealth among the races. Perhaps, its lost focus on growing the economic pie and instead concentrated on dividing the pie. What a pity.