Working with Markets: Harnessing Market Forces and Private Sector for Development

Working with Markets: Harnessing Market Forces and Private Sector for Development

Singapore transformed itself from a colonial port to a global city though good planning and governance based on sound economics. Since early years of independence, the government has embraced public-private collaborations to achieve urban development goals and used market-oriented pricing mechanisms to regulate the use of scarce resources like land and water.

The government’s approach to working with companies and markets has evolved from direct intervention to break cartels and supply building materials for public housing and infrastructure until the 1970s, to withdrawing from non-essential commercial activities over the next two decades, and towards greater private sector participation in major public projects in the new millennium.

In the early decades of development, state-owned firms known as government-linked corporations (GLCs) helped to accelerate infrastructure development and reduce costs. Some GLCs supplied building materials and technology for construction, and others managed state-owned commercial properties. Run largely for profit, these companies were eventually either privatised or divested in the 1990s and 2000s.

However, Singapore’s urban development has for the most part been orchestrated though the Government Land Sales (GLS) programme and land-use regulations, which have evolved with market conditions over the decades.

As Singapore’s biggest landowner, the state sells land to private developers, directs its use to fulfil social and economic objectives, and regulates supply to stabilize the property market. Established in 1967, the GLS has ensured the creation of various types of urban spaces to support a growing population and economy.

By attracting private sector participation and influencing outcomes, the government was able to renew the city centre and transform Singapore’s skyline by developing a new downtown boasting of iconic buildings in the Marina Bay area.

An enhanced living environment, better infrastructure, world-class office buildings, hotels and shopping complexes have enabled Singapore to attract global talent, investors, and tourists. This in turn has created jobs and improved living and working conditions for Singaporeans.

At the turn of the century, Singapore shifted towards greater private sector participation in activities previously conducted by the government. However, Public-Private Partnerships (PPPs) were mainly effective in building projects for desalinating seawater, recycling used water and waste-to-energy plants. While PPPs were successful for projects where responsibilities were narrowly defined and measured against clear parameters, multifaceted facilities such as the $1.33 billion Sports Hub proved more challenging to fund and become economically viable.

Working with markets has been a stable feature of Singapore’s development journey and remains a core urban governance principle underpinning the growth of a liveable and sustainable city.