City Life: Singapore

The island state that wishes it could be towed to less murky waters

Eric Ellis

14 April 2007

From Sotheby’s to shares, Singapore has no shortage of places to park cash. But new luxury apartment blocks are sprouting among the frangipani, touting all manner of metropolitan arcadia — infinity pools, gyms, private clubs. They sport bizarre names such as Trillium and Botanika, fashioned in designer fonts on hoardings that seem styled by the editors of Wallpaper* magazine. My favourite promises the elysian towers rising behind it will be ‘Home to 46 of the Most Luminous Families’ — which will presumably take care of residents’ electricity bills, also on the rise.

The reasons why it’s suddenly salad days for Singapore developers seem to reside in neighbouring Indonesia, a country rated by the graft watchdog Transparency International at 130th of the 163 nations it tracks in its annual corruption survey. Jakarta’s dubious tycoons and officials have long regarded Singapore as their own private Switzerland — a handy place to stash cash, few questions asked. Indeed, a Merrill Lynch study last year noted that a third of Singapore’s 55,000 millionaires were Indonesian nationals. They control US$87 billion in assets, making Singapore an affluent suburb of Jakarta. That seems to explain why I’ve suddenly got a private banker for a neighbour.

Seeking facts from chaos, as Mao might have put it, some analysts here who know Indonesia only too well (read: had their fingers burnt there) point to the coincidence that Singapore’s boom followed the Boxing Day tsunami of 2004. The worst of that calamity was experienced just an island away from Singapore in Aceh. After the waters came another tsunami, of aid and donations. But the aid effort has been plagued by massive corruption. Indonesia’s President Susilo Bambang Yudhoyono landslid to office in 2004 on a ticket to clean up graft in his sprawling archipelago. He suspects that too much of Indonesia’s wealth is secreted away in Singapore and wants to winkle miscreants back to justice in Jakarta. Brussels too wants Singapore to co-operate with its efforts to crack down on tax shelters. But the boom in private banking has been a nice little earner for Singapore, and it’s all very tricky for a regional financial centre which trades off a self-styled global reputation for transparency, good governance and intolerance to corruption.

Singapore and Jakarta don’t have an extradition treaty but, with so much at stake, the tiny city-state isn’t exactly rushing to sign one. So Indonesia, a poor country but by dint of its size and population the regional superpower, has gently reminded Singapore who is boss in Southeast Asia — by banning sand exports from neighbouring Indonesian islands to Singapore, depriving it of an essential building material for all those new towers to be developed and populated by Indonesian tycoons.