Rare Riot Reflects Challenging Demographic Trend

BMI View: The exceedingly rare riot that took place in Singapore's Little India district on December 8 th was the city-state's second relatively major social incident involving foreign workers dating back to November 2012's illegal bus driver strike. While we do not believe that these incidents reflect a material deterioration in Singapore's extremely strong business environment, we note that societal stresses related to the substantial economic and social separation between relatively low-wage, transitory foreign workers and the rest of the population will continue to be a concern in the country over the coming years.

Singapore suffered its first relatively large-scale riot in over 40 years on December 8 th, as approximately 400 people (largely hailing from South Asia) created a violent scene in the city-state's Little India district. The riot reportedly broke out after a private bus operating in the area struck and killed an Indian national some time after 9pm, and the government was quick to issue sharp criticisms towards those involved following the cessation of hostilities nearly three hours later. Although still inconclusive, damage reports indicate that at least five police vehicles, one ambulance, and a number of private vehicles were vandalised in the chaos, while as many as 18 people suffered injuries.

The incident was an extremely rare event for Singapore, which is by far the most socially and politically stable country in Southeast Asia and is known for its strict laws and wide-ranging policies meant to discourage social unrest. Nevertheless, it was the second relatively major social incident for the country dating back to November 2012, when 171 bus drivers hailing from mainland China organised a coordinated work stoppage, later deemed to be an illegal strike by the government.

Foreign Worker Inflows Altering Population Landscape
Singapore - Population By Type, % chg y-o-y

Rare Riot Reflects Challenging Demographic Trend

BMI View: The exceedingly rare riot that took place in Singapore's Little India district on December 8 th was the city-state's second relatively major social incident involving foreign workers dating back to November 2012's illegal bus driver strike. While we do not believe that these incidents reflect a material deterioration in Singapore's extremely strong business environment, we note that societal stresses related to the substantial economic and social separation between relatively low-wage, transitory foreign workers and the rest of the population will continue to be a concern in the country over the coming years.

Singapore suffered its first relatively large-scale riot in over 40 years on December 8 th, as approximately 400 people (largely hailing from South Asia) created a violent scene in the city-state's Little India district. The riot reportedly broke out after a private bus operating in the area struck and killed an Indian national some time after 9pm, and the government was quick to issue sharp criticisms towards those involved following the cessation of hostilities nearly three hours later. Although still inconclusive, damage reports indicate that at least five police vehicles, one ambulance, and a number of private vehicles were vandalised in the chaos, while as many as 18 people suffered injuries.

The incident was an extremely rare event for Singapore, which is by far the most socially and politically stable country in Southeast Asia and is known for its strict laws and wide-ranging policies meant to discourage social unrest. Nevertheless, it was the second relatively major social incident for the country dating back to November 2012, when 171 bus drivers hailing from mainland China organised a coordinated work stoppage, later deemed to be an illegal strike by the government.

Business Environment Not A Concern…

While we stress that sweeping conclusions should not be made regarding either of these isolated events, and that Singapore's foundation of social and political stability remains soundly in place, the two incidents do hint at incipient societal tensions that have arisen as a result of the ruling People's Action Party (PAP)'s liberal immigration policies dating back to the mid 2000s. As we wrote following the labour strike last year ( see 'Labour Strike Shines Spotlight On PAP's Challenges', December 3 2012), the make-up of Singapore's population has undergone a substantial transformation over recent years. From 2000 to 2012, population growth among Singaporean citizens totaled just 10.0%, far outstripped by the 31.9% rate of growth in non-residents, the majority of whom are relatively low-income foreign workers. Even as the government's liberal foreign labour policies have led to a healthy labour market (unemployment stood at just 1.8% in Q313) while keeping wages in labour-intensive industries such as construction and manufacturing competitive with the region, they have also stoked cultural, social, and economic tensions among foreigners and locals.

Foreign Worker Inflows Altering Population Landscape
Singapore - Population By Type, % chg y-o-y

…But Societal Tensions Can't Be Ignored

Such social pressures are not going to disappear anytime soon. Relatively low wage work permit holders account for the lion's share of the total foreign workforce in Singapore (74.8%, totaling nearly 1mn out of a total population of 5.4mn), and the social and economic separation between this group and the rest of the population is considerable. The virtual impossibility of integrating temporary foreign workers into the broader societal structure of a physically limited city-state will be a major challenge for the government to consider over the coming years, as it is not economically viable to drastically reduce the foreign workforce over a short period of time. While we do not expect Singapore's top notch business environment to witness a material deterioration, we note that further incidents are not outside of the realm of possibility given the inherent difficulties in governing such demographically disparate groups, particularly in a country with the third highest population density in the world.

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