State Development Plan, 1961–1964

Background

The State Development Plan, also referred to as the First Development Plan, was the first official blueprint for the economic development of Singapore after it attained self-government in 1959. Produced by the Ministry of Finance, the plan aimed to solve the pressing issues of economic stagnation and high unemployment rate through an expansion in manufacturing.¹

Background
In the 1950s, Singapore was already an important trading centre exporting the region’s raw materials and distributing manufactured goods from industrialised countries. As a result of rapid population growth, unemployment became a serious problem during that decade when manufacturing activities stagnated and the possibilities of trade expansion were limited. The population growth also brought about an increase in the need for social services, especially in terms of housing.²

Faced with a bleak economic outlook and a severe unemployment problem, a five-year development plan was conceived by the newly elected People’s Action Party (PAP) government, with the aim of increasing employment opportunities in the long term via a programme of accelerated industrialisation.³ The first draft of the plan had been completed in June 1960, but its publication was delayed as it had to be amended following discussions with the World Bank, the British government and the United Nations.⁴

The plan was subsequently reduced to a four-year plan for the period 1961 to 1964 with minor revisions to some projects.⁵ It was tabled on 12 April 1961 by then Minister for Finance Goh Keng Swee in the Legislative Assembly, and approved on 13 April 1961 after two days of debate.⁶

Earlier in October 1960, a United Nations Industrial Survey Mission led by Albert Winsemius had come to Singapore to survey and recommend industries that could be set up. A preliminary report was submitted to the government at the end of their stay in December 1960, and the final report submitted in June 1961.⁷ Also known as the Winsemius Report, it outlined a strategy to expand manufacturing activities and recommended specific industries that Singapore could develop in the long term, such as ship repairing, shipbuilding and metal engineering.⁸ The proposals and technical advice provided in the report paved the way for Singapore’s industrialisation scheme as laid out in the First Development Plan.⁹

Feedback and criticisms
Feedback collected by The Straits Times newspaper indicated that the development plan was generally well received by business associations, which viewed it as a realistic and practical solution for Singapore’s problems.¹⁰ However, it also drew criticisms from members of the opposition parties, who alleged that the timing of the plan was politically motivated, as it was launched just before the Hong Lim by-election. The PAP disputed this assertion.¹¹

Details of the plan
There are three parts to the 134-page plan. Part I examines the nature of the problems that Singapore faced – in particular, issues heightened by the population growth – and reviews its past revenue and expenditure accounts. Part II provides a summary of the plan, including a forecast of the state’s revenue and expenditure, how the plan would be financed and results of the plan. The last part contains details of the expenditure in the various sectors.¹²

The main purpose of the plan was to create more jobs for the growing population via government efforts in stimulating the economy and consequently increasing national income.¹³ Expenditure for the four-year development plan (1961–64) was projected to be $871 million, a substantial increase from $550 million between 1956 and 1960.¹⁴

The increased expenditure was meant to be a substantial investment to capital formation, which would allow a growth in per-capita national income to match the population growth. As the country depended greatly on international trade, the plan recognised that there must be a corresponding growth in private-sector investment in the industries. Hence, the government’s task was to create conditions and policies that would attract substantial private capital to be invested in the industries. The development expenditure towards social causes was recognised as inevitable due to the high rate of population growth, but it would not go beyond maintaining the existing level of social services.¹⁵

Allocation of development expenditure
Of the total development expenditure, 58 percent was allocated for broadly two groups of economic development projects: land and agricultural development projects, which would form 10.5 percent of the total expenditure for economic development; and industrial and commercial development projects, which would account for 66 percent. The remaining sum (about 23 percent) in economic development expenditure was allocated for transport and communication services, mainly on road development.¹⁶

A significant amount, $331 million, of the development expenditure was expected to be self-supporting and would generate additional revenue through the expansion of power, water, gas, housing and port development.¹⁷ Another large portion of the expenditure ($176 million) was allocated to industrial site preparations, swamp reclamation, rural development, all of which were also expected to be revenue-earning.¹⁸

Forty percent of the total expenditure was allocated for social development in the areas of public housing, health services and education, mainly to keep pace with population growth. The remaining amount – less than two percent – was for public administration.¹⁹

Sources of funding
The plan was envisaged to be mostly self-funding, where $591 million out of the $871 million needed would be funded by domestic sources of income: projected revenue surpluses, reserve funds in the government and statutory boards, and floating loans in the Singapore market. The balance of $280 million would be financed by external assistance from the United Kingdom and the World Bank.²⁰

Projects under the plan
Economic Development Board
One of the biggest allocations of the funds – $100 million – went towards the establishment of the Economic Development Board (EDB) as a government body to spearhead the industrialisation effort.²¹ The EDB replaced the Singapore Industrial Promotion Board (SIPB), and all the latter’s assets, liabilities and obligations were transferred to and vested in the EDB.²² The SIPB’s capital resources and organisation were deemed too small to make any meaningful impact on the state’s industrialisation plan.²³

The EDB’s objectives were to investigate and evaluate new industrial opportunities; provide financial assistance or guarantee loans; participate in establishing new industries; and lay out industrial sites with power, water and other facilities. It was also responsible for sourcing overseas technical experts, as well as making expert personnel, capital, technical services and market research available to local manufacturers and existing industries.²⁴ The EDB Act was passed on 24 May 1961, and the board was constituted on 1 August 1961.²⁵

Progress and developments
In 1963, towards the end of the planned period, the government reported that the national income had increased by 26 percent from $1.9 billion in 1959 to $2.4 billion in 1962 since the implementation of the development plan.²⁶ In terms of employment, it was estimated that the total number of economically active citizens grew by 70,000 in the period 1960 to 1965, 58,000 of whom found employment. The major growth was in the manufacturing sector, which saw an increase in employment from 61,000 in 1960 to 80,000 in 1965.²⁷

In terms of economic development, one of the first projects undertaken by the EDB was the development of a 9,000-acre site in Jurong into an industrial estate.²⁸ By 1963, 1,040 ac of the industrial estate had been levelled and prepared for occupation. Port facilities for Jurong were also developed, while roads leading to the Jurong Industrial Estate were completed and opened to traffic. In addition, smaller industrial estates in Redhill, Tanglin Halt and Jalan Ampat saw full occupation with 28 factories in operation.²⁹

On the social development front, housing accounted for $154 million of the funds. The Housing and Development Board had been expected to build 51,000 houses. Within three years, the board completed nearly 30,000 homes with an expenditure of about $130 million.³⁰

By 1963, 23 primary schools and 13 vocational and technical schools had been built, with another 26 schools under construction.³¹

Revisions and subsequent plan
Revisions were made to the annual estimates in the course of the plan’s implementation, and the plan was extended to include the year 1965.³² The preparation of a second development plan covering the period 1966 to 1970 began when Singapore was part of Malaysia. This was, however, superseded by new developments – the separation of Singapore from Malaysia in 1965, the withdrawal of British military forces, and increased industry requirements in technical education. Hence, the second development plan was eventually not implemented.³³



Author
Lim Puay Ling



References
1. Economic Planning Unit, Singapore, State of Singapore First Development Plan, 1961–1964: Review of Progress for the Three Years, 1961–1963 (Singapore Economic Planning Unit, Prime Minister’s Office, 1964), 2, 22. (Call no. RCLOS 338.95957 SIN)
2. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964 (Singapore: Govt. Print., 1961), 6, 11, 18. (Call no. RDLKL 338.95957 SIN)
3. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 1; Parliament of Singapore, Development Plan 1961–1964, vol. 14 of Official Reports – Parliamentary Debates (Hansard), 12 April 1961, col. 1234.
4. Parliament of Singapore, Annual Budget Statement, vol. 14 of Official Reports – Parliamentary Debates (Hansard), 29 November 1960, col. 37;
5. Parliament of Singapore, Development Plan 1961–1964, col. 1234.
6. Parliament of Singapore, Development Plan 1961–1964, col. 1249; Parliament of Singapore, Development Plan 1961–1964, vol. 14 of Official Reports – Parliamentary Debates (Hansard), 13 April 1961, cols. 1322, 1279.  
7. Albert Winsemius, A Proposed Industrialization Programme for the State of Singapore (Singapore: UN Commissioner for Technical Assistance, Dept. of Economic and Social Affairs, 1963). (Call no. RCLOS 338.095951 UNI)
8. Parliament of Singapore, Annual Budget Statement, vol. 15 of Official Reports – Parliamentary Debates (Hansard), 28 November 1961, col. 817.
9. Parliament of Singapore, Development Plan 1961–1964, col. 1238–39.
10. “Four-Year Plan Praised,” Straits Times, 5 April 1961, 9. (From NewspaperSG)
11. “Goh: Absurd to Say D-Plan Produced for By-Election,” Straits Times, 13 April 1961, 5. (From NewspaperSG)
12. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 63–101.
13. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 33.
14. Lee Soo Ann, Industrialization in Singapore (Australia: Longman, 1973), 37. (Call no. RCLOS 338.095957 LEE)
15. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 33, 59.
16. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 80, 101.
17. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 39.
18. Lee, Industrialization in Singapore, 37.
19. Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 34.
20. Parliament of Singapore, Development Plan 1961–1964, col. 1232; Ministry of Finance, Singapore, State of Singapore Development Plan 1961–1964, 50; Parliament of Singapore, Annual Budget Statement, col. 817.
21. “Economic Development Board to Be Set Up,” Straits Times, 25 May 1961, 16. (From NewspaperSG)
22. Economic Development Board Ordinance 1961, Sp.S 184/1961, 1961 Supplement to the Laws of the State of Singapore, 1961, 797. (Call no. RCLOS 348.5957 SIN-[HWE])
23. “New Board Will Have $100M for Lending,” Straits Times, 4 April 1961, 5. (From NewspaperSG)
24. “Economic Development Board to Be Set Up.”
25. Parliament of Singapore, Economic Development Board Bill, vol. 14 of Official Reports – Parliamentary Debates (Hansard), 24 May 1961, col. 1544; Parliament of Singapore, Annual Budget Statement, col. 817.
26. Parliament of Singapore, Annual Budget Statement, vol. 22 of Official Reports – Parliamentary Debates (Hansard), 28 November 1963, cols. 101–02.
27. Lee, Industrialization in Singapore, 42–43.
28. “The Big Aid-Industry Task,” Straits Times, 23 August 1961, 7. (From NewspaperSG.)
29. Parliament of Singapore, Annual Budget Statement, col. 93.
30. Parliament of Singapore, Annual Budget Statement, col. 97.
31. Parliament of Singapore, Annual Budget Statement, col. 98.
32. Parliament of Singapore, Annual Budget Statement, vol. 23 of Official Reports – Parliamentary Debates (Hansard), 2 November 1964, col. 124.
33. Lee, Industrialization in Singapore, 46.



Further resource
People’s Action Party (Singapore). (1959). The Tasks Ahead: PAP’s Five-Year Plan 1959–1964, parts I and II (Singapore: Petir, 1959). (Call no. RCLOS 329.95957 PEO)



The information in this article is valid as at 10 October 2017 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.