Who is Richer,
Indonesia or Singapore?
Ridiculous question? Not at all. It depends how you define wealth? Cash or resources in the ground?
Jan 27, 2001

When Indonesian leaders got mad at Singapore for not helping in her hour of need, a question that flashed through my mind was - Heck who is the richer guy?

In cold cash, yes the answer is obvious. Singapore's reserves stand at S$136.9 billion significantly understated (gold holding calculated at low book price), virtually no debts.

The city-state has invested more than US$100 billion all over the world. Indonesia, on the other, hand is heavy in debt and its currency is still sliding.

But if one calculates a country's wealth as more than reserves but its cash minus debt plus its entire land bank, natural resources, agriculture, and so on, the picture changes drastically.

A money-in-the-ground example is the recent agreement for Singapore to buy natural gas from Indonesia worth US$8 billion.

Water is next, unless President Abdurrahman Wahid takes himself seriously by letting it go to waste rather than selling to Singapore.

Recently, there were criticisms about selling sand to Singapore. There are other means where Jakarta can make a lot more money from its land - if it wants to.

Actually in 1995, the World Bank introduced precisely this new system of measuring wealth and declared Australia the wealthiest place in the world.

In layman's terms, what the Bank did was count what was in the ground as an asset and divide by the number of Australians.

That, of course, would relegate resource-scarce Singapore way down in the global assets ladder, probably below Indonesia and Malaysia.

The World Bank economists obviously felt that the use of reserves as sole measurement of wealth is not accurate.

It unfairly distorts against larger countries that are cash poor but land and resource rich, economists believe.

For example, Singapore is wealthier than, for example, the US because it has a larger reserves, but nobody would remotely suggest that it is richer than America.

It is a land of abundance - livestock, minerals, agriculture. Americans can virtually live off their land. It is not so for Singaporeans.

Indonesia has 13,900 islands. Think of their vast natural resources, land bank and infrastructure. All it needs is to use a little ingenuity to be able to turn them into profits.

Recently Malaysian Prime Minister Dr Mahathir Mohamad suggested Japan send its old folks to retire in his country.

I remember (apparently so does he) that more than a decade ago Japan had wanted to lease a part of northern Australia to set up a community for Japan's retired population.

Is there a reason why Indonesia cannot do it?

Surely leasing (if not selling) off some offshore islands for a fixed number of years to wealthier countries or individuals is a possibility.

Of course now in the New Economy, world economists will soon have to contend with a country population's total knowledge - or its ability to generate productive ideas - as assets, too, as soon as they can agree how to qualify them.

When that happens, Singapore's total asset will fall even further vis-à-vis the US, Western Europe, Japan and Australia.

Fortunately, reserves allow nations to invest in knowledge and software - so there's hope for a catch up.
Seah Chiang Nee