Liechtenstein vs Singapore - an alternative way to run a small state?

Now on my recent trip abroad, I visited the principality of Liechtenstein for the first time. In terms of its area, it is tiny - just over 160 km2 and is doubly landlocked between Austria and Switzerland. It is in the shape of a tear drop and measures no more than 8 km at its widest (from east to west) in the south and from north to south it spans about 20 km. It is a country that lies entirely in the Alps and the landscape is dominated by mountains reaching 2600m in altitude. It is not a popular tourist destination - few people have actually bothered to go there. It is not really near any major cities (well, Zurich is about 2 hours away and Innsbruck is also about 2 hours away) and had it not been for the fact that I was visiting St Anton (about an hour away) I may not have ever made it to Liechtenstein.

On the Swiss-Liechtenstein border. 

For some bizarre reason, because it is a principality rather than a sovereign state, it is often left out of any comparison when it comes to the richest countries in the world. Here's an astonishing fact: Liechtenstein has the highest gross domestic product per person in the world when adjusted by purchasing power parity and has the world's lowest external debt. Liechtenstein also has one of the lowest unemployment rates in the world at 1.5% (Monaco has the lowest). According to 2009 GDP per capita (PPP) figures, Liechtenstein's $118,000 is more than double that of Singapore $52,000. You Singaporeans think you're rich? Well, they're far richer.

What do Singapore and Liechtenstein have in common? Firstly, they are both small countries with virtually no natural resources. (There are other small countries which are extremely rich like Brunei and Qatar - but these are countries with abundant oil and gas reserves.) Both countries have created the wealth they enjoy today through hard work and brain power. Both have extremely sophisticated high tech sectors which generate a lot of wealth - for example, Liechtenstein is the world's largest producer of false teeth and sausage casings. These may seem like rather niche market products, but they have certainly done very well in these very specialized fields. The largest employer in the country is Hilti which manufactures direct fastening systems and high end power tools. Singapore, in contrast, has a far more diverse manufacturing sector because it is a much bigger city and country. Both countries have a highly sophisticated financial services sector and manage the wealth of those from far beyond their borders.

Milo and I sitting between the two countries. 

However, these two countries are very different in so many ways. Firstly, despite the fact that Liechtenstein is less than a quarter the size of Singapore, it does feel really quite empty. There are a few small towns spread around the principality and to get from one town to the other, you would pass through farmland, forests, mountains or just empty fields with nothing. I walked around the capital city Vaduz last Saturday afternoon and it was quiet - there were a couple of tourists wandering around but the bus was barely half full and there weren't many people in the shops either. It had a very laid-back small town feel to the place, there were a few office blocks but those were empty as it was a Saturday - try contrasting that to Orchard Road on a Saturday afternoon.

With a population of just around 35,000, there just weren't that many people around.  A typical new town in Singapore like Ang Mo Kio or Tampines would have about 300,000 to 350,000 inhabitants. Now given that the country is not densely populated, they could certainly try to grow the population through immigration - but they have not tried to do so. The rate of population growth for Liechtenstein has hovered around 0.7% to 0.8% for the last few years and this is mostly through natural growth rather than immigration.

By the main bus terminus in Schaan

It is not that there are no 'foreign talents' in Liechtenstein - however, the expatriates you find there tend to be highly skilled specialists in their fields who have come to do a very niche market job and are very highly qualified professionals who earn a lot of money (particularly in the financial services sector). They are not cheap labour who have come to work in the service sector there for peanuts (as in the case of Singapore).

Take the bus service for example - Liechtenstein Bus is staffed almost entirely by locals. The bus services isn't cheap but it is efficient and runs with clock work precision to cover every corner of this small country with connections to nearby towns in Austria and Switzerland. Could they get cheaper foreign bus drivers say from somewhere like Russia or Turkey? Sure they could - but they don't. They would rather have locals who know the routes well, speak the local language and dialects and have a reverence for road safety. Let me illustrate this.

In the capital Vaduz

As the bus I was on was passing through the small town of Eschen, a young boy of about 10 boarded the bus with his younger sister who looked no more than 6. They greeted the bus driver who seem to know them and it seemed that it was a regular routine for them every Saturday afternoon to get the bus on their own to visit their grandparents - the bus driver knew them and their parents and would make sure they got off at the right bus stop for their grandparents' house. The children talked a little with the bus driver, who was asking the children if their mother had recovered from a recent fall and had been in the hospital. The bus driver reminded the children that they should help their mother with household chores whilst she was having problems walking. Can you imagine something like that happening in Singapore with a PRC bus driver? I think not. Higher bus fares are but a small price to pay to maintain the kind of society they want - and as one of the world's richest country, it is a price they can afford to pay.

Is it paradise on earth? Are there faults to be found in Liechtenstein? Well, if I had to be critical, I found it very boring. The biggest town is Schaan and it has a population of about 5,000 - Vaduz the capital has slightly less and both towns are quiet, sleepy even. I suppose it depends what kind of lifestyle you want. If you want to spend your weekends on a mountain bike cycling through pristine countryside, enjoying the beautiful mountains, forests and lakes - then yeah, Liechtenstein is paradise. The government there has invested in art and culture - so there are plenty of theatres and museums, far more so than you would expect of towns so small. I did visit one of the museums - a stamp museum - and was surprised that there were no other tourists in there and was offered a personal guided tour. The museum was free, I suppose the government had plenty of money to spend on projects like that. There are beautiful concert halls and theatres in Liechtenstein - I wonder how often they are properly filled?

Downtown Schaan - note the snow capped mountains!

If you want to go shopping, then you're out of luck. There are very few shops and the biggest mall in the country was tiny by Singaporean standards. Most of the locals do their shopping online and get their shopping delivered - if they desired a traditional shopping experience, then it meant either getting on the bus or driving to Buchs in Switzerland or Feldkirch in Austria. Zurich is the biggest city that is near Liechtenstein and that is where the locals would head if they needed something really special.  If you enjoy the Orchard Road retail experience, Liechtenstein is going to bore the hell out of you. Singaporeans will get very bored in this place very quickly, I assure you.

The restaurants were extremely limited and ludicrously expensive - if you wanted Asian cuisine for for example, there were three in the whole country. There was a Thai restaurant and a Vietnamese restaurant in Schaan and a Chinese restaurant in Vaduz - all of them were ridiculously expensive compared to what one would pay for Chinese food in nearby Feldkirch just over the border in Austria. For example, you can get a whole set meal (starter of spring rolls or salad, rice or noodles with vegetables + roast duck + soft drink) for only 7.50 Euros in Feldkirch (Manga & Chen's Restaurant, Hirschgraben 4, Feldkirch town centre - fantastic, my first taste of Chinese food in a whole week), but across the border in Vaduz, that same meal would cost you about 50 CHF (about 41 Euros). So why is it that expensive in Vaduz? If you were the only Chinese restaurant in a place like Vaduz, you can charge what you want knowing that your clients are either filthy rich locals or tourists who are desperate enough to pay any price for decent Chinese food. I know my dad would be amongst the latter if he ever visited Liechtenstein.

At the tourist info office in Vaduz

I suppose for young people growing up in Liechtenstein, it is a double edged sword. Sure, it is a safe place for young children to grow up. Parents can let them go out and play without worrying about them getting into trouble - but I saw a bunch of very bored teenagers sitting outside the post office in Schaan with clearly nothing to do and nowhere to go. It was a warm Saturday, the shops were closed and these teenagers looked too young to go to the local bars - I suppose there were sports facilities available in town, but these teenagers didn't seem interested in sports. So what do they do? They sit around outside the post office (yeah, of all places, the post office) and 'hung out'.  I suppose they looked harmless enough. They were all rich kids, with designer clothes, iPods and smart phones - all dressed up with nowhere to go. No Orchard Road for them! These young people would probably find Singapore a lot of fun.

What about the poor people then? I saw cleaners at the bus station, sweeping what was already a meticulously clean bus station - how much are they paid? How do they survive in a country which seems to cater for extremely rich people? Certainly, there were no shops catering for those on a budget - do these cleaners live across the border in Austria? You see, on this trip, I first went to Buchs in Switzerland before going to Schaan and Vaduz in Liechtenstein. As it was a hot day, I ate ice creams in both Buchs and Vaduz and get this: the ice cream costed twice as much in Vaduz even though I bought the ice cream from a supermarket rather than some fancy ice cream parlour. Can you imagine ice cream from Switzerland being cheaper when Switzerland is already a notoriously expensive destination? Amongst the countries I visited on this trip, Austria and Germany were on par with the UK, Switzerland was expensive and Liechtenstein was just ludicrous. Ouch. I am glad we went back to Austria for dinner.

In downtown Schaan

At least in Singapore, the poor will be able to shop at wet markets and still find places to make their limited budgets stretch. I have no idea how they survive in Liechtenstein where the few shops seem to cater only for high end consumers - maybe the government gives them help to make sure they can put food on the table and pay their bills. Maybe the cleaners at the bus station are surprisingly well paid - they didn't look or sound foreign and I did hear them speaking amongst themselves in the local dialect of German. In any case, Liechtenstein uses the Swiss Franc (they don't have their own currency) so the fact that these cleaners are paid in a very strong currency may mean that they could cross the border into Austria and shop there where everything is priced in Euros, the same way Singaporeans go shop for bargains across the causeway in Johor Bahru. After all, Feldkirch is just 9 km from Schaan.

Despite Liechtenstein being a very expensive place, one thing that I did observe is that the houses tend to be pretty big. Given how sparsely populated the country is, most of the people lived in houses with a gardens and even when there were blocks of flats in Vaduz, they tended to be no more than about four or five storeys high. In fact, the only tall buildings in Liechtenstein tended to be the office blocks (of VP Bank in particular) in the centre of Vaduz and even those would be dwarfed by any office block in the Singapore CBD. There is simply no real incentive to build HDB style apartment blocks in Liechtenstein when there is just so much space, thanks to their very low population density. The low population density coupled with the slow population growth means that there isn't much pressure on the housing market in Liechtenstein - unlike in Singapore where property prices have shot through the roof in the last decade.

Another look at Vaduz, the capital

It is very common for rich people from Liechtenstein to send their children away for their university education in other parts of the English or German speaking world given that there is only a small university in Liechtenstein outside Vaduz and the options there are very limited. Many who have had a taste of the life in far more exciting big cities like Berlin, Vienna and London would find Vaduz way too boring to return to. Others long for the slower pace of life, the security of knowing that one can easily find a job in a booming economy with virtually no unemployment and enjoy a very high standard of living that comes with generous salaries. Others have a bit of both - they move away to somewhere like Berlin, Frankfurt or Vienna for their further education, gain some work experience working in a big city, enjoy the high life in these big cities and then when they are ready to settle down and start a family, they move back to Liechtenstein so that they can be close to their parents and their children will have a safe environment for a tranquil childhood.

I suppose there is a fundamental difference between the mindset of Liechtensteiners and Singaporeans - both countries are very small, surrounded by two big neighbours. Singaporeans view their two neighbours - Malaysia and Indonesia - with a guarded caution at best, but more often with suspicion and distrust. Liechtensteiners view Austria and Switzerland with far more trust - they share a common language (German), culture and religion. More to the point, Liechtenstein may be incredibly rich - but neither Switzerland or Austria are not poor at all either; in sharp contrast, Indonesia and Malaysia are a lot poorer than Singapore. This creates a far more open mindset when it comes to the way Liechtensteiners view their neighbours - indeed, it is possible to stroll back and forth between Liechtenstein and Switzerland across the river Rhine and there is no more than a sign to mark the border. Check out the video below where I decided to make an unusual border crossing.

Thus Singaporeans have this rather siege mentality whilst Liechtensteiners don't really have this "us vs them" mentality when it comes to their neighbours. This is why there is so much dissatisfaction bubbling over in Singapore right now over so many issues ranging from public transport to the 6.9 million population target to the lack of freedom of speech. Liechtensteiners genuinely feel that they are a part of the German speaking European community which includes countries like Germany, Austria and Switzerland. Singaporeans however, simply refuse to extend that kind of kinship to their fellow ASEAN members (out of a sense of superiority, I suspect) or even to countries like Hong Kong or Taiwan. This is why Singaporeans always come across as far more isolated in their mindset - is this a bad thing? One could argue that is breeds self-resilience and that could be identified as a positive Singaporean trait.

This is why even though Liechtenstein is much smaller than Singapore, they don't seem to have that small-country mindset. If things don't go well in Liechtenstein, they think okay, it's not the end of the world, I can move to Zurich, Frankfurt, Innsbruck, Berlin, Vienna or Hamburg and see if things are better there - but too many Singaporeans have such an irrational fear about moving out of Singapore that they insist on staying put no matter how bad their situation gets (NS for Singaporeans, scholarships for foreigners). Perhaps this is why I had experienced such negative reactions from Singaporeans for having the audacity to decide that I didn't want to spend my adult life working in Singapore - whereas if a Liechtensteiner got a job in London, nobody in his home town would even bat an eyelid.

By the Schloss in Vaduz

So there you go - that's my "compare & contrast" of two very different small & rich countries in the world. I think there are plenty of lessons that Singapore can learn from Liechtenstein - but the key one is that there is absolutely no need to grow your population in order to boost one's economy. Liechtenstein is small and are happy to stay that way. Then again, Singapore is a far more vibrant, exciting and cosmopolitan city which offers a far more interesting experience. To each his own, I suppose. As usual, any comments, any questions - you know the drill, leave a comment below, thanks.