Transcription
Singapore and Hong Kong are two of the richest cities on Earth. And neither of them got there the easy way because neither has oil, neither has farmland, and neither has much land at all. And yet, both grew rich regardless.
But Singapore grew richer. If measured by output per person, it now produces nearly twice what Hong Kong does, and it manages that on an island you could cross in under an hour. So, you'd naturally expect Singaporeans to be the wealthier of the two. And when you actually look, that's not what you find.
If you add up what ordinary people have to their name, their savings, their housing, their retirement money, it's the typical adult in Hong Kong who comes out ahead. So, the economy that has the higher GDP turns out to be the one whose typical adult owns less of it. The mistake here is that some people look at GDP as though it were personal wealth when all it really measures is what gets produced inside a place and never who ends up keeping the money.
Start with the number nearly everyone reaches for which is GDP per capita. You take everything a country produces in a year and you divide it by the number of people. And on the face of it, that sounds like a measure of how rich the average person is. The trouble is that it isn't because GDP only counts what gets produced inside a country's borders and says nothing at all about who ends up with the money. And those two things can be very far apart.
Take a foreign company that builds a billion-dollar factory in your town. It ships its products all over the world and every dollar of that production gets counted in your country's GDP. And yet the profit doesn't stay in town at all because it flows back to whoever owns the company wherever in the world they happen to live. Your GDP looks magnificent and your neighbors are no richer than they were.
This is exactly why economists reach for a second number GNI or gross national income. And the difference between the two is the whole game. Where GDP asks what got produced inside the country, GNI asks how much income annually stayed within the country's residents. And you get there by starting from GDP, adding the money that flows in from abroad and subtracting the money that flows out to foreigners. For most countries, the two numbers sit close together, so the distinction barely matters. But for Singapore, as we'll see, they pull surprisingly far apart.
And wealth is different from this. It isn't what a country makes in a year or what its people earn in a year. It's what families have slowly built up and own outright. The flat, the savings, whatever has piled up in the pension. A country can produce an absolute fortune and still leave its people holding very little of it. So Singapore outproducing Hong Kong is one thing. Whether Singaporeans actually end up wealthier is another question entirely and the answer is messier than the GDP figure suggests.
So here are the actual numbers and this is the point where the gap becomes genuinely hard to ignore. Take output first. Once you adjust for the cost of living, Singapore produces somewhere around $170,000 per person every year, while Hong Kong produces about $84,000. So Singapore generates more than $2 of output for every single dollar Hong Kong manages, a lead of well over 2:1.
Then turn to wealth and the picture flips completely because the typical adult in Hong Kong holds a median of roughly $222,000 while the typical adult in Singapore holds about $114,000. Which means the place producing twice as much per person has a middle citizen who owns roughly half as much. It's worth pausing on that word median because it's the honest figure to use here. The median is the person standing in the exact middle with half the population above them and half below them. And it matters that this is the middle rather than the average since averages get dragged upward by a handful of billionaires. Which is precisely why the median is the better guide to how a normal person is actually doing. And on that measure, Hong Kong is comfortably ahead.
And not only on the median, either because Hong Kong leads on average wealth, too. It has nearly twice as many millionaires, somewhere around 650,000 against Singapore's 330,000. And when you add up all the private wealth held across each city, Hong Kong's pile comes out something like 1 and a half times the size. So Singapore sits near the very top of the world for output, yet trails its own rival on the wealth its people actually hold, which raises the obvious question, where does all that output go?
It goes to three places. And the first is the largest by far. The first and the biggest is foreign ownership. And the crucial thing to understand is that Singapore engineered this deliberately. Go back to 1961 when the country had no resources to speak of, a tiny home market, and a deeply uncertain future. The government set up something called the Economic Development Board and handed it a single job, which was to persuade the world's biggest companies to come and build, trade, and run their regional operations out of Singapore. And it works spectacularly. So much so that the industries the board still chases today make up more than a third of the entire economy.
But the revealing part is who actually owns that economy. Because foreign companies account for only about a quarter of the businesses in Singapore. And yet they generate close to two-thirds of the value added by companies. Somewhere around $480 billion out of $700 billion. A quarter of the firms producing two-thirds of the output. And this is the detail that matters most for wealth because when a foreign chipmaker runs a plant in the city or a global drug company books its production there or an international bank runs its Asian desk out of Singapore, every bit of that activity shows up in Singapore's GDP. While the profit it generates is another matter entirely and a great deal of it ends up with shareholders in California or Zurich or Tokyo. The plant sits in Singapore. The owner very often does not, nor is it only factories, because foreign-owned firms move an enormous volume of Singapore's trade as well, sending well over $800 billion of exports out into the world through companies that ultimately answer to head offices abroad. And the money keeps on arriving with Singapore locking in more than $14 billion of fresh investment commitments in 2025 alone, led by semiconductors, chemicals, biomed, and aerospace, and much of it foreign-led.
This is precisely the leakage that GNI was designed to capture. In 2025, Singapore produced about 790 billion Singaporean dollars of output. And yet the income that actually stayed with people living in Singapore was only around 656 billion, which leaves a gap of roughly 133 billion, about a sixth of everything the country made that economists call net factor income outflow and which, in plain language, is the large slice of income from Singapore's output that ends up with owners, investors, and workers living somewhere else. Ireland shows the very same mechanism in a far more extreme form since so much multinational profit runs through it that its output last year of around €600 billion towered over the €400 billion or so its residents actually kept. Singapore's version is a good deal milder, but it's the same machine running underneath. And Hong Kong, tellingly, is the mirror image because its national income actually runs about 10% higher than its GDP, which means it pulls more income in from the rest of the world than it sends back out. The exact reverse of what Singapore experiences.
The second place the output goes is the state. And here the money doesn't actually leave the country at all. It simply stops belonging to the people. Singapore's state wealth sits in three main places: GIC and the central bank. Temasek runs an investment portfolio worth hundreds of billions of Singapore dollars. GIC invests the country's reserves all around the world and famously refuses to say how much it manages, though outside estimates put the figure above $800 billion US. And the central bank holds more than 500 billion Singapore dollars in reserves of its own. So put the three together and the Singapore state ends up controlling well over a trillion dollars. And none of it is simply sitting in a vault because through Temasek and GIC, the government holds stakes in real working businesses all over the world. Singapore Airlines and DBS, the country's biggest bank, are both partly owned by Temasek. Changi Airport is owned outright by the state and a great deal of what looks from the outside like a purely private economy turns out to have the government somewhere on the share register. The returns from all of this are real enough, but they don't land in anyone's personal account. Instead, they flow into the government budget to the tune of about $28 billion a year, which amounts to more than 17% of all government revenue and stands as one of the single largest sources of money the state has. And there's a deliberate rule attached. The government is allowed to spend only up to half of the returns it expects to earn, and it banks the rest for the future. So Singaporeans genuinely do benefit from this enormous pool of wealth, just never directly because it pays for their hospitals and their trains. It keeps their taxes low and it functions as a rainy day fund roughly the size of a small country's entire economy. What it never becomes is money sitting in any individual's account since this is wealth held in common by the state on behalf of everyone.
The third place is different in kind from the other two because this time the issue is one of measurement, specifically who gets counted in the average in the first place. Singapore is home to about 6.1 million people, but of those, only around 3.7 million are actually citizens, with a further half a million permanent residents, and then nearly 2 million more, close to a third of everyone in the country, who are non-residents, mostly foreign workers along with their dependents and a large population of international students. That foreign workforce is what keeps much of the economy running. Well over a million and a half people in total. And it splits into two strikingly different worlds. At the top sit a couple of hundred thousand well-paid expatriates on employment passes. The bankers and executives who have to earn at least $5,600 a month even to qualify. Below them are another 180,000 or so on mid-tier S passes. And beneath them lies the bulk of it. More than 1.2 million work permit holders. The people on the construction sites and in the shipyards and the factories, of whom only a couple of years ago, more than a million were earning under $3,000 a month.
Now, think about what all of that does to a simple per-person figure. Because every one of these people's output is counted in Singapore's GDP, while their wealth, for the most part, is not. The expatriots' long-term savings are frequently parked somewhere else entirely. And the migrant worker spends a portion of their wages in Singapore, but often sends another portion home to a family in another country that will never show up anywhere in Singapore's figures. So when you take the whole of Singapore's output and divide it by the population, what you're really doing is averaging together rich expatriots, low-paid migrant workers, citizens, and permanent residents. Four groups whose financial lives have almost nothing in common with one another. Which means the workforce that actually builds the wealth is a different set of people from the ones you're measuring when you ask how rich Singaporeans are. Somewhere along the way, the number and the people came apart.
And by this point, the gap has stopped being mysterious at all because some of the output belongs to foreign owners. Some of the wealth is held by the state, and some of the work is done by people whose savings were never going to stay in Singapore in the first place, which together is why the GDP figure can sit so high while private wealth looks so much lower.
Which leaves one last question worth asking. Does any of this actually leave Singaporeans poorer? This is the point where the simplest version of the story, the idea that Singapore is somehow secretly poor, quietly falls apart. Because the honest answer is that no, it isn't. Singapore isn't concealing poverty behind an impressive GDP figure. It has instead pulled off something almost no other rich country has managed, which is to build its people a floor beneath them.
And two government programs did most of that work. The first is forced saving. Every working Singaporean, together with their employer, is required to pay into a national account called the CPF. And the rate is strikingly high because for younger workers, it runs to 37% of wages, set aside every single month for retirement, healthcare, and housing. It adds up to a remarkable sum. The CPF now holds around $677 billion across more than 4 million members, which is a cushion that the average worker in most rich countries simply does not have.
The second program is housing. And through public housing, Singapore managed to turn a city of renters into a city of owners. Around three-quarters of resident households live in government-built flats, and more than 90% of those households own the home they live in. 90%! At a moment when home ownership is slipping out of reach across most of the wealthy world, Singapore deliberately engineered something close to universal ownership.
Put those two programs side by side and you can see exactly what the median wealth gap leaves out. Because a lower or middle-income Singaporean household generally isn't starting from nothing at all. There is CPF money behind them and, very often, a flat that they own. Whereas in a great many wealthy countries, the bottom half of society owns almost nothing whatsoever. Here, by deliberate design, far more people own something. And you can see the same thing in the income data. Before the government intervenes at all, the gap between rich and poor is wide. And yet, after taxes and transfers, it falls to its lowest level in a decade.
So why then is Hong Kong still ahead on what people actually own? Part of the answer is that the two cities are simply built differently. And part of it is that the data itself needs handling with care because different measures genuinely disagree about which of the two places is the more unequal. Both are highly unequal, and by some measures, it's Singapore that comes out as the more unequal of the pair. What's clearer than the inequity rankings is where the wealth physically sits. Because in Hong Kong, a larger share of it shows up directly in private hands as flats, share portfolios, and money in the bank. Whereas in Singapore, a larger share is held at one remove through the state, through the CPF, and through public housing.
It's also worth not overselling Singapore's version of all this because those flats are 99-year leases rather than land owned outright. And as the lease runs down, so does the value. While the CPF money comes hedged with rules about when it can actually be touched. It is a genuine asset base, in other words, but a carefully managed one, enough to keep people standing on solid ground, even if it never quite amounts to a personal fortune.
The model does, however, have real pressure points. The chief of which is that it depends on a steady supply of workers paying into it. And Singaporeans are now having among the fewest children of anyone on Earth. With the average woman having well under a single child, around 0.87, the lowest figure the country has ever recorded. The population, as a result, is aging fast. The median Singaporean is now past 43. Almost 1 in five residents is already over 65, and the number of working-age people supporting each one is falling quickly from 3.5 in 2024 to 3.3 just a year later. Enough of a strain that the government is once again raising CPF rates for older workers.
Singapore then is not a poor country today by any stretch. The difficulty is that the model becomes harder to sustain as the country grows steadily older because it was fundamentally built for a society with far more young workers than Singapore is now going to have.
So is Singapore twice as rich as Hong Kong, or is Hong Kong the richer of the two? Both are true. It depends what you measure. Measure output and Singapore wins comfortably. One of the most productive economies on Earth. Measure what people actually own and Hong Kong pulls ahead. The gap comes down to how Singapore is built. Foreign companies produce much of the output. The state holds much of the wealth, and many of the workers behind it are non-residents whose savings sit with families abroad. None of that makes Singapore poor. Its wealth is just held differently, more of it through the state, the CPF, and public housing than in private hands. GDP only ever measures what a country produces, never who keeps it. And in Singapore, that turns out to be nearly the whole story.