TNAG-0055-FCO40-91-Defence-review-1977 — Page 87

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D. ECONOMIC CONSEQUENCES FOR MALAYSIA, SINGAPORE AND NEPAL

34. The information which is at present available regarding the detailed impact of British Defence expenditure in the area and the precise phasing of the proposed rundown is not sufficiently precise or complete to enable an accurate assessment to be initiated. This will also require detailed study on the spot. The following assessment and conclusions can, therefore, only be regarded as tentative. Nevertheless the information available is sufficient to enable the broad picture to be seen.

35.

This study is based on the following assumpt tions

(a) British forces, other than some Gurkhas, will be completely

withdrawn from Malaysia by 1970-71;

(b) that partial withdrawal by 1970-71 from Singapore will be on the

basis indicated in paragraph 7 above;

(c) complete withdrawal by 1975-76 from Singapore and Malaysia.

The study starts by considering the effects of our withdrawal if no remedial action were taken and then assesses what we should have to do in mitigation. To the extent that the mitigatory action is effective, the economic consequences of the rundown will of course be less serious than is suggested in the first part of the analysis.

Singapore

Effects on the Economy

36. (a) National Income

The local expenditure of the British services is at present about £56.5 million a year. The reduction of our forces visualised by 1970-71 would reduce this expenditure to some £45 million a year. On arbitrary but not implausible assumptions this would have the effect of reducing Singapore's gross domestic product by about £10-£15 million a year by 1970-71 (i.e. by about 4 per cent of the 1965 g.d.p.). Total withdrawal when completed by 1975-76 would cause a loss of about £60-£70 million a year to the gross domestic product i.e. about 20 per cent of the 1965 gross domestic product of £350 million. Both these estimates allow for the fact that part of the expenditure of the British forces is on imports and thus does not wholly affect the national income.

(b) Employment

In early 1967 local employees of the British forces totalled approximately 45,000 including an estimated 11,600 domestic servants and 4,500 locally enlisted personnel. Under the present assumptions on the

phasing of the rundown some 20,000 jobs would be lost by end 1970-71. Assuming that the rundown did not get fully under way before 1968-69

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