Crossroads (Toward Philippine economic and social progress)
Philippine Star, 25 March 2015

 

No leader of a small island nation of four million inhabitants has made an impact on the world at large as Lee Kuan Yew of Singapore did. Lee died at the age of 91 this week.

In 1959 when he became prime minister of a self-governing city state, Singapore was a poor country trading and shipping outpost in Southeast Asia. Today it is in the front rank among the richest countries in the world.

Foreign direct investments in Singapore in 2013 amounted to $63.7 billion (16.5 times the FDIs of $3.86 billion that went to the Philippines). In terms of foreign capital stock that has formed in Singapore since 1995, foreign capital in place totalled $837.6 billion (25.7 times the corresponding figure of $32.5 billion for the Philippines). These numbers are also bigger than any foreign investment figures in other ASEAN member countries.

I grope for words to describe Lee Kuan Yew as leader of Singapore. Single adjectives would at least include these: effective, forceful, strong, purposeful. Compound descriptions should at least include: tenaciously purposeful; visionary authoritarian; honest and incorruptible; brilliant strategist; wily communicator; ambitious politician; well-prepared, studious and hard-working leader; dynastic nation-builder.

Memoirs tell a story. In his retirement years , Lee Kuan Yew wrote two books to tell us all how he did it. The Singapore Story: Memoirs of Lee Kuan Yew (Prentice Hall, 1998), the first of these, tells about the modern history of this island nation, which is inexorably also his story as Singapore’s founding and dominant long-time leader.

Lee recounted in the preface to these memoirs that he wrote the book to convey to his people “how vulnerable Singapore was and is, the dangers that beset us, and how we nearly did not make it.”

Indeed, this book provided a lineal story of the delicate and sometimes dangerous political battles fought with colonialists, communists and compatriots in the struggle for independence.

Independence from Britain was first earned as part of Federation of Malaysia in 1963, but after two years of incongruous union accented by racial and ethnic tensions, abrupt separation from the bigger country became Singapore’s fate.

With independence in 1965, Singapore became confined to its small island of 214 square miles at low tide, smaller even than the tiny Philippine island province of Bohol in the Visayas.

Lee Kuan Yew’s second volume, From the Third World to First: The Singapore Story: 1965-2000 (HarperCollins Publishers, 2000), tells about how he led the island nation to become an economic success story.

Cut off from its natural hinterland, Singapore had to survive in the midst of new nationalistic neighbouring states of Southeast Asia. How this task was accomplished is reported in the first part of this volume. The rest is a recitation of impressions, encounters, and experiences – all with personalities and events in the larger world stage.

I highlight some significant contributions that he made which successfully impacted on Singapore’s destiny.

Visionary leadership. Lee Kuan Yew had a clear, visionary insight. He pursued his goals distinctly and without let-up. He demarcated his political objectives from the economic goals. He did not disrupt the legacies related to the market place, and he found ways to build upon them further.

Thus, even as British political power departed, Singapore continued to be open to the market of commerce and finance. When he brought in the power of the state to intervene in the economy, it was to make the government pave the way for regulations to help strengthen the market.

Sometimes, this did not appear clear, because Singapore’s actions were often contradictory to what Hong Kong was doing. However, Singapore was building its new institutions while Hong Kong (until 1997) was backed up by the British empire in dealing with economic policy.

Lee Kuan Yew tried to learn the ropes, and he worked with colleagues, appointed highly competent ones in the cabinet who were also dedicated to the task like him. He was not above learning on his own and from others.

He sought good advice from all around him – even taking a short sabbatical in 1968 to learn more from what Harvard University could teach him and to enable him to pick ideas from well-known experts there. He sought advice from other foreigners who had good contacts and knowledge about industries.

He opened opportunities for foreign multinational corporations to set up operations in Singapore. In turn, they responded, after a short period of hesitation. A large influx of FDI manufacturing enterprises came and made Singapore a haven of investments in manufacturing, among the first of the ASEAN countries to benefit widely from liberal investment policies.

Financial center. Parallel development of Singapore as a financial center became a conscious effort. A generous encouragement of foreign banks was undertaken, taking due diligence to select major foreign banking institutions. In turn, this was helped by a liberal admission of foreign technical persons to complement technology and capital. Singapore would further use this policy to encourage investments in educational institutions in the country.

Social policies and housing as internal economic multiplier.  Wage-setting in the labor market was linked to productivity increases. The government allowed periodic adjustments in wages but devised a taxation mechanism to force savings from the process of rising wages through a Central Provident Fund (CPF) that was designed along a “progressive” contribution system: the higher the wage earnings, the higher was the tax or savings bite.

The CPF helped underwrite a successful low cost housing program that was based on self-financing. The rapid delivery of housing estates for workers helped to cement social welfare that was earned from worker’s contributions. Further, this housing program became a stimulant for further domestic growth through a multiplier process on income expansion.

Dynastic nation-builder. Lee Kuan Yew did not say it, but when he resigned as prime minister after more than twenty-five years as leader, he also foresaw the future. He appointed a younger man, Goh Chok Tong, to become premier.

Lee nurtured this generational change by staying on the sidelines as senior minister without portfolio, while preparing his son, Hsien Loong (now the third prime minister of Singapore) to grow and learn the process of leadership. In doing this, Lee Kuan Yew was a far-seeing dynastic leader in the Confucian tradition.