(Extracts of the speech on page 324)
Intelligence, he says, is crucial, though not the be-all and end-all.
“That’s the capacity to absorb information, organise it, then use it to deploy enough facts and argument to answer a specific point and, in the process, score marks. But after all these years choosing people for jobs, choosing ministers, I know that … your examination results are important, but it only shows one side of you. It shows IQ, application, systematic thinking and logic.
“That’s why the Shell system impressed me. Its simplicity: reduced to its essentials, its ‘helicopter quality’. You must have powers of analysis which are demonstrated by your examination results. You must have imagination and a sense of reality. You must have then the qualities of leadership and a natural ability to enthuse people.
“At the end of the day, you also must have idealism to succeed, to make people come with you. You must have that vision of what is at the bottom of the rainbow you want to reach. But you must have a sense of reality … to feel when this vision is not practical, that it will ruin us.
“A leader without the vision, to strive to improve things, is no good. Then you’ll just stay put, you won’t progress.”
Picking winners
How, then, to pick these men, whether to explore space or to run a country? It was a problem that exercised Lee’s mind for some time. To a large extent Singapore’s meritocratic system makes the process simpler and more straightforward than it otherwise might have been.
The first requirement is a successful career. This usually applies to those who had excelled academically – first class honours or a good second class degree, many with a doctorate or master’s degree. Selection by PAP leaders is done through a systematic round of “tea sessions” and interviews, including psychological tests. In 1984, the party had a data bank of 2,000 candidates, compiled from the lists of local scholars, returned scholars and registers of professionals. The exercise has far more in common with the search for chief executive officers and executive chairmen of multi-million dollar enterprises than the rough and tumble tussle at the grassroots for political leadership common in other countries.
This uniquely Singapore system has been developed and refined over many years now and is a hallmark of the political process in which Lee has had a pivotal role. In part it stems from his belief that whatever the problem it was possible to find a solution.
“There is a process in anything, right. That Singapore Symphony Orchestra has now been about for 12, 15 years or so. It’s still not a complete Singapore orchestra because you don’t have the people who want to be musicians. Whereas Israel, with a population of four million Jews, has six or seven world-class orchestras. You’ve got to select people, test them, train them. They must have the talent, the discipline.
“And nobody ever remains in power for long unless he’s good at seeing through people and judging them. You must be able to know the real man regardless of what his words are telling you. Assess him. Can this chap do it? Is he just flannelling away or does he know his stuff? For instance, in the PSC [Public Service Commission] I would say the best chairman we had was Tan Teck Chwee. He’s very good at choosing people, he’s very sharp, he has a good mind, he goes very thoroughly into every single officer, grasp for detail, and he’s able to see through an officer and he knows a good one from a not-good one. So if you put him on the selection board, he will come up with winners each time.
“If there isn’t a system, you’ve got to set one up.”
Lee would enthral audiences on many occasions with his passionate speeches during election rallies, which were once traditionally held at Fullerton Square, in the heart of Singapore’s financial district. To build a country, Lee would say often, you need “passion” as well as good men at the helm.
It is 30 years now since Lee spoke of the need to improve the incentives to draw the best and the brightest into government. Over the years the financial incentives have been increased. But 1995 saw the most radical move ever made by any government, indeed any organisation, to tackle the problem once and for all. Henceforth, ministers’ salaries will be based on a formula pegging them to the six highest paid men in the private sector – in banking, manufacturing, accountancy, engineering, law and managing multinational corporations.
There can be no greater departure from the conventional wisdom that political leaders must be motivated differently from bankers and lawyers as far as rewards go. But having thought through this particular problem of getting good men into government for 30-odd years, Lee finally came to the conclusion that there is no need to re-invent the wheel, that the answer had already been found and tested over the decades, in the private sector.
His speech in Parliament in November 1994 advocating the use of such a formula to peg ministers’ salaries leaves no doubts about his conviction, that after 35 years in government looking for good men, paying them top salaries was necessary in the changing times of the 1990s and beyond.
“I’ve spent 40 years trying to select men for big jobs – ministers, civil servants, statutory boards’ chairmen. So I’ve gone through many systems, spoken to many CEOs, how did they select. Finally, I decided that Shell had the best system of them all, and the government switched from 40 attributes to three, which they called ‘helicopter qualities’, which they have implemented and they are able to judge their executives worldwide and grade them for helicopter qualities. What are they? Powers of analysis; logical grasp of the facts; concentration on the basic points, extracting the principles. You score high marks in mathematics, you’ve got it. But that’s not enough. There are brilliant mathematicians but they make poor executives. They must have a sense of reality of what is possible. But if you are just realistic, you become pedestrian, plebeian, you will fail. Therefore you must be able to soar above the reality and say, ‘This is also possible’ – a sense of imagination. …
Lee recognised that the world, and Singapore, had changed dramatically from his early days, when young men like himself were drawn into the political arena by circumstances. Unlike in 1966, when he gamely braved the rains to go on a walkabout in the country’s backward southern islands, the young these days were swept up by a powerful wave of prosperity, which had caused them to shun politics for more lucrative endeavours, Lee noted in 1995 “with almost a touch of nostalgia for older and better times”.
“But now, a powerful wave has swept up our young and some of our not-so-young. There is an eagerness, almost anxiety, that they miss the escalator that is moving up and that can carry them to golden opportunities. And in fairness to the young, I will add this, with almost a touch of nostalgia for older and better times – it has swept up part of the older generation too. Because the old guards, they don’t just die away. In Hollywood movies, you walk into the sunset and music and clouds. But in real life you live on, you become a little bit more infirm, you need medical treatment, and you have needs to meet. For example, Dr Goh Keng Swee. Recently he resigned from the Board of the Government Investment Corporation in order to avoid conflict of interest situations with the GIC when he advises several financial institutions on investments in Singapore and abroad which may also be of interest to GIC fund managers. That’s quite a shift in the world. It’s as if I suddenly decided that I’ll join Henry Kissinger Associates. And the rewards are in, for key personnel, it’s six, seven figures. Or I don’t even have to leave Singapore. I could go back to Lee & Lee. I started the firm. …
“I’m prepared to put my experience and my judgement against all the arguments the doubters can muster. In five to 10 years, when it works and Singapore has got a good government, this formula will be accepted as conventional wisdom.”
(Speech in Parliament on the White Paper on ministerial salaries, November 1, 1994; text of speech on page 331)
May 1964. Lee visits the undeveloped area which was to become the Jurong Industrial Estate. Industrialisation and export trade were identified to beat problems of unemployment in the ear
ly years.
5
From Third World to First
Lee Kuan Yew flew to London in 1968 to persuade the Labour government to postpone its military withdrawal from Singapore. The mission made major headline news that year. Success was critical because a sudden pullout would bring devastating consequences to the Singapore economy, with the loss of thousands of civilian jobs. The military bases in Singapore, Britain’s largest east of Suez, meant a great deal to the Singapore economy, contributing 12.7 per cent to its Gross National Product. In the event, Britain’s Labour Party Premier Harold Wilson relented and pushed the withdrawal date to the end of 1971, instead of the beginning, and so held out the hope that if the Conservatives triumphed in the general election due at the end of that year, it might decide to keep the bases in Singapore.
These were trying times for Singapore, and for Lee, who had to use all his persuasive powers to put forth his case. But for all the stresses and strains that he must have felt at the time, he has not forgotten one incident that had nothing to do with the talks and did not make any headlines. It stayed with him to this day because of what it said then about the state of the Singapore economy.
As news of the talks were publicised on British television and in the newspapers, Marcus Sieff of the retailing chain Marks & Spencer’s asked to see Lee in his hotel in Hyde Park. Sieff wanted Lee, who was known to be a good friend of Gamal Abdel Nasser, to persuade the Egyptian leader to make peace with Israel. Lee listened to him and said that he would try. Sieff, who might have felt obligated to do something in return, then said to Lee, “Look, if you need to create jobs, why don’t you make fishhooks? It takes a lot of labour and skill. And you’ve got to put feathers on the hook, you know, for trout fishing and so on, and it’s high value-added.” Nasser did not make peace with Israel, but a Norwegian company, O. Mustad & Son, did set up shop in Singapore to make fishhooks, and employed a few hundred workers.
It might seem somewhat comical now, 29 years later, that a well meaning businessman in London saw the making of fishhooks as a lifeline for the struggling Singapore economy. But it was no laughing matter then. At stake was nothing less than the survival of a fledgling reluctant nation with no natural resources which had, three years before, been booted out of Malaysia. Fishhooks, motorcar tyres, cameras – what did it matter then, as long as it provided jobs?
How a country in such trying circumstances – dismissed by many commentators as another basket case of the Third World – managed to make the economic transition to First World status in 30 years is the success story of the region, if not the world. Of all Singapore’s achievements, its economic transformation is the most remarkable, and one which even its most severe critics accept.
In 1965, Singapore’s Gross Domestic Product stood at US$970 million, the same as Jamaica’s. But by 1990, the figure had ballooned to US$34.5 billion, almost 10 times the Caribbean country’s. Measured by income per head, it now ranks number nine in the world in purchasing power parity terms. As for social indicators such as school enrolment and infant mortality, measures that reflect how well economic growth has reached the masses, Singapore is also comparable to the developed world. Emerging economies like China, Vietnam and Myanmar have in recent years turned to Singapore for economic ideas and investment, and Singapore-modelled industrial parks are being built in as far-flung spots as Suzhou in China and Bangalore in India.
What lies behind the story?
Much has already been written about the subject and the classic explanations are well known. They include the development of an export-driven economy relying mainly on foreign direct investments for capital and technology, and trading openly with the rest of the world. Other important ingredients that have been identified by bodies such as the World Bank, and which have also been said to account for much of the East Asian economic miracle, are a high savings rate, a rigorous education system, a hardworking people and critical government intervention in key industries and sectors.
But much of this is post facto wisdom, with the benefit of perfect hindsight. Indeed the principles that have now been distilled from the Singapore experience – and those of Hongkong, Taiwan and South Korea – are now the accepted wisdom of the day.
What is not so well known, and perhaps more interesting, is how Lee and his colleagues saw the problem at the time when the economy was struggling and survival was at stake, the general principles which guided them then, and how these were tested in practice and modified along the way. It is a story of how a group of men led by Lee worked against the conventional wisdom of the day, which at the time eschewed foreign investments as being exploitative in nature.
The story of Singapore’s economic transformation and Lee’s role in it can be told in three parts: First, how Lee saw the problem in the early years. Second, his analysis of how it could be solved, in particular his explanations about how countries develop their economies and improve their living standards. And finally his assessment of the nature of Singapore society and what was needed for it to move up the economic ladder.
Our test: Does it work?
For Lee, the definition of the problem presented no great difficulty. Indeed he was single-minded to a fault about what the purpose of the exercise was all about.
“We were not ideologues. We did not believe in theories as such. A theory is an attractive proposition intellectually. What we faced was a real problem of human beings looking for work, to be paid, to buy their food, their clothes, their homes and to bring their children up. So whatever the final outcome, we had the immediate responsibility of getting the economy going and getting jobs and incomes …
“I’d read up the theories and maybe half-believed in them. But we were sufficiently practical and pragmatic enough not to be cluttered up and inhibited by theories. If a thing works, let’s work it, and that eventually evolved into the kind of economy that we have today. Our test was: Does it work? Does it bring benefits to the people? Our first objective was to get the economy going, to provide jobs, to feed the people so that people can live. We were not interested in theories. Of course, the prevailing theory then was that multinationals were exploiters of cheap labour and cheap raw materials and would suck a country dry.
“We had no raw materials for them to exploit. All we had was the labour. Nobody else wanted to exploit the labour. So why not, if they want to exploit our labour? They’re welcome to it. And we found that whether or not they exploited us, we were learning how to do a job from them, which we would never have learnt. We were learning on the job and being paid for it.
“In fact, we were part of the process that disproved the theory of the development economics school, that this was exploitation. We were in no position to be fussy about high-minded principles. We had to make a living and this was a way to make a living.”
It is important to understand the extent to which Lee then, and perhaps even more so today, was disdainful about the theoretical and the dialectic. It was easy to argue an intellectual case for this or that. But the real test was not the elegance of a theory or the logic of an argument. It was quite simply whether a thing worked or not. Has it worked elsewhere? What benefits, drawbacks did it bring? Lee and his colleagues learned very quickly that the choices for such a tiny place like Singapore, situated where it was and starting off with a low-skilled multiracial population, were quite limited.
“On our island of 224 square miles were two million people. We inherited what was the capital of the British Empire in Southeast Asia, but dismembered from the hinterland which was the empire. The question was how to make a living? How to survive? This was not a theoretical problem in the economics of development. It was a matter of life and death for two million people. The realities of the world of 1965 had to be faced. The sole objective was survival. How this was to be achieved, by socialism or free enterprise, was a secondary matter. The answer turned out to be free enterprise, tempered with the socialist philosophy of equal opportunities for education, jobs, health, housing.
> “Fortunately, an answer was possible, given the favourable economic conditions of the world in the 1960s. A hardworking people, willing and not slow to learn new tasks, given a sense of common purpose, clear direction and leadership – these were the ingredients that turned adversity to advantage. Instead of a capital city suffering from ever increasing pressure from the drift of population from the rural areas in search of jobs in the bright lights of the city, we were able to check the drift of rural people and regulate the flow to such numbers as were manageable and useful to our economy.
“We developed an economy in which the enterprise of American, European, and Japanese MNCs transformed British military bases into industrial facilities for manufacturing, and for servicing of ships, oil rigs, aircraft, telecommunications, banking and insurance. Manufacturing, which formed 11.4 per cent of the GNP in 1960, more than doubled to 25.4 per cent in 1977. When the British decided to withdraw from their bases in January 1968, British military spending constituted 12.7 per cent of Singapore’s GNP in 1967. What threatened to be a major economic setback was converted into an economic opportunity, as military facilities and the technicians working them were released for productive civilian industries …
“What made Singapore different in the 1960s from most other countries of Southeast Asia was that she had no xenophobic hangover from colonialism. The statue of the founder of Singapore, Sir Stamford Raffles, still stands in the heart of the city to remind Singaporeans of his vision in 1819 of Singapore becoming, on the basis of free competition, the emporium of the East, on the route between India and China. There were then 120 people on the island. They lived by fishing. Within five years of its founding, there were 5,000 traders – British, Arabs, Chinese, Indians, and others drawn in by this principle of free and equal competition, regardless of race, language or religion. Had the Dutch who governed the then Netherlands East Indies accorded these same ground rules to what made Singapore different in trade and commerce in the Indonesian archipelago, Singapore might never have got started. These were our origins. So we have never suffered from any inhibitions in borrowing capital, knowhow, managers, engineers, and marketing capabilities. Far from limiting the entry of foreign managers, engineers, and bankers, we encouraged them to come.
Lee Kuan Yew: The Man and His Ideas Page 13