Lee Kuan Yew: The Man and His Ideas

by Han Fook Kwang

  “Singaporeans were smart enough to recognise those more enterprising than themselves. That was the key to our rapid development.”

  (Speech at the 26th World Congress of the International Chamber of Commerce, October 5, 1978)

  Taming the unions

  In July 1965, Lee warned leaders of the Public-Daily Employees Unions Federation and National Trades Union Congress that the workforce would have to show discipline and not make excessive wage claims or he would have to enforce discipline for them. The run-in with the unions culminated in the passing of a new labour law in 1968 that restricted the unions’ right to strike.

  Anotable part of the Singapore system established early was the way trade unions were brought in line. This was no easy task considering that in the early years the unions led political activism in Singapore. Many unions had been infiltrated by communist and left-wing elements that used unions as front organisations. How did Lee turn the unions around and make them a force working with management and the government? He told the authors:

  “You can break the problem up into two periods. The first period was ’59 to ’63, when we were having a political battle. We were linked up with the communists … And their intention was not to get the economy cured and growing but to create more problems so there would be more unemployment, so the system would collapse. …

  “If you can read Winsemius’ oral history which will be available one day, he recounted how every time he met these trade unionists, like Lim Chin Siong, Woodhull and Fong Swee Suan, their intention was not to cooperate and get the economy going, but to create mischief to bring the economy down. … Because if the economy got going, the system will prevail and communism will not take over. So … endless strikes, go-slows, sit-ins, all sorts of demonstrations to block the economy and slow it down.

  “Then after Malaysia, it began to clean up. If you call a political strike without taking a ballot, you get deregistered. Slowly, we enforced the law. And that took about … until ’66. 1966, ’67 we were still having trouble, including our own government daily rated unions because they were infected … by all these militant ideas …

  “The turning point came in two ways. First, our two years in Malaysia. People realised that if we want to be out of the communal grip … we’ve got to put our house in order, we can’t go back to the old ways, then we will be ruined … So that was a critical turning point.

  “The other turning point was, in 1968, the British decided to withdraw. … we had to work hard and build up our own defences. And I think from then onwards, something happened in the population; they recognised that they were in trouble. …

  “I think from then onwards, we either made it or we didn’t, and we made it. So I was able to move fundamental laws – giving the right to hire and fire, to manage, to promote, to transfer – back to the employers because the unions had captured all those rights. So I passed the Employment Act and I passed the Industrial Relations Act. I changed the structure to make sure that unions were a complementary part of the production process, not a disruptive part.”

  And so foreign investors were courted with a liberal economic policy which included attractive tax and fiscal incentives. For instance, they could lease land and buildings cheaply and quickly while tax exemptions were given to companies which the government wanted to attract. Tariff protection and exemption from import duties were allowed under certain circumstances, and there was no restriction on the repatriation of profits and capital.

  Foreign investors responded well to these incentives. From 1965 to 1975, the value of foreign asset holdings in manufacturing increased 24-fold, from $157 million to $3,739 million. Hand in hand with this laissez-faire policy, the government played a strong interventionist role in key areas of the economy, especially in those ventures which the private sector was reluctant to enter. Wholly owned and partly owned industrial and commercial ventures were set up, either through the finance ministry or through statutory boards.

  We are revolutionaries

  When the Rotary Club invited Lee Kuan Yew, who was then an opposition member of parliament, to address its members, he turned down the request because the People’s Action Party’s political beliefs then ran counter to the interests of the club.

  Modern-day readers would find it amazing that the party once could not see eye to eye with captains of industry and those who were generally successful within the establishment, as Rotary Club members were and still are. But the PAP was a revolutionary party then, formed with the objective of overturning the existing social order and replacing it with its own socialist beliefs. But having formed the government in 1959, Lee was also only too aware that the economic realities facing the country compelled the party to work within the limitations of what was essentially an entrepôt economy. He explained the party’s economic and political objectives when he finally addressed the club in February 1960.

  “A whole set of political principles and socialist beliefs have often been summed up in the PAP phrase, ‘a more just and equal society’. By this, the PAP does not mean that all men are equal and will be rewarded equally. Men are not born equal in either physical or mental capacity. But a socialist believes that society as a whole will benefit, and there will be more happiness for more people, if all are given equal opportunities for education and advancement regardless of class or property. It therefore follows that even under the new social order there will be some men who are more successful than others, but with this fundamental distinction, that they have become more successful after free and equal competition and effort.

  “The PAP is basically a revolutionary and not a reformist movement, and the social and economic forces which threw the PAP into power have not altered. Although it is not practical or possible to have a profound change of social organisation by a major shift in the relations between social classes because of the entrepôt island economy of Singapore, it is nevertheless important to remember that the have-nots, who form the mass of the workers – the underprivileged, the underemployed and the unemployed, are seeking a change in their position in society. A government of Singapore which represents these urges cannot modify its social programme or political principles without forfeiting the trust and confidence that have been placed upon it by the underprivileged. Such a government can trim its economic programme to fit into the limitations of an entrepôt island economy only if a strenuous effort is made to redress the economic balance by a redistribution of social and economic benefits.”

  (Text of speech on page 343)

  Throughout, Lee and the government were not afraid to learn from the experience of others: to try out new approaches and new ventures, to capitalise on the successes and learn from the failures.

  “We had learned from the difficulties of other developing countries which had been ahead of us in economic development and industrialisation. As a result, today, textiles and garments constitute about 5 per cent of our domestic exports, compared to 50 per cent of Hongkong exports. We consciously sought more skill-intensive and less export-sensitive industries like machine tools, electronic meters, miniature ball-bearings. Such industries need workers who are literate and skilled in working machines. They can employ more managers, engineers, and technicians from our two universities and two polytechnics for the same 1,000 workers on the factory floor.

  “We invested heavily in our younger generation since they were our most precious resource; education was universal and was both academic and technical and from primary to tertiary levels. Because we had a trained and educated workforce ready, industries needing such a workforce came and set up operations in Singapore. And because they employed more sophisticated and automated machines, they could pay higher wages. This raised general wage rates and forced the low-wage factories to do likewise, increasing productivity by using better machines, or to move to a low-wage country.

  “The older factories, whose products had a high labour content – flour mills, sawmills, textiles, simple assembly of integrated circuits – stop
ped expansion in Singapore. Some have moved out, first to Malaysia, and later to Indonesia. Some have moved to Thailand. Others are planning to move to Sri Lanka and Bangladesh.

  “Small Singapore shipyards are expanding abroad instead of in Singapore. Singaporean shipbuilders and ship-repairers are in joint ventures with Philippines, and are discussing terms with Bangladesh. Singapore entrepreneurs, like the MNCs, are caught in the cycle of change, as rising costs and keener competition force them to look for new low-wage countries with good workers and stable social and political conditions. Only then can they stay competitive. The government actively encourages this for the transfer of labour-intensive industries frees valuable land and labour in Singapore for higher skill and capital-intensive factories.

  “Learning from scratch in the Singapore experience proved a costly business. For Singaporean entrepreneurs to go into industry when their past experience has been entrepôt trading, the least hazardous way is to choose an experienced and expert guide.”

  (Speech at the 26th World Congress of the International Chamber of Commerce, October 5, 1978)

  How many engineers does it take to run the economy?

  Getting the skills right: Engineering students at Singapore Polytechnic – the country’s first – learning to repair a colour television in 1972.

  One key aspect of running an efficient and modern economy was in training the population in all the requisite skills required by the global economy. This meant producing enough engineers, technicians, draughtsmen, production operators, drivers and a hundred other types of artisans and skilled workers. For a small country like Singapore with a limited pool of workers, training them to have the right skills was even more important. Lee, ever the pragmatist, demonstrated his attention to practical detail when he addressed Singapore Polytechnic students in January 1972.

  “I asked for some figures from the Education Ministry, and they said to train an ordinary academic secondary school student costs us $300 per year, per student. If you send that student into a secondary technical stream, that means he goes twice a week to some vocational centre where he learns to do technical drawing and metalwork, woodwork and so on, the cost goes up to about $420. You send that student to a vocational institute, his cost is $800 a year, which is more than twice that of the ordinary secondary academic school student because of the benches he requires, the space he occupies, the equipment that he must be supplied with. And you can, of course, take this on to tertiary institutions and, broadly speaking, we are subsidising the cost of an engineering student, the subsidy per year is between $4,000 and $5,000, and the subsidy on the polytechnic student is anywhere between $2,000 and $3,000 a year.

  “Therefore, we are presented with a very difficult problem of priorities. How many engineers do you produce for a certain number of skilled workers and technicians? We have had endless arguments on the matter. If you follow the American system then you produce probably one engineer for every two technicians, which is what they do in America. And the engineers do the jobs of the technicians. They are more highly paid. Or you take the British system where there is a clear demarcation between the pragmatic trained technician and the engineer who is the theoristcum-pragmatist, and the ratio works out to about 8 to 1.

  “Well, for the time being, we have decided, not because we are convinced that the British system is right but because of the economics of it, that it is probably more sensible for us to produce more technicians than engineers. And as we progress, we will have to review this. In five years, we make a review and another ten years, we make a second review. And the guiding factors will be what is the best possible way, given our peculiar, almost unique circumstances, to mobilise our manpower and train them.”

  (Text of speech on page 347)

  How the world ticks

  Lee’s pragmatic approach, however, is not without some deeply held beliefs about what makes the world go round. How does a country improve its standard of living, what is it that lifts a country to higher levels of wealth? While there might be any number of economic theories to explain all this, Lee’s account is interesting for the insights it offers into how a pragmatist like him explains the intricacies of economic development.

  “I now know that a lot of the stuff I was reading about factors of production and exploitation of labour by owners of capital – that’s exaggerated and often bunkum!

  “Supposing the colonialists and the imperialists never came to Africa or never came to Singapore and we were left to our own devices, you and I would not be here today. Why should you come? Why should our forefathers have risked their lives in junks to come here? What for? To catch fish? To plant tapioca?

  “Now, of course, having gone through this, having had practical experience of how the economy works, how the world has evolved and having read so much more now of economic history and futurology or futuristic assessments of the future, it’s quite clear what works and what doesn’t work. The history of man has been a history of his need to get access to more resources, to satisfy his needs as his population expands. So at any one time in a given state of technology for a given population, he soon multiplies to reach the maximum. That’s the way human reproduction has been. You reach your maximum population when you can no longer have the resources to feed it because otherwise you just keep on multiplying.

  “When you reach your limit, there are two ways out of that box that you are in. One is to reach new resources by either capturing territory or trading.

  “To capture, you have to use force and you must win or you are captured. … And from the very beginning of time, tribes have gone on to capture more territory for resources to expand, so the more vigorous tribes expanded. And so big nations grew out of these tribes, and so the biggest of them with the best leaders captured the most territory.

  “Or you trade, and what he has, you don’t have, you take. And what you have and he doesn’t have, you give. That enables you to get more resources and feed a bigger population.

  “The other is a scientific breakthrough where a man’s ingenuity is able to manipulate nature. So you build reservoirs, you save water. So a dry area, you can irrigate. You build dams … you get coal and you build power stations, and you save labour and you use machines. So it is technology and trade that has enabled the world to develop. There’s a limit to what trade you can do if you stay put at that technology. But when you break through to a different level of technology, then you’ve got another breathing space, more areas to fill up.

  “Supposing we never had the technology of highrise living, I think we would find no way to house three million people if we were confined to attap houses, right? One floor, you can’t house three million people. But the technology of highrise with lifts, power, electricity, water, compaction of refuse, disposal of refuse, has enabled people to live comfortably on limited land. So two things have contributed to this transformation of the world – technology and trade.

  “If you stop world trade today and say ‘right, all countries will be self-supporting’, I think everybody is going to get desperately poor in a very short while. You have an excess of apples which nobody wants to eat. And we’ll have an excess of human beings whom nobody wants to use.

  “But because the world works on the basis of exchange and improving your production by bringing in new technology, we are playing a critical role in directing the spread of finance to sponsor and seed these new projects, the ability to bring in people who are going to manage these new projects, to build a dam, the power stations, to repair things and so on. And we are providing a service that’s helping these countries develop.”

  Lee Kuan Yew and Mrs Lee surveying the transformation of the island from Telok Blangah Hill in November 1989. Lee said he was “surprised that we have done it so quickly in one generation, from rags to riches … It’s not been done, I think, by many people.”

  What made Singapore work?

  Having a clearly defined objective and a pragmatic appreciation of the workings of a modern econ
omy would have counted for nothing if Lee could not make Singaporeans understand what was needed to make the grade and if he could not mobilise them. The key to achieving this was to put in place a system that would encourage the people to work hard for themselves and their families, and so ultimately for the economy. As always, he was characteristically blunt about these things, choosing to speak honestly and frankly to the people.

  “At international conferences they use fine words about the application of science and technology to industry, but seldom about sheer sweat and elbow grease. That is what makes Singapore work. Whatever the shortcomings, people do work.

  “The … factor which helps us is that we have not got deep class divisions. Social mobility is half the secret of Singapore’s success: from rags to riches, from riches down the ladder. When you have social mobility, then you haven’t that animosity and antagonism. Looking back over the last decade, one of the reasons why the communists failed was that they worked in a class hatred which was not there. I am not saying it could not come. If we classify our society – and all the scions of the rich and successful go to separate schools, then they could develop a special accent of their own. One of the reasons for the antagonism of the British worker to management is that he is branded by his accent. You can make a million pounds but you are still Billy Butlin because you talk like one. The workers resent this and they take it out by denying the boss his full day’s work. In Singapore, irrespective of your father’s wealth, background or status, you enjoy the same opportunities from primary school to university.