It would be impossible to live in Singapore and not write a post this week about the late Lee Kuan Yew. So many people lined up to pay their respects that the line stretched for several kilometers and people stood for more than 8 hours. Nearly every company gave employees time off. The response was so overwhelming that the government has had to extend the viewing period to 24 hours. The subway and feeder bus lines also had to be opened nonstop to accommodate everyone.
Local media coverage was nearly as wall-to-wall. On the first day, the Straits Times ran an extra 32 page section on the Minister Mentor’s life and legacy. The second day, the tribute section ran another 20 pages. On the third day, 18 pages more.
With all the coverage, it may not be possible to comment on anything new. What is striking in many of these retrospective articles is the extent to which myriad economic policies put into place from the very beginning have been continuously refined and enhanced over the decades. The foundation for Singapore’s explosive economic growth—from third world to first, as Lee famously proclaimed—was set from the earliest days of independence.
Lee left much of the day-to-day management of government when he retired from the post of Prime Minister after 31 years at the helm. He continued to be involved in high-level policy decisions afterwards as Minister Mentor and a member of Parliament, although his influence tapered over time.
Clearly, the city state would not likely be what it is today without the policies put into place by Lee and his cohort of officials from the beginning. At the time of independence, 50 years ago, Singapore few obvious advantages. It had a limited population. No natural resources. Limited land.
It did have a strategic location and a history of being a port city. Lee and his colleagues set about enhancing the assets that were available. The market had been focused under colonial times on re-exporting products made elsewhere. But a relatively large number of unemployed, low skilled people needed to be put to work. Despite limited domestic savings and not a very deep bench of skilled entrepreneurs, the government decided that Singapore would have to focus outward to survive.
The neighboring countries, however, were not particularly helpful as destinations for the new strategy. After all, some of the neighbors were in similar situations and were likely to be aiming at the same markets. This meant that Singapore could not just concentrate on the region, but had to be planning from the earliest times to sell to a broader marketplace.
The lack of domestic skills meant inviting outsiders in to help and invest. Foreign investors were granted concessions, including favorable taxes, as part of a broader plan to encourage economic development. Foreign capital was combined with domestic savings, gathered through a new program called the Central Provident Fund (CPF) started in 1955 for civil servants and later expanded to include all citizens.
These policies continued and were expanded over the decades. Foreigners still receive concessions for investment and Singapore now receives more inward foreign direct investment than most of the rest of Asia, totaling $850 billion by the end of 2013. The CPF scheme has shifted Singaporeans from a nation of limited savings to a country with significant capital.
The Economic Development Board (EDB) was established in 1960 to direct the government’s industrialization drive. Over time, the government continued to expand the number of agencies tasked with assisting companies and economic development. In addition to the EDB bringing in foreign companies, Singapore now has Spring to help local small and medium enterprises as well as International Enterprise (IE) Singapore to help local firms that are interested in expanding into new overseas markets. These agencies are given ample funding to help encourage economic growth and development for local firms and, especially, to continue to attract foreign investors in targeted sectors.
Education was also a key early focus. Originally, Singaporeans were given basic vocational training to help them transition into factory positions. Over time, the orientation shifted to creating higher skills and, eventually, into advanced knowledge. Lee also emphasized language training, requiring students to be bilingual. He continued to promote the use of English and famously switched local Chinese language skills from various dialects to Mandarin.
Workers were housed in new high rise buildings, largely built by the Housing Development Board and sold to citizen owners at heavily subsidized rates. Given the scarcity of land, the government has always been extremely active in managing this resource. Buildings have been routinely demolished to make room for new, more productive construction and facilities.
As manufacturing began to take off, the country also highlighted its traditional role as a trading hub. The government continually took steps to ease the movement of goods in and out of the country. The sea and air ports were continuously improved. Government officials have always emphasized the development of excellent infrastructure in general.
From the beginning, Lee and his government put in place the foundations for strong economic growth. After 50 years, the lines of people waiting to pass by his coffin to pay final respects could be sheltered by gleaming glass skyscrapers inhabited by some of the most competitive and dynamic firms in the world. Other countries have tried to make a similar leap to economic development. Singaporeans have been lining up in droves to commemorate the man that they believe made the country succeed where many others have not.
***Talking Trade is a blog by Deborah Elms, Executive Director, Asian Trade Centre, Singapore***