Singapore wasn’t a start-up but was already exceptional in 1965

Dear Standard Chartered,

I refer to your article “Singapore: An exceptional start-up turns 50” published by Straits Times on 7 Aug 2015.

You wrote:

Singapore’s founder Lee Kuan Yew, who passed away this year, belonged to the bricks and mortar generation.

Lee Kuan Yew is not Singapore’s founder. Singapore’s founder is Sir Stamford Raffles who founded Singapore in 1819.

Lee and his People’s Action Party, who navigated Singapore’s incredible journey from Third World to First, could not have been more different from Silicon Valley’s brash tech entrepreneurs.

Lee did not navigate Singapore from Third World to First. Singapore was already Middle Income status, not Third World status back in 1965. According to the University of Pennsylvania, our 1965 real per capita GDP (output, chained PPP, 2005 USD) of $6,279 was third highest in Asia and 29th out of 109 countries (Penn World Tables version 8.0) and when converted to 2011 dollars, already put us in the Upper Middle Income bracket according to World Bank classification today. We were thus already at the cusp of becoming First World back in 1965. Lee Kuan Yew himself boasted to Chicago businessmen back in 1968 that we were already a metropolis. There’s no way Singapore could have turned from fishing village to metropolis in just 3 years.

Our per capita GDP in 1960 was already $1,330 which gave us a middle-income status

[Carl A. Trocki, Singapore: wealth, power and the culture of control, page 166]

We were already the 5th most important port in the world some 30 years before 1965:

Singapore was already the estimated 5th or 6th most important port in the world by the early 1930s and the key port in the Straits region by the late 19th century

[Goh Kim Chuan, Environment and development in the Straits of Malacca, pages 107, 114]

We were already the most important communications centre in the Far East and had more cars than anywhere else in Asia 10 years before 1965:

Singapore was the most important communications centre in the Far East, not just for shipping but a focal point for airlines, telecommunications and mail distribution at the beginning of the 1950s.

Singapore in the mid-1950s had 30 people per private car compared to 70 for British Malaya and more than 120 for the rest of Asia.

[The Economic Growth of Singapore: Trade and Development in the Twentieth Century, W. G. Huff, pages 31-33]

Given the level of development we already had, Singapore back in 1965 could hardly be considered a start up.

Furthermore, our industrial development at independence went according to Dr Albert Winsemius’ plan, not Lee Kuan Yew’s plan ( Lee Kuan Yew himself expressed gratitude to Dr Winsemius for our prosperity today.

For these reasons, Lee Kuan Yew cannot be likened to a Silicon Valley entrepreneur for no Silicon Valley entrepreneur worth his salt would hire someone else to do the start up on his behalf and taking over an already well run company cannot be considered an act of starting up.

You wrote:

Yet, as Singapore celebrates its 50th anniversary this week, I see striking parallels in the ethos and approach of Singapore’s founders in the 1960s and the Silicon Valley pioneers a decade later.

How can Singapore be celebrating our 50th anniversary this year when we had already celebrated our centenary back in 1919?

Yesterday’s historic ceremony honouring the colony’s founder
1819 – 1919
This tablet to the memory of Sir Stamford Raffles to whose foresight and genius Singapore owes its existences and prosperity was unveiled on Feb 6th, 1919, the 100th anniversary of the foundation of the Settlements … he (Raffles) founded Singapore, this child of his … On the occasion of the celebration of the Centenary of this important outpost of the British Empire … the Chinese Chamber of Commerce … express our admiration of the sterling qualities and remarkable foresight and fortitude of that great Empire builder, Sir Stamford Raffles, whose memory we have gathered here this morning to honour.

[The Singapore Free Press and Mercantile Advertiser (1884-1942), 7 February 1919, Page 5]

2015 is our 50th independence anniversary, not our 50th anniversary per say. In four years time (2019), we should be celebrating the 200th anniversary of our founding.

You wrote:

Singapore’s independence in August 1965 was not planned.

Forced to separate from a federation with Malaysia, Singapore’s leaders faced some incredibly difficult choices.

Singapore came of age when its much bigger Asian neighbours were also newly independent, but with significantly larger populations and natural resources to draw sustenance from. Faced with impossible odds, Singapore’s leaders did what pundits today describe when a tech upstart successfully takes on well-entrenched incumbents – they disrupted the status quo.

Singapore’s eventual emergence as an economic powerhouse followed an unconventional path. In the immediate aftermath of World War II and the burst of decolonisation that followed, new nation states turned inward and shut their doors to outside investment and influences …

For many newly independent nations in the 1960s, conventional wisdom held that policies built on self reliance and state control of the economy would deliver better results than free trade, foreign investment and the private sector.

Singapore’s leaders challenged this view, opening up the country to trade and investment at a time when many doors in the region were firmly shut.

Singapore’s leaders didn’t just come to power in 1965; they came to power in 1959 when Singapore attained complete internal self government which Lee Kuan Yew called ¾ independence. It is important to note that Singapore’s leaders didn’t choose the unconventional path between 1959 and 1965 when they were already in power and could do so. During this period, they chose the conventional path instead like leaders of other new nation states did and even forced Singapore to merge into Malaysia to pursue the conventional wisdom of import substitution for the Malayan Common Market.

Lee Kuan Yew and the PAP proposed a political union with Malaysia, which would provide a good-sized domestic market for an industrial strategy of import substitution. Expulsion from the union with Malaysia in 1965, on political grounds by the government in Kuala Lumpur, destroyed the import-substitution strategy.
[The Fraser Institute, Case Studies in the Relationship between Political, Economic and Civil Freedoms, page 155]

During the federation period and immediately afterward, Lee’s government initially pursued an import substitution strategy … but the alienation from Malaysia, with its much larger market, rendered the strategy impractical.
[Lee Kuan Yew School of Public Policy, Asia Competitiveness Institute, Remaking Singapore, Michael Porter and Christian Ketels and Neo Boon Siong and Susan Chung, July 2008]

Singapore’s industrialisation strategy was originally dependent on policies of import substitution within the Malaysian common market, but the attainment of political independence in 1965 led to export industrialisation.
[Robert Fitzgerald, The Competitive advantages of Far Eastern business, Page 55]

Import substitution was adopted in the early 1960s in anticipation of the Malayan common market. However, Singapore separated from Malaysia in 1965 dashing the hopes of the common market, hence an export strategy was promoted instead.
[Eddie C. Y. Kuo / Chee Meng Loh / K. S. Raman, Information technology and Singapore society, Page 87]

Singapore at first adopted the industrialisation policy of import substitution, followed after 1966 by the export of labour intensive manufactured goods.
[Jacques Charmes, In-service training: five Asian experiences, Bernard Salomé, Page 21]

Everyone knows the reasons why the Federation is important to Singapore. It is the hinterland which produces rubber and tin and that keeps our shop window economy going. It is the base that made Singapore the capital city. Without this economic base, Singapore would not survive. Without merger … and an integration of our two economies, our economic position will slowly and steadily get worse. Your livelihood will get worse …
[The Singapore Story: Memoirs of Lee Kuan Yew Volume 1, Lee Kuan Yew, page 109]

It was only upon our divorce from Malaysia that Singapore had no choice but to embark on the unconventional path. This is in stark contrast to true entrepreneurs like Bill Gates who forsook the conventional path through college and deliberately chose the unconventional path of entrepreneurship instead. Unlike true entrepreneurs, Singapore leaders did not forsake the conventional for the unconventional but was forced to do so only after the conventional became unavailable.

More importantly, it was Dr Winsemius who planned and wrote our unconventional path. Lee Kuan Yew wasn’t an entrepreneur in any sense of the word but merely engaged a true entrepreneur who was Dr Winsemius.

It is also worth noting that:

• the percentage of small population economies (less than 10 million) achieving World Bank’s High Income status is almost double that of large population economies (more than 10 million)

• economies that does not depend on natural resources (less than 5% of GDP) but have achieved World Bank’s High Income status is more than double that of economies that depend on natural resources (more than 5% of GDP)

It is thus wrong to assume that being large and predisposed of natural resources is automatically a blessing. Statistics point to the other way around instead – that for economic progress, it is far better to be small and nimble and unencumbered by natural resources.

It is also important to note that Singapore has a resource far more precious than any natural resource – our priceless geographical location that has been the basis of our founding and prosperity since 1819.

You wrote:

Singapore’s leaders believed in the role of the state, but with two crucial differences: They modernised governance to ensure clear accountability, and they focused on execution, ensuring that the vision of the founders was translated into tangible policy action that impacted the lives of Singaporeans.

Singapore governance – our laws, civil service, government organs were largely inherited and evolved from British colonial roots.

You wrote:

John Maynard Keynes once remarked that when his information changed, he altered his conclusions. Like Keynes, Singapore’s leaders injected a strong dose of pragmatism into their public policies. This helped Singapore through good times and bad, as policymakers were not wedded to ideological preferences.

To use the parlance of Silicon Valley, Singapore leaders “debugged” policies which were not working and “rebooted” the system when needed. Singapore’s ever-evolving cityscape embodies its willingness to constantly adapt and change.

But according to our leaders, adaptability wasn’t injected by them but inherited from our British colonial past:

There are four reasons which enabled Singapore throughout her history as a British colony, and today as an independent republic, to survive and even prosper in the face of apparently insurmountable difficulties … The second reason must be ascribed … to Sir Stamford Raffles’ great vision of the island growing into a great emporium founded on the Victorian belief in the virtues of free trade … For well over a hundred years Singapore learnt to adapt her economy to changing circumstances. This ability to adapt which was won in the hard school of experience remains an asset which the government of independent Singapore decided to retain. It might have been politically expedient to rid ourselves of institutions and practices that bore the taint of colonial associations. Had we done so, we would have thrown away a priceless advantage.

[Goh Keng Swee, The Practice of Economic Growth, Chapter 1: Why Singapore succeeds, pages 6-7]

You wrote:

This vision and determination to succeed is the hallmark of any good start-up entrepreneur.

But the vision came from Dr Winsemius, how can Dr Winsemius’ vision become the hallmark of Lee Kuan Yew?

You wrote:

Singapore policymakers like to say that no one owes the country a living, and such positive anxiety has fuelled the country’s remarkable growth since 1965.

Singapore policymakers also pay themselves the highest salaries in this world as though Singaporeans owe them our living. But make no mistake – it wasn’t Lee Kuan Yew’s anxiety but Dr Winsemius’ wisdom that fuelled Singapore’s remarkable growth.

Lee Kuan Yew, appearing in tears on television when announcing separation, was devastated. His feelings strongly contrasted with scenes in Chinatown where firecrackers were set off to celebrate liberation from rule by Malays from Kuala Lumpur … Most Singaporeans … did not share the government’s dismay … Lee’s dismay was also not shared by the country’s most prominent foreign advisor. Winsemius … said in an interview in 1981 that … To my amazement, a discussion had started: can Singapore survive? That was the only time I got angry in Singapore. I said: ‘now you have your hands free – use them!’ It was the best thing that happened during the whole period from 1960 till today.

[The business of politics and ethnicity: a history of the Singapore Chinese Chamber of Commerce and Industry, Sikko Visscher, page 171]

It was Winsemius who knew what to do because he had done it before. In contrast, Lee Kuan Yew was anxious because he didn’t know what to do.

You wrote:

The “little red dot of a nation” … has turned 50 – not bad for an exceptional start-up which has vaulted to the First World but never forgotten its scrappy beginnings.

No one says India turned 68 this year just because India achieved independence in 1947. Everyone knows India is thousands of years old. Similarly, no one says China turned 66 this year just because the People’s Republic of China was established in 1949.

Similarly, no one should say Singapore turned 50 this year just because Singapore achieved independence in 1965. Modern Singapore was founded in 1819 and has turned 196 this year. We are too old to be considered a start-up and our exceptionalism has been a part of the Four East Asian Dragon exceptionalism well documented by economists for decades already. With the 5th most important port in the world in the early 1930s, most important communications centre in the Far East in the 1950s, third highest per capita GDP in Asia in 1965, Singapore’s 1965 ‘beginnings’ were far from scrappy.


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