From Third World to First: The Singapore Story: 1965-2000 by Lee Kuan Yew

Lee Kuan Yew was the first Prime Minister of Singapore and "father of Singapore's emergence as a national state".

The book "From Third World to First" by Lee Kuan Yew is an account of his extraordinary achievement leading Singapore's transformation into a First World oasis in a Third World.

The book is an "account of the problems my colleagues and I faced, and how we set about solving them" and an account of the "ceaseless effort and attention from an honest and effective government that the people must elect".

It is essential reading for anyone interested in good governance and leadership.

The book is 768 pages long with 40 chapters. The key chapters and topics summarized here are of particular relevance:

Chapter 1: Going It Alone
Chapter 4: Surviving Without a Hinterland
Chapter 5: Creating a Financial Center
Chapter 7: A Fair, Not Welfare, Society

The intention here of this book review is to learn from Singapore's transformation from Third World to First. It is not intended to be analysis of Lee's policies or his decisions, or his methods, or his personality, or governance style, or alternatives, or Singapore politics.

Foreword by Henry Kissinger

Henry Kissinger writes in the foreword: "ordinary calculations can be overturned by extraordinary personalities" and "ancient argument whether circumstance or personality shapes events is settled in favor of the latter".

Henry Kissinger describes the book as "Lee Kuan Yew's account of his extraordinary achievement".

"Every great achievement is a dream before it becomes reality, and his vision was of a state that would not simply survive but prevail by excelling.

Superior intelligence, discipline, and ingenuity would substitute for resources".

Lee "summoned his compatriots to a duty they had never previously perceived" and inspired in them "superior performance".

Going It Alone: Motivation for birth of Singapore as independent country

Singapore grew as a trading and military post of the British. After the second world war, British decided to leave as part of their policy to have no presence east of the Suez Canal.

Once the British decided to leave, the people of Singapore had to decide their future. One alternative was to become part of Malaysia. Singapore had 75% Chinese population and 13% Malay. Malaysia wanted "Malay-dominated Malaysia" and "their use of communal riots to cow us" gave Singaporeans "no choice but to leave".

Lee already had memories of "Japanese occupation (1942-1945) filled me with hatred for the cruelties they inflicted on their fellow Asians, aroused my nationalism and self-respect, and my resentment at being lorded over. My four years as a student in Britain after the war strengthened my determination to get rid of British colonial rule."

The "communal bullying and intimidation made our people willing to endure the hardships of going it alone".

Surviving Without a Hinterland: Political, economic, and financial stability

Singapore is one of the best countries in the world for business for it's "political, economic, and financial stability and sound labor relations".

In the chapter "Surviving Without a Hinterland", Lee talks about how this happened.

We can be a devil's advocate and argue that perhaps Singapore was lucky, but luck favors those who plan and work hard. Singapore's success didn't happen by accident or just because of its geographic location or being at the right place at the right time of Asian growth.

It was because Lee's "strategy was to create a First World oasis in a Third World region".

"We had one simple guiding principle for survival, that Singapore had to be more rugged, better organized, and more efficient than others in the region. If we were only as good as our neighbors, there was no reason for businesses to be based here. We had to make it possible for investors to operate successfully and profitably in Singapore despite our lack of a domestic market and natural resources."

"If Singapore could establish First World standards in public and personal security, health, education, telecommunications, transportation, and services, it would become a base camp for entrepreneurs, engineers, managers, and other professionals who had business to do in the region."

"All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent."

Singapore established Economic Development Board(EDB). They hired the best: "choice of the brightest and best of our scholars who had returned from universities in Britain, Canada, Australia, and New Zealand" who were "inspired by Sui Sen, a quiet, outstanding administrator with an amazing ability to get the best out of those who worked for him". EDB culture was characterized by "the enthusiasm, the unflagging spirit, the ingenious ways they got around obstacles".

The value of hard work can never be discounted. "hard legwork for our young EDB officers", "EDB officers would sometimes call on 40 to 50 companies before getting one to visit Singapore". "They worked with inexhaustible energy because they felt the survival of Singapore depended upon them". "Ngiam Tong Dow, a young EDB director, later permanent secretary of the ministry of trade and industry, remembered what Keng Swee told him, that every time he drove by a school and saw hundreds of children streaming out, he felt downhearted, wondering how to find jobs for them when they left school".

Distance and geography should not be a show-stopper. First World Singapore was far away from other First World Nations, but "We had found our new hinterland in America, Europe, and Japan. Modern communications and transportation made it possible for us to link up with these once faraway countries".

"The key to success was the quality of the people in charge".

Lee advocated for Singapore to a meeting of American CEO's and laid down what Singapore can offer: "provide goods and services "cheaper and better than anyone else, or perish". And "They responded well because I was not putting my hand out for aid, which they had come co expect of leaders from newly independent countries. I noted their favorable reaction to my "no begging bowl" approach".

There is advice for investors looking to invest, and also organizations and nations looking to attract investment: "how Americans weighed business risks. They looked for political, economic, and financial stability and sound labor relations to make sure that there would be no disruption in production that supplied their customers and subsidiaries around the world" and "their businesses were safe from confiscation".

Example of this given in the book: "Within days of the oil crisis in October 1973, I decided to give a clear signal to the oil companies that we did not claim any special privilege over the stocks of oil they held in their Singapore refineries. If we blocked export from those stocks, we would have enough oil for our own consumption for two years, but we would have shown ourselves to be completely undependable".

"This decision increased international confidence in the Singapore government, that it knew its long-term interest depended on being a reliable place for oil and other business".

Even if we put moral, ethical and legal considerations aside, it makes business sense to not confiscate what does not belong to you.

This is important lesson today for governments, voters, and organizations who have all jumped on the bandwagon to enable confiscation and confiscate other people's property in the name of public good.

Creating a Financial Center: Bold, with uncompromising standards and transparent

"Anyone who predicted in 1965 when we separated from Malaysia that Singapore would become a financial center would have been thought mad. How did it happen?"

"we want, within 10 years, to be the financial center in Southeast Asia. Van Oenen replied, All right, you come to London. In five years you can develop it."

In chapter 5: "Creating a Financial Center" Lee talks about how Singapore achieved this.

The key business benefit was "If we put Singapore in between, before San Francisco closes, Singapore would have taken over. And when Singapore closes, it would have handed over to Zurich. Then, for the first time since creation, we will have a 24-hour round-the-world service in money and banking."

However, just this is not enough. "Foreign bankers needed to be assured of stable social conditions, a good working and living environment, efficient infrastructure, and a pool of skilled and adaptable professionals."

Lee's government's strategy was "The foundations for our financial center were the rule of law, an independent judiciary, and a stable, competent, and honest government that pursued sound macroeconomic policies, with budget surpluses almost every year. This led to a strong and stable Singapore dollar, with exchange rates that dampened imported inflation."

Even though they were new to financial services, Singapore did not compromise on standards. "The MAS's reputation for being thorough and uncompromising in admitting only financial institutions of repute was put to the test in the 1970s and 1980s when it denied a license to the Bank of Credit and Commerce International (BCCI)". BCCI subsequently collapsed. Singapore escaped unscathed because we refused to compromise standards.

Another word of wisdom from Lee is for "maximum disclosure of information" to build trust. "From July 1997, when the financial crisis broke out in East Asia with the devaluation of the Thai baht, disasters devastated the currencies, stock markets, and economies of the region. But no bank in Singapore faltered."

"When fund managers were fearful of hidden traps, withholding information was not an intelligent response. We decided on the maximum disclosure of information."

"Because of the competent steps the MAS(Monetary Authority of Singapore) had taken to deal with the crisis, Singapore consolidated its position as a financial center."

A Fair, Not Welfare, Society

Singapore did not try to become a welfare state like Europe and Canada. "when governments undertook primary responsibility for the basic duties of the head of a family, the drive in people weakened. Welfare undermined self-reliance. People did not have to work for their families' well-being. The handout became a way of life. The downward spiral was relentless as motivation and productivity went down. People lost the drive to achieve because they paid too much in taxes. They became dependent on the state for their basic needs."

Not just financial difficulties, the West's liberal and welfare policies creates "increasing social difficulties these advanced societies faced because of their liberal social and welfare policies."

"people are unequal in their abilities, if performance and rewards are determined by the marketplace, there will be a few big winners, many medium winners, and a considerable number of losers. That would make for social tensions because a society's sense of fairness is offended."

The key is to have balance between competitiveness in a society to reward winners, and wealth redistribution to ensure "rewards evenly redistributed, the greater the group solidarity" and stability. This was done by encouraging "Owning assets, instead of subsisting on welfare" and "high CPF compulsory savings of 40 percent of their wages".

The result: "Government expenditure has averaged 20 percent of GDP, compared to an average of 33 percent in the G7 economies. On the other hand, our development expenditure has consistently been much higher than that of the G7 countries."

Singapore also "avoid placing the burden of the present generation's welfare costs onto the next generation".

Lee's government focussed on ensuring high level of house ownership and good healthcare with co-pay but "fees subsidized at rates up to 80 percent".

"The British National Health Service was a failure. American-style medical insurance schemes are expensive, with high premiums because of wasteful and extravagant diagnostic tests paid for out of insurance. We had to find our own solution."

Healthcare was taken care of by "requiring co-payments from the user". As a result, "waste and costs kept in check". People made "monthly contributions for the Medisave account to 6 percent of wages, with an upper limit of S$15,000 in 1986".

"we made the difficult decisions early, we have established a virtuous cycle - low expenditure, high savings; low welfare, high investments."

Lee also leaves us with warning to those that believe in communism and socialism:

Perception and First Impressions

"I thought the best way to convince them(CEO's) was to ensure that the roads from the airport to their hotel and to my office were neat and spruce, lined with shrubs and trees. When they drove into the lstana domain, they would see right in the heart of the city a green oasis, 90 acres of immaculate rolling lawns and woodland, and nestling between them a nine hole golf course. Without a word being said, they would know that Singaporeans were competent, disciplined, and reliable, a people who would learn the skills they required soon enough."

Quiet a contrast to airports and borders in most Third World and some First World countries where airports are architectural monstrosities; border officials and police rude; and there is chaos and scams as soon as you step out of the airport.

Statesman

The book has gems scattered all over its 700+ pages in the form of words of wisdom for leaders and would-be Statesmen of the future.

"My duty was to give the people hope, not demoralize them."

Lee talks about his choice of S. Rajaratnam as foreign minister for "the right balance between standing up for principles and the need for diplomatic compromise".

Newly formed nation of Singapore "had to make a living different from that under British rule" and "We had to create a new kind of economy, try new methods and schemes never tried before anywhere else in the world". "We had to make extraordinary efforts" and "We had to be different." Lee demonstrated boldness and vision to lead a nation along a new path, and not slip into comfortable nostalgia of old ways.

Once Lee gained "political strength", he was careful to "not to squander this newly gained trust by misgovernment and corruption". This is important point as governments all over the world have lost trust of their people through misgovernment and corruption as governments and leaders all over the world take this for granted. This lack of "political strength" and squandering trust undermines our collective ability to work together to solve our major crises. All governments and organizations can learn from Lee's example to not squander people's trust by misgovernment and corruption.

He summarized the character of his government in a letter to the British Prime Minister: "My colleagues and I are sane, rational people even in our moments of anguish. We weigh all possible consequences before we make any move on the political chessboard... Our people have the will to fight and the stuff that makes for survival." The key trait here is to be sane and rational even in moments of anguish. Contrast this with governments and organizations today that keep their people in state of permacrisis and polycrisis, and then use that as justification to suspend all laws and acquire dictatorial powers.

Lee gives another example of devaluing of Pound Sterling which led to considerable financial loss to Singapore government foreign currency reserves. Lee used this as an opportunity to strengthen long term relations rather than use it as an excuse to fight. He wrote to the British PM: "I would be loath to believe that temporary difficulties could disrupt the trust and confidence we have in each other's good intentions, goodwill and good faith".

Another example is of the time when an agreement could not be reached. "If we cannot agree, well, we wait a while."

Another example "no desire to rewrite the past and perpetuate ourselves by renaming streets or buildings or putting our faces on postage stamps or currency notes". This is timely reminder to governments and organizations today where history is being rewritten and rebranded.

"The world does not owe us a living. We cannot live by the begging bowl".

"If we were a soft society then we would already have perished. A soft people will vote for those who promised a soft way out, when in truth there is none. There is nothing Singapore gets for free, even our water we pay for..."

There is also discussion on "hard-headed and realistic analysis of Singapore's problems and the dangers in the region".

"I always tried to be correct, not politically correct."

Words of Wisdom from a true Statesman.

Lee's reflections, and motivation for us

"Had we known how complex and difficult were the problems that lay ahead, we would never have gone into politics with the high spirits, enthusiasm, and idealism of the 1950s."

"Yet, there we were in the 1950s, a small group of English-educated colonial bourgeoisie, without the ability to reach the Chinese dialect-speaking masses who were the majority, going headlong into the fray."

"We pressed on, oblivious of the dangers ahead. Our visceral urges were stronger than our cerebral inhibitions. Once plunged in, we were sucked ever deeper into the struggle."

"When we started in 1959, we knew little about how to govern, or how to solve our many economic and social problems. All we had was a burning desire to change an unfair and unjust society for the better."


The keywords of leadership Lee mentioned and consciously followed and inspired in his people are: duty, balance, standing up for principles, diplomatic compromise, try new methods, extraordinary efforts, political strength, sane and rational even in anguish, trust and confidence... in each other's good intentions, goodwill and good faith, no soft way out, cheaper and better than anyone else, hard-headed and realistic.

Statesmen like Lee Kuan Yew brings vision and strategy. Statesmen make conscious decisions rather than tactical response to developing situations. They can look ahead, develop a vision, build a team, inspire, and delegate to world class people to execute. This is more valuable than resources, geography, timing or luck.

"we made the difficult decisions early, we have established a virtuous cycle-low expenditure, high savings; low welfare, high investments".

There is no substitute for "ceaseless effort and attention". Most of 700 pages are testament to the hard work and care that Lee and his team put in to make Singapore among the best places to live and do business.

This book is recommended reading for all who have "a burning desire to change an unfair and unjust society for the better".












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