Singapore’s experience as an independent country since 1965 has produced remarkable success in terms of high economic growth with low unemployment, as well as a record of political stability. In office since 2004, Mr Lee is Singapore’s third Prime Minister and the eldest son of its first, Lee Kuan Yew, and he thus represents a durable political tradition in the country.
Global: To complement past investment in manufacturing and infrastructure, the evolution of Singapore’s economic policy seems now to be emphasising the service sector, including culture and the arts. What are the key elements of your government’s ambitions in this regard?
Lee Hsien Loong: Singapore’s long-term vision is to become a global city in Asia. Manufacturing and services are both important to us, and we have been encouraging our companies in both sectors to upgrade and become globally competitive.
We have nurtured a range of service industries over the past few years. Singapore continues to thrive as an international financial centre. Business services have grown too, as more multinational corporations locate their regional headquarters and professional activities here to serve a growing Asia-Pacific market. In tourism, we hope the new integrated resorts will bring in millions more visitors a year. Major events like the Singapore Airshow and Singapore Maritime Week will help too.
We are also developing new areas, such as healthcare services, professional services and creative industries like arts and culture, design and media. Creative industries have a broader significance economy-wide, because they help to create a vibrant and exciting environment that attracts talent, encourages innovation and differentiates our products and services.
What is the secret of Singapore’s ability to keep attracting investment in the most high-value and innovative industries?
Singapore has limited land and manpower, and no natural resources. Our domestic market is small. To attract investments, we have to be efficient, reliable and transparent. Singapore provides a stable, pro-business environment and consistently ranks as one of the top places for business in various surveys. Our workforce is disciplined and skilled, and is constantly upgrading. We provide excellent physical and knowledge infrastructure, which are essential to high-value and innovative industries. We invest long-term in education, to develop scientists and technicians who can contribute in areas like biomedical sciences, interactive digital media and clean technology.
In addition, Singapore is well connected to Asia and other parts of the world. Our open and inclusive culture is welcoming to talent. Our unions, employers and the government work harmoniously within a tripartite partnership. This strong relationship has seen us through challenging times and helps us to seize future opportunities.
Does Singapore have a particular strategy for tapping into the new kinds of industrial innovation emerging from both China and India?
We enjoy longstanding good relations with both countries. In China, the Suzhou Industrial Park project has helped develop a lasting bilateral partnership and strong Singapore brand-name in China. Both sides are now cooperating to build an Eco-City in Tianjin. Singapore also recognised early India’s importance in the global economy and has maintained close ties with it. In 1992, a Singapore company, Ascendas, opened an IT park in Bangalore. Many more Singapore companies have followed to invest and do business on the sub-continent. We have bilateral trade agreements with both China and India. The ASEAN-China Free Trade Agreement (FTA) and the ASEAN-India FTA, entering into force this year, will give trade a further impetus. Singapore companies are pursuing investments in both countries. In China, rapid urbanisation is bringing opportunities in ‘urban solutions’, where our companies have expertise.
In India, Singapore companies are moving into manufacturing, hospitality and retail. Government agencies, such as International Enterprise Singapore, help Singapore firms internationalise their businesses and enter these markets. Many Chinese and Indian enterprises use Singapore as a gateway to the region, and tap our network of FTAs, connectivity with other economies, and efficient capital markets. Almost 3,000 Chinese companies have established in Singapore, including some 150 listed on the Singapore Stock Exchange. According to a Reserve Bank of India bulletin in April 2010, Singapore is currently the top destination for Indian Foreign Direct Investment. More than 4,000 Indian companies are here.
Can you define the special role played by the sovereign wealth fund Temasek? Do its investment decisions closely reflect the policies of the government?
Temasek was incorporated in 1974 to hold investments belonging to the Singapore government. We wanted to devolve responsibility for managing these assets to a professional and commercial management, and free the government to focus on its primary role as a policy maker and market regulator. Over the years, Temasek has divested many of its initial holdings, listed several successful companies, and expanded its portfolio to cover a diverse range of blue chip Singapore, Asian and global companies, as well as promising emerging businesses.
Temasek operates as an independent investment company to create and deliver sustainable long-term shareholder value. Temasek is commercially driven. The government does not interfere in its operations or business, including its investment or divestment decisions.
Temasek is independently overseen and guided by its board of directors. The government ensures that a competent board is in place and assesses Temasek based on the performance of its overall portfolio over the long-term. Thus far, Temasek has performed creditably. As at 31 Mar 2009, its total shareholder return (by market value) since 1974 has averaged 16 percent annually in Singapore dollar terms.
Government policy has very effectively brought the economy through some turbulent times in global markets, but how do you respond to the criticism that the pursuit of economic growth has been at the expense of political freedoms that are usually taken for granted in other highly-developed nations?
Each country has to work out for itself an appropriate form of government, based on its history and circumstances. We do not believe that developed nations provide the sole or ideal model of democracy. Singapore’s model has worked for us. It is not static, and will continue to evolve as our society changes, to meet our changing needs. Some countries have on paper all sorts of rights and freedoms for their people. It does not always translate into a better life – jobs, safety, stability, a legitimate, honest and competent government, opportunities and a brighter future for the next generation. By this more fundamental yardstick, Singapore has not done badly.
Is the current pace of political liberalisation – allowing new political parties to register and having nominated members of parliament to represent different interest groups – sufficient to satisfy the expectations of the younger generation, many of whom tap in to new media and, perhaps as a result, now aspire to less conservative lifestyles than their elders?
Singapore inherited the British model of parliamentary democracy. We have evolved it over time, in response to changing needs and our own circumstances. These gradual, careful adjustments have given Singapore decades of stability and prosperity, and improved the lives of all citizens. Singapore does not restrict new political parties from forming; indeed, new parties spring up regularly. Nominated Members of Parliament were introduced into our system 20 years ago. The scheme has worked well, and Nominated Members have raised the quality of debate in Parliament.
This year, Parliament passed several new changes to our electoral system. They will ensure a larger minimum number of opposition MPs whatever the result of a general election. Our overall aim is to represent a wider range of views in Parliament, including opposition and non-government views. We will continue to update our political system to reflect the aspirations of Singaporeans. But the system must continue to produce governments with clear mandates to govern effectively, in the interests of Singapore.
On the social front, as the population has soared what will be the determining considerations of Singapore’s future immigration policy?
Singapore faces a long-term population challenge, arising from low fertility and an ageing population. Our total fertility rate reached a new low of 1.22 in 2009, well below replacement levels. While we try hard to encourage more Singaporeans to get married and have more children, we cannot fill the gap overnight. So we augment our population through immigration, in order to sustain economic growth and promote a vibrant society. We also help Singaporeans overseas to stay connected to Singapore. We have to help new migrants integrate into society, and yet not dilute our national identity and social cohesion. We encourage interaction between local-born and new citizens through many community initiatives.
We recently established a National Integration Council to foster such interactions, and encourage new migrants to sink roots and become part of the Singapore family.
With such a plethora of racial, linguistic and religious differences in Singapore, what has been the secret of maintaining social stability?
Underpinning our racial and religious harmony are the basic principles of meritocracy, secularism and multi-racialism. We make sure that government policies are fair to all groups, and put in much effort to maintain good relations among our various ethnic and religious communities.
We also work to enlarge the common space where all Singaporeans work, live and play together. We pursue an integrated living experience in our public housing estates, in our national schools where almost all our children are educated, during National Service where men from all backgrounds stand shoulder-to-shoulder to defend our nation, as well as at our work places where ethnic and cultural diversity is the norm.
Our legal and social institutions and policy measures maintain peace and harmony, but they cannot guarantee our social cohesion. Our ethnic and religious organisations and leaders understand our multicultural context, and guide their followers to practise their cultures and faiths sensitively and pragmatically. Their efforts foster confidence and give-and-take across different groups, and promote tolerance, mutual respect and understanding among all Singaporeans.
Despite many years of racial harmony, we must never take things for granted. It is still quite possible for race or religion to polarise our society. We must continue to integrate our communities and strengthen our collective sense of nationhood.
Has the country now reached the final limits of its land reclamation potential? Will the new direction of building be more upwards than outwards?
Reclamation is a means to expand our land to support growth. Marina Bay, which is Singapore’s new downtown, is built on reclaimed land. The new Marina Bay Sands Integrated Resort has just opened at Marina Bay, and a new financial district is fast taking shape there.
There are limits to how much we can reclaim, but we have not reached them yet. We will continue to reclaim land within our territorial waters, where it is feasible and economic to do so, to meet our needs.
It is also important to optimise land use. Singapore works on a planning horizon of several decades. We strive to use our land optimally to support economic, social and environmental objectives in a holistic manner. We are increasing land productivity by building both upwards as well as downwards. For instance, one of our newest public housing projects, The Pinnacle, is over 50 storeys tall. We are studying creating underground caverns for such uses as storage, warehousing, and R&D facilities. We are also turning over land from existing uses to support higher-value activities. For instance, we are now starting to plan for a new waterfront city at Tanjong Pagar, which is leased to our port until 2027.
