Lee Kuan Yew on Singapore's economy in a global world

Lee Kuan Yew on Singapore's economy in a global world

SINGAPORE - For his book, One Man's View Of The World, Mr Lee Kuan Yew was probed by Straits Times journalists Han Fook Kwang, Zuraidah Ibrahim, Chua Mui Hoong and Elgin Toh, and civil servant Shashi Jayakumar, who was seconded to work on the project. Below is an exchange on the Singapore economy:

On the issue of making productivity gains, we lag behind many developed countries. In manufacturing and services, Singapore's productivity is only 55 per cent to 65 per cent of that in Japan and the United States.

Because we have large numbers of migrants who do not fit into the workforce so easily and who do not speak English.

Some hold work permits and do not stay for long - they leave within a few years, after developing skills.

Moving on to income inequality: Could more have been done to raise the wages of those at the bottom, despite the realities Singapore faces?

The inequalities are there because at the lower end, there's an enormous supply of Chinese and Indian workers, not here but in China and India.

So unless you are skilled, that gap will widen to your disadvantage.

But you ask yourself how many small and medium-sized companies will pack up if we cut off the foreign workers?

But isn't it a chicken-and-egg situation? Precisely because it is so easy and cheap to hire foreigners, the SMEs continue to rely on them. If the tap were tightened, they would be forced to find new ways of operation. There will be some that will shut down, but maybe some level of churn is necessary so that the economy can go on to be more productive.

You cut them off and you find the SMEs just caving in.

Would that be a bad thing, or could that just be a necessary transition?

If our SMEs collapse, we will lose more than half of our economy.

In a way, that is what the Government is now trying to do. They are trying to slow down the growth in the foreign labour force.

Yes, because the Singapore public feels uncomfortable with so many of them. Not because of the economics. From an economic point of view, we should grow.

So how do you see this ending now that we have started to tighten the tap? Does it mean that we will lose half of our economy?

As you bleed out the present workers on work permits, the economy will shrink. But we are keeping the same level and just slowing down the inputs of new workers. Not stopping them. You stop it, you are in trouble.

Our tax rate is now very low compared to many other developed countries. Is there scope for moving it up?

If you raise it too much, you find your best people leaving. Already, we are losing them. Many of our best students go to America, they are headhunted by the big companies and don't come back.

The people who are middle-aged and beyond will stay. They have no choice. Those who are still flexible, below middle-aged, will leave in larger numbers.

And without top-quality Singaporeans, this place would not be the same. Without my generation, there would be no such present Singapore. It's Goh Keng Swee, S. Rajaratnam, Lim Kim San who helped build this place.

In today's world, they would probably go to America and get a job with Microsoft and not come back.

But you and your generation decided to come back to Singapore after being educated at the best universities in the world. Is it not possible for a younger generation of Singaporeans to come back also if they feel a sense of home or purpose?

My generation - we were not allowed to stay in America or Britain after graduation.

Could you not have stayed on as a lawyer in Britain?

No. I wouldn't have made a living. I didn't do my chambers in Britain. I came back and started working here.

What about Prime Minister Lee Hsien Loong's generation? My point is, maybe the decision to come back is not merely one of economic opportunity.

No, the only reason that will bring them back is their parents.

That's one big reason. But how about a sense of patriotism, or a sense of having something to contribute to the land?

You're talking about a globalised world. The world is their oyster.

And maybe Singapore is a special part of the oyster?

No. The world was not globalised then. It is now."

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