National People Management and Development (Part 3)

Human ingenuity is infinite when translating power and discretion into personal gain…

We allowed the courts to treat proof that an accused was living beyond his or her means or had property his or her income could not explain as corroborating evidence that the accused had accepted or obtained a bribe. – Lee Kuan Yew

How they kept the Govt Clean

We conclude our three-part summary of the book From Third to First Worldby Lee Kuan Yew, hoping to glean insights for our use as a nation in transition. “When the PAP govt took office in 1959, we set out to have a clean administration. We were sickened by the greed, corruption, and decadence of Asian leaders. In 1960, we changed the outdated anticorruption law and widened the definition of gratuity to include anything of value. The amendments gave wide powers to investigators, including arrest and search and investigation of bank accounts and bank books of suspected persons and their wives, children or agents. We allowed the courts to treat proof that an accused was living beyond his or her means or had property his or her income could not explain as corroborating evidence that the accused had accepted or obtained a bribe. Also, it was our opinion that for an honest govt, candidates must not need large sums of money to get elected, or it must trigger off the cycle of corruption. Before we got into govt, we got govt to make voting compulsory and to prohibit the practice of using cars to take voters to the polls. Govt officials must be paid a wage commensurate with what men of their ability and integrity are earning for managing a big corporation or a successful legal or professional practice or else it would be difficult to attract talented people into govt. We proposed to Parliament to settle a formula so that revisions to salaries of ministers, judges, and top civil servants were automatic, linked to the income tax returns of the private sector.”

Modelling Decisive Leadership and Making Tough Calls

After recovery in 1975, we could afford to be more selective. When our EDB officer asked how much longer we had to maintain protective tariffs for the car assembly plant owned by a local company, the finance director of Mercedes-Benz said brusquely, “Forever,” because our workers were not as efficient as Germans. We did not hesitate to remove the tariffs and allow the plant to close down. Soon afterwards we also phased out protection for the assembly of refrigerators, air conditioner, television sets, radios, and other consumer electrical and electronic products.
Guinness had already paid a deposit for a site in Jurong for a brewery when we had to tell them we would not allow even one bottle of stout to be imported. So, they set up brewery instead in Malaysia and offered to allow us to forfeit their deposit. We returned it. Years later we repaid their compliment when we refused to reduce the import duty on stout from Malaysia. Guinness eventually settled on a Singapore brewery to produce it for them under license.
We used to also have a situation where Indian cowherds were bringing their cows into the city to graze. We gave owners of cows and goats a grace period, after which all such stray animals would be taken to the slaughterhouses and meat given to welfare homes. By December 1965, we had seized and slaughtered 53 cows. Very quickly, all cattle and goats were back in their herds.
We set up Singapore Airlines and got landing rights to Hong Kong, Tokyo, Sydney, Jakarta and Bangkok. But the most important destination was London, however the British were reluctant to give us landing rights. When I was told later how difficult it was to get landing rights, I asked them to let the Secretary General of our unions know about it because I had earlier agreed to his proposal that if the British were difficult, we would get Singapore unions at our own airport to apply pressure by going slow on servicing British aircraft. Within weeks after applying pressure though our unions, we obtained landing rights in London.

They mixed Socialism and Capitalism

The government took the lead by starting new industries such as steel mills (National Iron and Steel Mills) and service industries such as shipping line, Neptune Orient Lines (NOL), and an airline, Singapore Airlines (SIA), and Chartered Industries of Singapore (CIS), a mint and a factory for small ammunition. We later spun off Singapore Technologies, a high-tech company that, among other things, a set up water fabrication plants in joint venture with top MNCs.We had to put faith in our young officers who had integrity, intellect, energy, drive, and application but no record of business acumen. Our top scholars had been chosen from the best of each year’s crop of students and sent to the top universities in Britain, Canada, Australia, New Zealand, Germany, France, Italy, and Japan and later, when we could afford it, America. We made them our entrepreneurs to start up successful companies like NOL and SIA. I was fearful that these enterprises would result in subsidized and loss-making nationalized corporations as had happened in many new countries. The projects succeeded. As a result, many new companies sprang up under the auspices of other ministries and their ministries. When these also were successful, we turned state monopolies such as the PUB (Public Utilities Board), the PSA (Port of Singapore Authority), and Singapore Telecom into separate entities, free from ministerial control, to be run as companies, efficient, profitable, and competitive.

Winning over the Unions

Our union practices, I explained, were forcing employers to become capital-intensive, investing in expensive machines to get the work done with the minimum of workers. The ministry of health implemented their new wok system for cleansing workers. Next one of the unions went on a wildcat strike. The police arrested the leaders and charged them with calling an illegal strike. The registrar of trade unions issued notices to the union to show cause why they should not be deregistered. At same time the ministry of health declared that the strikers had sacked themselves; those who wished to be reemployed could apply the next day. This coordinated firmness panicked the strikers. 90% of them reapplied for employment. I tried to convince them at their annual labour congress that industrial relations between employers and workers were more important for our survival than wage increases, and that together we had to get the labour movement into better shape by cutting out restrictive practices and the abuse of fringe benefits. We made it illegal for a trade union to take strike or industrial action without a secret ballot. If it did so, the union and its officers would be liable to prosecution. They also held amodernisation seminar and convinced union delegates of the need to modernize their functions tomeet the changed environment.

How the Lee Kuan Yew’s Govt managed the Media

My early experiences in Singapore and Malaysia shaped my views about the claim of the press to be the defender of truth and freedom of speech. The freedom of the press was the freedom of its owners to advance their personal and class interests. Once the Press Foundation of Asia, issued a statement asking us not to cancel a paper’s license and invited me to speak at their annual assembly. Before leaving for the assembly, I cancelled the printing license of the newspaper. Had I not attended, the assemble would have passed resolutions condemning Singapore in my absence. I told them I did not accept that newspaper owners had the right to printwhatever they liked.Unlike Singapore’s minister’s, theyand their journalists were not elected. My final words to the conference were: “Freedom of the press, freedom of the news media, must be subordinated to the over-riding needs of Singapore, and to the primacy of purpose of an elected govt.” A few years later we passed laws prohibiting any person or his or her nominee from holding more than 3% of the ordinary shares of a newspaper, and created special category of shares called management shares, which the minister gave to Singapore’sfourmajor local banks. We enacted a law to restrict sale of foreign publications that engaged in our domestic politics. If after they had misreported or slanted stories on Singapore, they must be willing to publish our reply unedited otherwise the distribution of their publication was severally cut down.

How they creatively managed their compulsory Pensions Scheme

The colonial govt had started the Central Provident Fund (CPF) as a simple savings scheme for retirement: 5% of wages contributed by the employee with a matching 5% by the employer, to be withdrawn at age 55. We considered it inadequate. We expanded it into a fund that would enable every worker to won his home. Workers were allowed to use their accumulated CPF savings to pay the 20% home ownership down payment and service the housing loan for the balance by monthly installments over 20 years. From 1955-1968, the CPF contribution had remained unchanged. I raised it in stages from5% to 25% in 1984, making a total savings rate of 50% of wages. This was later reduced to 40%. The minister for labour was usually most anxious to have the worker’s take-home pay increased and would urge me to put less into the CPF. I regularly overruled him. I was determined to avoid placing the burden of the present generation’s welfare costs onto the next generation. Later on, we made all CPF members set aside 15 of their monthly expenses in a special account that could be used to co-pay medical expenses for themselves and their families. It was gradually increased to 6%. We allowed the CPF to be used as a personal savings fund for investments. Eg we revamped the bus service and formed Singapore Bus Services(SBS), listed it on the stock exchange, and allowed to use up to $5,000 of their CPF to buy shares. Thereby created a disincentive to demand for cheaper bus fares and govt subsidies for public transport.

Rejuvenation, Training and Development for the President

After I [Prime Minister Yew] had settled policies to counter the loss of Britain military spending, in the autumn of 1968, I took a short sabbatical at Harvard. I had been in office for nine years and needed to recharge my batteries, get some fresh ideas and reflect on the future. The Kennedy School of Government made me an honorary fellow and arranged breakfasts, lunches, dinners, and seminars for me to meet at a host of distinguished scholars. During the exchanges, they sparked off many useful and interesting ideas. I learned much about American society and economy by reading and talking to Harvard Business School professors such as Professor Ray Vernon. Vernon gave me a valuable lesson on the ever-changing nature of technology, industry, and markets, and how costs, especially wages in labor-intensive industries determined profits. He dispelled my previous belief that industries changed gradually and seldom moved from an advanced country to a less-developed one. Reliable and cheap air and sea transport made it possible to move industries into new countries, provided their people were disciplined and trained to wok the machines, and there was a stable and efficient government to facilitate the process for foreign entrepreneurs.