From Third World to First: The Singapore Story

An antidote to utopian idealism.

A history of hard headed realism and pragmatism, this book is Lee Kuan Yew’s memoirs of sailing Singapore to prosperity through the hard and difficult early years. Seeing Lee’s approach to different problems throughout the book, page after page and chapter after chapter, one is left with an infectious sense of pragmatism. And that would be the biggest takeaway of this book. If nothing, reading this would leave an idealistic reader a bit more realistic than when he started.

Furthermore, the book offers a window into the mind of someone who’s had to grapple with issues on diplomacy, economics or defence on a daily basis at minute detail. The self learned layman’s perspective when coupled with the intimate expertise he’s gained offers a unique perspective on those issues.

The second section while being very personality driven, still gives a whirlwind tour of South Asian history but it gets confusing quick because there’s too many names to keep track of.

Overall, a comparable book to read right after India after Gandhi to get an idea of south Asian history.


Chapter 6. Winning Over the Unions

▪ Singapore’s British-style trade union practices had been the bane of our labour movement. To counter communist influence, the colonial government brought in advisers like Jack Brazier from the British Trade Union Congress. To draw non-communist union leaders away from communist influence, these advisers taught them all the bad habits and practices of how to squeeze employers for more pay and benefits regardless of the consequences to the company

▪ 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. This stopped the practice of voting by an open show of hands where dissenters were intimidated into acquiescence.

▪ I persuaded Teng Cheong to work with the unions. He agreed and by 1983 was elected NTUC secretary-general. He remained in the cabinet; it worked well since the unions had their interests represented and the government was able to take their views into consideration when discussing policies.

▪ In 1982 Chee Onn, who was then NTUC secretary-general, initiated the change from industrial to house unions. It made for better communication between union leaders and workers, and leaders could focus on the specific issues and problems of their own company with management. In 1984 the NTUC, convinced of the benefits, adopted a resolution to support house unions.

▪ To maintain the symbiotic relationship between the PAP government and the NTUC, I encouraged the NTUC to get some MPs to work full-time with the unions, and to appoint others as advisers to various unions. These MPs raised union issues in Parliament.

Chapter 7. A Fair, Not Welfare, Society

▪ I wanted a home-owning society. I had seen the contrast between the blocks of low-cost rental flats, badly misused and poorly maintained, and those of house-proud owners, and was convinced that if every family owned its home, the country would be more stable.

▪ I further amended the law to give the government power to acquire land for public purposes at its value on a date then fixed at 30 November 1973. I saw no reason why private landowners should profit from an increase in land value brought about by economic development and the infrastructure paid for with public funds. As we became more prosperous, we moved the base year to January 1986, January 1992 and then to January 1995, closer to market rates.

▪ As property prices rose, everybody wanted to make a profit on the sale of their old flat and then upgrade to a new one, the biggest they could afford. Instead of choking off demand by charging a levy to reduce their windfall profits, I agreed that we accommodate the voters by increasing the number of flats built. That aggravated the real estate bubble and made it more painful when the currency crisis struck in 1997.

▪ A patient in a government hospital pays fees subsidised at rates up to 80 per cent, depending on the type of ward he chooses. As incomes increased, fewer patients chose the lower-cost wards which had the highest government subsidies, and opted for wards with more comfort but lower subsidies. We considered but rejected a means test to determine which wards patients were entitled to use; it would have been difficult to implement. Instead we encouraged people to upgrade to the ward they could afford by making clear differences in comfort between different types of wards.

▪ We allowed the use of Medisave for private hospital fees, subject to price limits for various procedures. This competition put pressure on government hospitals to improve their service quality

▪ In 1990 we added MediShield, an optional insurance against the cost of catastrophic illnesses. Premiums could be paid out of the Medisave account. In 1993 we set up Medifund with money from government revenue to cover those who had exhausted their Medisave and MediShield, and had no immediate family to rely on. They could apply for a total waiver of all fees which would then be paid from Medifund. Thus while no one is deprived of essential medical care, we do not have a massive drain on resources, nor long queues waiting for operations.

▪ To discourage “stagging”, the immediate sale for cash gains, which happened when the British privatised British Telecom, we offered shareholders the right to bonus shares after the first, second, fourth and sixth years, provided they had not sold the original shares. This resulted in 90 per cent of the workforce owning Singapore Telecom shares, probably the highest in the world.

▪ To ensure a member’s savings will be enough for his retirement, neither his CPF balance nor his assets bought with CPF money can be levied upon or attached for any debt or claim. Nor is his HDB flat bought with CPF money available to his creditors. Only the HDB can execute against an owner for mortgage instalments unpaid on the flat.

Chapter 9. Straddling the Middle Ground

▪ From many unhappy encounters with my communist opponents, I learnt that while overall sentiment and mood do matter, the crucial factors are institutional and organisational networks to muster support.

▪ That he had no principled stand suited us, because he was unlikely to become a credible alternative. I decided he was useful as a sparring partner for the new MPs who had not gone through the fight with the communists and the UMNO Ultras. Besides, he filled up space on the opposition side of the political arena and probably kept better men out.

Chapter 11. Many Tongues, One Language

▪ When I acted as legal adviser for the Chinese middle school student leaders in the 1950s I was impressed by their vitality, dynamism, discipline and social and political commitment. By contrast, I was dismayed at the apathy, self-centredness and lack of self-confidence of the English-educated students. The nub of the problem was that in our multiracial and multilingual society, English was the only acceptable neutral language, besides being the language that would make us relevant to the world. But it did seem to deculturalise our students and make them apathetic.

Chapter 12. Keeping the Government Clean

▪ We decided to concentrate on the big takers in the higher echelons and directed the CPIB on our priorities. For the smaller fish we set out to simplify procedures and remove discretion

▪ The most effective change we made in 1960 was to allow the courts to treat proof that an accused was living beyond his means or had property his income could not explain as corroborating evidence that the accused had accepted or obtained a bribe.

▪ A precondition for an honest government is that candidates must not need large sums of money to get elected, or it must trigger off the cycle of corruption. The bane of most countries in Asia has been the high cost of elections. Having spent a lot to get elected, winners must recover their costs and also accumulate funds for the next election. The system is self-perpetuating.

▪ Our most formidable opponents, the communists, did not use money to win voters. Our own election expenses were small, well below the amount allowed by law. There was no need for the party to replenish its coffers after elections, and between elections there were no gifts for voters.

▪ I pointed out that the remuneration of ministers and political appointees in Britain, the United States and most countries in the West had not kept pace with their economic growth. They had assumed that people who went into politics were gentlemen with private means. Indeed, in pre-war Britain people without private incomes were seldom found in Parliament. While this is no longer the case in Britain or the United States, most successful people are too busy and doing too well to want to be in government.

▪ This change to a formula, pegged at two-thirds of the earnings of their private sector equivalents as disclosed in their income tax returns, caused an enormous stir, especially with the professionals who felt that it was completely out of proportion to what ministers were paid in advanced countries

Chapter 13. Greening Singapore

▪ For years we could not clean up the city by removing these illegal hawkers and pirate taxi drivers. Only after 1971, when we had created many jobs, were we able to enforce the law and reclaim the streets.

▪ I knew when a country and its administrators were demoralised from the way the buildings had been neglected – washbasins cracked, taps leaking, water-closets not functioning properly, a general dilapidation and, inevitably, unkempt gardens. VIPs would judge Singapore the same way.

▪ On the first Sunday in November 1971, we launched an annual Tree Planting Day that involved all MPs, community centres and their leaders. We have not missed a single tree planting day since. Saplings planted in November need minimum watering as the rainy season begins then.

▪ All factories had to landscape their grounds and plant trees before they could commence operations.

▪ We took it one step further and banned the importation of firecrackers altogether. When we live in high-rises 10 to 20 storeys high, incompatible traditional practices had to stop.

▪ First we educated and exhorted our people. After we had persuaded and won over a majority, we legislated to punish the wilful minority

Chapter 14. Managing the Media

▪ A few years later, in 1977, we passed laws to prohibit any person or his nominee from holding more than 3 per cent of the ordinary shares of a newspaper, and created a special category of shares called management shares. The minister had the authority to decide which shareholders would have management shares. He gave management shares to Singapore’s four major local banks. They would remain politically neutral and protect stability and growth because of their business interests.

▪ We did not ban them, only restricted the number of copies they sold. Those who could not buy copies could get them photocopied or faxed. This would reduce their advertising revenue but did not stop their reports from circulating. They could not accuse us of being afraid to have their reports read.

Chapter 15. Conductor of an Orchestra

▪ I had earlier agreed to Devan’s proposal that if the British negotiators were difficult, he would get the unions at the airport to apply pressure by going slow on servicing British aircraft. As soon as the NTUC mounted a go-slow on BOAC aircraft at Paya Lebar, the British high commissioner, Arthur de la Mare, came to see me at my office. I asked him to get his government to be reasonable. A British airline could land in Singapore but a Singapore airline was denied landing rights in London.

▪ I proposed that a new car owner had to bid for a certificate to purchase and put the car on the road. The number of certificates available each year would depend on road capacity. We calculated that the roads then could accommodate a 3 per cent annual increase of vehicles

▪ By trial and error, I learnt that if I wanted to get an important proposal accepted at all levels, I should first float my ideas with my ministers, who would then discuss them with the permanent secretaries and officials. After I got their reactions, I would have the proposal discussed among those who had to make it work. If, like the transport system, it concerned large numbers of people, I would then get the issue into the media for public discussion.

▪ Every vehicle now has a “smart card” at its windscreen, and the correct toll is automatically deducted every time it passes under gantries sited at strategic points in the city. The toll amount varies with the stretch of road used and the time of day. Technology has made it possible to fine-tune the ERP system and extend it to all roads that have become congested. Since the amount a person pays the government now depends upon how much he uses the roads, the optimum number of cars can be owned with the minimum of congestion.

▪ Although we mixed the races by making them ballot for their flats, we found that they were collecting together again. When owners sold their flats and were able to buy resale flats of their choice, they soon recongregated. This forced us in 1989 to put percentage limits (25 per cent for Malays, 13 per cent for Indians and other minorities per block) beyond which no minority family could move into the neighbourhood.

▪ This quota ceiling limited the pool of buyers for certain resale flats and so depressed their prices. When a Malay or Indian is not allowed to sell to a Chinese because the Chinese quota has already been filled, the flat invariably sells at a price lower than the market rate because the smaller numbers of Malay or Indian buyers are not able to pay the higher price which the Chinese majority can. However, this is a small cost for achieving our larger objective of getting the races to intermingle.

▪ Three or four single-member constituencies were amalgamated into single group representation constituencies (GRCs) to be contested by three or four candidates as a group or team which had to include one candidate from a minority community, an Indian or Malay. Without this arrangement, the Chinese majority in all constituencies would most likely return Chinese candidates.

▪ One advantage of a GRC is that Chinese candidates cannot make Chinese chauvinist appeals without losing the 25–30 per cent non-Chinese vote. They need a Malay or an Indian who can win over the minority votes to be a member of their GRC team of candidates.

▪ A Straits Times court reporter who had watched many jury trials gave evidence to the same select committee that superstitious beliefs and a general reluctance to take responsibility for severe punishment, especially the death sentence, made Asian jurors most reluctant to convict.

▪ The reporter said he could predict that whenever a pregnant woman was a member of the jury there would be no conviction on a murder charge, for otherwise her child would be born cursed.

▪ We found caning more effective than long prison terms and imposed it for crimes related to drugs, arms trafficking, rape, illegal entry into Singapore and vandalising of public property.

Chapter 16. Ups and Downs with Malaysia

▪ Singapore had an anti-long hair campaign in 1971 as we did not want our young to adopt the hippie look. Men with long hair were attended to last at government counters and at all entry points – airport, port and Causeway. Three youths, two Malays and a Chinese, were picked up at the Orchard Road car-park and interrogated as suspected secret society members. They were detained for 16 hours, had their hair cut by a police barber, and released. They turned out to be Malaysians. The Utusan Melayu played up the story which caused a minor storm

Chapter 18. Building Ties with Thailand, the Philippines and Brunei

▪ Thailand is the only Southeast Asian country that has never been colonised.

Chapter 19. Vietnam, Myanmar and Cambodia: Coming to Terms with the Modern World

▪ We discussed their loss-incurring state-owned enterprises (SOEs). They wanted to privatise them or sell them off to the workers and others. I explained that this method would not provide them with what was critical – efficient management. Singapore Airlines was 100 per cent government-owned, but it was efficient and profitable because it had to compete against international airlines. We did not subsidise it; if it was not profitable, it would have to close down. I recommended that they privatise their SOEs by bringing in foreign corporations to get an injection of management expertise and foreign capital for new technology. A change in the management system was essential. They needed to work with foreigners to learn on the job. Privatising within the country by selling to their own people could not bring about this result.

Chapter 20. Asean – Unpromising Start, Promising Future

▪ The role of President Suharto was crucial for the success of Asean. After some false starts by pushy Indonesian officials, Suharto moderated the approach to one diametrically different from India’s vis-à-vis the member countries of SAARC (South Asian Association for Regional Cooperation). Under Suharto, Indonesia did not act like a hegemon. It did not insist on its point of view but took into consideration the policies and interests of the other members. This made it possible for the others to accept Indonesia as first among equals.

Chapter 21. East Asia in Crisis 1997-99

▪ By the early 1990s the economies of Thailand, Indonesia and Korea were already operating at full capacity. Many of the new investments were channelled into projects of doubtful value. While the euphoria lasted, everyone overlooked the institutional and structural weaknesses in these economies.

▪ The savings were directed by the government through their banks for specific conglomerates to capture market share in designated products. This has often resulted in uncompetitive industries. When they were catching up with the advanced countries, it was possible to spot which industries to invest in. Now that they have caught up with the West, it is not easy to pick the winners.

Chapter 23. New Bonds with Britain

▪ it was nevertheless sad to see Britain’s gradual economic displacement by Japan, Germany and France. Time and again, its recovery was slowed down by industrial action of unions driven by class antagonism and not merely economic injustice. I believe one great obstacle to Britain’s adjustment to its post-imperial condition was its class-conscious society. It was slow to shed class distinctions. Without empire, Britain needed a meritocracy to retain its position as the leading nation of Europe, not a ruling class which distinguished itself from the working class by its accent, social manners and habits, old boy network, clubs and old school ties.

▪ Thatcher as prime minister downgraded class and promoted meritocracy. John Major, her successor, spoke of a “classless” Britain. Prime Minister Tony Blair’s New Labour wants Britain to be rid of class consciousness.

▪ After the British withdrew their forces the only power in East Asia was America. We needed to have some of our best students educated there to understand them, and to network with future leaders in their centres of excellence.

Chapter 26. Following Britain into Europe

▪ His (Mitterrand) great vision enabled him to come to terms with Germany’s past and he was determined that the past would never again be repeated. Hence his single-minded pursuit of the European Monetary Union (EMU) which he referred to as a question of war and peace. He believed the Euro would make the process of European integration irreversible.

▪ Until the Europeans settle on a common language, they cannot equal the uniformity and the benefits of scale that America enjoys. Every EU country teaches English as the second language. None is prepared to give up its language for English or any other language. EU engineers and managers will therefore not be so easily interchangeable as Americans when working on major projects.

Chapter 28. America: The Anti-Communist Anchorman

▪ I was relieved the Americans were prepared to oppose communists wherever they threatened and whatever the cost. Because Americans were resolutely anti-communist and prepared to confront them, Nehru, Nasser and Sukarno could afford to be non-aligned

▪ In fact, the Vietnamese offensive was a failure, but the media convinced Americans that it was an unmitigated disaster

▪ The forte of British academics of that period was in rigorous study of the past, not of the present or the future, which involved conjecture. They did not have the direct interaction with business and industry which the Harvard Business School provided. The Americans, unlike the British, did not confine themselves to a critical examination of the past. Investigating the present to predict the future is a strength of American scholarship. Their think-tanks have made futurology a respectable subject under the title “futuristic studies”.

Chapter 29. Strategic Accord with the United States

▪ He had a broad strategic mind and saw the value of China in the overall balance against the Soviet Union and as a check on Vietnam from becoming too much of a tool of the Soviets

▪ Nations wax and wane. I argued that if a nation on the rise, with an excess of energy, was not allowed to export its goods and services, its only alternative would be to expand and capture territory, incorporate the population and integrate it to make for a bigger economic unit. That was why nations had empires which they controlled as one trading bloc. It was a time-honoured way for growth.

Chapter 30. America’s New Agenda

▪ In spite of many mistakes and shortcomings America has succeeded, and spectacularly so. In the 1970s and ’80s, its industries were going down as against Japanese and German industries, but they came back with unexpected vigour in the 1990s. American corporations lead the world in the use of computers and information technology. They have exploited the digital revolution to restructure and flatten their organisations, and increased productivity to previously unheard of levels while keeping inflation low, increasing profits and staying ahead of the Europeans and Japanese in competitiveness. Their strength is in their talent, nurtured in their universities, think-tanks, and in the R&D laboratories of their MNCs. And they attract some of the brightest minds from the world over, including many from India and China, to new, high-growth sectors like Silicon Valley. No European or Asian nation can attract and absorb foreign talent so effortlessly. This gives America a valuable advantage, like having a magnet to draw in the best and brightest from the world

Chapter 31. Japan: Asia’s First Miracle

▪ But Japan faced obstacles in its search for a role as a major economic power, the most serious being the attitude of Japanese leaders to their war-time atrocities. They compare badly to the West Germans who openly admitted and apologised for their war crimes, paid compensation to victims, and taught younger Germans their history of war crimes so they would avoid making the same mistakes. In contrast, Japanese leaders are still equivocal and evasive. Perhaps they do not want to demoralise their people or insult their ancestors and their emperor. Whatever the reason, successive LDP prime ministers have not faced up to their past.

Chapter 32. Lessons from Japan

▪ No nation in Asia can match them, not the Chinese, Koreans, Vietnamese or Southeast Asians. They consider themselves a special people. You are either born a Japanese and therefore in that magic circle, or you are not. This myth of being special makes them a formidable force as a nation, a corporation or a team in any workplace.

▪ When pressed, Hizaki said Singapore workers would never catch up 100 per cent. He gave two reasons. First, the Japanese worker would cover for his work-mate who had to attend to other urgent business; the Singapore worker looked only after his own job. Second, there was a clear division in Singapore between the rank and file and the officer cadre, which was the British system, where a polytechnic or university graduate came straight into the officer grade. This was not so in Japan.

▪ I learnt from the Japanese the importance of increasing productivity through worker-manager cooperation, the real meaning of human resource development.

▪ The ties that bound them to their company were many and strong. Of course only the big companies and the public sector could afford this life-long employment system. They were able to pass on the burden of retrenchments in a downturn to their suppliers, the smaller companies. I wanted to emulate them but gave up after discussions with Singapore employers. We did not have their culture of strong worker loyalty to their companies. Moreover, many of our big employers were American and European MNCs with different company cultures.

Chapter 34. Hong Kong’s Transition

▪ The Western media wanted to democratise China through Hong Kong, or at least put pressure on China through democratic changes introduced into Hong Kong. So they backed Governor Patten’s belated and unilateral political reforms.

▪ Hong Kong stock and property markets had collapsed after the shock of Tiananmen at the prospect of the colony’s return to China. Eight years later, China had achieved a complete turnaround in its economy, and Hong Kong was looking forward to continuing growth with a thriving China. As 1 July 1997 approached, the Hong Kong property and stock markets went steadily upward, demonstrating a confidence which no one could have predicted. Hong Kong businessmen who had decided to stay, and nearly all did, had accepted the reality, that their future depended upon good relations with China.

Chapter 37. Deng Xiaoping’s China

▪ I replied that Singapore was a small country with two and a half million people. He sighed and said, “If I had only Shanghai, I too might be able to change Shanghai as quickly. But I have the whole of China!”