It gives me great pleasure to speak to you at this year’s Temasek Seminar. Each year, the Temasek Seminar brings together top students from our junior colleges to have a dialogue on issues that are important to Singapore’s continued prosperity and progress.

Our Beginnings

Singapore’s independence was foisted upon us in 1965. Because of our small size and lack of resources, many felt and some hoped that Singapore would not survive. Domestically, we faced wide-ranging problems such as unemployment, housing and education. The Government’s immediate concern then was to create a livelihood for 2 million Singaporeans and in doing so, to give them hope for the future. In the early years of our independence, that hope was manifested in the form of jobs for a basic livelihood, basic housing, a safe living environment and an education for their children.

Conventional wisdom at the time dictated that developing countries should rely on import substitution strategies, i.e. reducing a country’s imports by encouraging the growth of domestic industries. However, these were not viable for Singapore because of our small domestic market and we took a different tack instead; we opened our doors to attract Multi-National Corporations or MNCs to Singapore to create jobs. This also allowed us to penetrate overseas markets with products made with imported technologies. In effect, we embraced globalisation even before it became a buzz word.

We also carried out large public housing projects to provide quick and affordable housing for our people. With the pull-out of British forces from Singapore, we had to quickly build up the SAF by introducing National Service. During this period, even our education system was survival-driven. National schools were built rapidly, to provide a one-size fits all programme to equip students with skills for the job market.

Our Progress

In the past 40 years or so, we have come a long way. Since 1965, the economy has been growing at nearly 8 percent every year on average. From basic manufacturing, we moved up the value chain to higher-end manufacturing and service industries, and are now investing heavily in cutting-edge Research & Development.

I thought it would be useful to do a quick comparison with a number of countries which became independent around the same period as we did.

Comparison with Other Countries

Let us take a closer look at three countries that also became independent in the 60s.

First, Kuwait—like us, a former British Colony which gained independence in 1961, just a few years before us. Today, its GDP per capita stands at over 30,000 USD and it has a Human Development Index (HDI) of .891, both of which are comparable to Singapore. Even its population number of 3 million is not far from Singapore. Apart from its larger size, how did Kuwait achieve this? The answer, as we all know, is that Kuwait is fortunate to have reserves of a natural resource that much of the world is heavily reliant on—oil. This has been the main ingredient for its economic success. However, in spite of its wealth, Kuwait did not invest sufficiently in building up its own defences. As a result, Kuwait’s military forces were easily overrun by Iraqi forces in 1990 which subsequently threatened to invade oil-rich Saudi Arabia. Fortunately, the US-led coalition forces mobilized to liberate them. It is a useful reminder that small, wealthy countries in a tough neighbourhood cannot take their security for granted.

While things have worked out well for Kuwait and Singapore, we could easily have turned out otherwise. Let us now take a look at Zambia. Zambia became independent in 1964, a country well-endowed with copper. Back then, its GDP per capita was low but not that far off from Singapore’s. However, its reliance on the copper industry hampered its economic progress when copper prices declined in the 1970s. The government incurred heavy debts when it tried to make up for falling revenue with extensive borrowing. With the country’s economic growth rate failing to keep pace with its population growth rate, about two thirds of Zambians slipped below the poverty line. Today, it is one of the world’s poorest nations, with a GDP per capita of less than 1000 USD.

Finally, we take a look at Guyana. Guyana gained independence from the British in 1966 and its economy depends heavily on agriculture and mining. However, it has faced chronic problems since independence, such as shortage of skilled labour and lack of infrastructure, as well as low prices for key mining and agricultural commodities. As a result, the government accumulated a sizable external debt. In 1989, the government introduced the Economic Reform Programme (ERP), developed in conjunction with the World Bank and the International Monetary Fund (IMF). The ERP significantly reduced the Government’s role in the economy and encouraged foreign investment. Since then, its economy has rebounded slightly. However, a volatile and unstable political scene has threatened to derail its progress thus far.

What do these examples tell us? One key lesson would be that having natural resources does not guarantee prosperity. It gives a good head-start but good governance and long-term, far-sighted policies are crucial if we are to remain successful and stay exceptional. Do you think we could have turned out like one of them? I think the possibility of us falling into the same situation as some of these countries was very real back in the 1960s. Even if we had started out well, things could have gone wrong along the way and things could still go wrong.

How Did Singapore Get to Where We Are Today?

So how did Singapore get to where we are today despite the odds stacked against us? There are many reasons and much had been written about why we succeeded. In my opinion, the most crucial ingredient is because of the collective effort of every Singaporean backed by a strong work ethic. Our people were prepared to toil ceaselessly and accept short term sacrifices for long term gains.

Instead of mirroring other countries’ actions and following conventional wisdom, we were bold enough to come up with our formula for success. At the same time, we had the foresight to learn from others’ mistakes, and the courage to acknowledge our problems and address them decisively. We had a corruption-free government that made wise decisions, including the ones that Minister Teo mentioned in his keynote address.

Forging Ahead: Preparing for the Future

However, we cannot assume that the factors contributing to our success thus far will continue to hold us in good stead in a rapidly changing world. We face a number of challenges:

First, competition will intensify. What was unconventional has now become conventional wisdom; an export-led, MNC-driven model of economic development is no longer unique in today’s context. Almost all developing countries in the world are liberalizing their markets and aggressively courting foreign investments. Our neighbours are rapidly catching up. Countries like China and India, which offer large domestic markets and competitive cost structures, are now attracting the lion’s share of foreign investments in the region. With globalization, we are no longer just competing within the region, but with other global cities, not contending just for investments but also for top talent.

Second, we are now facing the challenges experienced by developed economies. In demographics, we are seeing an aging population, coupled with low fertility rates. In economic growth, we have strong dynamism in some knowledge intensive sectors and cutting-edge industries, but stagnation and low levels of job creation in the more traditional areas. In income distribution, we are also seeing a widening income gap, and while we moderate the effects with help schemes like Workfare, we need to ensure that the less fortunate amongst us also stand to benefit as our society progresses.

Third, we have to contend with “critical uncertainties”. The September 11, incident, followed closely by the arrest of the local Jemaah Islamiyah (JI) elements in 2001 and more recently, the escape of Mas Selamat are reminders of a new type of threat we face. Then there is the danger from unpredictable catastrophes. While we are fortunate to be spared the direct impact of natural disasters such as tsunamis and earthquakes, we have experienced and thankfully recovered strongly from the SARS outbreak in 2003. We continue to be justifiably worried about an influenza pandemic and the blanketing effects of haze from forest fires in the region. Finally, with globalization and an open economy comes greater exposure to global market forces and we cannot expect to be insulated from the forces of external economic developments. The Asian Financial Crisis a decade ago could have and the ongoing financial turmoil originating from US sub-prime crisis can derail us. Being adroit and nimble in decision making and holding sufficiently large reserves both to buffer us from an extended downturn as well as exploit opportunities that come our way will give us greatest flexibility to respond to these developments.

How Do We Ensure our Continued Success?

Some of you may then ask—What can we do to give Singapore the best chance to stay successful in the years to come? Let me share some thoughts at three levels: I have termed it the ‘Three Beyonds’—Beyond Self, Beyond Orthodoxy and Beyond Singapore.

Beyond Self.

First, as in the past, I believe that our people will continue to make the difference. Much of what Singapore has achieved so far is due to the individual and collective efforts of our people. But it is not enough for you to make your success count for yourself as an individual. Instead, I would like to call upon you to make your success count for your community and your country. We need to stay together as one people. This will be more important but also more challenging for the younger generation. You are better informed, connected to events and people around the world, more exposed to different ideas and ideals and these will help shape your perspectives and beliefs. Your generation has benefited from a first class education and with it many opportunities to pursue your passions and careers both in Singapore and abroad. We must go further to engage our young and strengthen their sense of belonging to Singapore; if we do it right, then we can be confident that even if we take the child out of the country, we will never take the country out of the child. We must instill in them the conviction that Singapore is a special place that belongs to them, whose future depends on them. Most of all, we must help shape an instinctive obligation to give back to Singapore, believing that the most worthwhile investment they can make is an investment in the lives of those who follow after them, and in doing so, the next generation of Singaporeans will one day get to enjoy the opportunities they do.

Beyond Orthodoxy

Second, we need to continue to observe and learn from the experiences of other countries, understand the implications and consequences for the short and long term, while we assess with an open mind as to whether what they prescribe or practise can work in our context. Because if we are unthinking in adopting their practices en masse, unquestioning in following the prescriptions of the theorists, academics and NGOs or unchanging in perpetuating our policies which had worked well for us in the past and unmoving in holding fast to our tried and tested ways, we will lose our edge. Therefore, it must be pragmatism rather than ideology, flexibility rather than orthodoxy which is our guiding light. And so we have been prepared to make some radical departures from the past - our decision to host the first Formula 1 night race in Singapore, and to build two integrated resorts come to mind. And we will continue to evolve but in an orderly, progressive way to avoid sudden, destablising changes.

Beyond Singapore

Third, we need to extend our horizons beyond Singapore. For us, this is not a tactical option, it is a strategic compulsion. We will continue to draw investments to Singapore, make a pitch for MNCs to establish regional and global HQs in Singapore and establish R&D set-ups here in collaboration with reputed overseas partners. But our open economy and small domestic market necessitates that we adopt an outward orientation, watch carefully the changes taking place around us and act promptly when threats or opportunities arise, placing judicious bets and leveraging on the larger global community to maximize the possibilities for ourselves. For example, we play a key role in the World Trade Organisation to ensure that the global trading system continues to remain transparent and rules-based. Singapore has been an active player in working out a set of principles for Sovereign Wealth Funds and for countries receiving them. We extend our reach in other areas, for example, in air and sea port operations overseas. PSA International is the second largest port operator in the world with 28 port projects across 16 countries. Changi Airport International has also invested in foreign airports and offered consultancy and training services to them. Increasingly, even our SMEs are more adventurous in expanding overseas. The government and its agencies play the role of facilitator to identify new possibilities and help to open doors, But ultimately, it is the individuals and the companies that must translate these possibilities into reality for themselves and Singapore. One important plus factor for us with the external world is our reputation, our high international standing. If we want to be remain exceptional, if we want Singapore to stand out, then upholding our reputation is critical.

Conclusion

Singapore has come a long way since 1965. Though we faced numerous challenges when we first became independent, Singapore managed to overcome them and we have thrived so far. To me, it is quite clear that Singapore is the little country that can because our people can. This is why, despite being just a little red dot on the world map, it is a sparklingly dot, an oasis of tranquility, a bright, shining city perched on a hilltop,

The future presents challenges but also many opportunities. It is up to the next generation of Singaporeans like you to take the lead and help write the next chapter of the Singapore Story. The challenge to you is to strive to be exceptional for Singapore, so that Singapore can continue to be the exceptional little country that can. I look forward to hearing your thoughts and exchanging views with you during the Q & A session. Thank you.

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