In an interview with HAQ, Deputy Prime Minister Lee Hsien-Loong of Singapore, son of Senior Minister Lee Kwan Yew and likely successor to the current Prime Minister, considers Singapore's future in the global and regional economies.

Mr. Lee Hsien-Loong is currently the Deputy Prime Minister of Singapore and the head of Singapore's Monetary Authority. He received his Masters of Public Administration (MPA) from the Kennedy School of Government and is a Brigadier General in the Singaporean Army.

John Ruwitch is currently HAQ's Southeast Asia editor and a Master's candidate in Harvard's Regional Studies East Asia program specializing in Chinese and Vietnamese politics. He has worked previously in Taiwan as a reporter.

From the seat of the man whom many believe is destined to become that city-state's next Prime Minister, the future of Singapore is essentially rosy, although government action and a reinvigoration of a sense of community among its citizens will be critical to meeting that forecast. Deputy Prime Minister Lee Hsien Loong delivered a message to the Harvard community this November that unambiguously conveyed conservative optimism about the post-Asian Financial Crisis economic and cultural future of Singapore -- an optimism that hinges on a healthy dose of government intervention in both economics and society.

Deputy Prime Minister Lee, son of Senior Minister Lee Kwan Yew and a graduate of the Kennedy School of Government (MPA, 1980), took a few days during a trip to the United States in early November to visit his alma mater. While in Boston, DPM Lee had the chance both to hear from Harvard students and to explain his views on the current state of Singapore and the direction in which it is heading. According to Goh Aik Guan, the Deputy Prime Minister's personal private secretary, who accompanied him to Harvard, DPM Lee came to the United States "to establish [and] renew contacts with Americans to get a feel of their views on the region [Asia]. "This," Goh noted, "includes the thinkers in Harvard as well."

At an intimate luncheon arranged by the Asia Center on November 5th, DPM Lee, along with Singapore's ambassador to the United States, Chan Heng Chee, chatted freely with a handful of Harvard students, one MIT business school student, and one recent graduate of GSAS. Although the purpose of the lunch, according to DPM Lee, was for him to get a sense of Harvard students' thinking about Singapore and Asia in general, the range of topics discussed was broad, and DPM Lee found himself doing much of the answering. In the view of DPM Lee, Singapore's economic well being is intimately tied to its social development and dependent upon social cooperation and cohesion. At the luncheon talk and in a more formal address before over 100 people at the Kennedy School on November 8th, Lee emphasized that nationalism and a sense of citizenship and common destiny were critical to Singapore's future.

The government is currently promoting means for propelling Singapore's economy to new heights that are heavily people based and which, according to DPM Lee, require a high degree of social cohesion and patriotism among Singapore's diverse population to be successful. Singapore's government is actively working to improve education, job training, attract experts from abroad, and encourage entrepreneurship.

Although small, Singapore is a country, not merely an economy, DPM Lee said in his talk at the Kennedy School. In order to maximize the individual and group performance of its citizens the government must play a key role in enhancing the "assets of the people" and building a "sense of belonging and ownership."

Following the conclusion of the November 5th luncheon, DPM Lee was kind enough to allow an interview with HAQ. Below is the transcript from that interview:

Interview with Brigadier General Lee Hsien Loong, Deputy Prime Minister of Singapore

HAQ: First of all, Singapore's economic growth in 1997 was 7.6%, in '98 it was 0.3% to 0.5%, this year, I read yesterday, 1.3% is an estimate…

LHL: No, we may hope to get 5%.

HAQ: Are you satisfied [with this recovery]?

LHL: I think, under the circumstances it's not bad. We got positive growth last year when the region was doing very badly, and we only had two negative quarters. This year, we've rebounded much faster than expected.

HAQ: Faster than expected?

LHL: Yes. And the region has picked up, too, so we are going with it. But at least we are not lagging behind it.

HAQ: What are the biggest challenges in the next five or ten years economically for Singapore?

LHL: We've got to build capabilities. First, we have got to manage the recovery from the crisis. We cut our costs very drastically last year to strengthen our competitiveness. Overall we've brought the business costs down by perhaps 15%. We now have to go back to a normal throttle setting, and we can't do that overnight. We've got to take some time to adjust as the economy recovers and put things back in trim. So that will take some judgement.

Beyond adjusting business costs, we've got to build capabilities for the future -- long term capabilities -- so that we can develop, we can generate higher productivity and higher growth. And that includes things like education, training for workers because they need to learn new skills for new jobs, bringing in talent from around the world because you need the best people to generate and run the best outfits. You need to talk about entrepreneurship. Developing or at least providing preconditions and infrastructure to support people with entrepreneurial ideas and help them get those ideas off the ground. Then you have to develop capabilities in various sectors of the economy including services, like financial services and telecommunications, where we are deregulating, liberalizing, promoting competition. We also need to develop capabilities in areas like software or IT where you need to train the people so that they will be available and can do the jobs which are waiting-- also, capabilities in manufacturing. While who comes to Singapore is a matter for the free market, a certain amount of infrastructure as well as support is provided by the government. If we provide the right sort of infrastructure, then we can attract the right kinds of investments and businesses. For example, we are developing a chemical island, which we are reclaiming out of seven little islands and coral reefs which we have joined together with sand from under the sea. We are bringing in on that island a whole complex of different chemical and petrochemical plants -- upstream, downstream -- linked together. We are really the match maker. Each individual project would not have made sense. But because we became the match maker and we brought the whole cluster in, together they make sense. So the final outcome makes sense according to market principles and profits and losses, but the government has played an important role. These are things we have to do for the future.

HAQ: You mentioned education and training; those have been big issues in the press lately. I know that the Prime Minister's National Day speech talked about those issues. Do you worry about growing inequality [in society]?

LHL: Well, in overall numbers, no, because we are getting a very large proportion that makes it to tertiary education now. More than twenty percent attends university in Singapore. Probably another ten percent goes overseas. We are not sure. And perhaps another forty percent goes to polytechnics, which are also tertiary institutions. So, more than half attends tertiary institutions in Singapore. So, in overall numbers, we are getting a big group educated to quite a high level. But at the extremes, we do have some concerns because there are some who still drop out from school or have difficulties coping. Numbers are not enormous, but we worry about every single one.

HAQ: How about rising economic inequality? Those with higher education will obviously be making more money.

LHL: Well, as I said, because so many more are getting higher education, the scarcity value of a degree is less. Furthermore, the overall inequality in the society is much less than when 3 or 5 % were getting degrees and they were in great demand. If you had a degree, you could easily buy a house or a car, and it was no problem because that was your pulling power. Now, with 20% getting degrees and more tertiary educated, they are earning more than those who didn't go to university. But university graduates are not as few as before and, therefore, make less.

HAQ: You also mentioned stimulating entrepreneurship. A huge portion of the Singaporean economy is fueled by [investment from] MNCs (multi-national corporations). Does that promote entrepreneurship, or has that helped keep it down?

LHL: Well, it's provided an alternative to people starting up their own businesses. Probably if they didn't have a chance to go and work with MNCs, maybe some more would have started their own companies. But we had no choice, because we could not have generated all those jobs and growth by ourselves or had that technology or market reach. It's not possible. So we had to bring in the MNCs, and they have taken quite a large proportion of talent. But at the same time, they really have given a lot of people a basic education in how business is done and an understanding of technology. A fair number of entrepreneurs are people who have spun off from working for MNCs and gone and started up their own companies. Sometimes they become clients to their old firm, sometimes going way beyond.

HAQ: On a separate line of questioning, you mentioned in a Far Eastern Economic Review interview this summer to a question asking what you have learned from your father [Lee Kwan Yew], the difference in thinking between the two of you. You said that your generation of Singaporeans probably "spend more time worrying about how to make things better than thinking very soberly about what can go disastrously wrong." What about the next generation? …[With] globalization, the internet, cable TV, [and] also with workers coming in from outside, how is that going to affect the next generation's thinking?

LHL: Well you can't be sure exactly how the next generation's will grow up, but we hope that if it continues to be a stable environment, they also will be able to work to get Singapore better. But I think that they will have to work harder to make Singapore get together, because the external pulls will be greater. What can be a plus for them will be that we would have had a longer history and, perhaps, have developed a stronger sense of national identity. Nevertheless, it will be in quite a bracing world because there will be many more Singaporeans who will have the skills, the language, to go to other places. Singapore may become a lifestyle choice. That's a difficult situation to be in.

HAQ: Will the political landscape of Singapore change much?

LHL: It will change. New generations will have to produce new leaders and develop new styles. I don't know how exactly it will be, but it can't be the same. The same formula won't work as before. And the same persons probably won't work as before, either. We'll need to produce a new generation of leaders.

HAQ: Competitiveness with other areas in Asia and in the world… is certainly something that Singapore is aware of and is working to increase. Do you see Singapore as in direct competition with Hong Kong or Taipei, or Mexico, maybe?

LHL: Well, in some areas. In the financial industry, for example, there is a certain amount of direct competition between us, but there's also cooperation because together our markets could become the nucleus for a pool of liquidity servicing the whole region. Also, just to have two centers vibrant and active in Asia gives us somebody to measure ourselves against. If he is doing well, I have a reason to outdo him and to match up to his standards, and he's probably watching us, too. So, I don't see it as a zero-sum game. Our competition is not singly focused; there are many countries which compete with us in different ways. At the lower end, even China, for example, if you're talking about disk drives, could, if not now, within a very short number of years, become a competitor. At the higher end, you're talking about countries like Ireland, even countries in central Europe, Hungary, Czech Republic. Mexico could be a competitor in the same way China could be. Over the last two years, our share of the American electronics market has gone down, but that of other Southeast Asians has not gone up, except for the Philippines, China, and also Mexico. So, in a sense, they are taking share away from us, but we are not in exactly the same segments of the industry.

HAQ: Do you see Singapore as benefiting more from regionalization or globalization or both? Are the two, as far as Singapore is concerned, at odds?

LHL: The companies have to make a choice. Do they go overseas in the region, or do they go overseas around the world? I think that actually they don't have a lot of options. If you want to develop a bank, for example, you are not going to become a big American bank, short of buying one. That's not really possible. In the region, it's possible to do, although it's not easy. In other industries the natural linkups may be global rather than regional. In telecommunications, really, it may be easier to make a linkup with a company in Britain or America rather than in Southeast Asia. So, it varies. I don't see a basic contradiction. The basic drive is that we have to go offshore; Singapore is not enough. If we want to grow, we must grow with the rest of the world, in the rest of the world.