The Singapore Story: From 3rd world to First World – Summary With Notes and Highlights

📕 Book Summary in 3 Sentences

What can I say about the book in 3 sentences?

1. Using what works to develop a successful country
2. The use of human nature to set policies that work in a country
3. Implementing what works irrespective of a person’s belief or ideology

🤔 Major Insights/Ideas

What are the major insights or ideas in the book?

1. Insight 1: Tourism drove economic growth because it was more labor-intensive – maids, drivers, tour guides – and less capital-intensive.
2. Insight 2: There was a drive to attract American Multinational through stable governance and sound economic policies
3. Insight 3: Finding a way around a person’s difficulty. For instance, Israel ignored the hostility of its Arabic neighbors and traded with Europe and America.
4. Insight 4: Having a clean, green environment inside and outside your office makes an impression on people looking to conduct business with you. This also applies to the way you dress for client meetings.
5. Insight 5: The Central Bank of Singapore can’t print money. The country doesn’t spend more than it earns
6. Insight 6: The Singapore government invests in government bonds issued by developed countries
7. Insight 7: The Singapore government nourished the idea that a person should be paid more for performance than time spent on the job. The idea is that wage increases cannot exceed productivity increases.
8. Insight 8: Lee Kuan Yew changed his ideology from socialism – equal shares to all – to capitalism. He understood that personal motivation and rewards are essential for a productive economy.
9. Insight 9: He believed home ownership was essentially to promote patriotism in Singapore. People with homes have something worth protecting.
10. Insight 10: He built a health service that required patients’ co-payments. Based on human nature – people value what they pay for.
11. Insight 11: There was a deliberate drive to move from taxing income to taxing consumption. This gave people an incentive to work harder. And a choice on how much tax they paid.
12. Insight 12: Green Harvest – The idea of offering jobs to undergrads before they write their final exams. Singapore used this to stem the brain drain in the country.
13. Insight 13: The political system becomes corrupt when a candidate spends too much money to ascend to power. After spending so much money, they need to recoup their investments by giving projects to their friends. To curb this, Singapore has made it compulsory for everybody to vote in their general elections. In addition, the state finances all political parties up to a certain amount.
14. Insight 14: Regarding decision-making, disagreements are allowed during the brainstorming stage. When a decision is made, all parties are to abide by it. There can be disagreements in private. But the government is a united force in public.
15. Insight 15: Canning with rattan was a more effective form of deterrent than long prison sentences for crimes related to drugs, arms trafficking, rape, and illegal entry into Singapore

💬 Notable Quotes

What are your top quotes?

• The Monetary Authority of Singapore has all the powers of a central bank except the authority to issue (print) currency notes.
• All Chinese know the saying: big fish eat small fish, small fish eat shrimp.
• Petty power invested in men who cannot live on their salaries is an invitation to misuse that power.
• A precondition for an honest government is that candidates must not need large sums of money to get elected, or it must trigger the cycle of corruption.
• Greening is the most cost-effective project I have launched in Singapore.

✍🏼 My Personal Reflections

How has your life/behavior/thoughts/ideas changed after reading the book?

• I learned the importance of human nature in being a leader. People are more certain to act with selfish interest than any other emotion. For instance, a person is likelier to care for their own home than free accommodation.

💡 Actionable Steps/Ideas (if any):

• I should be more disciplined and live within my means. The Central Bank of Singapore doesn’t have the ability to print money. The country doesn’t spend more than it earns.

🔆 Book Highlights

1. I returned to Singapore in 1950, confident of my cause, but ignorant of the pitfalls and dangers that lay ahead. An anti-colonial wave swept me and many others of my generation. I involved myself with trade unions and politics, formed a political party, and at the age of 35 assumed office in 1959 as the first prime minister of an elected government of self-governing Singapore.
2. I did not think agriculture or light industry at all promising for Singapore.
3. One of our soft drink manufacturers suggested to me that we promote tourism; it was labour-intensive, needing cooks, maids, waiters, laundrymen, dry-cleaners, tour guides, drivers and makers of souvenir handicraft. Best of all, it required little capital. We formed the Singapore Tourist Promotion Board.
4. The usual format was drinks before lunch or dinner, conversation at the main table with the important CEOs, then a 20-minute speech followed by questions and answers
5. They looked for political, economic and financial stability, and sound labour relations to make sure that there would be no disruption in production that supplied their customers and subsidiaries around the world.
6. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence.
7. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbours who boycotted them, to trade with Europe and America.
8. If Singapore could establish First World standards in public and personal security, health, education, telecommunications, transportation and services, it would become a base camp for entrepreneurs, engineers, managers and other professionals who had business to do in the region
9. We had to make it possible for investors to operate successfully and profitably in Singapore despite our lack of a domestic market and natural resources.
10. By the late 1970s GE was to become the largest single employer of labour in Singapore. American MNCs laid the foundations for Singapore’s large high-tech electronics industry. Although we did not know it then, the electronics industry was to mop up our unemployment and turn Singapore into a major electronics exporter in the 1980s
11. Visiting CEOs used to call on me before making investment decisions. I thought the best way to convince them was to ensure that the roads from the airport to their hotel and to my office were neat and spruce, lined with shrubs and trees
12. Beecham Pharmaceuticals set up a technologically advanced operation to manufacture semi-synthetic penicillin for the Asian market, especially Japan.
13. Both Keng Swee and I had decided in 1965, soon after independence, that Singapore should not have a central bank which could issue currency and create money
14. The Monetary Authority of Singapore has all the powers of a central bank except the authority to issue currency notes.
15. The foundations for our financial centre were the rule of law, an independent judiciary, and a stable, competent and honest government that pursued sound macroeconomic policies, with budget surpluses almost every year. This led to a strong and stable Singapore dollar, with exchange rates that dampened imported inflation
16. The GIC’s most important responsibility was to allocate our investments between equities (stocks and shares), bonds (mainly bonds issued by the governments of developed countries) and cash.
17. Each year 30,000 school leavers sought work. 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, as in Britain
18. We needed new attitudes, the most important of which was that pay must accord with performance, not time spent on the job.
19. The police arrested and charged Suppiah and 14 other leaders of the cleansing workers’ union with calling an illegal strike. The registrar of trade unions issued notices to the union and the federation to show cause why they should not be deregistered. At the same time, the ministry of health declared that the strikers had sacked themselves; those who wished to be re-employed could apply the next day. This coordinated firmness panicked the strikers. Ninety per cent of them applied for re-employment
20. We banned all strikes in certain essential services and made each statutory board have its own union.
21. 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
22. From its early years, all parties agreed on the principle that wage increases must not exceed productivity increases.
23. I encouraged NTUC leaders to work with management to introduce quality control circles (QCCs), groups of workers who together put up suggestions on how to improve work, save time and costs and achieve zero defects. Progress was slow
24. We believed in socialism, in fair shares for all. Later we learnt that personal motivation and personal rewards were essential for a productive economy.
25. 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
26. If the soldier’s family did not own their home, he would soon conclude he would be fighting to protect the properties of the wealthy. I believed this sense of ownership was vital for our new society which had no deep roots in a common historical experience.
27. In 1968, after we passed an amendment to the CPF Act to raise the rate of contribution, the HDB launched a revised home ownership scheme. Workers were allowed to use their accumulated CPF savings to pay the 20 per cent down payment and service the housing loan for the balance by monthly instalments over 20 years.
28. I should have known that it does not pay to yield to popular pressure beyond our capacity to deliver.
29. I was a student in Britain when the Labour government in 1947 implemented the National Health Service. Their belief that all men were equal and no one should be denied the best of medical services was idealistic but impractical and led to ballooning costs. The British National Health Service was a failure. American-style medical insurance schemes are expensive, with high premiums because of wasteful and extravagant diagnostic tests paid for out of insurance. We had to find our own solution.
30. The ideal of free medical services collided against the reality of human behaviour, certainly in Singapore. My first lesson came from government clinics and hospitals. When doctors prescribed free antibiotics, patients took their tablets or capsules for two days, did not feel better and threw away the balance. They then consulted private doctors, paid for their antibiotics, completed the course and recovered. I decided to impose a charge of 50 cents for each attendance at outpatient dispensaries. This fee was gradually increased over the years to keep pace with rising incomes and inflation.
31. He understood what I wanted: good health services, with waste and costs kept in check by requiring co-payments from the user.
32. To reinforce family solidarity and responsibility, Medisave accounts could be used to pay medical costs for a member’s immediate family: grandparents, parents, spouse and children.
33. Co-payment by patients did prevent waste. A patient in a government hospital pays fees subsidised at rates up to 80 per cent, depending on the type of ward he chooses
34. We thought it best to reinforce the Confucian tradition that a man is responsible for his family – his parents, wife and children
35. The CPF has provided workers with a comprehensive self-financing social security fund equal to any old-age pension system or entitlement programme, without shifting the burden to the next generation of workers. It is fairer and sounder to have each generation pay for itself and each person save for his own pension fund.
36. To work a social security system like the CPF, an economy needs to have low inflation and interest rates above inflation rates. People must be confident their savings will not melt away through inflation or devaluation against other currencies. In other words, sound fiscal and budget policies are preconditions for the success of the CPF.
37. We progressively reduced income tax, both personal and corporate, until direct taxes in 1996 made up about half of total tax revenue, compared to three-quarters in the G7 economies. We moved from taxing income to taxing consumption
38. But good tax lawyers and accountants left little for the tax collector. In 1984 we cut estate duty from a maximum of 60 per cent to between 5 and 10 per cent, depending on the value of the estate. We collected more revenue as the wealthy no longer found it worthwhile to avoid estate duty
39. Sustained growth ensures stability, which encourages investments that create wealth. Because we took the difficult decisions early, we have established a virtuous cycle – low expenditure, high savings; low welfare, high investments.
40. Politics was now no longer a game of mass rallies and demonstrations. It had become a matter of life and death. All Chinese know the saying: big fish eat small fish, small fish eat shrimp. Singapore was a shrimp. People worried over their survival. They knew only the PAP had been tried and tested and had the experience to lead them out of danger.
41. They provided advice and services in more than one hundred community centres we set up to conduct literacy classes in Chinese and English, and courses in sewing, cooking and repairing motorcars, electrical instruments, radios and television sets. By competing against and outdoing the communists, we gradually won back part of the ground they had cultivated
42. We changed the constitution in 1990 to provide for a small number of non-elected MPs, called Nominated MPs (or NMPs), to reflect independent and non-partisan views
43. To reverse this reproductive trend, Keng Swee, then minister for education, and I decided in 1984 to give graduate mothers who have a third child priority in choosing the best schools for all their children, a much-prized objective of all parents. It was a sensitive and divisive issue
44. In its place, I gave special income tax concessions to married women – this time to graduate, polytechnic, A level and O level mothers, enlarging the pool and lessening the sense of elitism. They qualified for substantial income tax rebates on either their or their husband’s income for their third and fourth child. These concessions did encourage more third and fourth births.
45. This systematic search for talent worldwide brought in a few hundred graduates each year. It made up for the loss each year through emigration of 5–10 per cent of our better-educated to industrialised countries
46. For the exceptionally bright, we tried to “green harvest”, an American corporate practice of offering jobs even before graduation, on the basis of their performance before their final examinations. By the 1990s this inflow through active recruitment was three times the outflow. We began offering a few hundred scholarships to bright students from China, India and the region in the hope that some would remain because of the better job opportunities; those who returned to their countries could still be useful for our companies that went abroad.
47. The superior officers do not set a good example. In many cities in the region, even hospital admission after a traffic accident needs a bribe to get prompt attention. Petty power invested in men who cannot live on their salaries is an invitation to misuse that power.
48. 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.
49. With a keen nose to the ground and the power to investigate every officer and every minister, the director of the CPIB, working from the Prime Minister’s Office, developed a justly formidable reputation for sniffing out those betraying the public trust.
50. In 1963 we made it compulsory for witnesses summoned by the CPIB to present themselves to give information. In 1989 we increased the maximum fine for corruption from S$10,000 to S$100,000. Giving false or misleading information to the CPIB became an offence subject to imprisonment and a fine of up to S$10,000, and the courts were empowered to confiscate the benefits derived from corruption
51. Wee Toon Boon was minister of state in the ministry of the environment in 1975 when he took a free trip to Indonesia for himself and his family members, paid for by a housing developer on whose behalf he made representations to civil servants. He also accepted a bungalow worth S$500,000 from this developer and took two overdrafts totalling S$300,000 in his father’s name against the personal guarantee of the developer, to speculate in shares. He was a loyal non-communist trade union leader from the 1950s. It was painful to confront him and hear his unconvincing protestations of innocence. He was charged, convicted and sentenced to four years and six months in jail. He appealed. The convictions were upheld but the sentence was reduced by 18 months.
52. 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. 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.
53. Singapore has avoided the use of money to win elections. As leader of the opposition, I had persuaded Chief Minister Lim Yew Hock in 1959 to make voting compulsory and prohibit the practice of using cars to take voters to the polls.
54. 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. We got them to vote for us again and again by providing jobs, building schools, hospitals, community centres and, most important of all, homes which they owned. These are substantial benefits that changed their lives and convinced them that their children’s future lay with the PAP.
55. Adequate remuneration is vital for high standards of probity in political leaders and high officials.
56. I had introduced anti-spitting campaigns in the 1960s. But even in the ’80s some taxi drivers would spit out of their car windows and some people were still spitting in markets and food centres.
57. After independence, I searched for some dramatic way to distinguish ourselves from other Third World countries. I settled for a clean and green Singapore.
58. One arm of my strategy was to make Singapore into an oasis in Southeast Asia, for if we had First World standards then businessmen and tourists would make us a base for their business and tours of the region. The physical infrastructure was easier to improve than the rough and ready ways of the people
59. 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. We licensed the cooked food hawkers and moved them from the roads and pavements to properly constructed nearby hawker centres, with piped water, sewers and garbage disposal. By the early ’80s we had resettled all hawkers.
60. Pirate taxi drivers were banished from the roads only after we had reorganised bus services and could provide them with alternative employment.
61. We gave owners of cows and goats a grace period until 31 January 1965, after which all such stray animals would be taken to the abattoir and the 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 sheds.
62. To achieve First World standards in a Third World region, we set out to transform Singapore into a tropical garden city.
63. To overcome the initial indifference of the public, we educated their children in schools by getting them to plant trees, care for them and grow gardens. They brought the message home to their parents.
64. Nature did not favour us with luscious green grass as it has New Zealand and Ireland. An Australian plant expert and a New Zealand soil expert came in 1978 at my request to study our soil conditions.
65. They explained that Singapore was part of the equatorial rainforest belt, with strong sunshine and heavy rainfall throughout the year. When trees were cut down, heavy rainfall would wash off the topsoil and leach the nutrients
66. To have grass green and lush, we had to apply fertilisers regularly, preferably compost, which would not be so easily washed away, and lime, because our soil was too acid
67. We have not missed a single tree planting day since. Saplings planted in November need minimum watering as the rainy season begins then.
68. Greening is the most cost-effective project I have launched in Singapore.
69. I also had to deal with noise pollution which the old Singapore suffered from vehicles, pile-driving on construction sites, loudspeakers from open-air entertainment and television sets and radios.
70. Noisiest and most dangerous was the custom of firing crackers during the Chinese New Year season. Many, especially children, suffered serious burns and injuries
71. We took it one step further and banned the importation of firecrackers altogether
72. A ban on chewing gum brought us much ridicule in America.
73. Differences on policy we kept within the cabinet until we had resolved them and reached a consensus. Then we would put forth a clear line which people could understand and accept. Once a decision had been taken in cabinet, we made a point of abiding by it
74. My style was to appoint the best man I had to be in charge of the most important ministry at that period, usually finance, except at independence when defence became urgent.
75. We could not afford to run an airline just to show the flag like other countries did. Right from the beginning, management and union clearly understood that their survival depended on being profitable. Cooperation between union and management helped SIA succeed.
76. I had the plan discussed publicly in the media for several months. We refined the proposals, for example allowing cars with four passengers to go through without a licence and settling for a charge of S$3 per day, less if bought on a monthly basis. The plan eased rush hour traffic jams and was well received.
77. I gave MUIS the responsibility for building replacement mosques and set up for them a building fund which received S$l per month from each Muslim worker through our CPF system. This gave our Malays pride in building their mosques with their own funds.
78. The jury system had also been tried in India, failed and was abolished.
79. Soon after I became prime minister in 1959, I abolished the jury system for all cases except murder. I retained this exception to keep in line with the law in Malaya at that time. In 1969, after separation from Malaysia, I asked Eddie Barker as minister for law to move a bill in Parliament abolishing the jury system for murder trials.
80. We found caning (with rattan)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.
81. He introduced information technology into the courts to speed up their work; lawyers can now file their court documents and make searches through their computers. By 1999 the reputation of our courts brought visits by judges and chief justices from developing as well as developed countries to study his reorganisation. The World Bank recommended Singapore’s system, both at high court and subordinate court levels, for other countries to learn from.