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Dutiful son or closet rebel?

SCMP July 26, 2004

The August 12 elevation of Lee Hsien Loong to the post of prime minister of Singapore is a good time to contemplate some characteristics of the city state and remember why Hong Kong is, and needs to remain, very different.

Three themes are evident in the way Singapore's leadership is organised. They are: the importance of family relationships, confidence in the wisdom of a centralised bureaucratic elite, and belief in meritocracy based on book-learning. They broadly represent a neo-Confucian world view.

Reliance on the family goes well beyond the rise of Lee Kuan Yew's elder son to the top job. Nor is it seen just in the grip that the younger Lee has long had on the levers of financial power. Nor even in the power of his wife, Ho Ching, chairwoman of the state holding company, Temasek, which controls huge businesses such as Singapore Airlines, DBS Bank and Singapore Technologies. Nor even Lee Kuan Yew's doctor daughter, Lee Wei Ling, who now heads the National Neuroscience Institute, having been involved in the sacking of its former director. Family tentacles stretch far and wide in Singapore life. They may be justified by the clan's genetic qualities and exaggerated by the small size of the city state. But they do exist.

There is no doubting that the leadership, as well as the family as a whole, places a very high premium on education. Lee Hsien Loong followed his father with a first from Cambridge, and most of the younger generation of leaders of the bureaucracy and the People's Action Party (basically the same people) has records of winning scholarships to the best institutions.

In turn, they carry on the belief in the leadership role of the government, of the need to pick winners, put resources, tax breaks and top management talent into areas in which Singapore is deemed to enjoy an actual or potential comparative advantage. These have ranged from oil servicing to offshore banking, aviation, electronics and now, biotechnology. In their own terms, they have been successful. Lee Kuan Yew was always suspicious of local private big business, fearing that economic power led to political power. Hence, the big battalions he created are state-linked. For all the talk about encouraging entrepreneurship, there is not much sign that the leadership has lost faith in its ability to pick winners. Intellectually, it may see the merit of more freewheeling attitudes, but it is hard to change the practice of a lifetime.

The remarkable thing about Singapore's system has not been its success - real though that is - but the way in which its dirigisme is praised by western institutions as a shining example of economic freedom. This is mainly because nominal tax rates are low, intellectual property is well protected, capital movement is free and tariffs almost non-existent. They forget the draconian forced savings schemes which limit freedom of choice of how to dispose of one's income. These have helped deliver first-class infrastructure, reasonable housing and mammoth foreign exchange reserves, but poor returns. Meanwhile, foreign business gets incentives unavailable for most local private business.

The economic system is a product of the political-bureaucratic system which gives priority to the corporate state over the rights and entrepreneurial aspirations of individuals. That Lee Hsien Loong will be prime minister and Ho Ching is chairwoman of Temasek is not just symbolic. It sums up the reality. Like it or not, we must recognise it for what it is.

Probably, the younger Lee will attempt to follow in his father's footsteps. But, just possibly, he might show real leadership, break out of the paternal mould and let Singapore become the sexy, creative, intellectually alive, multicultural madhouse which it sometimes seems to crave to be.

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