Dirt poor. Dangerously unstable. Hopeless future…
Think about the worst possible thing you could say about a country’s prospects. The most negative stereotype. Chances are, once upon a time, Singapore would have been the perfect embodiment of it.
In 1965, Singapore was quite literally a swamp. It had a GDP per capita of just over US$500 — one of the lowest in the world. Over two-thirds of the population struggled to survive in cramped slum settlements. And to make matters worse, the ever-present threat of ultranationalism and communism loomed large, fanning the flames of sectarian violence.
No one gave Singapore much of a chance of surviving, let alone thriving. This was a predominantly ethnic-Chinese island forced to ‘fish’ in a hostile Malay sea. It had no natural resources. No farming land. No freshwater supply. The outlook for its continued existence looked bleak. Very bleak.
Given the odds stacked up against Singapore, it would have been so easy for the tiny city-state to stumble and fall. To be crushed under the full weight of its aggressive neighbours. To be condemned to the trash heap of history.
Just another failed state.
Fading away like smoke in the wind.
But, of course, that’s not what happened. We now know that Singapore did not wither and die. On the contrary, what happened instead was one of the most dramatic and stunning reversals of the 20th century.
A traumatic birth
To understand the Singapore story, you have to first understand the deeply traumatic way the nation came into existence. It was quite literally a collision of East and West; race and religion; colonialism and postcolonialism.
Both Singapore and Malaysia were once part of British Malaya — the crowning jewels of the Empire. However, after the devastation of the Second World War, Britain itself was financially broke. Its military energy had been sapped. Its imperial prestige had been greatly weakened.
In light of this, Britain made plans to withdraw from most of its colonies. This meant giving Singapore and Malaysia full independence.
From the start, it looked like a match made in heaven. Singapore was a strategic port, situated at the heart of key shipping lanes. Malaysia, meanwhile, was abundant in natural resources like tin and rubber, and it would serve as the de facto mainland, supplying Singapore with everything from food to labour.
Sadly, this political union grew tragically turbulent, marked by rising social tensions.
Malaysia, under Prime Minister Tunku Abdul Rahman, favoured an apartheid-style system known as Bumiputra. Loosely translated, it means ‘Sons of the Soil’. This gives ethnic Malays enormous privilege at all levels of society, granting them exclusive access to schooling and housing and jobs.
Singapore, under Chief Minister Lee Kuan Yew, firmly opposed the Bumiputra system. He saw it as a slippery slope and could only lead to ethnic non-Malays being shut out of the Malaysian economic system. Effectively treated as second-class citizens.
As the arguments escalated, the vitriol took on a bitter edge. Threats of genocide were hinted at. Racial riots in the cities broke out. It seemed like the federation itself was in danger of fracturing and descending into all-out civil war.
Under intense pressure by Malay ultranationalists, Prime Minister Tunku Abdul Rahman did the only thing he could do: expel Singapore from the federation.
Security and stability
‘For me, it is a moment of anguish. All my life, my whole adult life, I believed in merger and unity of the two territories.’
On 9th August 1965, Lee Kuan Yew became the prime minister of Singapore. He was in tears as he announced that this tiny island was now being forced to go it alone.
It was a sudden and rude awakening. Singapore had no natural resources. No long-term economic plan. Not even a military of its own.
Singapore was in a very vulnerable place, and the dark forces arrayed against it seemed insurmountable. Both Malaysia and Indonesia could barely disguise their contempt of Singapore. Friends in the Southeast Asian region were few and far between.
Singapore truly was an ethnic-Chinese island fishing alone in a hostile Malay sea.
It was in this moment of profound anxiety that Singapore found an unlikely ally: Israel.
As a tiny Jewish state surrounded by larger Arab neighbours, Israel had already accumulated much experience in the art of warfare and spycraft. It saw a kindred spirit in Singapore and offered to help Lee Kuan Yew build up a military and intelligence network from scratch.
Given the anti-Semitic attitudes of the Malaysians and Singaporeans, this cooperation would remain a secret by necessity. The Israelis were code-named as ‘Mexicans’, and a great deal of effort was made to conceal their presence as trainers and advisors.
This ‘special relationship’ paid dividends, creating a professional fighting force capable of deterring external aggression.
With the threat from Malaysia and Indonesia greatly reduced, Lee Kuan Yew was able to consolidate his position. He could focus now on what mattered most: building up Singapore’s economy.
Lee Kuan Yew’s approach to governance can be summed up in one word: authoritarian pragmatism.
This was especially true in the early days of Singapore’s journey, where the country was beset by a combination of poverty, social division and a lack of natural resources.
Lee Kuan Yew did a steely-eyed analysis of his country’s prospects. And he came to one undeniable conclusion. For Singapore to survive and prosper, it needed to develop the only resource it had available: its people.
To make this happen, Lee Kuan Yew became, in effect, a benevolent dictator. He detained and discredited his political rivals. He exercised total control over his country’s media outlets. He created stringent regulations governing public behaviour.
Uncompromising, unflinching, Lee Kuan Yew’s message was simple: Singaporeans were one people, moving in one direction. There would be no quarter given to ultranationalists or religious extremists using hate speech to divide the public. Nor would there be any kindness shown to vandals displaying antisocial behaviour like defacing public elevators with chewing gum.
Lee Kuan Yew cracked down fast and hard on all of it, in a controversial manner that appeared to be at odds with the Western-style concept of human rights. But he would not be deterred by his critics. He talked about a mythic idea known as Asian Values — a dynamic blend of socialism and capitalism that was tailor-fit for the Singapore he envisioned.
Lee Kuan Yew’s pace of change only accelerated as time moved on. Slums were demolished and replaced by high-rises. English and mathematics were given priority in an accelerated education programme. Pro-business policies promoted low taxation with a highly skilled workforce. Multinationals were lobbied hard and invited to set up shop in Singapore.
As the swampy Singapore of old receded, something newer and better took its place…
From Third World to First
What a stark transformation.
Today, Singapore is a bustling metropolis. Clean. Prosperous. Modern. It has one of the highest GDP per capita in the world — over US$64,000. The population is highly educated and highly affluent. Everything here flows with the precision of clockwork. The country regularly stakes its claim on various global rankings.
Here’s just a taste of Singapore’s many achievements:
- Ranked #1 as the easiest country to do business in.
- Ranked #1 as being the most competitive economy.
- Ranked #1 as the best educated nation.
- Ranked #1 for order and security.
- Ranked #1 as the best place for children.
Yes, the respect for the Singaporean model is universal. This city-state punches well above its weight, occupying an enviable position as the premier economy in Southeast Asia. It confidently straddles the divide between East and West, offering the best of both worlds.
The Singaporean journey has been one of tears and sweat; courage and perseverance; vision and enterprise.
Perhaps there’s no greater testament to Singapore’s success than in the large number of Malaysian professionals who now stream across the Causeway, choosing to live and work in Singapore. Yes, they give Singapore preference over their own country.
Poetic justice? Absolutely.
Not bad for a tiny island that was once treated as an ugly stepchild by overbearing siblings. Not bad at all.
And what of the founding father himself? How can we describe him?
Lee Kuan Yew was perhaps all of these things, defying simple stereotypes, transcending rigid ideology. His bold actions on the geopolitical stage will continue to be examined by historians.
But one thing is for sure: his legacy is most definitely assured. This is a rags-to-riches story for the ages.
Unsurprisingly, my colleague Simon Angelo recommends at least one dividend-paying Singapore stock in our premium research newsletter — Lifetime Wealth Investor.
He has spent a good deal of time in that market and continues to see potential, especially in the current volatile environment rocking Hong Kong and China.
Singapore, now as before, may find opportunity.