Q: "Senior Minister, with the benefit of hindsight, how do you think Asia has fared in the economic crisis?"

Mr Lee: "You don’t need hindsight for that. I think it’s done as well as it possibly could. It could have done much better if the Americans have been more forthcoming to help Thailand and then Indonesia earlier in the crisis. They came in and helped only after South Korea was hurt. It would have mitigated the effects. The market would have taken to heart American support, especially Wall Street support and US Treasury and they would have helped to roll over the loans and the meltdown might not have been so drastic. But there

is water under the bridge."

Q: "Why do you think that the US and Hongkong ...(indistinct)... aid of Asia?"

Mr Lee: "I cannot say. I think it didn’t focus on it. In the case of South Korea, they had to because US troops are stationed in South Korea."

Q: "Singapore wasn’t as badly hit as the other countries. What did it do right that the other countries here in Asia didn’t?"

Mr Lee: "Well, first, we did not peg our dollar to the US dollar. We had a basket of currencies. We allowed our dollar to move up or down against the US dollar, and when the US dollar weakened, as it did in the first half of the 1990s, ours strengthened and our interest rates were lower than US interest rates. So, there was no reason to borrow in US dollars. The other countries pegged it and they have high local interest rates and their local currencies and so, it was cheaper to borrow in US dollars with lower interest rates. And it was where the trouble started. Had they borrowed just in their own currencies, they wouldn’t have melted down in the same way. And, of course, we didn’t have the problems of corruption and collusion, nepotism. We are a fairly transparent and open system. So, there was no wastage, no misallocation of resources."

Q: "Looking at Singapore, it has been a small base for manufacturing the so-called hardware side of the business. With advances in technology, many say that countries need to strengthen the software side of their businesses. Do you think that that’s the way Singapore will be going and should be going and at what stage is Singapore in, evolving now?"

Mr Lee: "Well, I don’t think it can be simply classified as hardware and software. What we have to do now, as information technology and new products are being spawned as a result of the applications of information technology, is to try and encourage more of our young to be adventurous, start new companies, like the Americans do, help them with venture capital and if they are able to link up with good Silicon Valley groups, they might get on to something. The key, really, is to have enough, not just entrepreneurial drive, which hasn’t been our strong point because the way our history developed, most of our best minds went into the professions and not into business. Now, we hope that some of them will go into business and try and break out."

Q: "Do you think the Singapore education system nurtures the sometimes individual spirit that is necessary for entrepreneurism to grow?"

Mr Lee: "Well, it’s the standard question the Western-educated or Western-type liberals put to Japanese, to Chinese, to all Asians. I don’t think it’s the education system as such alone. It’s the whole basic culture of not questioning your teacher. I think we’ve got to try and amend or modify our educational system or, more important, the mindset. Even if you don’t want to question your teacher, you have a question mark against what he has pronounced as inalienable truths and then challenge it quietly and maybe prove him wrong."

Q: "But that is what you say, Senior Minister, but, for example, in a country like Japan where, I think, a similar type of education system exists where many of the students are known to not question the teachers unless something goes wrong for a long time. How do you actually start to change this?"

Mr Lee: "I don’t know. I think you can. You look at Akio Morita, the man who founded Sony. He and his partner, after the War, worked on the transistor which the Americans had discovered and went into transistor radios and then on to a whole range of transistor products, went on to the Walkman and the Discman. So, you can’t say that they lack the capacity to create or to think outside the box. Where it’s true that they have not been as bold in their innovations is that they tend, as a matter of tradition and habit, history, to do incremental improvements. So, when they went for high-definition TV, they spent billions of yen, but working on the analogue, which was very expensive and it didn’t take off outside Japan, and even in Japan, it was...only a few stations had broadcast in HDTV analogue and the Americans just bypassed the whole process and went into digital. So, I’m not sure it’s something you can teach.

"I was once watching an interview of a great writer, who’s now dead. He writes in Yiddish, Isaac Singer, but it was an interview in English and the interviewer asked him, "Can you teach a person how to write a great novel?" And he paused and he said -- he was doing a course on creative writing at the University, I think Columbia or some such place -- and he said, "Provided it is in the man, then I would save time and show him how to get there quicker. But if it isn’t in him, if he hasn’t got it in him deep inside or inside here, you can teach him all the technical rules, he won’t make it"."

Q: "Some people say that it’s 99 per cent effort and one per cent... You seem to be saying that not all people are created equal?"

Mr Lee: "If that was so, the Japanese, the Koreans, the Chinese, they don’t lack effort. You look at all the great violinists and pianists. Every Korean and Japanese and Chinese mother or father wants his son or daughter to be a virtuoso, soloist. How many make it? You must have it in you, and if it is in you, then the application can blossom. I mean, it’s not an optimistic view of potential, but I think as a macroeconomic setter of policies, I have to take a hard-headed view where the investments are going to give returns."

Q: "Talking about teaching, Singapore has tried to teach China, Suzhou, to teach them about how to build an industrial park. Now, the Suzhou Government itself has come up with its own industrial park..."

Mr Lee: "Yes."

Q: "What is the status now? There seems to be an opposite ...(indistinct)... these days between the two parks?"

Mr Lee: "Well obviously, we are not happy because we are not getting the kind of attention which we were assured we would get, special attention. Indeed, what we are getting now is competition because theirs can always be... Having learnt how we are doing it, they can always duplicate it and offer it at a lower rate of land. So, I think the problem has to be sorted out and what we hope to do is to complete one sector in the way we promised to do, so that it would be done as an example of what the whole sector could have been if we had completed it. But having completed this sector, we’ll say, "Now, you do it. You compete with your own rather than we compete with them and we’ll help you do it as best as you can. But you will do it"."

Q: "How has the Municipal Government come to agree with the terms?"

Mr Lee: "Well, it’s not a question of agreeing. Either they agree to those or they take it over and run it, as we offering to complete a particular segment of it so that it is a standard by which they can measure the rest of the project."

Q: "Now, I turn to something else. There has been a debate in the media about the pros and cons of investing in Singapore or Hongkong?"

Mr Lee: "It’s a Western media debate, it’s not a real one. The issue has always been a measure of competition. We learn from Hongkong and I don’t know if Hongkong finds any value in the Singapore model and we learn from the rest of the world. Each time we travel, our officials come back with good ideas, we implement them. But our competitors now is not Hongkong, it’s the world because technology enables big foreign players to enter what was a closed home and regional market. You take banking. With electronic banking, you don’t even need a bank. All you need is a laptop and a smart card and you can do all the banking you want to do for all the sophisticated products with any of the big American banks. And that’s going to come because we’ve got our population Internet-literate. So, we have just got to meet worldwide competition, it’s not Hongkong’s competition. I don’t know how the media came to the conclusion that we’re doing this in order to..."

Q: "Well, I think the debate came from the idea of trying to attract foreign investment, not only investing in your country?"

Mr Lee: "But we’ve always done that and we’ll continue to do that and it’s up to investors to weigh the pluses and minuses, which side offers them the more advantages, lower costs, better support and a long-term role that they intend to play in that side..."

Q: "The Indonesians..."

Mr Lee: "And it’s not a zero-sum game because many of the companies have sensitive data. For instance, before the handover, 1 July 1997, they didn’t close their operations in Hongkong. They just moved the back end of their operations, like sensitive credit card data, into their back offices in Singapore, but they still carry on business here. So, they feel more comfort in having taken out sensitive data away from what they feel may not be as secure a place as before. But it wasn’t a zero-sum game."

Q: "I’m sorry that I was trying to cut into your answer there. I know you don’t have much time. Now, the Indonesians are going through a lot of changes with the elections. What kind of economic and political system would work there, in your opinion?"

Mr Lee: "It’s not for us to tell them what kind of economic or political system would work, and really, they have few choices. The system has broken down, the society is at odds with each other, or parts of the society at odds with other parts and the rest that can come out of these elections is a government that has broad support that can carry out the kind of healing process, reconcile the differences which have erupted between their own peoples -- Christians who have suffered because the Muslims have attacked them; Chinese who have been unkindly treated by the Indonesians; Dayaks and Malays who have cut off the heads of Madurese settlers who come from some other part of Indonesia to Borneo. All that is going to take time to heal and they need a government which has got broad support across the spectrum to heal these wounds and then to carry out very painful reforms to bring back Indonesia’s economy to health. In other words, most important of all, to restore confidence that the investor who puts in $100 million will be able to see his factory or his plant work for the next ten, 15, 20 years at a profit. That’s not something simple to do."

Q: "You retain the title of Senior Minister. What exactly is your role in Singapore politics?"

Mr Lee: "Well, it’s really a kind of the 12th man in an 11-man team, a resource person, somebody who’s had over 40 years of experience in politics and been through many ups and downs and maybe when they are in doubt -- and "they" meaning the younger ministers and the Prime Minister -- feel that they want to refer something to me, I will study it and discuss it with them. And If I feel that it carries risk, I will say so, but I will also say that life is not without risks and maybe this is a risk worth taking because you cannot go just by past history.

"You cannot say that because once upon a time, we had this experience with Indonesia, therefore, for all time, we have nothing more to do with them. I mean, it wasn’t the way it worked out. We had troubles with them in the early 1960s.

We mended relations in the 1970s. We have excellent relations for nearly 30 years and trade and investments and tourism flourished. And we are going through a similar experience now, difficult relations because they are in transition and leaders are under stress and they’ve been saying things which perhaps they didn’t mean to say, had they not been under stress. And it’s important that I should not, just going on my past experience, misjudge the future conduct and behaviour of a younger generation of Indonesian leaders who may react and chart a different course for Indonesia. But it’s a useful extra point of view because it’s got historical depth."

Q: "Do you find that the current leadership ...(indistinct)...?"

Mr Lee: "Well, not all the time; otherwise, I wouldn’t be here talking to you. I have considerable spare time, so I’ve written my memoirs, mostly in the evenings."

Q: "You reportedly, though, despite what you’ve said, retain still an enormous influence on the Government in Singapore. I’ve talked to your businessmen in Singapore and they’ve said that with you out of the picture, Singapore would be in deep trouble. What’s your response?"

Mr Lee: "Well, I think that’s an unnecessary compliment."

Q: "It’s business people who have said that. I didn’t say that."

Mr Lee: "Well, maybe they think I... They want a mascot. But my influence derives from the confidence people have in my judgement. By that, I mean three million Singaporeans cannot understand every economic or every political problem, but they do know who has been right most times and who has consistently told them the blunt truth and say, "Do this". And so, they’ve come to accept me as hard-headed, brutal, if they don’t like it, but definitely frank and on the level, and if I say something, they take it seriously and that’s useful. If I lose that influence, then my value to the Government is less."

Q: "Senior Minister, thank you very much for your time."

Mr Lee: "Thank you."

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