Mayor Heng Chee How
Distinguished Guests

First, let me thank Mayor Heng for honouring me with this invitation to speak at the 2003 Central Singapore Mayor Lecture Series. I am glad for the opportunity to interact with young people, and happier still to see that you all look bright and enthusiastic, undimmed by the crisis that Singapore has just gone through.

We are in the midst of significant changes for our CPF system. The nation’s attention is focused on this issue. We have just completed four days of debate in Parliament. The Prime Minister himself put these changes to the house. But I wonder if this issue resonates with the young, who might be wondering, "What’s the hype about? After all, isn’t this just an issue in cost-cutting?"

I remember that when I was young, there were moments when I said to myself that adults seem to be so materialistic, always worrying about dollars and cents. So I would not be surprised if some of you here think that way. The young must be idealistic and that is one luxury accorded to you. But I hope to convince you by the end of this talk that this CPF debate is important because it is about you. It’s a tall order but I will try. Some of the points today, I would have spoken in Parliament but they bear repeating.

Prime Minister Goh said that this issue about CPF has brought this nation to a crossroads. At a crossroads, people stop and evaluate their past and consider their future. You would have experienced your own crossroads after PSLE or your ‘O’ Levels, when you wondered about what could have been, what if and what will be.

We are at the crossroads because in recent years, we have been bombarded with bad news. First it was the 9-11 terrorist bombings. Next came the Bali bombing and the Iraq War. When we thought the worst was finally over with the containment of SARS, news of the Jakarta bombing shocked us once again. These have been setbacks in Singapore’s economic recovery.

At this moment at the crossroads, many Singaporeans wonder about our future and our fates. There is even fear among some Singaporeans. They are asking if these changes signal an end to the Singaporean dream; a relegation from our first world status; an end to some aspirations and hopes.

In other words, the concerns about CPF changes are just symptoms of something deeper. The real questions being asked are "What is the future of Singapore? Will we prosper again? What kind of standard of living can we look forward to? Will we live better lives than our parents?"

I think some of you are already beginning to see why this CPF debate is about you. Because the answers affect you ultimately. Singapore is our home but your inheritance.

To answer these questions, we need to ask why do some nations do well and others don’t. But Singapore is too young and 38 years is not enough to give an answer. We have to look to the past of other nations - not 380 years but more like 3800 years. But don’t worry, my lecture will not be that long. I will summarize and give a few examples.

China has a particularly venerable history. It boasted inventions such as printing and paper (9C), gunpowder (11C), the compass, porcelain. The Chinese invented machines to spin hemp in the 12C, some 500 years before the Industrial Revolution in England began. China had the knowledge capital and advantage over many countries. With its inventions it could have been the first to print books for the masses to accelerate learning. It could have experienced its own industrial revolution. With gunpowder, it could have revolutionised the science of propulsion for industry or military gains. But it only used gunpowder for firecrackers.

It could have but then China – the self-absorbed Celestial empire - closed its mind to progress and became insular. From the 15^th Century, other nations pulled ahead. So for the last five hundred years, China lumbered along, living on past glory. But the dragon has stirred and when it chose to engage the modern world, its progress has been remarkable.

Japan’s income rose from 20% of the United States in 1950 to 75% by 1998. At the end of the Second World War, after the two atomic bombs were dropped, Japan was in ruins. Hundreds of thousands of soldiers were left stranded outside Japan. The domestic economy was in dire straits. But this phoenix rose miraculously from its atomic ashes and dazzled the world with its manufacturing prowess. But in the last two decades, when faced with lesser challenges, it lacked that same resolve to pull itself out of the quagmires.

From 750 to 1100, Islamic science and technology far surpassed that of Europe. In their golden years, the world’s greatest scientists wrote in Arabic. Indeed during that period, many Muslims taught science to Europeans, especially at the frontiers like Spain where intermixing occurred. Then something went wrong. Religious zealots denounced Islamic science as heresy. These nations regressed as they chose a parochial emphasis on religious conformity.

Here is a first lesson on why nations rise and fall. Any group or nation – no matter how mighty – that discards knowledge, prefers form over substance, sacrifices future needs for present comforts, resists change, erects barriers to progress, is doomed to fail. Ultimately, these barriers are self-destructive.

In other words, while all countries walk through hills and valleys, some walk right into ravines or get mired in swamps. Others stay still and get hemmed in and suffocated by the overgrowth. Those that erect barriers, either physical or mental, will be overtaken. Only those who choose to engage progress wholeheartedly, expand their minds and economic space, survive and thrive.

Some of you are probably asking, "Well, Singapore is willing to change, make sacrifices, and engage progress. But we have been through so much in the last 5 years. How much more can we take?"

Here again, history is a good teacher. Tenacity, diligence, boldness and a cohesive spirit have helped nations in more dire circumstances than Singapore pull themselves out of the rut. I will give two examples of city-states that had it much worse than Singapore but emerged victorious. Our challenges and pains pale in comparison to these examples.

Take Ireland for example. In 1840 the Irish population was 9 million. A decade later, it was halved: over a million died of starvation, most emigrated; a quarter of those who boarded the ill-fated coffin ships to America died on transit. After emerging as the Irish Free State, it promptly plunged into a civil war that lasted until 1923. At that time, the population included fewer than three million people and was still dwindling.

To demonstrate economic "self sufficiency" as well as political independence, Ireland adopted inward-looking, protectionist policies: high tariffs, bans on majority foreign ownership in industry, the establishment of state-owned enterprises in areas such as power generation, shipping, banking, and insurance. These policies were pursued well into the 1950s, with increasingly perverse results. The economy stagnated, and emigration soared as more than four hundred thousand people left Ireland between 1951 and 1961. In the mid-1980s, the unemployment rate reached 17%, and the government's finances were a shambles.

But at the end of the year 2000, Ireland could look back on fourteen years of uninterrupted economic growth, which had accelerated to nearly 10% annually. With this growth came markedly lower inflation, one of the lowest unemployment rates in the European Union (EU), and a growing government-budget surplus. Most dramatic, however, was the return to Ireland of young workers in increasing numbers to fill new jobs awaiting them at home.

How did they reverse their terrible plight? It was not just due to the luck of the Irish. In the 1960’s the tenacious Irish rallied. The government and people decided to adopt low corporate tax rates to encourage foreign investment. At a time when they could least afford, they spent more on educating their people better and established high-tech industries, especially IT and telecommunications. Ireland joined the EU. In the 1990s, true to the aphorism that "fortune favors the well prepared", an IT revolution was the chance element that helped start an economic boom in Ireland.

Finland is another example of a tenacious people that refused to be beaten down. Tucked away in the northernmost corner of Europe, five million dedicated Finns continue to demonstrate the fierce nationalism that has enabled them to survive an unforgiving climate as well as a turbulent history, in a land repeatedly fought over through the centuries.

Twice in the 20^th Century Finland had been written off as lost: first in the "Winter War" in 1939 when the Finns were left alone to face invasion by a Russian army 50 times it size, and again at the end of World War II when Finland was given over to the Soviet sphere of influence. In the early 1990s, the Soviet empire fragmented and the rouble collapsed. Finland’s economy, which was closely tied to that of the Soviet Union, also shrunk sharply and unemployment rose. Yet, it has managed to come out of its troubles.

How? Government and industry made dramatic efforts to surge into the world’s new information technology, supported by one of the most highly skilled labor forces in the world. Finland today is rightly called the telecommunications laboratory of the European Union, with an exceptional hi-tech infrastructure. Many of us know as we use their Nokia phones. This is in addition to industrial production ranging from complex instrumentation for meteorological and environmental sciences, to medical diagnostic equipment, to automated wood-harvesting machinery, to innovative icebreakers and luxurious cruise ships. In the late 1990s, Finland's economic growth rate was one of the highest of industrialized countries.

What then are the common lessons or ingredients for nations to succeed? Economic historians such as Stephen L. Parente and Edward C. Prescott in their book "Barriers to Riches" tell us that differences in living standards have little to do with natural resources — or levels of investment. It’s not how big or how much you have that finally counts.

Rather, they see these differences in the intensity that various countries make of the world’s existing stock of know-how. It’s what we can do with knowledge that counts! Countries that are open to the flow of ideas — and whose laws, customs and institutions encourage wealth creation — can catch up with the old-established "industrial" economies. Japan and Korea and recently China are all outstanding examples of catch-up.

"Will Singapore prosper again? Can I leave you with a better future than that which I inherited?" Prosperity depends on two elements – systems and people.

We have spent these last 38 years investing in both. The hardware is there. Our roads, telecommunciations, ports, schools, homes etc. The governance and judiciary systems are respected for their efficiency and transparency. We will continue to build on these capabilities.

What about people? Almost every child born in Singapore today can be certain of 12 years of solid education. Every student is subsidized about $4,000 for each year in primary school; $6,000 in secondary school; $8,000 in ITE, JC or poly and $11,000 in University. Which means that each of you will receive at least $60,000 in education subsidies by the time you leave JC, Poly or ITE.

70% of you here or more will obtain higher education that is a passport to anywhere in this world to further his study. Access to good medical care will continue to be available to the masses, and not only to the privileged or rich.

But even though we have good systems and have invested in the education of our citizens, whether we succeed still depends on one vital ingredient – you. It depends if Singaporeans are willing to commit to Singapore. I do not mean just to the state or as a cohesive nation. I mean if you are willing to commit to your own success. If you can exploit the education that has been given to you to discover new products, innovate better ideas and sell them to the world. If you can be another Bill Gates or Sim Wong Hoo.

Am I hopeful that Singaporeans will rise to the challenge? Yes, let me give you some examples.

Over the last 3 years, Major (Ret) Ishwar Lall Singh, now 74, has been taking up various computer classes and is now well-versed in programs like office automation, PowerPoint and can even troubleshoot minor problems on his computer. He now trains security officers under Spring Singapore’s National Skills Recognition Systems.

Mr Tan Wee Siong never imagined that he would become an entrepreneur. That is, until he was retrenched in March last year. He had made his way up the corporate ladder, working in a bank and MNCs, and was happy with his job. When he was retrenched however, he decided instead to start his own business. He did his market research and even spent two weeks in Myanmar, checking out antique furniture dealers. In May, he registered his company, Elegant Imperial. Knowing the Singapore market was not big enough, he decided he would export to Australia, Indonesia and other countries. He sourced for more contacts in China and elsewhere, and established his customer base by e-mail and advertising online.

When local customers started asking to see his products, he opened a shop in Orchard Point in October last year. He has been in the black since the first month, and hopes to export to Sri Lanka, Finland, Germany and Spain as well. Said the determined entrepreneur – "I will try all means to succeed."

Take another example, the 2001 Lee Kuan Yew Gold Medallist Award Winner Simon Foo Fang Guo. Simon was no ordinary ITE student, having entered ITE at the ripe age of 25, despite shouldering the responsibilities of being father and husband.

After his GCE ‘N’ levels in 1991, Simon decided to pick up a skill and earn a living at the same time. With the allowance he received as a trainee under ITE’s Traineeship Scheme, he hoped to supplement the income of his taxi driver father and support the education of his younger brother. It was a very trying period for him, studying for the National Technical Certificate Grade 2 Aircraft Maintenance course and slogging for his ‘O’ levels while being committed to his job at Singapore Aerospace. But he persevered and succeeded.

Many of you youths have also chosen to take the entrepreneurial route. Nanyang Polytechnic graduate Nicholas Tan, just turned down a job offer from a bank. The 23-year-old has his hands full with three businesses dealing with shopping, studying and self-improvement.

There are many youths like you who exemplify the passion for learning, the ability to overcome odds, and the courage to live their dreams. If we expand our minds to see possibilities and capitalize on our strengths and opportunities, all of Singapore will prosper.

I hope that I have convinced some of you that this CPF debate is about your future. I look forward to hearing from you what type of future you like to see and how we can work towards it.

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