Singapore Government Press Release

Media Relations Division, Ministry of Information, Communications and the Arts,

MICA Building, 140 Hill Street, 2nd Storey, Singapore 179369

Tel: 6837-9666

TRANSCRIPT OF MINISTER MENTOR LEE KUAN YEW'S INTERVIEW

WITH YOMIURI SHIMBUN ON 26 JULY 2005 AT ISTANA

Q: "So, this year, Singapore will mark the 40th anniversary of its independence. So, what do you think is the most important factor for Singapore to have achieved this so developed society, modernised society?"

Mr Lee: " Supposing the world had not progressed, it had remained as 1950 or 1960, we will not be what we are today, but because of globalisation, you can go to any Japanese restaurant -- there are 20, 30 Japanese restaurants now in Singapore -- they can give you toro maguro from Tokyo, arrived by JAL or SIA, Singapore Airlines.

"Also, I think because we decided to use English as our main language of communication. Supposing we had chosen Chinese or Malay or Tamil, we would have become less relevant, more difficult to connect with the world. But today, we are connected. Everybody speaks English. So, you keep some part of your past, not at the same high level, same standard as before because you have to do English and mother tongue, two languages, very difficult. But if you are satisfied, say, your English is 80 per cent of what you would achieve if you only do one language, then your second language will be about 50, 60 per cent, that is good enough. If you go to China, you want to work there, with the 50 per cent Mandarin you can bring it up to 80 per cent over one year, two years."

Q: "That's a weak point of the Japanese society now?"

Mr Lee: " I would say a disadvantage."

Q: "Yeah, disadvantage."

Mr Lee: "Which you can overcome by starting teaching of English, not just reading or writing because that is the easy part, listening and speaking, and that requires many teachers. But now with the Internet and digital classrooms, it's not so difficult."

Q: "Thank you very much. So, what do you think is Singapore is required to do in order to achieve further development in the next 40 years, for example?"

Q: "Yes, yes, in the future."

Mr Lee: "Five years, ten years, I think to progress, we have to take advantage of our links with the developed world which we have already established, America, Japan, Europe. They are the three big engines in the world. Now and for the next ten,20, 30 years, two new engines in Asia, China and India. They are growing at about eight, nine per cent China, India, six, seven, eight per cent. So, these are opportunities for us and we've got a new comprehensive economic cooperation agreement with India. We’ll have another one with China. Later on maybe with the European Union. This provides us with the momentum. But we must upgrade our education. That's the most important factor for future growth because the kind of jobs we are going to get will not be the assembly jobs because our costs have gone up -- labour costs up, higher than China, higher than India. All other costs, land, power, water, whatever are also higher.

“So, the advantage we have is the rule of law, respect for intellectual property, safety in health and security in personal safety. We are going to get the higher end of technology, which means our workers must be educated to do such jobs. We have already reached about 21, 22 per cent of each year's cohort to universities, another 40 per cent to polytechnics and the rest, 38, 39 per cent to Institutes of Technical Education. In the institutes of technical education, they are taught to use robots, computers and so on, so that they will not be structurally unemployed. The jobs that new investments bring, they must be able to do because there will be fewer jobs which require no skills.

that is a very big challenge.

"At the same time, we must also try and get Asean to move faster. The Asean ten countries, unless we combine a bigger market, we will not get the investments to compete with China and India. If we all try individually, not as a group in an Asean Free Trade Area, we will get less investments. So, we must bring forward the Asean Free Trade Area, make it comprehensive. Allow Japanese, Americans, Europeans to build their businesses here and export and compete with businesses in China, in India. That is the other arm that we must try and establish."

Q: "Last year, the Prime Minister of this country changed from Mr Goh Chok Tong to

Mr Lee Hsien Loong. What does this change imply for the government in Singapore?"

Mr Lee: "Well, it means a younger generation is in charge. Goh Chok Tong and his team were 60 years-plus, Goh over 60. The present Prime Minister, Lee Hsien Loong, and his team will be in their early 50s and late 40s. It's a younger team, more connected with the younger voters, also more willing to change because they have been educated and grown up in a different world. They are more connected with that generation. So, we have to get a younger generation to move into positions of authority so that they can move quickly with the rest of the world in this Digital Age."

Q: "You may know already today’s news is that Myanmar has given up its chairmanship in 2006. They announced this decision in the foreign ministers' AMM in Vientiane. So, what do you think of this event?"

Mr Lee: "Well, it avoids embarrassment, but the problem still remains. Myanmar has to face up to the fact that the world is changing and moving ahead and they cannot stay frozen in time. To staying frozen in time means they're building up problems for themselves and those problems will overflow into Asean. You cannot have Thailand growing five, six per cent growth per capita, four, five times that of Myanmar and not have your people unhappy. No medicine so they have to smuggle medicine from across the border with Thailand. No income, no R&D for their fruits. You can eat Thai mangoes, Thai durians, Thai jambus, Thai pomelos. Same climate in Myanmar, similar delta, similar big river, same latitude. But no R&D. So, their pomelos and other fruit are not as sweet and big. I told them, go into Thailand, buy the seed or take the cuttings and plant, or borrow a R&D team from Thailand, or start an R&D team. But if you want an R&D team you must have schools, universities, you must have teachers for science, biomedical sciences. If you remain frozen like this, you will be left behind."

Q: "Last year in December, I visited Myanmar, I visited Yangon and Mandalay, to my surprise, a lot of students want to study abroad and many said that, quite a portion of them, never return to Myanmar."

Mr Lee: "Of course, why would you want to return to a no-opportunity country?"

Q: "So, what do you think Asean can do in order to crack this frozen country?"

Mr Lee: "You better ask the other leaders. I have tried my best. I used to meet Khin Nyunt. He was the most flexible and receptive. I said, follow the Indonesians. Suharto came in as a military man, then he shed his uniform, formed a party and had elections. Better follow him. They were moving along that way. So, we encouraged our people to build hotels there, said, open up. They've got nice temples in Pagan, Mandalay. Then the Asian financial crisis, Suharto fell, they put a stop to change. They drew the wrong lesson from that setback. Now, Khin Nyunt is sentenced to 44 years' jail. So, what to do?"

Q: "You referred to the role of Asean before and regarding to today's announcement that Myanmar will give up its chairmanship, there is a question in general that Asean has given in to the pressure of the Western countries and the United States. There is also…?"

Mr Lee: "I don't think so. Asean countries are themselves very embarrassed, and in difficult situation.

Q: "The definition of the community?"

Mr Lee: "If you say it's going to be like the European Community, I say that is beyond our reach. But if you say a free trade area, we can do it as a first step to eventually an economic community, a common market, but not a European Union."

Q: "I just arrived in Singapore yesterday from Vientiane and if you see the reality of their life in the capital of Laos, I don't think it is possible to be united even economically because the gap between, for example, Singapore and Laos is too huge. How do you…?"

Mr Lee: "I have said before that the new countries should join as associate members until they are ready. Only Vietnam is able to come in. The others are slower. Cambodia maybe in a few years' time, but Cambodia can also in the end make it, but Laos is so disadvantaged, so remote and Myanmar is so isolated. What can we do? It's a problem."

Q: "Thank you very much. So, may I move to the question related to China?"

Q: "I was in the southern part of China, Yunnan, two weeks ago to cover the Greater Mekong Sub-Regional Forum. I also think that China is becoming a new engine in Asia. What do you think of the current Chinese regime led by President Hu Jintao? How do you think …?"

Mr Lee: "I think they are very pragmatic, they are practical and they want China to grow economically. They want to spread the growth, especially to the west, the northwest and north because they know that… Both of them served their early years in the poor provinces, so they know that in this instant age of satellite television and they see Beijing, Shanghai in their television screens and see little progress in the interior, there will be great unhappiness. So, they are concentrating on increasing the infrastructure. I think they are spending US$50 billion every year on infrastructure for the western and northern provinces -- roads, bridges, railways, airports, telecommunication -- and giving special economic privileges if you invest there; not for export, but sell to the domestic market because it's too deep inside. So, some of our businessmen have started investing in Chungqing and Chengdu and some are looking at Xian. We have resorts in Yunnan, tourism, our companies have gone there. I think that can raise the standard of living but not to equal the coastal provinces because they don't have the same advantages. But they are trying their best to close the gap."

Q: "China has revalued the yuan against the dollar…?"

Mr Lee: "Only two per cent, but it's a first move."

Q: "Will the revaluation of yuan contribute positively to the Singapore or Asian economy in the future?"

Mr Lee: "I think it's a right move to make. I don't know at what speed it will go up, but eventually, it must go up because if you look at the trade imbalances, you look at their balance of payments surpluses, if they don't go up, they will face very difficult problems. I'm not saying this is only good for the world. If they go up, it's good for America, Japan and other countries in Europe, but I think it's also good for them because if it doesn't go up, they have big problems of liquidity in China. They are flush with money. So, they will have inflation, that's a problem because they cannot sterilise so much inflow of speculative money. Everybody knows it must go up. So, they buy land, houses, shares, wait for it to go up, then sell off so that the country is flooded with foreign money coming in. But how do you sterilise that? If you want to stop inflation, you have to increase interest rates and squeeze liquidity. That will be a problem of slower growth. So, they have to adjust. It's good for them and good for balance in the world. But I think they want to go slowly because they don't want a sudden change. The main thing is they have not opened up their capital account. So, you cannot take your money in and out freely because that was what happened with Thailand and Indonesia. They opened up their capital account and people took their money out. Suddenly, stock market collapsed, currency collapsed. So, that, they are not allowing."

Q: "Singapore, have you obtained in advance the information on the revaluation of the yuan?"

Mr Lee: "No, they told us after they did it. “

Q: "China-US relations, including major events, recent changes have affected international order maybe. Should China's military expansion be allowed so that the security framework in Asia will become unstable? What is your view of this point?"

Mr Lee: "I do not believe the Chinese intend to challenge America militarily. They know they cannot because their military technology is way behind the Americans' and they can see Iraq, first war, Iraq, second war, they can see. Kosovo, Serbia. But what they’re doing is to build up the military capabilities to make it very expensive for America to intervene if they decide they have to use force on Taiwan. That limited role they can do; not to win, but to deter the Americans because they can inflict heavy casualties -- maybe American ships sunk, or whatever. I believe that is their strategy. They are not stupid. They know that if they go to war with America, after the war, they will lose through an economic embargo by America and Japan. So, they only have the European Union. They would have lost two partners, and for maybe five to ten years, it will affect their growth. Not that they will collapse but from eight, nine per cent they will go down to four, five per cent. So, I do not believe they want to challenge America. Not possible for 40, 50 years. What will happen in 50 years, I don’t know. It depends on the next several generations of leaders and their technology, their economy and their civilian technology."

Q: "Since Japanese relations have worsened considerably in recent months over separate issues, including competing territorial claims, what is your view on this, Japan?"

Mr Lee: "I think it’s unfortunate, very bad for Asia. Both sides are to blame. For the Chinese, they have used the war record of the Japanese as a stick to put the Japanese on the defensive. On the Japanese side, it's not necessary to provoke them -- history textbooks, Yasukuni Shrine. It’s not only Chinese who protest, Koreans also protest. Both sides are to blame and, of course, this as a good reason to block Japan’s hope to become to be a permanent member of the Security Council. Now they’ve said you are not qualified because you have not acknowledged your past. So Japan is out. America has not supported Germany. So, the G4 resolution, it's difficult to succeed."

Q: "Do you support the Japanese application for the...?"

Mr Lee: "Yes, we have said so."

Q: "Japan is always following the American policy. So, if it gets a permanent seat on the Security Council, it'd just follow the American policy?"

Mr Lee: "If you get more Koizumis as Prime Ministers, it will follow its own policy. But at the same time, it will be wise for Japan to keep in tandem with America because on your own, I don’t think you can take on China and Korea. You need America to balance. The Koreans now are very close to China. You look at their investments in China. The largest number of foreign students learning Chinese in Chinese universities are Koreans. They see the future, in China's growth. They are so close and their technology China needs and the Chinese market is huge. So, they are producing for Chinese markets and for export. In Suzhou, we have an anniversary celebration last year at the Suzhou Industrial Park. So, they had one of the investors with a factory in Suzhou to speak for all the investors, it was a Korean and he spoke in Chinese, in Mandarin, not perfect but understandable. It shows their determination to get close together and do more business with China."

Q: "Thank you very much, Mr Lee. I would like to have your view of the East Asian Summit and your…?"

Q: "East Asian Summit and diplomatic policy of Singapore. So, the East Asian Summit will be held in Malaysia in December. So, what do you think is the meaning and the significance of this summit for the Asia-Pacific region?"

Q: "But I'd like to have your opinion…?"

Mr Lee: "If you ask me, it is to get the East Asian countries closer together, not just in economics, but in political and other fields and to grow into something like the European Economic Community eventually in 50, 100 years' time. A common market is possible, 50 years or maybe less, but political union, I don’t think is possible. We are too different from each other."

Q: "In Asia, Asean countries, if they are united under one community, is it possible to have national integration?"

Mr Lee: "No, If you ask me now, I say I don’t see it in the future. How can Japanese, Koreans, Chinese, Vietnamese, Laotian, Indonesians have an East Asian council, East Asian parliament? Can you see that? Will your Japanese people agree in a referendum? Even the French and the Dutch are worried about whether this idea of going eastwards and southwards and bringing the Turks is a good idea. So, they said, "No"."

Q: "It is difficult to determine the same council at the East Asia Summit because the membership or the framework will be only similar to the…?"

Mr Lee: "No, it's not. Originally, it was similar. Now, we have India, Australia, New Zealand."

Q: "Thank you very much. What do you think of the US commitment to the Asean region? What is the Singapore’s diplomatic policy towards the US?"

Mr Lee: "As far as I know, apart from the Middle East, which is their main preoccupation, or her preoccupation -- Iraq, Israel-Palestine, Syria, Iran -- their next preoccupation is North Korea and China. Always be interested in Southeast Asia because of the sea lanes between the Pacific and the Indian Ocean into the Gulf for oil. So, it’s a permanent, long-term interest. When the oil runs out, maybe it will change, but for another 100 years, I think it will be an important area of attention, and for Japan and for China, too."

Q: "Could I ask one more question? Singapore is pursuing free trade agreements, including not only China, India and Japan but also Middle East? How would you envisage Japanese commerce or trade policy would have any requests or comments about Japanese trade policies, especially about FTA?"

Mr Lee: "No, we are doing fine under the FTA. Trade has gone up by 20, 30 per cent. It will continue to grow. If Japan's growth rate increases, we will benefit from it. We have no complaints."

Q: "Don't you think Japanese policy we are making is too slow?"

Q: "In terms of negotiating with Asean countries on…?"

Mr Lee: "That is the problem of your bureaucracy. Your coordination is much more complicated than the Chinese. So, the Chinese make moves very quickly because they are very centralised. The leaders decide and all the ministries agree -- trade, industry, environment all quickly agree. So, the Asean-China free trade agreement is going off; whereas you have so many problems. Your farmers, your agriculture, your this, your that. So, it drags on.

"I think Japan must recognise that you now have a very savvy political player. The Chinese may not be experienced free marketeers because it's new to them, but in diplomacy, they are very good. They know each individual country. So, before they talk to you, they've studied what do you need and they come out with a list, I will help you, one, two, three, four, five. So, in Indonesia, when the Bandung Conference over, there was and official visit by the President Hu Jundao who proposed a strategic partnership. They know the Indonesians want roads, bridges, container ports. They are ready. They've got enormous building capacity, large numbers of engineers and skilled workers and so on. We will do this, this and this. What do they want? Oil, gas, palm oil, whatever they have. So, it's very good deals. Japan is in a different position. You don't want all that. Yes, you want oil and the gas, but otherwise, you don't really need that much raw materials from Indonesia. What you want is good relations and their market. What they want from you is technology, middle technology to upgrade their workers, but to do that they must have stability so that they can invest and get returns. They must put down terrorism and instability."

Q: "Last year, I attended the Asean Summit which was held in Vientiane. They didn't comment, they didn't ask Myanmar – this question is again about Myanmar -- they didn't ask Myanmar's government to release Aung San Suu Kyi. So, do you think this foreign ministers' meeting, which is now going on, should officially require Myanmar to release her?"

Mr Lee: "I don’t know. We can ask. You are dealing with an immobile government. You isolate them, they are happy. The Chinese will give them what they need to survive. Now, the Indians are competing with the Chinese, and will also give them what they need to survive. They don't need prosperity. The people can be kept down. For how long, I don't know, but I think not forever. That's the problem because the people can look at Thailand and compare their lives. Why should they not have the same or at least half as much as Thailand?"

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