Economic Club of Washington DC Interview with PM Lee Hsien Loong (Oct 2017)

Mr David Rubenstein, President of the Economic Club of Washington DC: So, you are here to see President Trump. Have you met President Trump before?

PM Lee Hsien Loong: Yes, I have met him in Hamburg at the G20 meeting. We had a good call, we talked about the region, talked about our bilateral relations, and I look forward to seeing him again.

Mr Rubenstein: And so, you will sign the agreement about the airplanes there?

PM Lee: Yes, Singapore Airlines (SIA) is signing it with Boeing, it is a private agreement but its emblematic of the relationship and of what we hope America will get in Asia and why America has a great interest in what is happening in Asia.

Mr Rubenstein: TPP, as you mentioned, was not agreed to by the United States. The countries that signed on to it in Asia, they are going to move without the United States in effect?

PM Lee: Well, we are talking to one another about how we can move forward without the United States. 12 minus one should be 11, but when you make 12 minus the biggest one, you are not quite sure what the remainder is. And it is complicated because it was a deal which was on the basis that America would get something considerable out of it, the other countries would get something considerable out of the US, and overall when the US joined, it fundamentally shaped the structure of the package. Now we have taken out the US, and the rest of us having made all these arrangements to satisfy Michael Froman. Now that Michael Froman is not there, why are we still doing that? Well, we are trying to work out a package which makes sense. I hope something can be worked out, we have been talking about it, I see that the new New Zealand Prime Minister has some thoughts on this. We have to see where she lands.

Mr Rubenstein: So, the main message that you want to convey to the president today is what?

PM Lee: That Asia is important to the United States, Asia depends on the United States, what we can do together and a lot that you can contribute, and your policies need to be based political support in America but hope that it would be possible to develop that support in order to pursue policies that will benefit America for many decades, as you have done in bipartisan way for many years.

Mr Rubenstein: Now, historically, Singapore has had a very close relationship with the United States, and still does, but also a close relationship with China. Which country is more important to Singapore, the United States or China?

PM Lee: I think they are both very important. President Xi Jinping, last year, talked about overlapping circles of friendship and we hope to be in that overlap.

Mr Rubenstein: You were in China recently, you met with the foremost senior Chinese leaders. What impression do you have of what Xi Jinping wants to do in his next five years?

PM Lee: They were busy preparing for the 19th party congress, I was there just a month before that. The congress is in progress now. Xi Jinping has made a speech at the beginning with a comprehensive agenda that goes well beyond the next five years and stretches to 2050 of all things which he would like to do for China. And these are, none of them, earth-shaking, new goals because they have been talking about them for some time, whether it is economic growth, whether it is improving the living for the middle income, whether we are talking about social support, environmental, whether there is anti-corruption, or most important and item number one, whether it is continuing vitality of the rule of the Communist Party of China.

Mr Rubenstein: When you were growing up, your father as I mentioned earlier, was the first Prime Minister of Singapore. Did he say I want you go into government or did he say you can do whatever u want?

PM Lee: No, he did not plan for me to go into government. When I was completing high school, I wanted to get a government scholarship because all the good students wanted government scholarships, and if you did not, you thought something was wrong with you. I got a government scholarship and then a year later, we were building up the Armed Forces at that point, and the Armed Forces needed talent. They introduced an Armed Forces scholarship, which was something new, and I decided to apply for it, my father encouraged me. I went to Cambridge on an Armed Forces scholarship, and after that I came back to serve in the Armed Forces. Some years later, I spent a year at a place not many of you have been to, which is Fort Leavenworth in Kansas.

Mr Rubenstein: There are some people in Washington have probably spent time there.

PM Lee: Now I have kindred souls, because some of them went to Quantico. And that was where I was headed. Beyond the armed forces, we did not think quite that far but probably somewhere in civil service or the public sector. But in 1984 or around then, my predecessor Mr Goh Chok Tong, who was then my minister in the Defence Ministry, asked me, “Would you be prepared to come into politics?” My wife had just died, it took me awhile to think over but and I said “Yes, I will do that.” I resigned from the army, stood for elections, was elected, went into government and I have been there for now more than half my life.

Mr Rubenstein: And did your father tell you this was a difficult line of work, or he did not discourage you?

PM Lee: No, he did not discourage me but he did say it is going to be difficult, because I am his son and people will make comparisons.

Mr Rubenstein: Now you have announced, I think publicly, that after the next election, you probably will not stay for a full term? Is that correct?

PM Lee: No, I do not want to stay the whole term. I have said that soon after the next election, I strongly hope that there will be a successor ready, and in position to take over from me. And I really should not be Prime Minister beyond 70 if I can help it at all.

Mr Rubenstein: So, when you do step down as Prime Minister, what might you consider doing?

PM Lee: I will think about it then. I hope I will still have something valuable to contribute.

Mr Rubenstein: No private equity positions for you?

PM Lee: (laughs)

Mr Rubenstein: So today can you explain to people who have not been to Singapore, how Singapore has managed, with a relatively small population of 5.6 million people, to become one of the economic powerhouses of the world? You have got I think the third highest GDP per capita in the world. How did Singapore do this from a running start in 1965 when Malaysia did not really think Singapore could actually grow very much.

PM Lee: Well, first of all our backs were to the wall – either we did this or we died. There were a lot of people who thought we could not do this and there were some people who hoped we could not do this. So we decided, we would show them. We got together, we worked hard, we pursued policies which were at that time unconventional, and in particular, we decided to allow ourselves to be exploited by multinationals. Because in the 1960s, the conventional wisdom was that multinationals were evil, they exploited the populations and they were to be kept out and kept down. You should commode your own indigenous economic development. And we decided that if by exploiting us, it created jobs for us and generated markets for us and they brought in technology and organisation. I think, so be it, and we were very happy to do that. It led us to take off, so that was one very important factor. A second important factor was that we built up our Armed Forces through National Service – a draft, and every male citizen aged eighteen will do National Service for two years, at that time, two or three years. And we built up a credible armed force, and Singapore was seen as being defensible, and not just a walk over, as had happened when the Japanese invaded. And in the process of building up an armed force through National Service, we also built a nation, because the people, having served together with comrades from all different walks of life came out, and it changes your attitude towards the country.

Mr Rubenstein: Today who do you see who as your military rival that might actually invade?

PM Lee: One of the reasons we have so many friends is because we have a good armed force.

Mr Rubenstein: Okay, let us talk about inside the country. You have a reputation for producing students that score extraordinarily high on Maths and Science tests. Is there something that Singapore is doing in its school to have such high Maths scores from your students?

PM Lee: I am not sure, I think our students work very hard and their parents put a lot of emphasis on education, that is one part of it. Another part of it is that our Maths curriculum, somehow we have seemed to find the right formula or the right combination between drilling and thinking. Because you do need to learn certain things, and at the same time you do need to jump out of the box and solve problems and I think we have got the formula right. And other countries, including some American jurisdictions, have tried out our textbooks and seem to be happy with them.

Mr Rubenstein: You were a Maths student yourself, is that right?

PM Lee: Yes.

Mr Rubenstein: Are you an expert still in Maths, and you keep up with what the students are doing today?

PM Lee: No, I am a voyeur and I just read what Mathematicians do and wish I understood what was up.

Mr Rubenstein: Now, a number of years ago, to some controversy at that time, Singapore invited gaming companies to enter Singapore and some people were concerned about that. How has that experiment worked.

PM Lee: I think it has worked out well, it is contentious, it still is not unanimously welcomed, but it is something which we thought would be a plus for us because we convinced ourselves that if you wanted to develop a tourism market, this was one way to do it. And it could be done in a way which would limit the social impact and which would generate dividends beyond the gambling profits. Because it is really a comprehensive resort, you have got conventions, you have got hotels, you have got retail, you have got restaurants, you have got shows, you have got a lot of other activities and spin-offs, which made sense. We decided that we could take the chance. Our people were already exposed to gambling. There is all sorts of gambling legally happening in Singapore, there is gambling online which is impossible to shut out, gambling illegally which happens all around us, and while we are not that virginal to be impossible to be exposed to temptation. We decided to allow this, we made a market solution. We say, you are Singaporean and you go into the casino, it is $100 for 24 hours of exposure. It is a fee – paid to the government.

Mr Rubenstein: So, in other words, if you are Singaporean, you pay extra. If you are from China, you do not pay extra.

PM Lee: That is right, and hopefully you will gamble more from China and end up paying something to us. That has worked out very well. That result is that it has made a foreign market, the impact on Singaporeans has been limited, and the impact on jobs, in terms of GDP, in terms of revenues, has been considerable. So, I say it is a plus.

Mr Rubenstein: Have you been in gambling yourself?

PM Lee: I went in once to take a look, I paid $100 and was very regretful that I did not do anything with it.

Mr Rubenstein: Singapore, years ago, received some international attention. I think your father was against chewing gum.

PM Lee: Yes, he was – implacably.

Mr Rubenstein: He did not want anybody chewing gum in Singapore, and you could be fined for that. Is that still the policy?

PM Lee: No you cannot be fined for chewing gum. What we did was to ban the import of chewing gum, and fortunately, we are not a native producer.

Mr Rubenstein: Oh, so how do you get it then?

PM Lee: Well, some people smuggle it in.

Mr Rubenstein: Oh okay. I thought his concern was that people were people were picking on buses and putting it under the bus chairs.

PM Lee: I think that the final – I am not sure if it was the final straw or the final wad – was when somebody took a lump of chewing gum, stuck it on the train door and the train stalled. So he decided that that was a good reason to pursue the matter, which he had wanted to do for a very long time.

Mr Rubenstein: Now, talk about Southeast Asian countries today, and let us talk about yours first. Why is Singapore a good place in which companies should invest – American companies or other companies. Why is it a good place to invest?

PM Lee: Well if I may be permitted a commercial, it is where you are able to have political stability, a good environment to live, a good business environment to work, and a work force that works very hard and is disciplined and cooperative with management and basically in the middle of a region that is prospering and from Singapore you can cover a big part of the region, to China to some extent, to India to a certain extent, South East Asia. So, you come to Singapore not because of Singapore but for the region.

Mr Rubenstein: Suppose somebody has never been to Singapore, they are not interested in being a business person but coming here for a nice tourist place to visit, why should they visit Singapore? What is the appeal of Singapore?

PM Lee: You do not have to come to the casinos in that you can just see the city itself because the city, I mean it is a very gracious place to live, something which we are very proud of. If you have been to Marina Bay, you have seen what the skyline is like and walk around and you get a sense of what the people are like, the atmosphere, the absence of anxiety or insecurity. You do not see soldiers every corner, or policemen, but seeing people who are working, getting business done, who are bringing up families, who are looking forward to the future.

Mr Rubenstein: You have a lot of Americans living in Singapore now?

PM Lee: Oh, huge numbers. We have one of the biggest American schools in the world, which is a very good one. We send a lot of students to Ivy League universities so that may be another reason to come.

Mr Rubenstein: Ok, let us talk about your neighbours. How is Indonesia as a place to invest and is that a growing economic power in the region?

PM Lee: It is a big economy. They have 250 million people, they have a lot of natural resources, and the government is working hard, trying to bring in infrastructure investments, natural resource investments, trying to create jobs because the population is still growing quite rapidly. Their costs are low. The environment is progressively improving but it is a big country. We are one of the biggest foreign investors.

Mr Rubenstein: When you say investors, this is through the GIC?

PM Lee: Well, GIC will have some proportion of their portfolio in Indonesia. They are globally diversified. Temasek has some investment in Indonesia too. But a lot of private sector investments are in Indonesia too.

Mr Rubenstein: Now for those who are not familiar with GIC, it is more of less their sovereign wealth fund. It is generally considered one of the best managed in the world and it has been around for quite some time now. What is the reason for its success, would you say?

PM Lee: I am not sure we would put ourselves as best managed. We benchmark ourselves against other countries. I think there are two to three factors that make it work. One, we made it a company rather than part of a company or a quasi-government organisation because that means it can set up on its own terms, pay people properly, you can generate the right incentives, bonus structure and corporate culture in order not to manage the fund as a private fund but as a custodian, as a steward on behalf of future generations of Singaporeans. So that is one part of it. The second part of it is, we treat this religiously as a fund management outfit. We do not use them as an agent of national service or of a government state policy. So, if the government wants to take money to subsidise an industry or use some money to pay for some benefit for the population, well, we vote money on the budget and then we take the money back. It is ours and we decide what to do. But when GIC invests, their remit is long term risk-adjusted returns and strictly that. They do not worry about political overlay. Our job is to protect them from the politics so that they can do a professional financial job. So that is very, very hard to do, inside the government.

Mr Rubenstein: So, let us talk about your neighbours - Malaysia. Given your success, does Malaysia ever say maybe you would like to reunite with them, they want you back now or not.

PM Lee: We do not often discuss such possibilities. I think there was a fork in the road fifty-two years ago when we went one way and they went the other and you cannot turn back. They have gone further in their route, we have gone further in ours, and if we came back together, I think we would cause enormous difficulty to each other.

Mr Rubenstein: Now let us talk about Japan. Mr Abe was strongly re-elected. So how big a presence is Japan now in Asia relative to China.

PM Lee: In economic terms, they have big investments. They have substantial MNCs in Singapore. Their banks are in Singapore and at one time their banks were one of the biggest in the world, now less so but still significant. The Chinese are beginning to invest outbound and they are also present in Singapore not yet to the same degree. In terms of regional presence, the Japanese do a considerable amount in terms of Official Development Assistance (ODA), foreign aid, diplomacy with Asian countries. But somehow, I think in the Japanese system, it is harder to pull all of the whole of government together and operate as Japan Inc. which the Chinese have less difficulty in doing.

Mr Rubenstein: Now because of World War Two, is there still some animosity towards Japan in Singapore, South East Asia?

PM Lee: Well, the generation who experienced it will never forget. They are passing on but the subject is not disappeared. Earlier this year, we had a small kerfuffle in Singapore because we made an exhibition in a historic site, the Ford Motor Factory, where the British surrendered to the Japanese. And we called it the Syonan Gallery. We called the exhibition the Synonan Gallery and Syonan is what the Japanese called Singapore when they governed it, when they occupied it. There was a humungous row and I think we did the wrong thing, and we changed the name of the gallery. It was not just those who lived through the years who said you are putting the name of the oppressor on our exhibit but even many others who said why are we doing it.

Mr Rubenstein: So what about India. Is India becoming a bigger presence in South East Asia?

PM Lee: Well, India is growing. Their interest in the outside world is also growing. In relative terms their GDP is I think about a third of China's and their foreign trade is about one-fifth China's. Their interest has been very heavily focused on the sub-continent because they have a very complicated environment in the sub-continent with their neighbouring countries. But as their economy grows, and if Mr Modi's policies work and as it develops more inter-dependencies, it will have a growing interest in the region and a growing activity in diplomacy, in economic relations, in infrastructure and we hope they will play a constructive role in it.

Mr Rubenstein: You are going to be in the United States and Washington for a few days seeing other members of the Administration. Can you tell is who else you are going to see, and who you are going to see in Congress?

PM Lee: Well, Mr Tillerson is away. So is Mr Matthis. I am going be meeting the Commerce Secretary, Wilbur Ross, Mnuchin, Gary Cohen and Mr McMaster, as well as some Congressmen. They are very important, and Senators.

Mr Rubenstein: So would your main message to convey to them is the importance of Asia for the United States as well?

PM Lee: Yes, I know you are preoccupied with domestic matters as well. Every country has its own domestic issues to handle but the external world is moving. Asia is dynamic. And America, you not only have a role to play. It is really your game to lose. Do not lose it.

Mr Rubenstein: Now, you flew over here on Singapore Airlines.

PM Lee: Actually, not. I flew over on somebody else's airline.

Mr Rubenstein: Because Singapore Airlines was not available, I guess, at that time.

PM Lee: We do not fly directly to Washington, alas!

Mr Rubenstein: Well, maybe you can change that!

PM Lee: We hope so, the intermediate stops do not quite agree.

Mr Rubenstein: So, Singapore Airlines has a very good reputation for service. So what is its secret, why is it generally rated the best airline in the world?

PM Lee: Well, the Chairman is here, you can ask him. I think it is because he knows that the reputation is on the line. Furthermore, they have to earn their bottom line. And if they do not, well, there is no bail out for them. So, they work very hard and they have built up a very strong team and there is a very strong pride amongst the team in SIA and among Singaporeans in our national airline.

Mr Rubenstein: And do the European leaders ever call you up and you say should buy airbus for your airline?

PM Lee: Regularly.

Mr Rubenstein: What do you tell them?

PM Lee: I tell them I will consider if you make me a good offer, which sometimes they do!

Mr Rubenstein: And so, today you enjoy being Prime Minister as much as when you first became Prime Minister in 2004?

PM Lee: Well, you get into your stride and you know what you can do, what you cannot, how long things take to do, what are sensitive matters. And you try to push to the limits of what is possible.

Mr Rubenstein: The greatest pleasure of being Prime Minister of Singapore is, other than this interview, what is the greatest pleasure?

PM Lee: To feel that you have made some contribution to a country which has been stable, which has been united and which has been making progress steadily now for more than a decade.

Mr Rubenstein: The greatest challenge being Prime Minister?

PM Lee: The job gets harder in a way because your expectations are higher and you are at a higher level and it is a much more uncertain global environment. Every private equity fund is telling us that it is very hard to make money now.

Mr Rubenstein: And they still ask you to give them money, right?

PM Lee: Well, if they show good performance, we will think about it.

Mr Rubenstein: Would you like your children to go into government or politics?

PM Lee: It is up to them, they have not shown any interest. I think they have to have the right combination of temperament, character, ability, so we will see but so far, they have been happily pursuing their own paths.

Mr Rubenstein: And you think when you are in Washington, you have time for other than meeting government officials, any sightseeing, any restaurants you want to go to.

PM Lee: I went to have a walk at the Rock Creek Park. Beautiful fall day. Two weeks later would be even more beautiful but it is a very pleasant and leaves were turning, beginning to see some colour. And then we had lunch at Shake Shack.

Mr Rubenstein: How was that?

PM Lee: My children told me I had to do it.

Mr Rubenstein: Well, on that note, I want to thank you very much for coming to Washington and thank you very much for this conversation.

PM Lee: Thank you.