PM Lee Hsien Loong's remarks at the "In Conversation With PM Lee Dialogue" hosted by Enterprise Singapore, in Mexico City

Mr Raul Rodriguez-Barocio: How do you explain the transition of Singapore? 50 years ago, Singapore was facing a painful separation from Malaysia - poverty, ethnic strife, religious divides and scarce natural resources. Fast forward, just one generation later, you are the most amazing showcase of the kind of future we all in this room crave for. You have the most competitive, inclusive, transparent and open economy in the world. The most tech- ready, with the third highest GDP per capita. In a nutshell, can you tell us what happened? Which were the linchpins to this process? 

PM Lee Hsien Loong: Well, I hesitate to tell you how we succeeded but I will tell you what we did. First, we started off on the assumption that nobody owed us a living, that we had to fight our way in the world. New country with no resources, and we had to depend on our wits and our abilities. Secondly, we invested in our people because we do not have copper, we do not have oil and gas. There is no petroleum company of Singapore. What we have are Singaporeans. We invest in them, educate them, train them, make them hardworking, make them work together, make them be productive and proud of themselves, and able to deliver results together. Our education system has made a lot of difference on that. Thirdly, we depended on growing the economy. It was a time when people believed in import substitution and state-led economic planning. We decided that the free market had lot to commend it, that multinationals had a lot to contribute in terms of creating jobs, in terms of bringing in technology, and in terms of giving us markets. If they are going to be said to be exploiting us, we are ready to be exploited.

We brought them in, they came, and they found us good workers, a good place, a government which was supportive. They helped us to make the economy take off - 10% growth per year for a couple of decades and 8%, and then 6%. We went from third world to first. I would also add that having created the growth, we put a lot of emphasis on making sure that the growth benefited Singaporeans across a wide range, that everybody had a share in this - in terms of good education, good healthcare, and housing. One of our major social programmes is home ownership program where 85% of Singaporeans own flats, which are built by the government - Housing Development Board flats. People felt that this was their country and their success, and they benefited from it. So we got onto a virtuous cycle. But I should also say that we were lucky, because in the last 50 years, we have not had a major war. We have been at peace with our neighbours. We have had war in Southeast Asia - in Vietnam particularly, and in Indo-China. The position was stabilised after the Vietnam War ended, and other non-communist countries in Southeast Asia, including Singapore, we were able to concentrate on economic development, and building prosperity, and not on conflict. That helped to bring us here, and we cannot be sure that the next 50 years, we will be as lucky.

Mr Rodriguez-Barocio: This transition gets a lot of credit for shifting the central gravity of the economic and political power in the world. You have been clearly a driving force, among others, but a clear driving force behind this process. Today, it is clear from an economic standpoint that we are in the Asia century. What about from a political standpoint? How do you see the coherence among the Asian reality in general - small countries and large? How is that evolving? Can we truly think of an Eastern Bloc as we move forward?

PM Lee: I would not say that Singapore caused the center of gravity of the world to change. We are far too small. At the time we became independent, we had maybe one and a half, less than two million people. Now we have about five and a half million - including foreign workers and immigrants. We are too small to shift the world.

What really shifted the world is China, when they decided to open up – Deng Xiaoping in 1978, and embarked on reform and opening up, and their economy took off dramatically. That transformed the global strategic landscape. Fortunately for us, in the process, the other Asian countries, were able to benefit from China's opportunities from China’s growing prosperity from the markets which were there. We prospered with them. I think that Asia is a diverse environment. We all are looking to prosper in our different ways. We hope that we all have a good region within which to live and to cooperate with one another. But our politics in the different countries are very different. We have to understand the diversity. China is very different from India and Singapore for example. Sometimes people do not understand that because many of us are ethnic Chinese, meaning we have Chinese ancestors, but we have become Singaporeans. We look similar, but we are not the same. That is crucial, because the similarity enables us to work with them and to perhaps understand them mutually, somewhat better than Westerners would. On the other hand, the fact that we are different, means that we have adapted to our place in the world, and we add value when we do business with the Chinese because we bring a different perspective to them, which they find difficult to duplicate themselves. We have operated a western system, we have the western rule of law, we have done business western style, and the links are there from Singapore to countries all over the world - the Americas, Europe, Japan, Australia, New Zealand. Therefore, we make a living for ourselves.

If you look at the 21st century, people used to say is the Asian century. I think the Asian economy will grow as a percentage of the global economy because China is still growing faster than the developed countries and plan for a while more. India also is growing somewhat faster than developed countries, and potentially could grow even faster, but their politics is more complicated. I think the centre of mass will continue to shift, but I do not believe that Asia will be the center of the world. In order to prosper, Asia needs, markets, needs cooperation, needs technology, with the Americas, with the European, with other regions. If it closes on itself, we just say this is the Asian region, and we are doing business with ourselves in Asia. You will not starve, but you will miss out on many opportunities, and we will be the poorer for it, and so would be the world.

Mr Rodriguez-Barocio: Not to contradict your very down to earth modesty, but Deng Xiaoping did inspire his reforms on Singapore.

PM Lee: No, he used us as his poster boy. He had his ideas on what he wanted to be done, and he used us because we were a Chinese society, which is majority Chinese. The unspoken message was, if that Chinese society - sons of labourers can do it, we in China with our 5,000 years of history, and the scholars and the literati and all the wealth of culture and civilization, we can do it too. Which was, to a large extent, true.

Mr Rodriguez-Barocio: Be that this is the Asian century or not, why don’t we call this shift? It is a real shift, and Asia is having a more of a preeminent role as we speak. How does Mexico in your mind and Latin America fit in that shift?

PM Lee: It is a very important part of our worldview, because we do not want a world in which the Asian countries look only to other Asian countries. We have a lot of business with China, India, but we have previously had and still have a lot of business with the United States, and a substantial amount with Central American and Latin American countries. In Central America – Mexico, and Latin America – Brazil and other countries. We think that that is important, not just quantitatively, but also in terms of how it shapes our worldview - that we see opportunities around the world, that we want to do business with other advanced economies, which have a lot to offer, and we believe that in the Asia Pacific on both sides of the Pacific Ocean. You may be 16,000 kilometers apart, but there are opportunities for us to cooperate and to prosper together.

You see the same on the eastern side of the Pacific. For Mexico, America looms very large - about 85% of your exports, some vast amount. Yet, you do not really want America to be the only partner you have. You have a growing trade with Asia, certainly with China, and we hope not only with China, but with other countries as well in Asia. There are investment opportunities in Asia for your companies. There are investment opportunities here in Mexico for Asian companies. I have brought a business delegation along with me and I hope they will meet their counterparts and some sparks will catch fire and we will have some good projects that come from that. I think if we are looking for a world which is interconnected, not just small country connected to nearest by big country, then links across the Pacific make a lot of sense.

Mr Rodriguez-Barocio: A logical follow up to that would be the US-China rift. Your thoughts on that?

PM Lee: We are very worried about that. We can understand that is not an easy adjustment to make. For the Chinese - to become a big economy, dramatically greater in terms of influence and heft, and to be to be able to shift to this new position of influence, without over pressing their advantage, and to fit into a global order which benefits them peacefully, and in a way which leaves space for other countries. That is a very difficult transition to make, because there is a very understandable pride that the country has grown strong, that the period of humiliation is over, that now we stand up again. We will not allow ourselves to be trodden upon. At the same time, you have to remind yourself, neither will we do unto others, what unfortunately we have suffered. That is not a very easy line for any leader to take. On the American side, to understand that China is growing, that its GDP is now second largest to America, and within a less than a generation will be bigger than America. Maybe not as advanced, but larger. And that this is not stoppable, and it is unwise to stop this. You can try to shape it, you can try to develop the relationship, you can try to make sure that it develops constructively, and that new rules will apply, which will enable China to fit into the global system.

But if the response is a defensive one, that this growth of a new player is a threat to America, and we must make sure that they never become number one, and we must always be number one; I think that can only lead to a very troubled relationship, and it is an effort which cannot succeed. As the Chinese say, we are growing, you can hit us, you cannot kill us, but you can hurt us. That is true, but the person who hates us will also hurt. If both sides understand that, then however difficult it is, there is some chance that you can work together and develop a relationship which you will have competition, where there will be issues where you do not agree with one another, but there is a substantial area where you cooperate with one another and benefit from that.

Mr Rodriguez-Barocio: In a pessimistic scenario, we will be faced with unhappy and painful choices, the rest of us.

PM Lee: Because for Mexico, your links are more preponderantly with the US than even. But for countries in Asia, which includes not just Singapore, but many countries in Asia - including Japan, South Korea, Australia, or many American allies, in fact, that economic ties with China exceed the economic ties with America. In terms of trade, the American investments are critical. American MNCs play a big role. The Chinese MNCs do not do that. But in terms of export markets, the Chinese are bigger than Americans. So, to have to choose between them, and say I now settle on one block instead of the other block, it is going to be very difficult choice for any of those countries. Even some of the allies of the United States, treaty allies such as Australia, have said that, they would very much prefer not to have to choose sides. I think that is a reality which may not be fully appreciated in the big countries.

Mr Rodriguez-Barocio: You have been championing the idea of multilateralism. Tell us more about that. You spoke about this in the UN General Assembly in September, the Washington Post called you the “man in the middle”, a “convener”, particularly in the context of perhaps, for Macron, who is “busy with the resistance within Europe”, or Trudeau, who is basically “busy with his own domestic issues”. So, you truly stand out as a leader in the world who is pushing for that agenda. Do you think it is viable? Where do we go with that?

PM Lee: I think that there are many countries in the world who do want to cooperate, not just bilaterally with one another, but in wider groupings. The EU is, despite the difficulties with Britain, is a very resilient and an important grouping, and the countries in the EU all want the EU to succeed. Nobody is queuing up to leave the EU after the British. Not even the Greeks. So, that is one example.

If you look more broadly for trade issues, for example, we concluded the CPTPP trade agreement, Mexico is party, Singapore is party, America was going to be party but Donald Trump said no. The remaining 11 proceeded. That was a very important signal that countries do want to cooperate with one another, more than on a bilateral one-on-one basis. Furthermore, on a win-win basis, so that it is not just an exercise in arm wrestling - my arm is stronger than your arm, because this is not a win-lose game. This is a win-win game. If you can come together, then there are joint games, which we can mutually benefit from. The difficulty is that the ultimate for this multilateral model is the WTO – where all the countries come together and you try to make a deal involving everybody - 160 odd countries. That is a very difficult because the attitudes are very different. You have the big countries which some of which used to push for freer trade like the US used to. Now the US is playing a different role. You have the developing countries, some of which were very conservative in trade matters - India, Brazil, South Africa. If you go on consensus, you need to carry them along, and therefore, the deal does not close. So what do you do, in the absence of new rules where you can proceed without people who did not agree with it? Those who are willing, come together and they work as willing groupings. The CPTPP was one willing grouping. Within Asia, we are now talking about the Regional Comprehensive Economic Partnership - which is another Free Trade Agreement with ASEAN, with the Northeast Asian countries - China, South Korea, Japan, with Australia and New Zealand. We had hoped with India, but India says they are not ready, so we will see what India does. It is a substantial FTA in Asia involving multiple countries cooperating with one another, in one forum. I think that is the way forward. In your part of the world, you are doing the same. You have the Pacific Alliance with Colombia, Chile, and Peru. We are negotiating an FTA - Singapore with the Pacific Alliance. I hope we will be able to close it by the end of the year, and I hope we have Mexico’s support.

Q: On behalf of all the students of my university and Singapore University of Technology and Design, they are going to be part of the first corporate challenge that will take place next January in Singapore, in order to create economic and educational corporate programmes in Singapore. We welcome you, Prime Minister, and all your official and business delegation to Mexico.

On Singapore’s Smart Nation initiative, new technologies have been implemented. There have been investments in research and development to improve your interoperability among systems and cyber security. People in Singapore are very high-skilled in technology, and your government is pushing to make Singapore one of the most influential countries in technology. So the question is, what role does your universities have, to improve technological development in your country? Is your country relying on entrepreneurs to drive these innovation?

PM Lee: The answer is both. We think technology is very important to us for our economic development, because we are reaching the limits of what we can do, just based on number of persons in our workforce. Our population growth is leveling off. In fact, we are not reproducing ourselves adequately into the next generation. For the workforce to grow, either a bigger proportion of Singaporeans must work, and most of the men do. So you are talking about the women, and already amongst the women, the proportion working is already quite high. Or, I have to depend on immigration, which I will to some extent, but there are social limits. Or, I have to depend on technology to raise productivity. IT Technology is one of the very important areas where you can make a breakthrough - whether you are using artificial intelligence, FinTech, manufacturing 4.0, 3-D printing and smart manufacturing. These are things that can transform the way you do things, not just make things a bit better, but transform the way we organise ourselves in order to make the most of our efforts and our productivity.

The university, first of all, train good technical people. STEM – Science, Technology, Engineering and Mathematics. They must be competent, must master their skills, and must be good at what they are doing. We must produce enough of them. That means you must get good students to come in and do these courses, and come out, and continue to pursue these careers and work in engineering and tech jobs, and see that the future is there. Sometimes, if you do not follow through, you train people in STEM, but they come out and they go into other parts of the economy. Sometimes they go into Wall Street and become bankers. If the property market is hot, they may decide that it is not bad to be a real estate agent for a few years before you decide what to do with yourself. From the individual point of view, it makes sense. But from the national economic point of view, I may not be making the most of the talents which I have. The first thing that universities must do is train good STEM people, and enough of them.

The second thing is we would like them to be centres for innovation. That means, have new ideas, do research some at the basic level and some at the applied level. Research which will help us to come up with new ideas, which will have downstream practical economic implications, and will support companies which are operating in Singapore. For example, if you have set up an electronics firm in Singapore in semiconductors, you want to have a Research Institute which know about semiconductor science and physics. If you are talking about hard disks, you know about magnetic materials. If you are researching quantum technologies, you have people who know about quantum technologies, on a theoretical basis in the university.

The third part of it is entrepreneurship. If a university professor has a brilliant idea, we do not mind if he decides to start a company and try to make a success of that idea. He starts up a firm, he produces the product. If he makes it big, he generates a unicorn. Even if it does not, it is part of the ecosystem of innovation and entrepreneurship, which is important if you are talking about an economy which is moving into the tech age. But, the universities do not only do this alone. We also look for entrepreneurship from other sources, our own people who graduate and go into these fields, or people from the region or from elsewhere, who decide that Singapore is a good place to come in order to set up a tech startup and to do business. We have companies in Singapore which originated in the region in Malaysia and Indonesia, and they have decided they want to be based in Singapore. They have presence in many countries, but they made Singapore their main centre. I think that is an important part of our tech efforts as well.

Mr Rodriguez-Barocio: If I may, let me complement the question. A year ago, the full board of Monterrey Tech visited Singapore. Deputy Prime Minister (then) Tharman was very kind in opening many doors for us. We met with the leadership at NTU, NUS and SMU. Those present today will attest to that we are basing our reform process, which is the most ambitious academic reform process in Latin America, on what we learn in Singapore, and thank you for that.

PM Lee: We all learn from one another. We all see how people do things elsewhere. We would like to pick up features of that and do it ourselves. It is not always so easy. Monterrey Tech is having a cooperation with SUTD. I think you are going to have some 40 odd students in January, and I look forward to receiving you in Singapore.

We have got a common connection, because SUTD started off with MIT, and Monterrey Tech started off also taking inspiration from MIT. When we started SUTD, one of the ideas was, these are things which MIT wanted to do, but could not implement in Boston, in Cambridge, Massachusetts, because they did not have a green field site. They had established departments and established ways of doing things. You cannot just break it up and reshuffle the pieces. But in Singapore, they felt that they did have a chance starting afresh to orientate the whole university around the idea of design. It is not orientated around department of physics or engineering or IT or biology, but orientated around the idea of design and multi-disciplinary. I do not know to what extent we made it happen, but this is different from what is in Cambridge. I think we all learn from one another.

Q: Mr Prime Minister, we thank you very much for your visit. I read the brief biography of yours and I was quite impressed. For more than 15 years you have been Prime Minister and I am certain in these turbulent times, you’ve seen leaders and governments coming and going. What kind of advice would you provide to our business community - not just in Mexico, but in Latin America, that we are suffering this kind of troubling times in order to ensure that we can provide growth? Thank you.

PM Lee: I think we have to take a long-term view of the opportunities. You have to make an assessment of the societies - whether generally heading in a positive direction, or whether these are very deep entrenched problems which may take a generation or more to work out. It does not mean that if you are heading in the right direction, things will progressively get better and better. As you see from the example of Chile, even as the economy grows and inequality comes down, unhappiness may, in the process, intensify. Before you can reach the happy outcome, you already have an unhappy mishap, which can be quite sudden and unexpected. But you still have to work in those directions, and as business people, you have to take the environment for granted. But at the same time, you do have a role in setting the tone for how businesses operate, that they operate transparently, that they operate from the point of view of creating long term value, and that they operate in ways which will encourage the economy to be open and discourage rent seeking and closing in on yourself. I know that is easier said than done. We are all in favor of free trade, but please not in my industry and preferably not in my company. That is a human nature. And yet, if we all take that attitude, those are some of the trends which lead to political economic systems, where the politics and the business gets deeply intertwined, and you have the long term tragic consequences.

In Singapore, we have tried our best to keep our system separate. Even when we the government owns the company, for example, Temasek Holdings - we have put in governance measures, so that the government ministries cannot interfere in the business decisions of Temasek Holdings, or of its subsidiary companies. From the ownership point of view, they are government-linked companies. The government directly or indirectly owns 20 / 30 / 40% of them. But the ministries do not run the companies. The companies have to be run as businesses, accountable to all of their shareholders, following the same rules as any other business. There are two sides to this. On the one hand, we cannot give the company any special favour because the government owns it. On the other hand, we cannot ask the company for a special favour, because the government is a shareholder. The two have to come together because if I asked you for a special favour, you can be sure at some point, the company would come back and say, I have this special requirement, please take care of it. Very soon, you will be washing cars.

It is not easy to do, for example, the Chinese who have got state-owned enterprises in a big scale. They come and they look at our system, and they try to understand how we operate, how is it possible for us to appoint a board and yet not interfere in the operations of the board? They go back, and they tell us, I think I understand how you do it, but I do not think I can do that back in my own place, which is an honest assessment. The political conditions are not possible. But if you can reach that kind of system situation, where the businesses are competitive or self-confident, push for openness, and in the way they operate, also enable bring along the improved lives or a significant proportion of the population. Your employees, but also the whole economy. Then, I think you will make a contribution to the country.

Q: I am Lorenzo, from a public company. The very first time that I heard the word logistic was from I understand a classmate of yours – Mr Robert Yap, he was my classmate and a great inspiration for what I do today.

PM Lee: We were in the officer cadet school together.

Q: Today, Mexico has been evolved for the last 25 years, and industrial parks have been playing a major role. We do have today some of Singapore investments into our companies. We see that there is a lot of potential to increase these partnerships. I would like to hear your thoughts on that.

PM Lee: I think there is opportunity. I think that one of the reasons that the world has prospered until 10 years ago or five years ago, is because there has been intensifying globalization and the supply chains have been distributed to many countries. This international division of labour has enabled tremendous gains and productivity in cost savings. Also in countries having an interest in one another's success, and therefore contributing to a more stable, geo-political environment. Now, you are in a different situation, the USMCA FTA has got more stringent rules of origin on autos especially, as well as generally being less open to a multi-directional cooperation. Mexico has decided that you have to move forward with this and I can understand that decision. I hope that as you go in that direction, you will not neglect to cooperate with other partners as well in the world, including in Asia.

Q: We represent electronic recycling company from Singapore, the leader in electronic recycling in the world. The purpose of this company is to invest in Mexico to provide the best solution for electronic recycling and energy storage solution. You are very welcome to visit the plant in Singapore, also with Mexican authorities, to meet directors technology and the new plant for recycling lithium batteries. It is an invitation to you to visit.

PM Lee: Recycling is an important subject. I do not think we have time to do justice for it. But I just like to say actually, it is a business which could be properly internationally operated, but because it is not properly regulated and there have been so many abuses, it has acquired a bad name, and is not easy for electronic waste to cross international boundaries. That means, many inefficiencies and high costs will be incurred. If Mexico is able to have a good regime managing this business, we will be very happy to cooperate with you.

Mr Rodriguez-Barocio: Prime Minister, thank you so much. In my 41 years of traveling to Singapore, all the way back when we landed at Paya Lebar, and the best thing to do at that time was to drink a Singapore Sling at the Long Bar at the Raffles, you can still do that. You have come a long way and that is truly the understatement of the morning. What strikes us the most is what you have done in terms of infrastructure and development, and so forth is the mindset that constant thought in your minds across the board that you can do more and you can always strive to do better. Thank you for your visit and it is more than timely considering the times that we are living in and throughout Latin America. Please come often in the future and your visit and presence here is more than inspiration than you can think of so thank you.

PM Lee: Thank you.