TIME: You have a climate of control which engenders the notion there are certain lines beyond which you cannot go.
Lee: There are certain lines beyond which you can't go--the lines really are because of race, language and religion, and they are always going to be sensitive issues in Singapore.
TIME: There is a new openness--is that a consequence of a younger generation coming up?
Lee: If you compare us with America.
TIME: Liberalizing foreign banks?
Lee: We have to change. We worked the system for a long time, it has worked well, but the financial industry has become quite different and if we want to become a financial center then we have to have world class institutions--that means allowing more competition and getting our local banks to upgrade.
TIME: Was this done because of the economic crisis?
Lee: We really started this before the economic crisis in 1997 because we were becoming progressively dissatisfied. The industry was growing, it was quite respectable, but we were getting feedback from the bankers if you want to take the next step forward you have to loosen up some--it is not something you can lightly do, because if you are in a controlled environment you cannot just let go and expect a 100 flowers to bloom. You have got to manage your transition. We started doing that in 1997 just about the time the crisis began. Then as the crisis deepened we decided consciously to proceed with this rather than slow it down or change course. We did the other parts first, because they were easier--fund management, bond issues, fixed incomes securities market, the stock exchange and the futures exchange. The most delicate one which we took some more time over was the banking sector, which we have now done.
TIME: Not a big bang, more of a tweak?
Lee: It is more than a tweaking, what we want is a series of adjustments which will be cumulatively significant, but not an overnight change.
TIME: It would seem that a couple of foreign banks would become dominant here and you would have two big Singaporean banks--what is your vision for the next 10 years?
Lee: Ten years is very long. We have said we would like to have at least 50% of the market in domestic hands--even if you look at Hong Kong two-thirds is in domestic hands, and they are about as open as you can be.
TIME: As Hong Kong comes more under the control of China, is that an opportunity for Singapore?
Lee: I think we play complementary roles. We are a state, they are not, they are part of China, we are not.
TIME: Suzhou?
Lee: We have problems, which we have been working out with the Chinese, it is not easy, the Chinese have many levels of government. This is a project which had more than a commercial purpose. It was to be a vehicle where you could try out some of the ideas which worked in Singapore but in the Chinese context. Depending on how that works out you have a model which you might be able to use selectively in other parts of China. But along the way that objective has become diluted.
TIME: Was it a mistake?
Lee: I am not sure it was a mistake, it was an ambitious objective and we didn't realize how ambitious it was.
TIME: Internationalizing the Singapore dollar?
Lee: We are making some changes to the rules, but the fundamental policy of non-internationalization remains. I doubt we will want to do that--how does it help us?
TIME: Singapore shot itself in the foot with the recent revelations of scanning Internet accounts--that would be anathema to IT capitalists looking to set up shop somewhere.
Lee: They shouldn't have done it, we have stated our position that it was a mistake. We have put it right, we are in a learning process--these are new areas where there are no rules.
TIME: You seemed to have licked your illness?
Lee: So far so good. I had lymphoma in 1992, and the doctor said if it doesn't come back in five years you are probably alright. So more than five years have passed--you keep on being watchful.
TIME: You said somewhere one of the lessons from this is there are some things you cannot control. What does that mean?
Lee: There are things you can't predict, you cannot know what will happen. Also you realize your personal limitations, you really can't go and do everything. When you are young you think any problem can be mastered from first principles and you can work on the solutions. But beyond a certain point you realize there are some things you can't and you have to go on advice of people who know better and you have decided to trust, and you work with a team, and not all outcomes can be completely predetermined.
TIME: People say it has made you easier to work with?
Lee: Maybe, I hope so. (Laughs.)
TIME: Any specific goals you have? Your father founded this country, Goh has said he is of a bridging generation, how would you like to see described what you have done?
Lee: I think to have made a contribution to a country which has endured beyond the founding generation and adapted itself and kept its soul. A Singaporean growing up now can go and work in London or Silicon Valley. Singapore, if you are not careful, just becomes one of the options. To make this more than an option, and a place where you belong, I think that is a great achievement.
Partly it is quality of life, but there has to be some emotional attachment, some rootedness in the place.
TIME: This brings us back to where we started, Singapore "not yet a nation"--this identity crisis that Singapore keeps using to renew itself.
Lee: We are 30 years old, it is not surprising we haven't firmed an identity yet.
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