"Our destinies are interlinked"

SINGAPORE turned 42 on Thursday. In his National Day address, Prime Minister Lee Hsien Loong painted a rosy picture of Singapore's future, revising its full-year growth forecast from 5-7 per cent to 7-8 per cent. In an interview with visiting Asean journalists at the Istana, Lee spoke on, among others, the republic's relationship with Malaysia and its role as a foreign investor, FAUZIAH ISMAIL reports.

Q: How would you describe Malaysia-Singapore relations now under the Abdullah administration?
A: I think it is good.

Q: What areas do you want to see improve?
A: We would like to work on a win-win basis but this depends on both countries identifying areas that we can co-operate.
The private sector moves ahead. They find their own opportunities and, provided that the relationships are amicable and we don't have thunder and lightning, they know what they need to do.
In terms of government-to-government co-operation, we have got to find areas where both sides find it worthwhile to proceed.
In the Iskandar Development Region, for example, we have the joint ministerial committee working on the issues. Even then, when we set up the joint ministerial committee, there were some reactions within Malaysia.
Our attitude is, it is entirely up to Malaysia. We want a win-win situation but we don't want to be misunderstood.
We will proceed at the pace Malaysia is comfortable with. We will let the Malaysian side take the lead. This is a practical arrangement.
In other areas, we will proceed like that, too. Otherwise, if we push too hard, there might be some misinterpretation.

Q: What outstanding issues do you wish to see resolved under your administration?
A: I don't see any specific items I urgently want settled. There are outstanding issues, which have not yet been resolved but have been discussed twice.
The first was in a package proposal between (then prime minister) Tun Dr Mahathir Mohamad and (then Singapore prime minister) Goh Chok Tong, and that was not possible.
The second time was when Prime Minister Datuk Seri Abdullah Ahmad Badawi took over. Goh and Abdullah tried again to come to an agreement and harvest some low-hanging fruit, but the fruit was not ripe.
I think it is best that we put these matters aside. Where we can agree, we do it on new areas of co-operation. As for the old issues, we just let it be. If they have to be resolved, we'll go according to the law and treaties because that is non-contentious.
Both sides can accept it and it doesn't lead to any loss of face.
It is not easy. If it were easy, they would have been solved already.
I don't see myself being able to do better than Goh, and I don't think it would be easier for Abdullah to do better than Dr Mahathir.
What Dr Mahathir could not give, Abdullah cannot give. Otherwise, he would be asked why he gave away more and I would be asked why I gave what Goh did not give.
It is better if we settle it according to the law and the treaties.
For example, when we had the dispute over Singapore's reclamation works and Malaysia raised some issues, you took us to the International Tribunal for the Law of the Sea in Hamburg. You presented your case and we presented ours. A ruling was made and we both abide by it. It was not politically sensitive any more.
That is a good model. The Pedra Branca (Pulau Batu Putih) claim is before the International Court of Justice in The Hague that is coming up in November. Whichever way it comes out, I hope we will accept it.
This is the way disagreements ought to be resolved. It would crop up from time to time between close neighbours, and because it is between close neighbours, it has to be handled particularly carefully.

Q: Do you see Singaporean investments in Iskandar Development Region as politically sensitive?
A: I would ask Malaysia whether they see our investments as politically sensitive.
Abdullah has made it clear to me that he welcomes our investments. Deputy Prime Minister Datuk Seri Najib Razak has also made his position quite clear. So has Menteri Besar Datuk Abdul Ghani Othman.
But, of course, on the ground there are other views. Pas has some strong views; even Umno Johor has some outspoken views in print and in parliament. These are things I'm quite sure investors would take into account.
So it is not a question of whether the governments see that this is going to be politicised. The question is whether investors see this as an opportunity that is good and whether they are going to be welcomed. That I think is the important question to ask.
To be welcomed not just now but over a period of 20 to 30 years because once you have put in a factory, built up the capability, your plant is there, your people have been recruited, you don't want to quit within a short period of time. You want it to succeed. You want a predictable environment in which to work.
That is something Singapore has tried to do with investments. When we promise the investor something, we try very hard to fulfil that promise. Even if the situation changes, we will do it.

Q: What lessons did Singapore learn from the Shin Corp deal?
A: From our point of view, this is a commercial deal. Temasek makes its decisions based on commercial considerations. It operates independently although the Singapore government owns it. It has a board that is fully responsible. When it invests, whether in Singapore or elsewhere, it has to invest fully in accordance with the laws of the land and the stock exchange, which is what it believes it did in Shin Corp.
It became an issue in Thailand. It was something that had to be sorted out.
The philosophy is that Singapore companies invest based on commercial considerations and invest because they believe in the long-term prospects of the country and have confidence in the country.
If you don't have confidence in the country, you don't go in. But if you do have confidence and the environment is a welcoming one, you go in and you invest.
If the investment prospers, it will be good for the company and also for the country.
I think that is the philosophy that Temasek has and we encourage all Singapore companies to take. In the case of Shin Corp, I think it got caught up in the domestic politics of Thailand.

Q: Would you advise Singaporean companies to avoid investing in politically unpopular countries?
A: Companies will make their own decisions. If they think they are not going to be welcomed and it's going to cause a row, they will have to take that into their calculations.
They will have to decide whether it would be worth their while to do it. I would not advise anybody to go in if it is going to cause a big rumpus.
On the other hand, if we take the approach that we don't want to invest in one another because it may become controversial, then we would have an Asean with no economic integration, interdependence or co-operation.
That is contrary to the Asean economic community that we are hoping to build by 2015.
Singapore is open. We have investments by Malaysian companies. You owned one of our cellular companies, M1. You have invested in all sorts of things such as properties in Singapore. We welcome you.
Similarly, we have quite a lot of investments in Malaysia. Sometimes issues have come up, sometimes not.
I think it's good that Singapore and Malaysia have investments in each other because then our destinies are interlinked. We wish you well because we want our investments to do well. I think you have an interest in us doing well, so that your investments will not run into trouble.
I think that is the way we have to go. Sometimes it is politically sensitive. This is something countries will have to manage.
But the more we are able to have this interdependence, I think the better it is.

Q: After 42 years of independence, what challenges do you foresee for Singapore?
A: It depends on the timeframe.
In the long term, our biggest challenge is to keep our identity and national spirit in a very globalised world. We speak English, sing English songs, browse the Internet and travel the world but home is Singapore.
This is something we have to do a lot of work to maintain.
In the medium term, a major challenge is to ensure we have political renewal. We have to continue to have good leaders who have the confidence of the people, who will take the country forward. It would be at all levels, from the members of parliament, ministers, the community, at the grassroots and people who feel for Singapore and have the capability to do something.
In the medium to shorter term, the challenge for us is to continue to grow but, at the same time, to manage the income gap. If the top moves forward but the rest stagnates, that would create many social problems.
This means we are not taking care of our population. Everybody wants to participate and benefit from Singapore's success and we should help them do so.
We have a lot of work to do.

As appeared in the New Sunday Times August 12 2007