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- Jake Maxwell WattsThe Wall Street JournalCANCEL
Updated March 26, 2015 6:29 a.m. ET
SINGAPORE—The death of Singapore founder Lee Kuan Yew marks the end of an era at a time when the country is facing slowing economic growth and struggling to complete its transition to a first-world economy.
But despite the current difficulties, businesses say Mr. Lee’s policies and philosophy will outlast the elder statesman, and that his son’s administration has proved that it will continue the legacy of pragmatism that characterized the Lee years.
“Singapore has always been able to change and adapt in order to remain competitive in a world of changing dynamics,” said Stuart Dean, chief executive of General Electric in Southeast Asia. General Electric has been in Singapore since 1969 and characterizes itself as “one of the pioneers of the then swampy Jurong,” referring to Singapore’s now-modern industrial island. Jurong Island is now home to some of the world’s largest chemical and oil companies.
Michael Zink,Citigroup Inc.’s head of Southeast Asia and its country officer for Singapore, said Singapore is likely “to thrive for many years to come because of the strong foundation that he has laid during his time of service in government.” The bank has been in Singapore since 1902 and now employs about 10,000 people in the city-state.
Mr. Lee, who led the country for 31 years, died on Monday after a fight with pneumonia. He was 91.
World leaders are attending Mr. Lee’s funeral on Sunday. Among the dignitaries visiting include former U.S. president Bill Clinton, who will lead an American delegation including former secretary of state Henry Kissinger. Indian Prime Minister Narendra Modi, Australian Prime Minister Tony Abbott and Indonesian President Joko Widodo also plan to attend.
Mr. Lee’s core principles—including a focus on a clean and efficient government, business-friendly economic policies, and social order—helped attract massive investment and many of the world’s biggest companies to Singapore after he became prime minister in 1959, catapulting living standards to first-world status from third-world levels in hardly more than a generation.
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Some of the world’s biggest companies, such as U.S. manufacturing giant Hewlett-Packard Co., investment-banking firm J.P. Morgan Chase & Co. and technology giants like Microsoft Corp. and Google Inc., have a presence in the country.
During Mr. Lee’s tenure as prime minister, Singapore’s per capita gross domestic product rose nearly 30-fold from US$428 in 1960 to US$12,766 in 1990 when he left office. Singapore’s GDP per capita as of 2014 stood at US$56,284, higher than that of the U.S. and comparable with the highest in the world.
However, the export-dependent nation is struggling with slumping economic growth as global demand remains weak and the government tries to rein in Singapore’s reliance on cheap foreign labor. The government and the People’s Action Party, under Mr. Lee’s son, Prime Minister Lee Hsien Loong, is now focusing on increasing productivity growth, which is tepid at best, and controlling the city’s skyrocketing property prices.
Productivity growth—doing more with the same resources—is a hallmark of first-world economic growth that Singapore has yet to consistently achieve over the long term, instead relying on imported foreign talent and investment to a degree that has caused frustration among the country’s citizen population.
“The past development model has run quite predictably into diminishing returns as well as political, social and resource constraints,” said Linda Lim, a Singaporean and professor of strategy at the University of Michigan’s Ross School of Business. Yet she says the country is likely to continue its role as a global services center, with the rest of Southeast Asia as a hinterland. “The only difference would be a shift to resource allocation based on market forces rather than government incentives,” she said.
Indeed, Prime Minister Lee Hsien Loong is finding that with Singapore’s changing demographics and public outcry over overcrowding and disproportionate numbers of foreigners, the government is having to break with many of the policies championed by the senior Mr. Lee and his People’s Action Party in order to propel Singapore forward so rapidly.
“So long as the PAP is in the driver’s seat, I think we will continue to be pro-business. That said, nobody can ignore the nation’s changing demographics,” said Stefanie Yuen Thio, joint managing director at local law firm TSMP Law Corp. in Singapore. The senior Mr. Lee—a lawyer himself—had helped foster a world-class judiciary and legal system in Singapore.
Ms. Yuen Thio notes that Mr. Lee hasn’t been involved in active government for some years, but he “had a formidable reputation and very deep respect from various sectors of society,” she said. “There may be elements of the community or the business world who, now that he is no longer with us, will be more vocal in their demands for change or in their criticisms.”
Singapore also retains its wealthy state investment companies, which over the years have been used to build Singapore and make its government one of the richest, proportionally, in the world. The legacy of these companies, as with the economy as a whole, also rests with Mr. Lee, who guided sovereign-wealth fund GIC as chairman for around three decades.
Together, GIC Pte. Ltd. and state investment company Temasek Holdings Pte. Ltd. have close to $300 billion of assets under management. These two firms have acquired assets and stakes all over the world in sectors ranging from financial institutions to real estate, consumer and resources, and continue to remain strong. For instance, GIC and Temasek spent close to a record $21 billion last year, making them one of the biggest spenders in Asia that year.
Piyush Gupta, chief executive of Singapore’s largest bank by assets DBS Group Holdings Ltd. said of Mr. Lee: “He was a gift to Singapore, and today, all of us at DBS mourn the passing of not just a great man, but of an era.”
Write to P.R. Venkat at firstname.lastname@example.org and Jake Maxwell Watts at email@example.com
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