From Third World to First The Singapore Story pdfdrive com

Nhan Dan
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their newspaper, gave me reservations. They were unfriendly, even threatening.
Dong declared Vietnam was a socialist country and he a communist. His
doctrine was Marxism-Leninism. He had come to Singapore to speak as the
prime minister of the Socialist Republic of Vietnam. Vietnam had to contribute
to the cause of revolution and peace in Southeast Asia and the world. This
should not be of concern to Singapore. Vietnam was a country of 50 million
people, a brave nation, intelligent and rich in natural resources. Both the United
States and Japan had told the Vietnamese that their country would become
economically a strong country, and that they, the United States and Japan, would
need economic and trade relations with it.
After this confident opening, in answer to my questions he claimed that
Beijing had instigated 140,000 to 150,000 ethnic Chinese in the north to leave
Vietnam and return to China across the border. They could not understand why.
The root cause was China’s policy towards Vietnam after Vietnam’s victory

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over the Americans. China had continued its expansionist policy against
Vietnam. Beijing had made use of Khmer leaders to launch attacks into
Vietnamese territory to commit atrocious crimes. China had caused the Hoa
people to leave through a campaign launched by their embassy in Hanoi to train
those who returned in order to send them back to Vietnam. The overseas Chinese
had always been attached to their fatherland, feelings that were genuine and
respectable. Beijing had exploited such sentiments.
I asked whether China would have the same policy in Singapore if it had an
embassy here. He did not think it would because it did not want to bring back all
the overseas Chinese. It was better to leave them where they were, to use them
as instruments. Looking at me pointedly, he said that ethnic Chinese everywhere
would support China, just as ethnic Vietnamese abroad would support Vietnam.
Then he turned to economic relations, with the astonishing news that
Singapore could contribute to Vietnam’s reconstruction. When I gently
remonstrated that we must get some return for our goods and services, he bluntly
said Vietnam’s economy was not developed and the possibilities for trade were
limited. That night, as I walked with him to dinner, he again said Vietnam could
not trade but needed help; Singapore had benefited from the Vietnam War,
selling the Americans war material, hence it was our duty to help them. I was
dumbfounded by this arrogant and belligerent attitude.
As we drove along the waterfront the next day he saw the many ships at
anchor. Once again he charged that we had profited immeasurably from the
Vietnam War and developed Singapore at their expense so it was our duty to
help them. I was incredulous. I could not understand how we were under an
obligation to help them because they had been impoverished by a war we had
not caused and in which we had played no part. I said the main war materials we
supplied to US forces in Vietnam were POL (petrol, oil and lubricants) from
American and British oil companies. The profits to Singapore were negligible.
He looked sceptical. I said we were prepared to trade but not to give aid. He was
not pleased. We parted civil but cold.
Twelve years later, in 1990, in Davos for a World Economic Forum meeting,
Vo Van Kiet, the first vice-chairman of the council of ministers of Vietnam,
asked to see me. He hoped we would set aside outstanding differences and
cooperate. I regretted that so much time had been lost in their occupation of
Cambodia since December 1978. Until that conflict was resolved there could be
no government-to-government ties. Kiet said there were great opportunities and
he had granted over 100 investment licences to foreign companies. I replied that

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whether there were 100 or 1,000 licences, Vietnam’s economy could not take off
until the United States signalled the World Bank to extend soft loans for its
rehabilitation and the big US banks decided that Vietnam was an acceptable risk.
But once Vietnamese troops were out of Cambodia, we would resume where we
had left off in 1978.
In October 1991 Vietnam and all parties signed agreements in Paris for a
comprehensive political settlement. A week later, Vo Van Kiet, now the prime
minister, visited Singapore. Although I was no longer prime minister, we met
when I attended a dinner for him given by my successor, Prime Minister Goh
Chok Tong. As the dinner was breaking up, he rose, walked up to me, held my
arms in a semi-communist embrace, and asked whether I would help Vietnam. I
asked, how? By becoming their economic adviser. I was speechless. I had been
the target of their virulent attacks since their occupation of Cambodia.
Recovering from my surprise, I said that my experience had been confined to a
city state, that I had no experience of a big country like Vietnam with a
population of 60 million people, a country devastated by many years of war and
working a communist system that had to be transformed into a market system.
He persisted and followed up in two letters.
After an exchange of letters, I agreed to visit them, not as an adviser, but to
brainstorm ideas on their change to a free-market economy. It was a totally
different relationship when I went to Hanoi in April 1992. In an ornately
decorated conference chamber, with Ho Chi Minh’s bust as the centrepiece, I
spent a whole day with Vo Van Kiet and his team of ministers and top officials.
They had five questions, starting with what commodities Vietnam should focus
on in its modernisation, in what markets and with what partners. I replied that
the questions themselves disclosed a mindset that came from long years of
central planning, because they assumed there would be specific commodities,
markets or partners that could bring about a transformation for them. I suggested
that they study the process through which Taiwan and South Korea had
transformed themselves from agricultural into newly industrialising economies.
A good strategy, I said, would be to use South Vietnam, especially Ho Chi Minh
City (formerly Saigon), as the dynamo to get growth going for the whole
country. Communism had prevailed in the north for 40 years, but for only 16
years in the south. People in the south were familiar with a free-market economy
and could easily revert to working the old system. The best catalyst would be
their émigrés – Vietnamese refugees who had left after 1975 and done well in
business in America, Western Europe and Australasia. Invite them to return and

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kick-start the economy in the south, since they would want to help their families
and friends.
Kiet seemed attracted to the suggestion. He himself was from the south, but
other, more senior leaders wanted development to be spread equally, north and
south. Unstated were their apprehensions that these émigrés would return with
subversive ideas or with links to foreign agencies like the CIA. After decades of
fighting a hide-and-seek guerrilla war, they were suspicious of everyone.
Kiet flew to Ho Chi Minh City from Hanoi for a final meeting with me. He
asked me to return every year, saying I had been a real friend because I had
given honest and sincere advice, although sometimes it was painful to hear. I
promised to return within two years. In the meantime, I would send a task force
to study their infrastructure short-comings and make recommendations on their
seaport, airport, roads, bridges, telecoms and power supply.
Our officers believed the Vietnamese wanted me to be associated with them
to get closer to Asean and be more secure vis-à-vis China. Singapore had been
Vietnam’s most vocal opponent. If they normalised relations with us, foreign
investors would have greater confidence. We decided to put the past behind us
and help them as best we could to adjust to the market economy and become
compatible partners in Asean.
In Hanoi I asked to call on Pham Van Dong. Although he had retired, he
received me at their seat of government, a 1920s stone building which had been
the office of the French governors. He met me at the main door at the top of a
flight of stairs. Obviously infirm, he stood erect with great effort, then walked
unsteadily to his chair some distance away. They had switched off the air-
conditioning because he could not stand the cold. He was frail but spoke with
great firmness and determination. He recalled our meeting in Singapore, and said
the past was over; Vietnam was opening a new page. He thanked me for my
friendship in coming to help them. He sounded bitter and chastened. I
remembered the haughty and arrogant leader who came to Singapore in 1978.
Seeing how tough he was in defeat, I was thankful that Deng Xiaoping had
punished the Vietnamese. They would have been unbearable as the victorious
Prussians of Southeast Asia.
The Vietnamese leaders were an impressive group. Kiet was soft-spoken, but
his record as a communist underground fighter belied his gentle ways. They
were formidable opponents who had great determination and fighting spirit.
In my note to the cabinet I described Vietnam’s terrible state, although it was
six years after their opening up. In 1975 Ho Chi Minh City could vie with

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Bangkok; now (in 1992) it lagged more than 20 years behind. I felt that for the
time being the people had lost confidence in their leaders, and the leaders had
lost confidence in their system. However, they were an energetic and intelligent
people, Confucianist at the grass roots. I believed they would bounce back in 20
to 30 years. Every meeting had started and ended punctually. Their leaders were
serious men.
Both Kiet and the ex-general secretary of the Communist Party, Nguyen Van
Linh, whom I met in Ho Chi Minh City, separately said they had to re-educate
their cadres on the market economy and free themselves from wrong Marxist
thoughts. A foreign banker in Ho Chi Minh City told me that because of their
grievous brain drain, they suffered from a dearth of trained talent. They regarded
all foreigners as potential enemies whose activities their Vietnamese employees
had to report. He believed they wanted to prepare for the next war.
They were still very communist in their ways. Kiet was noncommittal after
the discussions we held in the morning and afternoon of the first day.
Immediately after these two meetings, I was taken to meet the Communist Party
general secretary, Do Muoi, who had been briefed on the contents of the two
discussions in the 20 minutes that elapsed from my parting with the prime
minister. Kiet must have got the nod after my meeting with Do Muoi because
that night, in his dinner speech, he picked up a point I had made, on which he
had earlier been noncommittal, that Vietnam should not have too many
international airports and seaports, but should concentrate on building one big
international airport and one big international seaport so that they could be
included in the world network of airports and seaports.
We discussed their loss-incurring state-owned enterprises (SOEs). They
wanted to privatise them or sell them off to the workers and others. I explained
that this method would not provide them with what was critical – efficient
management. Singapore Airlines was 100 per cent government-owned, but it
was efficient and profitable because it had to compete against international
airlines. We did not subsidise it; if it was not profitable, it would have to close
down. I recommended that they privatise their SOEs by bringing in foreign
corporations to get an injection of management expertise and foreign capital for
new technology. A change in the management system was essential. They
needed to work with foreigners to learn on the job. Privatising within the country
by selling to their own people could not bring about this result.
An infrastructure task force we sent in September 1992 submitted a report
which was adopted by the Vietnamese government. We set aside a US$10

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million Indochina Assistance Fund for technical training of their officials.
Do Muoi visited Singapore in October 1993. He was astonished at the high
quality of buildings and infrastructure. When he visited NTUC Fairprice
supermarkets he was impressed by the variety and abundance of consumer goods
available for our workers, just as Russian Prime Minister Ryzhkov had been in
1990. When I returned his visit a month later, I discovered from his officials that
he had instructed their agencies to learn from Singapore and wherever possible
to accord preference to projects proposed by Singapore investors. However, in
spite of the many agreements signed, our investors found they were not being
implemented. Junior officials used them to extract better offers from other
businessmen.
Do Muoi was the most important man in Vietnam. Of heavy build, with a big
face, broad nose, dark complexion and straight hair parted at the side and
combed straight towards the two sides, he looked neat and tidy. He wore the
Vietnamese version of a Mao suit, unlike Kiet who dressed in lounge suits. He
was not as reform-minded as Kiet, but neither was he as conservative as the
president, General Le Duc Anh. He was the balancer and arbiter between the two
wings of the party.
He told me he had been given two of my books when he was in Singapore.
He had the book of my speeches translated from Chinese into Vietnamese, read
them all, underlined the key parts on economics, and sent them to all his
important cadres and ministers to read. He slept little, from midnight to 3:00 am,
exercised for half an hour, and read until 7:30 am before he started work. Our
embassy staff reported that my book of speeches translated into Vietnamese was
on sale. They had not heard of copyright.
When he asked how he could increase the flow of investments, I suggested
they should abandon the habits they learnt in guerrilla warfare. Development
projects for the south which had been approved by the Ho Chi Minh authority
had to be approved again in the north by Hanoi officials who knew little about
conditions there. It was time-wasting. Next, projects approved by the
government in Hanoi were often blocked by local authorities because of the
supremacy of the local commander-in-charge, a legacy from their guerrilla days.
He spoke with sorrow about Vietnam’s unhappy past – 1,000 years spent
fighting China, another 100 years fighting French colonialism and imperialism,
then fighting for independence after World War II. They have had to fight the
Japanese, the French, the Americans and later the Pol Pot clique. He did not
mention China’s attack in 1979. For 140 years the Vietnamese had successfully

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waged wars to liberate their country. Their war wounds were deep, their
industries weak, their technology backward, their infrastructure deplorable. I
sympathised with him, saying that the war was a tragedy for both the United
States and Vietnam. He sighed and said Vietnam would have been a developed,
modern country like Singapore had it not been for the war.
I reassured him that eventually Vietnam could do better than Singapore.
There was no reason why the present peace and stability should not last for a
long time, for the lesson East Asia had learnt from the last 40 years was that war
did not pay. In two big wars, in Korea and Vietnam, and in the guerrilla war in
Cambodia, there had been no victors, only victims. Do Muoi sadly agreed.
In fact, the Vietnamese had made progress. As a result of more contacts with
foreigners and greater information on the market economy, ministers and
officials had a better understanding of the workings of the free market. Greater
street activity, more shops, foreign businessmen, hotels – these were all signs of
prosperity in Ho Chi Minh City and Hanoi.
On another visit, in March 1995, First Deputy Prime Minister Phan Van Khai
led the discussions on economic reforms. He was reputed to want to move
forward faster. Our investors had run into a thicket of problems. I told Khai that
if he wanted to attract investors, he must make the early ones welcome. They
should be helped to succeed after they had fixed their assets to Vietnam’s soil.
To treat investors with fixed assets in Vietnam as captives was the surest way to
drive others away. Their officials dealt with investors as they had dealt with
American soldiers, as enemies to be led into ambush and destroyed. Instead
investors should be treated as valued friends who needed guidance through the
maze of their bureaucracy with its landmines and other traps.
I gave some examples of the difficulties our investors had faced. One
Singapore property developer was building a hotel in Hanoi. Some 30
households around the site complained of noise and vibration nuisance. He
agreed to pay each household compensation of US$48 per month. Once this was
agreed, another 200 householders demanded payment. The developer decided to
use a different method to bore in the piles without noise or vibrations. He was
not allowed to do this because his licence was for the old equipment.
Next, Singapore Telecom had a joint-venture agreement for a radio-paging
service with Ho Chi Minh Post and Telecoms on a one-year trial basis, after
which they could apply for a 10-year licence. After Singapore Telecom had
spent US$1 million to get the system started, Ho Chi Minh Post and Telecoms
proposed to buy it from them. I told Prime Minister Kiet that the sum involved

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was just a million dollars, but the principle was important. If they reneged on the
agreement, they would lose the confidence of the Singapore business
community. Kiet must have intervened to get the project through, but not
without further changes to the original agreement and several outstanding issues
still unresolved.
Feedback from foreign investors showed that my message did get through
for Vietnamese officials became more helpful. The CEO of a large German
company who visited Singapore after Vietnam told me that they had provided
him with a guide. I smiled in satisfaction.
The top leaders continued to be fearful of the social ills that followed the
opening up of Vietnam, and also of losing political control, and slowed down
liberalisation. Unlike China, where most of the mayors and provincial governors
were young, tertiary-educated men, the top men in charge of Vietnam’s cities
and provinces were all former guerrilla commanders. They were aghast at what
had happened in Moscow and the Soviet Union, and they did not approve of the
social evils that had infected China’s coastal cities. This was not what they had
fought for.
In 1993 I had suggested to Kiet and his team that they promote these
guerrilla veterans to important advisory positions and allow younger men,
preferably those with exposure to the West, to take day-to-day charge. They
needed to have men who understood the market economy and could relate to
foreign investors. But the veterans who had fought and won the war were in
charge and wanted to build the country their way. When a younger generation
takes over, I believe Vietnam’s economy will advance faster. Important
leadership changes in September 1997 saw Vice-Premier Phan Van Khai
become prime minister in place of Kiet and Vice-Premier Tran Duc Luong
replace General Le Duc Ahn as president. These were steps towards a younger
generation, more widely travelled and exposed to the real world, who would
know only too well how far behind Vietnam was compared to its neighbours.
In November 1997 I visited Ho Chi Minh City where I met the rising mayor
and secretary of the Ho Chi Minh City party committee, Truong Tan Sang. The
country was in “holding” mode. Our investors in Ho Chi Minh City and foreign
bankers were aghast at the latest prohibition: no remittances out from
Vietnamese Dong into foreign currency. How were they to meet their foreign
debts, bank overdrafts, interest payments due for loans they had taken out in
banks overseas for their investments in Vietnam? How could they carry on
business? The ministry of trade and industry had been strongly against this move

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which they knew must discourage investors, but could do nothing. The
Vietnamese central bank and ministry of finance were alarmed by the currency
crisis that had hit the region and worried about their low foreign exchange
reserves.
In Hanoi I explained to Phan Van Khai why such sudden changes were
damaging. Many other things had also gone wrong. Singapore Telecom had
settled its paging business only to run into trouble over its mobile phone
business. Vietnamese Telecoms did not want to issue the licence although they
had promised one. The Vietnamese wanted to run it themselves. I pointed out
that Singapore had to follow the trend in the developed world in privatising its
telecoms, which had to meet international competition. The only way to meet the
fiercest competition was to operate as a private-sector company with foreign