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SCMP Reporter

Politics has proved fertile ground for Singapore's new Trade and Industry Minister George Yeo Yong Boon - in more ways than one.

 Not only has Mr Yeo enjoyed an illustrious career spanning five different ministries since resigning from the armed forces in 1988 to take up the civic cause. It has also done wonders for his private life.

 Explaining his initial reluctance to enter politics, Mr Yeo recalls: 'At that time, we didn't have children. We had difficulties starting.

 'The doctors said stress is no good for you and your wife. But after I entered politics we became very fertile.'  Within 23 months of taking office in 1988, the couple conceived three children.

 'Once we had the engine started we thought we better not stop,' he said.

 Two-and-a-half years later his wife Jennifer gave birth to a fourth.

 That's when they decided to call it a day.

 Mr Yeo's career in government has been similarly prolific. Within two years of taking office, he was appointed minister of state for both finance and foreign affairs by then prime minister Lee Kuan Yew.

 Then, when Mr Lee stood aside in 1990, one of the first moves of new Premier Goh Chok Tong was to create a new Ministry for Information and the Arts (Mita) and ask Mr Yeo to take charge.

 It was his first fully-fledged Cabinet role and one he held until June this year.

 Because of Singapore's tight focus of power, it is common for political high flyers within the ruling People's Action Party to double up with secondary posts.

 From January 1997, Mr Yeo spent half his day at Mita overseeing censorship, the media and culture, and the other half as second minister for trade and industry.

 So when he was asked to replace First Trade Minister Lee Yock Suan in June's Cabinet reshuffle, it made for a smooth transition.

 'When I came in as No 2 in the trade ministry, it was towards the tail-end of the boom,' he said.

 'At that time the prime minister was rather worried about asset inflation and people taking things easy. So, in a very prescient way, he said let's take a long look at the economy.'  A special committee was set up to conduct a major review of Singapore's long-term competitiveness, with Lee Yock Suan as its chairman and Mr Yeo again his No 2.

 The timing of the creation of the Committee on Singapore's Competitiveness (CSC) proved uncanny.

 Mr Yeo said: 'No sooner had we formed the committee we went into the downturn. So the entire focus shifted from a long-term look at a time of boom, to a long-term look at the same time getting us out of the downturn.'  It meant that when the Thai baht's peg was smashed by speculators on July 2, 1997 and contagion spread, Singapore already had the apparatus in place to prepare a cool, calculated response to the structural repercussions while some of its neighbours panicked.

 'It was amazing. We had a series of meetings, and each meeting the picture looked more bleak than the previous meeting,' Mr Yeo said.

 'Naturally, we became quite preoccupied by the crisis and how to get us out of it, but at the same time kept one eye on the long-term.'  The committee's wide-ranging recommendations comprised a package of both short and long-term remedial measures which have won widespread international acclaim and done much to hasten the republic's rapid economic recovery.

 The centrepiece of the short-term initiatives was a S$10.5 billion (about HK$48.57 billion) a year cut in business operating costs including an average 15 per cent reduction in salary packages, taking effect this year.

 The currency crisis left the Singapore dollar down about 15 per cent against the US dollar, while its main regional competitors saw their currencies fall by more than 30-40 per cent, thus boosting their comparative cost base. (Except, of course, for Hong Kong and the mainland).

 This made rethinking Singapore's competitiveness all the more imperative. The government concluded that migration of low-cost manufacturing out of Singapore was to some extent inevitable.

 Instead, the CSC and other government-initiated think-tanks have drawn up a long-term master plan to upgrade Singapore industry for the new millennium, focusing on high-yielding, high-skilled businesses not too draining on the city-state's limited land and human resources.

 Electronic commerce, petrochemicals, high-technology manufacturing such as wafer-fab production, pharmaceuticals, research and development, and financial services are among core industries chosen as priorities by the Economic Development Board.

 Mr Yeo said: 'Within manufacturing, the metal bending and assembly kind of work, we can never compete with Malaysia or Guangdong, or eventually Sichuan and some inner provinces of China.

 'We accept that those things we will lose. But at the same time, product life-cycles are shortening.'  In the bright new future envisaged, Mr Yeo and Cabinet colleagues see the city-state serving as a hub for entrepreneurs and scientists to invent, develop and manufacture new products during their early life-cycle when extractions are highest.

 They realise that when everyone else jumps on the bandwagon, production will inevitably be initially lost to cheaper, less advanced countries abroad.

 But later in the life-cycle, once mass production of that product becomes hi-tech and automated, skilled process engineering becomes important, allowing Singapore a 'second squeeze of the olive', as Mr Yeo put it.

 That is when Singapore, with its highly skilled, reliable and computer-literate workforce, comes into its own and labour and land costs become secondary.

 It is a formula that worked for high-cost Japan, and one Singapore hopes to duplicate.

  'Old patterns will no longer prevail in the future. We have got to take a fresh look at what are our strengths and our weaknesses,' Mr Yeo said.

 The CSC's recommended cost-cutting package was clearly a short-term response to the currency crisis. What worries Mr Goh's government more are the longer-term structural problems for which the committee was originally intended.

 A major overhaul of Singapore's education system, legislation, physical infrastructure and manpower policies has begun for the new millennium.

 Foundations are being laid for a hi-tech, computer-literate, e-commerce society. About 98 per cent of homes now have access to broadband cable, providing citizens with a wealth of super-high-speed Internet and e-commerce services.

  Schoolchildren are being told they must grow up to become 'technopreneurs' and by the end of this year a first batch of 100,000 people should be provided with computer training.

 Teaching methods are being altered to encourage youngsters to become creative and inventive, addressing one of Singapore's traditional weak points.

 At the same time foreign talent and venture capital is being lured and tough bankruptcy laws eased to encourage more corporate risk-taking among would-be Bill Gates'.

 The rethink even goes as far as to making Singapore a more attractive place in which to live, not just for the benefit of foreign businessmen and scientists, but also to prevent Singaporeans' own finest from drifting abroad.

 Mr Yeo said: 'In the end, we are creating a total environment that is conducive towards brainwork.'  An easier option for Singapore may have been to follow Hong Kong's example and largely kiss domestic manufacturing goodbye and focus instead on its vibrant services and trading sectors.

 'I think if we had no need for a defence force, the temptation to be more like Hong Kong would be strong,' said Mr Yeo, as his military past crept to the surface.

 'Hong Kong has lost its manufacturing to China. This makes sense for Hong Kong. But we say no. Whatever it takes, we will not be hollowed out.

 'Like Japan, we will always emphasise twin engines, which means not just services but manufacturing.

 'We are an independent country. We must defend ourselves, which means we need a counter defence force . . . and we've got to be good in missile technology, in mechanical systems, and command and control systems.

 'If we are not at the forefront of manufacturing technology, how do we maintain a defence force. And that is crucial to us.'  One of the main reasons behind Singapore's push to set up off-shore industrial parks in neighbouring countries has been to provide a total service to multinationals based in the republic.

 Not only do multinationals with regional headquarters status get lucrative tax breaks and VIP treatment in Singapore, they can also enjoy its hospitality, efficiency and clean management should they need to set up cheaper factories abroad.

 The benefit for Singapore is that it not only continues to collect rent, but off-shore revenues are returned to the republic. In addition, higher yielding research and development, marketing, management and hi-tech automated manufacturing remain.

Brigadier-General George Yeo Yong Boon entered politics after a distinguished military career. On graduating from Cambridge University with a double first in engineering, he joined the Singapore Air Force as a signals officer, rising to become head of air planning. After time out to complete a masters degree at Harvard Business School he returned to Singapore as air force chief-of-staff, then Defence Ministry director of joint operations and planning.

We are an independent country. We must defend ourselves 



Singapore industry minister George Yeo tells Barry Porter his battle plans