Sorry, Singapore: Malaysia dumps assets to cope with US$245 billion debt

March 29, 2018

Politics

• Malaysia is holding a fire sale of its ‘non-strategic’ assets.
• Critics fear the moves will privilege an elite group and worsen ties with neighbouring Singapore.

by Tashny Sukumaran

Malaysian Prime Minister Mahathir Mohamad. Photo: Xinhua

A year into a new ruling administration, Malaysia continues to grapple with a whopping 1 trillion ringgit debt (US$245 billion) – but as it goes on a selling spree of “non-strategic assets”, questions are being asked over who is benefiting from the exercise and whether the moves could cause ties with neighbouring Singapore to take a further hit.

Government-linked investment company Khazanah, which has resolved to pare down its “non-strategic” assets, has so far got rid of its stakes in telcos, health care groups, banks and properties. Reports have indicated larger projects, such as the popular theme park Legoland, may also be up for grabs for the right offer.

 

In parliament earlier this week, Finance Minister Lim Guan Eng said a tower building in Hong Kong – which once housed the Malaysian Consulate-General – was being sold for 1.6 billion ringgit (US$392 million). This came just days after Khazanah was reported to be selling the 39-storey Duo Tower in Singapore, owned by M+S – a joint venture by Khazanah and its Singaporean equivalent, Temasek Holdings. Last month, Malaysia’s Axiata Group, in which Khazanah has shares, announced it would sell its stakes in Singapore’s M1 telco.

The DUO tower, in Singapore. Photo: Ole Scheeren

 

 

 

Khazanah also last year began selling shares in CIMB Bank, and dumped a 16 per cent stake in Malaysian-Singaporean private health care group IHH Healthcare. This move has raised eyebrows among analysts and opposition politicians, who have criticised the ruling Pakatan Harapan coalition for vague economic policies and failing to focus on remedying wealth inequality, with others commenting the sale reflected a cooling of interest in joint Singapore projects.

 

Khazanah, which is managed by the Minister of Finance Inc and modelled after Singapore’s Temasek Holdings, last year posted its first pre-tax loss in 13 years, partly due to its takeover of the loss-riddled Malaysia Airlines.

It attributed the 6.27 billion ringgit loss in 2018 – compared with a profit of 2.89 billion ringgit in 2017 – to both the resetting of the government’s mandate as well as global and domestic developments.

IHH Healthcare’s Mount Elizabeth Novena Hospital in Singapore. Photo: Bloomberg

 

In line with the new government’s strategy, Khazanah split its assets into “commercial” and “strategic” holdings, with managing director Shahril Ridza Ridzuan telling local media the commercial fund was “really gearing up towards being a long-term real return provider for the government”, as the government needed it as an alternative source of revenue.

 

Disgraced former prime minister and sitting Member of Parliament Najib Razak has fiercely questioned Khazanah’s new strategy, saying it was illogical to reduce investments, citing its annual growth rate of 14.7 per cent from 2008 to 2017.

 

“Even if this is to pay government debt, where is the logic in selling assets which generated a profit of 14.7 per cent each year to pay debt which has interest charges of 3.8 per cent per year?” said Najib, who served as both prime minister and finance minister when Malaysian debt rose to an all-time high. Najib is currently facing scores of charges of corruption and money-laundering over his role in the 1Malaysia Development Berhad (1MDB) financial scandal.

Meanwhile, observers have questioned whether the asset sale strategy will truly benefit the nation, or backfire by creating oligarchies because of the administration’s concurrent focus on a Bumiputra economic agenda.

 

In Malaysia, ethnic Bumiputra – Malays and indigenous peoples – make up about 69 per cent of the population, and are constitutionally granted special privileges: affirmative action that takes the form of enhanced access to scholarships, civil service positions, land, and real estate purchases.

 

Upon coming to power last May, Pakatan Harapan pledged to chart a “new” Bumiputra-centric economic empowerment agenda that would generate growth and allow Bumiputra entrepreneurs to lead the economy – although some senior leaders such as prime minister-in-waiting and democracy icon Anwar Ibrahim have stressed that the government must focus on Malaysia and poverty eradication.

“If they are going to divest and also abide by this Bumiputra agenda, then it limits the cohort of people who can acquire assets such as government-linked companies,” said top political economist Terence Gomez of University Malaya. “Who can afford to do this – and of that group, who are the Bumiputras with the resources to invest? Is the government going to channel even more wealth to a rich elite? Divestment of assets should not be an ethnic issue.”

Doing so could result in an oligarchy of rich businessmen who run key national services and corporations, Gomez said.

 

 

“When countries like Indonesia democratised by turfing out draconian governments, they also began divestment exercises. But this created oligarchs, which is not a road Malaysia should go down,” he said. “Is this the reform Pakatan Harapan promised? If so, it is just creating new problems that can emerge from this divestment exercise. Wealth inequality is a problem and taking assets from the government and passing them on to only rich people who have the resources will only make the rich richer.”

The divestment strategy can be made even more problematic if the government does not clarify what it means by “non-strategic”, as it could extend to institutions such as banking or utilities which should remain under state control, Gomez said.

 

‘I love Malaysia Airlines, but we can’t afford it’, Mahathir says. Moves such as the selling of Axiata’s stake in Singapore’s M1 and the rumours of Duo Tower being sold down have also raised questions about Prime Minister Mahathir Mohamad ’s often hawkish relationship with neighbouring Singapore, and whether he considers these assets unessential.

“I won’t discount the possibility that Mahathir views such joint ventures with Singapore as being ‘non-strategic’,” said Eugene Tan, a law and public policy expert with Singapore Management University. “There could be the assessment that such investments benefit the Singapore economy more than Malaysia’s public coffers. This, arguably, stems from his perception that many of the deals his predecessor entered into – especially with Singapore – were and are not necessarily in Malaysia’s best interests.

Putting it bluntly, Mahathir could be flagging that he is not confident in the Singapore economy Eugene Tan, Singapore Management University

“But it could be about something simpler: the imperative of the Malaysian government to monetise its assets in order to reduce its budget deficit – and the assets in Singapore are probably best to monetise given the returns,” he said.

 

“Mahathir could also be signalling that the prognosis for the Singapore economy may not be good in the short-term, and so it is best to strike while the iron is hot and fully capture the value of these assets,” Tan said. “Putting it bluntly, Mahathir could be flagging that he is not confident in the Singapore economy.” Singapore-Malaysia tensions put Lion City’s lawyers to the test.

 

Political analyst Mustafa Izzuddin of Singapore’s ISEAS-Yusof Ishak Institute shared a similar view, saying that besides being an economic decision, the sale of stakes in Singapore projects could also be viewed as a “political decision” that reflects Mahathir is not as “genuinely interested as his predecessor Najib was of embarking on joint ventures with Singapore”.

“If the joint ventures are not in Malaysia, as is the case with the Duo office, the Pakatan government under Mahathir are more likely to monetise it, especially if it does not bring direct domestic economic benefits to Malaysia,” said Mustafa.

 

Najib and Singapore Prime Minister Lee Hsien Loong had entered into joint projects in Singapore and in the Iskandar region of Malaysia’s southernmost state of Johor as part of efforts to entwine the two nations with a “prosper thy neighbour” philosophy and place bilateral ties on a surer footing.

 

But the two countries have recently experienced a cooling off in ties following differences of opinion oversea and air borders, as well as disputes over water prices, though their leaders will meet on April 8-9 in Kuala Lumpur for a retreat.

In an attempt to better manage its debt of over 1 trillion ringgit, Malaysia has also cancelled or delayed several infrastructure megaprojects, including the High Speed Rail between Singapore and Malaysia, and several China-backed gas pipeline projects.

Mahathir has urged the people to be patient, saying that if Malaysians “cooperate in an atmosphere of peace and calm, then we can restore the financial position and develop our country”. ■

https://www.scmp.com

WOMEN WHO SPEAK TRUTH TO POWER

March 26, 2019

Kia Soong Kua

5 hrs ·

Press statement by Kua Kia Soong, SUARAM Adviser 26.3.19

The obsequious protestations by mainly male politicians over Nurul Izzah’s frank opinion about the Prime Minister in her Straits Times interview brings to mind my article last year: “Thank goodness for daughters!” (9 Jan 2018). At that time it was a breath of fresh air to read Sangeet Karpal’s critical statement on Pakatan Harapan’s endorsement of BN 2.0 with Malaysia’s infamous autocrat as their “interim Prime Minister.

She also pointed out that the leaders in the opposition had remained silent in the face of Mahathir’s recent hollow “apology” over his use of the ISA during his first term as PM. Then there was Anwar Ibrahim’s other daughter, Nurul Nuha who on 14 September 2016 felt she had to uphold her family’s dignity by demanding that former PM, Dr Mahathir apologise for ‘trumped up’ charges against her father. The men currently critiquing Nurul so loudly doth protest too much…

Is it not Malaysian to criticise the PM?

Some of these male politicians have spouted the old feudal argument by saying that Nurul Izzah should show more courtesy toward the Prime Minister. Really? If Malaysians want to learn about the correct etiquette with regard to respecting Prime Ministers, they should learn from the recalcitrant Dr. M himself! Didn’t he teach us the art of the surat layang when he wrote his piece against the Tunku during the May 13 crisis? It certainly was not “sopan santun” the way he slammed the “Father of Independence” on his way to political power.

And if the office of Prime Minister has to be so respected, why did Dr Mahathir proceed to humiliate and denigrate Prime Minister Abdullah Badawi after he had ascended the post in 2003 and to do the same against Prime Minister Najib Razak after 2009? Wasn’t it the only way to get rid of the Great Kleptocrat as Dr. M has reminded us? Let’s not forget that Dr. Mahathir does not respect prime ministers and presidents in other countries either and that was why the former Australian PM Paul Keating bequeathed Dr. M with the epithet “recalcitrant”.

Calling a spade a spade

Was Nurul Izzah wrong to refer to Dr. M as a former dictator?

Some young male politicians in PH may have been born after Dr. M left office in 2003, but they only need to talk to their older colleagues like the former leader of the Opposition and the PM-in-waiting himself to know that Dr. M was called worse things after 1998. Nurul Izzah and her siblings know this only too well. Or if these male politicians in PH are keen to learn, they can start reading all that was written about Dr. M during his first term as Prime Minister by writers such as K. Das, Barry Wain, Kua K.S. and others.

Whiffs of autocracy

Nurul Izzah has resigned from the PAC because Pakatan’s promised reform of having an Opposition MP chair the committee has been overruled by the PM. This is but the latest in a series of unilateral decisions by Dr. M since he took office in May 2018, including the plans to privatise Khazanah and to start another national car. The Cabinet will have to bear collective responsibility for the consequences in the event of its failure. We are witnessing the same “silence of the lambs” culture for which the DAP used to criticise the BN leaders under Mahathir 1.0 with the new ministers saying “We’ll leave it to the Prime Minister” and “I’ll discuss this with the prime minister to let him decide”, ad nauseum.

The PH manifesto prohibits the PM from also taking over the Finance portfolio but Dr Mahathir has in the 100 days taken over the choicest companies, namely Khazanah, PNB & Petronas under his PMO. It is the return to the old Mahathirist autocracy. The appointment of Prime Minister Dr Mahathir Mohamad and Economic Affairs Minister Azmin Ali to the board of Khazanah Nasional Berhad also goes against the PH manifesto promise of keeping politicians out of publicly-funded investments since it leads to poor accountability. Only by insisting on boards being comprised of professionals and on rigorous parliamentary checks and balances for bodies such as Khazanah can we ensure a high level of transparency and accountability.

Mahathir’s response to this criticism was the old feudal justification: “I started Khazanah so why can’t I be in it?” In other words, “Stuff your high ideals and democratic principles!”

What spat with Singapore?

 

Some of these male politicians have further claimed that Nurul Izzah should not have made her views known to a Singaporean newspaper because of our supposed “spat” with Singapore over the water agreement. Do we have “spats” with either Singapore or China or are these issues just another diversion created by Dr. M to cover up his unfulfilled reforms and failed economic policies?

Let us be clear. The 1962 water agreement between Singapore and Malaysia is sacrosanct just like all the other international agreements made with China and other countries. Dr M himself should be held responsible for failing to amend the agreement when we had the right to do so in 1987. In fact, this is another issue that he should apologise to Malaysians for. Malaysia’s current financial difficulties are strictly of our own doing and we cannot rely on other countries for alternative sources of revenue growth. Creating a “spat” over the water agreement is another vain attempt at creating a storm in a teacup out of a tired issue when the new administration should be doing its best to nurture good bilateral relations with all our neighbours in the region.

 

The importance of speaking truth to power

Malaysians in the “New Malaysia” need to value and practice “speaking truth to power”. Instead of criticising Nurul Izzah based on feudal obeisance to authority, let her be an example especially to the opportunistic men who have lost their principles and integrity. It means that we have to take a stand if we truly want reformasi and to challenge injustice and authoritarianism.

All it takes is courage, courage to stand for one’s convictions and not the courage to throw conviction out the window for personal gain or political opportunism. “Speaking truth to power” means believing deeply in what you say – it may not be popular. It means taking a risk, it means standing for something without fearing condemnation.

After witnessing these interventions by Karpal Singh’s daughter, Sangeet Karpal and Anwar Ibrahim’s daughters, Nurul Nuha and now Nurul Izzah at the critical junctures, I say again: Thank goodness for daughters. They have shown the male politicians that they have the gall to speak truth to power…

 

 

 

Malaya-Singapore Relations: Old Bilateral Issues have resurfaced under PH Rule, says Diplomat Bilahari Kausikan

February 22,2019

Mr Kausikan said the fundamental reason for Malaysia’s continued provocative acts towards Singapore is because of the republic’s system of a multiracial meritocracy, which greatly contrasted from the former’s race-based policies.

Political instability in the ruling Pakatan Harapan (PH) coalition and its failure to capture Malay support are aggravating relations between Malaysia and Singapore, said former Singaporean diplomat Bilahari Kausikan.

Mr Kausikan said after Barisan Nasional (BN) was replaced by PH in the 14th general election last year, “old bilateral issues almost immediately resurfaced”.

He was referring to recent disputes on maritime boundaries and joint airspace control, as well as ongoing negotiations into the price of water Malaysia sells to Singapore.

“These issues are not new and they cannot be resolved,” Mr Kausikan said in a public lecture at the National University of Singapore.

“To resolve an issue, both sides must want to resolve it. Whereas in this case, the other side’s interest is to keep them alive to use them to rally support. “It would be wrong to place too much emphasis on the personality of (Prime Minister) Dr Mahathir (Mohamad) although that was undoubtedly a factor,” he told more than 200 attendees.

“More importantly, the new Pakatan Harapan government is fundamentally incoherent.

“It’s falling apart,” said Mr Kausikan.

He cited a Merdeka Centre research last year which found a three-way split of Malay votes for PH, UMNO and Islamist party PAS, meaning that the support of Malaysia’s largest ethnic group looks to be fiercely contested by the three groups.

The results, said Mr Kausikan, reveals the instability of the ruling pact, which will grow further as it desperately tries to rally greater Malay support if it hopes to retain power in the next general election.

Using Singapore as a bogeyman or whipping boy to rally the Malay ground is a time-tested tactic,” he said.

“Dr Mahathir used it when he led UMNO, he uses it now that he is head of Bersatu.

“This is not just a matter of personality or historical baggage.”

In his lecture, Mr Kausikan also said he expects Malaysia’s political scenario to remain in a flux for some time because of infighting within PH and the growing threat of Islamic fundamentalism.

Show of Might

The Former Policy Adviser to Singapore’s Ministry of Foreign Affairs urged the republic’s incoming new leadership to maintain the country’s military capabilities, saying that a show of might is crucial in its dealings with Malaysia.

This is because Malaysian leaders will always seek to undermine and subjugate the city-state.

“Even though Singapore is now accepted as a sovereign state, it is not a situation which Malaysia is entirely comfortable with,” Mr Kausikan said at the lecture titled ‘Singapore’s relations with Indonesia and Malaysia’.

Today, the governments of our neighbours deal with Singapore as a sovereign nation only because we have developed capabilities that have given them no other choice.

“It is not their preferred way of dealing with a small, ethnic Chinese-majority city-state.

“They would prefer us to accept a subordinate role as do their own Chinese populations,” he said.

Singapore’s new leaders must, therefore, continue to “establish red lines,” which send a clear message to Putrajaya that the country is equipped and ready to use its military might in the event it is forced to a corner. The threat of use of force is as much part of diplomacy as negotiations.

Diplomacy is not just about being nice.“It is essential to establish red lines because it is only when red lines are clearly understood that mutual relations can be conducted on the basis of mutual respect.”

Mr Kausikan said the fundamental reason for Malaysia’s continued provocative acts towards Singapore is because of the republic’s system of a multiracial meritocracy, which greatly contrasted from the former’s race-based policies.

“The basic and enduring issue is not what we do, but what we are – a multiracial, meritocratic small city state that performs better than they do and we must always perform better.

“The very existence of our dramatically very different system, too close to be ignored or disregarded, that does better than their system, poses an implicit criticism of their system to their own people.”

https://www.todayonline.com

 

How Deng and his heirs misunderstood Singapore

February 3, 2019

Mark R Thompson – 01 Feb, 2019

 

https://www.newmandala.org/how-deng-and-his-heirs-misunderstood-singapore/

 

As official China celebrates the four decades of “reform and opening” that began in late 1978 to early 1979, it is instructive to recall the role Singapore played in this process. The fulsome eulogies for Lee Kuan Yew offered by Chinese officials in 2015, beginning with Xi Jinping himself (who has been noticeably less enthusiastic in his praise for Deng Xiaoping given China’s top leader’s “family feud” over who deserves the most credit for the reforms), are just the most obvious indication that Lee and the “Singapore model” more generally have played (quite literally) an oversized role in China’s rapid transition from Maoism to “Market-Leninism”. Appropriately, Lee was honoured late last year as one of the foreigners who helped China most in its reform process.

Ezra Vogel’s his monumental 2011 biography of Deng

In November 1978 Deng, newly installed as China’s paramount leader, visited Singapore. Ostensibly the trip was part of a diplomatic campaign by China against what it considered a growing threat from Soviet-backed Vietnam. But in Singapore, Deng instead became obsessed with the city-state’s purported transformation from a backwater fishing village to a leading global city under Lee Kuan Yew and his People’s Action Party’s (PAP) rule.

In his welcoming remarks, Lee stressed that Singapore’s ethnic Chinese citizens were the sons and daughters of uneducated, landless peasants from Southern China, leading Lee to suggest, as former Foreign minister George Yeo has recently phrased it, if Singapore with its “poorly-educated coolies could make good, how much better mainland China could be if the right policies were adopted.” Deng showed great respect for Lee (going so far as to not smoke in the presence of the fastidious Lee despite the Singapore leader providing him with a spittoon in a well-ventilated room) as he had inherited a broken system that he was quickly trying to fix. In his comments Deng endorsed the (exaggerated) story of Singapore’s miraculous metamorphosis.

Crucially, Deng and Lee developed a special relationship during Deng’s short visit. Both were anti-colonial leaders at the forefront of their countries’ revolutionary movements and committed to political order over chaos. Ezra Vogel, in his monumental 2011 biography of Deng, comments that:

“Deng admired what Lee had accomplished in Singapore, and Lee admired how Deng was dealing with problems in China. Before Deng’s visit to Singapore, the Chinese press had referred to Singaporeans as the ‘running dogs of American imperialism.’ A few weeks after Deng visited Singapore, however, this description of Singapore disappeared from the Chinese press. Instead, Singapore was described as a place worth studying .…. Deng found orderly Singapore an appealing model for reform, and he was ready to send people there to learn about city planning, public management, and controlling corruption.”

Unlike other Chinese party leaders and academics who, as Kai Yang and Stephan Ortmann have shown, were looking at a variety of potential models such as Sweden (seen then to represent a “‘third way’ between Communism and capitalism” and symbolising “the ideals of social equity and harmony”), Deng was single-mindedly focused on Singapore, a fascination that was initially quite idiosyncratic. He was searching for a model that both legitimated party rule and was adaptable to the country’s rapid industrialisation. Deng’s articulation of the “Four Cardinal Principles” in 1979 showed that he still adhered to party orthodoxy in regard to repressing political dissent and reaffirming the party’s monopoly on power. But Deng was also concerned with how the party could guide China through state-led capitalist growth. In this regard, Deng left little doubt his thinking was closer to Lee’s than Karl Marx’s.

Yet the example of Singapore became central to the Chinese regime’s efforts to legitimise authoritarian rule only after collapse of the Soviet Union and its Eastern European state socialist satellite states and the Tiananmen Square massacre. Deng’s endorsement of Singapore as a model during his early 1992 “southern tour”, undertaken to restart the reform process, led to an outbreak of “Singapore fever” and an obsession with learning from Singapore among Chinese governing elite and academics. In quick follow up to Deng’s praise, a high level Chinese Communist Party (CCP) delegation was sent to Singapore, which quickly produced by book about the city-state that was distributed to all party branches. Hundreds of official trips followed, with Singapore setting up various programs to accommodate the influx of Chinese visitors such as the “Mayor’s Class” at Nanyang Technological University, attended by thousands of mid-level mainland officials.

An authoritarian path to modernity

It has been difficult for China to find examples of a successful combination of centralised authoritarian rule with effective and corruption-free government in a modern society anywhere else in today’s world besides Singapore. Besides the tiny sultanate of Brunei, Singapore is the only high-income country with a non-democratic regime in East Asia and arguably the only clear case globally, as oil-dependent absolute monarchies are rich but not “modern” in most understandings of the term. China’s observers also tend to see Singapore as “Chinese” and Confucian-influenced (ignoring its distinctive national identity and multi-ethnic character), making it seem more culturally appropriate for emulation.

Although Singapore remains a stand-alone example of high income, non-petroleum reliant “authoritarian modernism”, there is historical precedent for the attempt to remain authoritarian while successfully modernising in East Asia. Framed this way, Singapore is much less a “lonely” example of authoritarian modernity than it is a continuation of a historical trend. The “Prussian path” of German authoritarian-led development was followed by Meiji reformers and this model was later diffused throughout East Asia. Singapore is a particularly important example of this phenomenon not only because it wanted to “learn from Japan” (a government campaign in the early 1980s in which Japan had served as an ideological device used to maintain political control and manage social change that accompanied the upgrading of the country’s economy) and constructed a reactionary culturalist discourse (the “Asian values” debate of the 1990s) to help justify continued electoral authoritarian rule, but also because it became the chief model for Deng’s post-Maoist developmentalist leadership.

 

The chief “lesson” Chinese experts have derived from Singapore’s fight against corruption is the importance of a committed leadership. But this analysis ignores the significance of the rule of law in Singapore, despite its being a tool to “constrain dissent” and increase the PAP’s “discretionary political power”. Theoretically, the PAP is not above the law, while the CCP claims primacy over any laws (euphemistically called “rule by law”), with China’s top judge recently denouncing judicial independence as a “false Western ideal”. By viewing determined leadership as the main lesson from Singapore, while at the same time rejecting an effective and independent legal system which was key to the city-state’s success in combating corruption, the Chinese leadership has picked “lessons” that confirm their own policy style while ignoring others that could potentially raise critical questions about it.

In many important ways, from country size to political “DNA” (i.e. the legacies of totalitarianism in post-Mao China compared to Westminster-style parliamentary institutions in Singapore), the two nations are simply too different to allow for any meaningful policy transfer. Moreover, Chinese observers have largely seen what they want to see: a one-party state ruled by wise leaders and built on Confucian principles which is successful and legitimate.

Rather, the key significance of the Singapore model for China has been primarily as a form of ideological confirmation, as it has provided an alternative telos for China as it modernises. Singapore shows what China can become: a highly modern but still one-party state undertaking carefully calibrated reforms. Thus, small though it is, Singapore has played an outsized role in reinforcing the CCP’s leadership’s belief that it can avoid the “modernisation trap” and remain resiliently authoritarian during modernisation and even after it successfully modernises.

Growing out of the “Singapore model”

But more recently China seems to have moved away from adopting Singapore’s “soft authoritarian” style of rule. A recent book by David Shambaugh claims that gradualist political reforms by Xi Jinping’s predecessors Jiang Zemin and Hu Jintao, albeit within a continued authoritarian framework, were “intended to open up the system with carefully limited political reforms,” seeking to “manage political change rather than resist it.” By contrast, Xi’s recent widespread crackdown on dissent has undermining hopes of further, however constrained, political liberalisation. Shambaugh regrets that Singapore’s semi-competitive system, with a dominant party legitimised through limited but significant popular participation, and whose power is constrained by the rule of law, is no longer considered relevant by the Chinese leadership.

Thus, China seems to be moving further away from rather than toward the Singapore model. At the same time, as China takes a more aggressive stance in its foreign policy, particularly the South China Sea, and becomes more confident of its own political and developmental success, its interest in Singapore, which has staked out an independent foreign policy that has sometimes angered the mainland, has declined. After many years in which  officials offered a codified version of the “Singapore story” to Chinese observers, Singapore Prime Minister Lee Hsien Loong recently described the island state as little more than a “bonsai tree model of what China is” that might be “intriguing to scrutinise” but from which is hard for a gigantic country like China to draw lessons. Seemingly consigned to a historical period of conservative reformism in China, the “Singapore model” now appears to represent a path not taken by the mainland’s hard-line leadership.

This essay draws extensively from the author’s Authoritarian Modernism in East Asia (Palgrave 2019)

 

This is What Inequality Looks Like

REVIEWER: Serina Rahman

Singapore’s leadership one step ahead

December 13, 2018

 

by Michael Barr, Flinders University

http://www.eastasiaforum.org

 

After years of winnowing through candidates, Singapore Prime Minister Lee Hsien Loong has anointed Finance Minister Heng Swee Keat as his successor. Back in 2016 there were six candidates for the role but one by one they were removed from contention, mostly by mechanisms in the form of gifts from the Prime Minister. One of the stronger candidates, for instance, was unexpectedly made Speaker of the House, which put him out of contention.

 

There is no formal process of selection and the decisions are made behind closed doors, with narratives about the selection process generated retrospectively. The trigger for the final declaration of Heng Swee Keat as the designated successor was his election to the rather obscure position of First Assistant Secretary-General of the ruling People’s Action Party. This election was initially greeted as an indicator that Heng Swee Keat was merely the front runner to be next Prime Minister but in the space of a day it morphed into a declaration of succession.

Heng Swee Keat was already known to be Lee Hsien Loong’s favourite even before 2016. When Heng Swee Keat suffered a stroke during a Cabinet meeting in May 2016 and spent six days in a coma, it was universally accepted as being a blow to Lee Hsien Loong’s succession plans. Only extreme medical intervention saved Heng Swee Keat’s career and brought him back into contention. Since then, the process of selecting the next prime minister has suffered unexplained delays. Now we know why the delay was necessary: to give Heng Swee Keat a chance to settle doubts about his health, while the other candidates were dropped.

Heng Swee Keat was never an obvious candidate. He has a relatively narrow range of Cabinet and professional experience and is a rather awkward public speaker. No one doubts his technocratic competence, nor that he will be ‘a safe pair of hands’ but few, if any, suggest that he has strong political skills. So why did Lee Hsien Loong endorse Heng Swee Keat ahead of younger, stronger and healthier candidates with better political instincts?

The question is easier to answer if we begin by asking who will be the next prime minister after Heng Swee Keat. Lee Hsien Loong’s son, Li Hongyi, is currently a senior civil servant working in one of the divisions of the Prime Ministers’ Office and has been identified by his close relatives as harbouring political ambitions. Li Hongyi denies that he wants to follow in his father’s and grandfather’s footsteps but he and his mother have been carefully cultivating his media and social media profiles as one would for an aspiring politician. Rumours are now circulating that he will enter parliament at the next General Election in 2020.

Lee Hsien Loong is 66 and indicated he would like to step down by age 70, which would make Heng Swee Keat about 61 when he becomes prime minister. If his health holds up, Heng Swee Keat can expect to enjoy a decade or perhaps longer as Prime Minister, by which time Li Hongyi would be 45 to 50 — an acceptable age for a prime ministerial aspirant.

Granted that any of the six original candidates would have met the basic threshold of political and administrative competence, the attraction of Heng Swee Keat is his age, health record and ordinary communication skills. In short, he is not likely to disturb a succession plan by overstaying his welcome — as did former Prime Minister Goh Chok Tong, who was supposed to be a stop gap between Lee Kuan Yew and Lee Hsien Loong but persisted in the job for 14 years.

The main risk of the Heng Swee Keat succession is that it leaves the government with a Prime Minister who has no record of being an effective politician (as opposed to an effective administrator) at a time when a number of political red flags have surfaced.

The most serious institutional issue is the government’s recent declaration that Housing and Development Board flats will have nil value at the end of their 99 year leases and at that point will revert to the government without compensation. This is a particularly uncomfortable issue because about 80 per cent of Singaporeans ‘own’ their flats and regard them as their main financial asset. The government has also spent decades talking up their values. Now it turns out that devaluing flats is part of its plan.

The government is not going to lose the next election but it does not like to leave anything to chance. In the absence of good political instincts and a mediocre record of administrative achievements, the Cabinet has upscaled the intensity of its repressive actions throughout 2018, continuing a trajectory that has been developing for several years.

This may be satisfactory as a short-term measure to retain control but it is not a great way to launch a new round of change in government, nor to lay the groundwork for the following generation.

Michael D. Barr is Associate Professor of International Relations at Flinders University and a Fellow of the Australian Academy of the Humanities.

This article is part of an EAF special feature series on 2018 in review and the year ahead.

 

 

Singapore’s uphill battle to maintain ASEAN unity

December 3, 2018

by Joel Ng, RSIS

http://www.eastasiaforum.org/2018/11/30/singapores-uphill-battle-to-maintain-asean-unity/

As year as the ASEAN chair was marked by several milestones in the deepening of regional peace and security. Ahead of the 33rd ASEAN summit from 11–15 November 2018 that finished with Singapore’s official handing over of the chairmanship to Thailand, Singaporean Foreign Minister Vivian Balakrishnan stated that ASEAN ‘actually achieved far more than I dared to anticipate’.

 

As a small nation, Singapore cannot impose its own ideas in regional or global settings. Instead it has the much trickier challenge of convincing other players, each with their own contexts and agendas, that strengthening the multilateral framework is in their best interests.

Tensions in the South China Sea, North Korea’s long-range missile tests and threats of a US–China trade war clouded the end of 2017 and presented a considerable challenge to ASEAN’s ongoing efforts to enhance regional cooperation. Despite the uphill battle, ASEAN and Singapore have played an integral part in ameliorating tensions on all three fronts.

Most recently, the 33rd ASEAN summit made an important contribution to the easing of regional tensions, with China agreeing to participate in talks on the long-proposed South China Sea Code of Conduct (COC). China offered a timeframe of three years for COC negotiations to be completed, which Singaporean Prime Minister Lee Hsien Loong declared as good progress.

The COC is perhaps the most important document related to the South China Sea disputes. With competing states attempting to apply different rules to claim legitimate sovereignty over the waters, fears have arisen that conflict could break out over misunderstandings or maritime encounters going wrong. The COC has been in gestation since the 2002 Declaration on Conduct in the South China Sea, but has barely progressed in the intervening years.

Claimants agreed upon a draft negotiating text for the COC earlier this year, ahead of the ASEAN–China Post Ministerial Meeting in August 2018, and now China has committed to signing the COC within three years. While this may sound like piecemeal progress, it is important to remember the headwinds facing the discussion: as a much larger power, there is little incentive for China to sign anything at all.

Keeping all parties on board while pushing consensus and norms forward — at a pace that divergent parties can accept — is something ASEAN does well. With Singapore at the helm, ASEAN has helped to keep the COC moving forward without alienating any of the negotiating parties. The significant difference in 2018 has been China’s explicit commitment to a rules-based order, a position it believes distinguishes itself from the United States.

Perhaps the most surprising event of 2018 was the US–North Korea peace talks in Singapore. As recently as 2017, both sides had issued threats against the other. North Korea continued to conduct missile tests, and the murder of Kim Jong-nam had soured its previously cordial relations with Malaysia. Singapore was one of the only plausible choices as a venue because of its high security, positive relations with both sides and an avowed impartiality.

While talks were initially cancelled just weeks before they were to be held, Singapore remained alert and ready for their resumption. The country’s experience in hosting summits put it in good stead for facilitating the dialogue, regardless of uncertainties on either side. The eventually successful engagement demonstrated the importance of Singapore as an open, inclusive and highly efficient state ready to contribute to international security.

ASEAN has paddled against global currents in 2018 to offer hope that multilateral initiatives will continue to bring states closer together on common objectives. But trade tensions between ASEAN’s two largest partners — the United States and China — continue to concern the region. Progress on the Regional Comprehensive Economic Partnership (RCEP) remains a priority for ASEAN to offset this concern, though negotiations will continue into 2019 after RCEP partners failed to meet the November 2018 deadline.

The initial impetus for Southeast Asia to unite as a region was to buffer individual countries against the pull of larger powers, whose efforts to draw smaller states exclusively towards them are often driven by whimsical domestic agendas. As Prime Minister Lee noted during the opening ceremony of November’s ASEAN summit, ASEAN has raised its standing in the world and made itself greater than the sum of its parts by maintaining a collective voice on global issues.

Singapore’s chairmanship offered a strong restatement of ASEAN’s aims and bolstered the frameworks that were devised to address the myriad concerns of its members. Maintaining unity in the face of these external pressures is probably the best way for ASEAN states to maintain a strong position and secure the best outcomes for their continued growth.

Joel Ng is a Research Fellow in the Centre for Multilateralism Studies at the S Rajaratnam School of International Studies (RSIS), Nanyang Technological University.

A version of this article originally appeared here on RSIS.