This book is now available at Select Books. See my two earlier posts about this book: Hype & Spin: Questioning the Singapore Miracle AND Much Of The World Has Been Deluded by Singapore’s Hollow Roars Of Success
Singapore Miracle – Brilliant Success Or Flawed Experiment? Monday, Oct 29 2007
“Long Nightmare” In S’pore Bookstores Now! Sunday, Aug 26 2007
A World Of Hypocrisy, Power And Enormous Wealth Monday, Jul 16 2007
Joe Studwell is the author of Asian Godfathers: Money and Power in Hong Kong and South-East Asia. What follows is an article he wrote for the latest edition of Newsweek magazine.
Crony capitalism is stunting southeast Asia, says the author of a new book on the region’s godfathers.
By Joe Studwell
July 23, 2007 issue – A couple of years ago I was fortunate enough to have dinner with Bob Zoellick, the wise American who now heads the World Bank. The conversation turned to Southeast Asia, a region Zoellick knows intimately, and about which I had recently agreed to write a book. In the wake of the 1997 financial crisis, Southeast Asia had been overtaken by China and India as the darlings of developmental economists and multinational business, yet I was optimistic. Zoellick listened quietly as I conjured up images of how the crisis could inspire a cathartic transition from crony capitalism to a market free of manipulation by bureaucrats and politicians. When I was finished, Zoellick looked across the table and said simply: “I am afraid that you may find that is not the case.”
Faulty Towers: Singapore’s growing economy has made the rich richer, but the working- and middle-classes are being left behind. Photo: Vivek Prakash / Reuters
He was right, as three years of research have revealed. The architecture of the Southeast Asian economy remains what it was 10 and 50 and 100 years ago. The domestic economies of Hong Kong, Singapore, Thailand, Malaysia, Indonesia and the Philippines are all still dominated by reclusive, enigmatic billionaires and their families, even if fewer of them rank among the richest people in the world. In 1996 no less than eight of the top two dozen billionaires on the Forbes global rich list were Southeast Asian; in 2006 only Hong Kong’s Li Ka-shing, with a net worth of US$18.8 billion, ranked in the top 24. Nonetheless, while some Southeast Asian tycoons have been overtaken by more entrepreneurial billionaires from other parts of the world, the region remains the global epicenter of rentier family business.
This sits heavily with ordinary citizens. To the extent Southeast Asia has succeeded, it has done so despite the influence of the tycoons. For 40 years the growth of gross domestic product and the creation of jobs in the region have moved in lock step with the expansion of exports, produced either directly by multinational corporations or under contract by small-scale local manufacturers. The billionaires avoid export manufacturing and its requirement for global competitiveness. Instead they prosper from concessions, monopolies and cartels in local service economies that define things like port handling, real estate, telecommunications and gaming.
A decade after the Asian crisis, Southeast Asia’s billionaires remain in the ascendancy because promised deregulation has never bitten. Even Hong Kong— lauded by the Heritage Foundation as the world’s freest economy (de facto cartels affect the port to supermarkets to electricity to cement) —has failed to pass the kind of antimonopoly statutes that are a central pillar of developed economies around the world. There has been no substantive progress on creating a common free market in services for the members of the Association of Southeast Asian Nations, despite relentless rhetoric. ASEAN is a toothless tiger, with no mechanism for enforcement of rulings, in a jungle of petty vested interests. Unlike the European Union, there are no regional or global brand-name corporations with the capacity to originate new services and technologies. There are simply local billionaires, lionized by domestic media, but running businesses whose productivity is regularly shown by economists to lag both that of Southeast Asian manufacturing and global enterprise in general. Why else, as once example, would container-handling charges at Hong Kong’s port be more than twice those in Germany?
Despite now bullish stock markets in the region, the billionaires—with their lousy corporate governance and manipulation of local banks to provide cheap and easy alternative sources of credit—also have contributed to the worst long-term emerging-market-equity performance in the world. From 1993—when the first significant international portfolio investments came into Southeast Asian bourses—to the end of 2006, total dollar returns with dividends reinvested in Thailand and the Philippines were actually negative. Returns in Indonesia and Malaysia were worse than leaving money in a London bank account. Singapore produced less than half the gain of the London or New York markets, with which only Hong Kong was comparable. It is a brave investor who thinks long-term equity returns will improve in the absence of structural economic change.
For working- and middle-class Asians, the past 10 years are mainly defined by rising and palpable inequality. The two wealthy city-states, Hong Kong and Singapore, today boast inequality as measured by the international Gini benchmark that is on par with urban Argentina. Postcrisis, the proportion of people in the Philippines, Thailand and Indonesia living on less than the World Bank’s $2-a-day measure of poverty and near poverty is greater than in Latin America. Today, it seems all too possible that the region’s coddled political and economic elites will allow their states to slide into a Latin American morass, as they continue to live high on the hog while the dreams of ordinary people go down the tubes.
Colonialism is partly to blame for this state of affairs, and for the whole tycoon system, though not entirely. In Thailand, which was never formally colonized, kings were employing Persians and Chinese to operate trading monopolies and tax farms from the 16th century. In Indonesia, Chinese entrepreneurs also entered into monopoly management arrangements with Javanese aristocrats before the arrival of Europeans.
Typically, there was a racial division of labor in which locals were political entrepreneurs focused on maintaining political power against indigenous rivals and, later, in partnership with Western colonists. Outsiders, often Chinese immigrants, were the economic entrepreneurs. So in Indonesia, the Dutch gave key ethnic Chinese traders both monopolies and pseudomilitary titles: majoor, kapitein, luitenant. The Spaniards who controlled the Philippines until 1898 named the top Chinese trader the gobernadorcillo de los sangleyes—the governor of the businessmen. In Malaya, the British and local royals sold trading, mining and other licenses to Chinese and Indian immigrants while encouraging rural indigenes to stick to farming.
When independence came, in the 1940s and 1950s, the region’s new leaders built on a system in which politics rules the economy. In Thailand, military leaders demanded substantial equity positions and a board presence in ethnic Chinese-run companies; the Malay political elite made its financial expectations of Chinese businessmen very clear, in what became known locally as “the bargain.” While the Thai and Malay elites stuck with established Chinese trader families, the two great Southeast Asian dictators of the postwar era—Suharto in Indonesia and Ferdinand Marcos in the Philippines—turned to unknown small-timers of whose absolute loyalty they could be sure. They were men like Liem Sioe Liong, a trader who in a few years became Indonesia’s top tycoon, and Lucio Tan, a man who once worked as a janitor but ended up as a Marcos billionaire.
To this day, there are precious few Southeast Asian tycoons whose wealth is not rooted in some form of state-sanctioned monopoly. (The exceptions are a couple of lesser Hong Kong billionaires, Patrick Wang of micromotor maker Johnson Electric and Michael Ying of clothing business Esprit, whose money was made in recent years in manufacturing in mainland China.) Soft-commodity monopolies for consumer items like sugar and flour produced early cash flows for Indonesia’s Liem and Malaysia’s Robert Kuok. Gaming licenses primed Stanley Ho in Macau and Lim Goh Tong, Ananda Krishnan and Vincent Tan in Malaysia, and lumber concessions made Mohamad (Bob) Hasan, Prajogo Pangestu and Eka Tjipta Widjaya in Indonesia.
In Hong Kong and Singapore, real estate became an effective cartel because of the way British colonial regimes structured the land market—selling off “crown land” in large lots that created a barrier to entry for all but a few big players. In the 1990s land packages in Hong Kong were commanding prices of about US$1 billion. The city-states also restricted access to their banking markets, creating other huge rents for local players; the biggest of all went to the institution that is now known as HSBC.
After access to concessions, access to capital was the second prerequisite of Southeast Asian tycoons. Elsewhere in the region, tycoons used their political influence to secure credit lines from state banks or opened their own institutions, which served as private piggy banks. The Philippines has lurched from one banking crisis to the next for almost a century, some based around state banks and others around private banks set up by tycoons. The country has never recovered from the financial-sector meltdown in the mid-1980s, when Marcos went into exile.
Across Southeast Asia the impact of the 1997 crisis followed the degree of corruption in the banking systems of Indonesia, Thailand, Malaysia, Singapore and Hong Kong. The Indonesian case was extraordinary. By 1997 every Indonesian tycoon had his own financial institution, and most banks had more than half their loans made to businesses run by the controlling families, ignoring the legal maximum of 20 percent. Liem’s Bank Central Asia, the biggest in the country, was owed 60 percent of its loan portfolio by other Liem companies.
In the wake of the crisis, there was some banking consolidation. Indonesia now has 130 banks, compared with 240 in 1997. Many banks were nationalized. Unfortunately, corrupt governments have an even worse record of managing credit allocation than tycoon-controlled financial institutions. It was notable that the Indonesian billionaire named by Forbes as the country’s richest individual in 2006—timber to real-estate tycoon Sukanto Tanoto, worth an estimated $2.8 billion—was listed by state bank Mandiri the same year as one of its six biggest delinquent borrowers.
Those Southeast Asian banks that have been reprivatized have often gone back to the billionaire fraternity; Liem’s BCA, for instance, is now controlled by the Hartono tobacco dynasty. Almost no bank in the region is widely held. The obvious exception, HSBC, whose terms of incorporation never allowed any shareholder to own more than 1 percent of its equity, is the only financial institution (and almost the only company) to have broken out to become a global enterprise.
After the financial crisis in Southeast Asia, in state after state, taxpayers picked up the tab, tycoons picked up the pieces and life went on as before. The lesson of the past decade has been that the relationship between political and economic elites in Southeast Asia is more enduring than almost anyone imagined.
Malaysia, which imposed capital controls and raised a finger to the International Monetary Fund as the crisis spread, dealt with its fallout in traditional fashion. The businesses of Halim Saad and Tajudin Ramli, the leading bumiputra (or indigenous) tycoons with close links to the ruling United Malays National Organization, were bailed out with injections of government money and state share purchases. Ananda Krishnan, the Tamil Sri Lankan billionaire and Mahathir confidant with an empire including telecoms and broadcasting, was shored up when state oil company Petronas bought out his interest in the vast Kuala Lumpur City Centre and Twin Towers real-estate development. Most telling was the fact that after the crisis, UMNO began to set up new tycoons on the old model. Within a few years, tycoon-of-the-moment Syed Mokhtar al-Bukhary, a former rice and cattle trader, built a vast conglomerate based in power generation, the operation of Port of Tanjung Pelepas, mining, plantations and hotels through government concessions and the provision of state financing.
Throughout the region, businessmen have been pushing deeper into politics, and Thaksin Shinawatra took this trend to its logical conclusion in Thailand. Backed by other key tycoon families—such as the Chearavanonts of CP Group and the Sophonpanichs, who control Bangkok Bank—he formed a political party and won election as prime minister. As had happened long before in the Philippines, the businessmen overran the political system, blurring the traditional distinction between political and economic elites.
The Thaksin adventure was doomed, however, and not just because middle-class Bangkok opinion was against him. Though Thaksin brought representatives of tycoon families like the Chearavanonts into his cabinet, his fellow tycoons became ever more livid that—in their view—all the spoils of power appeared to go to Thaksin. The prime minister’s telecoms and media business boomed (far faster than the Chearavanonts’), and by the fall of 2006, when Thaksin was pushed out in a coup, the other plutocrats were delighted. Today, Thaksin is in exile and buying an English soccer club; Thailand is again ruled by a military junta, and Thaksin’s peers are back at work, sailing in familiar political winds.
Almost none of the big players was ruined by the financial crisis in Malaysia, Thailand or the Philippines, and so it was in Indonesia, despite the fall of Suharto. The old man’s closest confidant and golfing buddy, Hasan, was made an example of with a conviction for fraud; he served a couple of years in a special and commodious prison cell. Despite a $56 billion write-off by the Indonesian Bank Restructuring Agency, most of which was required to bail out tycoon banks that engaged in illegal lending practices, most billionaires were able to hold on to the bulk of their assets.
Many prominent figures, nervous that they were not quite safe in Jakarta, decamped to Singapore and ran their operations from there. Sjamsul Nursalim, who repaid only about 10 percent of the money he borrowed from IBRA, is today focusing on large and growing businesses in Singapore and China. The most extraordinary escape story was that of the Widjaya family, which crawled out from under a cumulative debt of $13.9 billion owed by their Asia Pulp and Paper business and its subsidiaries. The Widjayas forced almost all their creditors to take a haircut, bought back bonds they issued for pennies on the dollar, survived the attempted intervention of senior European and American politicians with the government in Jakarta and faced down legal suits from Singapore to the United States. The family filed successful suits in Indonesia that declared some of its bond issues to have been illegal under local law and therefore not subject to repayment. The Widjayas, who were responsible for the biggest debt default in Asian history, are today probably richer than ever.
So where do these shenanigans leave Southeast Asia? It is easily forgotten that 150 years after the modern globalization era began, there is still only one significant Asian country that has made the transition all the way from backwardness to developed-nation status: Japan, and that was a century ago. We are not so good at learning the lessons of development as we think, and Southeast Asia richly illustrates the point.
In the absence of a deregulated common market, ASEAN’s intraregional trade is currently 20 percent of its total, compared with more than 50 percent in the European Union. Banking systems remain bloated by the region’s high savings rate but dysfunctional in their lending practices. Domestic economies are still concession-based, and corporate governance leaves much to be desired. Perhaps more than anything, what stands out in a review of Southeast Asia 10 years after the crisis is the contrast with South Korea and Taiwan, which is starker than it has ever been in the postcolonial period. Where Southeast Asian states stuck with modified colonial rentier systems after the second world war, South Korea and Taiwan took a different course. They successfully implemented land reform—in stark contrast to countries like the Philippines, where political elites have ensured the continuance of a landed ascendancy—and thereby ensured a bottom-up development process. Their governments made a commitment to social equity, reflected in far lower levels of inequality than are present in Southeast Asia, and the existence of independent organized labor. And when South Korea and Taiwan backed leading family businesses—as all developing states are wont to do—they supported local manufacturers rather than cosmopolitan trading elites.
Most obviously, it is clear today that South Korea and Taiwan take political systems seriously as drivers of development. In 1997, Kim Dae Jung, a longtime democracy and human-rights activist, was elected South Korean president and set in motion the most effective reform process to have occurred in the main crisis countries. Reporting and compliance requirements in the Seoul stock market are now stricter than in Southeast Asia, and the judiciary has shown far greater independence and resolve in pursuing those whose actions contributed to the crisis. The families behind Korea’s chaebol are today much weaker than their peers in Southeast Asia.
When the colonial era closed at the end of the second world war, South Korea and Taiwan were just as impoverished as the new nations of Southeast Asia: indeed, South Korea was much poorer than the Philippines. Today, with GDP per capita of about US$19,000 in South Korea and US$15,000 in Taiwan, those countries are three to four times richer than Malaysia and 10 to 12 times richer than Indonesia and the Philippines. The difference is political choices that in one part of Asia are creating free societies and globally competitive companies and in another sustain a superannuated economic aristocracy.
Much Of The World Has Been Deluded by Singapore’s Hollow Roars Of Success Tuesday, Jul 3 2007
Singapore is brilliant at self-promotion, says an Australian analyst, but it is no financial dynamo. Much of the world has been deluded by its hollow roars of success
Singapore, the modern city-state known for its authoritarian ways and conservative government, has a reputation for functional efficiency and capitalist success.
The smallest member of Asean geographically is often touted as one of Asia’s great success stories – a gleaming city that emerged from the tropical swamps under a strict but wise autocrat, Lee Kuan Yew.
But a fascinating new book by Australian Rodney King looks deeper into the “the Singapore Miracle” and reveals that a lot of the city’s supposed successes are in fact hot air.
Reports of Singapore being a dynamic commercial melting pot are, King says, simply the oft-repeated claims of a government that tolerates little dissent, and city leaders who may actually have stifled the sort of entrepreneurial dynamism you get in places such as Hong Kong, Shanghai, Taiwan and maybe even Bangkok.
King is a Perth journalist who lived in Singapore for a number of years and worked briefly at the Straits Times.
“The Singapore Miracle – Myth and Reality” casts doubt on the city-state’s claims of cutting-edge efficiency, global competitiveness, economic freedom and transparency. Most Singaporeans are not as affluent as their government makes out, King says in his extensively documented, 500-page tome.
“Books about Singapore usually praise its achievements or criticise its authoritarian rule,” he writes. “But few ever probe its widely publicised claims that it is a brilliant success that other countries should follow.”
King argues that Singapore’s workforce productivity is often mediocre and well below that of the West and Asian economies such as Hong Kong.
“The country also displays endemic inefficiencies at both macro and micro-economic levels. The performance of the construction, financial and service sectors is second-rate, while Singapore Airlines does not deserve the top rankings it receives.”
Singapore, he says, has “a dependent and underdeveloped economy”. Multinational companies and state enterprises predominate, and the economy has “low entrepreneurial and innovative capacities and an under-educated workforce”.
The city-state’s supposed affluence is also largely a myth.
“About 30 per cent of the population still lives in poverty by Western living standards,” he says. And Singapore’s Housing Development Board, Central Provident Fund and state-run health schemes have severe shortcomings.
What Singapore has been good at, he says, is marketing itself.
“Singapore has brilliantly sold itself to the world as an amazing success story to attract foreign investment and talent. It’s managed to get most Western think-tanks and ratings agencies to give it top scores for such things as competitiveness, transparency, economic freedom, etc.
“These bodies reflect the interests of foreign capital and their methodologies are shoddy and incompetent at times. And the statistics they are fed by the Singaporean authorities are often dubious and designed to put Singapore in the best light.
“To sell itself to the world Singapore has also denigrated and patronised its lesser-developed neighbours.”
Singapore was hardly an economic backwater when Lee Kuan Yew took power in 1959, says King, who has no special regard for the premier, who held office through his People’s Action Party (PAP) for 31 years. Lee is now known as a “Minister mentor” and elder statesman.
“Lee is always carefully listened to, and rather too politely … his views and lectures often receive reverential attention from opinion lenders, American think-tank experts and others who often have little direct first-hand knowledge of Singapore.”
In the early to mid-’60s, Singapore had one of the highest living standards in Asia, with one of the best-educated and hardest-working populations. Its strategic location and magnificent harbour – with extensive British-built shipyard facilities – alongside one of the world’s busiest sea-lanes, meant that it became a natural transport hub. And these features were a great asset for industrialisation.
The strategies Lee used to develop Singapore were an open-door policy to foreign capital and export orientation to tap into global trade. They helped the city-state enjoy double-digit growth from the ’60s to the ’80s.
But the Lion City became heavily dependent on foreign capital while state enterprises focused on infrastructure and “nation-building concerns”.
Entrepreneurial and innovative capacities have suffered because of a lack of domestic competition and the predominance of state bodies. Public servants running state boards often have little experience of the private sector “and no idea how to run a business”, King and other analysts say.
“The local private sector, normally the seedbed of innovation in most market economies, is stunted and starved of venture capital,” King writes. “The country’s capacity for indigenous research and development and entrepreneurial and innovative endeavours remains limited.
“Heavy state control of the economy is exercised through an extensive layer of state enterprises. The state imposes this control through layers of red tape.
“The government also manages a big chunk of the people’s savings through forced savings … and owns 72 per cent of the city-state’s land. Moreover, the government controls the unions and most of the labour force. Equally mythical are Singapore’s claims to being transparent. Nothing could be more untrue. The operations of Singapore’s government and bureaucracy are swathed in secrecy.”
King counters claims of high home-ownership levels, saying 86 per cent of Singaporeans rent government flats from the Housing Development Board on 99-year leases.
The author is provocative but very thorough. Every aspect of life in the city-state is analysed in detail.
“Singapore’s flaws are hidden by the PAP state’s vigorous marketing campaign,” he says. And most local and foreign journalists “are usually too restricted or intimidated by government defamation laws and other penalties to challenge or refute” the “river of statistics” promoting Singapore’s achievements.
There is a wealth of statistical and anecdotal material in this book to counter the official lines – or lies. Economists and anyone with an interest in Singapore should take note. This book could change the way you view our industrious neighbour.
But, perhaps the saddest facet of King’s work is not what he’s written, but the fact that the people who most need to read his book may find it hard to get, if Singaporean bookshops refuse to stock it, as he expects.
Hype & Spin: Questioning The Singapore Miracle Friday, Jun 8 2007
MELBOURNE, April 17, 2007 (Bernama) — A book just released here has questioned the achievements of the Singapore Miracle.
Australian writer Rodney King, in his book, “The Singapore Miracle, Myth and Reality”, has taken a contrarian view of the city-state’s claims of cutting-edge efficiency, global competitiveness, economic freedom and transparency.
King, who has lived in Singapore for a number of years in the 1980’s and 90’s, asserted that Singapore had brilliantly sold itself to the world as an amazing success story to attract foreign investment and talent.
His arguments run counter to the frequently-held view that Singapore is a highly-developed and successful free-market economy.
The island republic has always been described as a remarkably open and corruption-free country with a per capita Gross Domestic Product equal to that of the four largest western European countries.
Last year, the Singapore economy grew by 7.9 per cent and growth estimates for this year are between 4.5 and 6.5 per cent.
But the author, who once worked briefly for The Straits Times newspaper, said: “It (Singapore) has managed to get most Western think-tanks and ratings agencies to give it top scores for things such as competitiveness, transparency, economic freedom.”
King claimed that to sell itself to the world, Singapore had denigrated and patronised its lesser-developed neighbours.
“As such, it’s really time that Singapore and its much-touted achievements were rigorously scrutinised,” he argued.
Below are excerpts from:
The Singapore Miracle: Myth and Reality
Rodney King, 2006
Selling Singapore’s miracle to the locals is as important as promoting it to foreign capital and the international community. Singaporeans must be happy with their lot to make them more malleable.
They will more readily accept restrictions the Government imposes on them to please foreign capital. The PAP never tires of telling Singaporeans how much they have benefited from its rule, how much happier they are in their HDB units than in the kampongs and how poverty has all but disappeared.
The rivers of dubious statistics the PAP state generates to back its questionable claims have often been uncritically accepted by journalists and Western neo-cons and the now discredited “Asia Rising” theorists.
Both the myths and the statistics used to “prove” the Singapore Miracle are suspect. To what extent is the miracle a statistical mirage? If the statistics and myth-making used to promote this miracle are scraped away what is left? – A dependent and EIC-deficient economy, driven by MNC capital and expertise, with severe inequalities of wealth and income, high living and an often poorly paid workforce. Such truths about Singapore’s miracle are not widely known abroad.
Negative foreign comments about Singapore focus on its authoritarian nature, the ruthless persecution of political opponents, its compromised and “complaint” judiciary, its lack of press freedom and its less-than-free elections. But Singapore is still seen as an economic success story that has delivered high living standard to its citizens despite democratic shortcomings.
Apart from Singaporean political activist Chee Soon Juan, few writers have exposed the many shortcomings of Singapore’s economic miracle, and especially how little Singaporeans have gained from it.
Were more commentators to do so, Singapore would no longer be regarded as a model for national development. It would lose its iconic “brand name” status around the world, particularly among neo-conservatives and the globalisation lobby. An MNC outpost serviced by underpaid locals and ruled by a manipulative and over-paid political elite is not an inspiring development model.
Myth versus Reality
Unlike Singapore’s foreign friends, PAP leaders understand its real situation. Frantic government efforts to transform the country into an entrepreneurial, innovative, risk-taking society reflect this concern. However, such ends can only be achieved if the PAP state relinquishes much of its power over the economy and people.
While desperately trying to transform the economy, the PAP continues to deluge Singaporeans with assurances that everything is fine, using biased statistics to do this. Many Singaporeans see through such subterfuge, perceiving their society as one riven with privilege and inequality.
While the Government soothingly talks of cosmopolitans and heartlanders, Singaporeans name things differently. There is the “condo class” composed of highly-paid managers and professionals, at whose center are the country’s over-paid PAP rulers. And there is the “HDB class”, comprising the vast bulk of the population, battling along on incomes of S$1,500 to $2,000 a month and often less, living limited and intimidated lives under a watchful and repressive state.
Another major socio-economic division in Singapore is between the privileged MNC-SE sector, protected at the expense of a stunted, marginalized SME sector. SME resentment at this intensifies with every economic downturn. They know well that there is no level playing field for them when competing against the MNCs and Ses.
Besides growing inequality, Singapore is hollowing out economically and socially. It will remain dependent on foreign capital and talent despite endless “re-engineering” efforts to make it more competitive. Singapore is becoming a transient hotel-type society. State-led efforts to inculcate patriotism and a sense of community merely disguise this process.
Eventually the truth may emerge that Singapore cannot be transformed into the economy the PAP wants unless the Government is prepared to relinquish significant economic and political control.
The PAP cannot do this because it would undermine its rule and disrupt many powerful vested interests. However, without such reform Singapore is condemned to ongoing mediocrity. A vibrant MNC sector and huge national reserves will disguise this only for a while.
Nonetheless, a combination of internal and external factors could disrupt and tear apart Singapore’s carefully cultivated image as a competitive cutting-edge economy. Some scenarios have been outlines on how this could occur.
If conditions worsen, no amount of PAP spin, compliant ratings agencies or neo-con accolades will disguise Singapore’s growing problems. Only then will the myths that have sustained PAP’ Singapore for so long be exposed; and only then will Singapore become a deservedly discarded development model for developing countries. Then, the Singapore Miracle will finally be seen for what it is.
Singapore’s Two-Faced Judiciary Thursday, Jun 7 2007
Excerpted from Beyond Suspicion? – The Singapore Judiciary by Francis T. Seow, published in May 2007, Monograph. Published by Yale Southeast Asia Studies. Copyright©2007 by Yale Southeast Asia Studies. Reprinted by permission.
Francis Seow was once the highly-regarded solicitor general of Singapore in the government of Lee Kuan Yew and president of the Singapore Law Society. After leaving the government, Seow made the mistake of defending people the government was prosecuting.
In 1988, Seow was taken in for questioning by the Internal Security Department. After 17 straight hours of invasive interrogation, he collapsed and was rushed to a hospital by officials who feared he had had a heart attack. While he was incarcerated, his law office was raided by authorities who removed all of his records. After he was released from detention, he announced plans to run as an opposition candidate and won a non-constituency parliamentary seat. The government filed six counts of tax evasion against him and ultimately convicted him in absentia after he had fled the country. He was disqualified from sitting in Parliament as a result of his conviction.
To show how far the government pursues its opponents, Seow had earlier won a seat on the board of the Singapore Turf Club, the republic’s horse-racing organization. The government abolished the turf club, wiped out the entire board, appointed a new one and took over the newly formed racing club. At the time of his arrest, Seow was involved in a relationship with a Singaporean businesswoman who was financing a business deal through Bank Nationale de Paris. The bank suddenly dropped her line of credit and forced her out of the business deal. Bank officials at the time said the government had nothing to do with aborting the transaction.
While he was in the United States, the government abolished all appeals to the Judicial Committee of the Privy Council — Singapore’s last court of appeal in London — which made him wary of returning to Singapore. Seow obtained a fellowship from Yale University and has lived in the United States since 1988. This is the preface to his book.
Justice in Singapore is Janus-faced.
The Singapore courts—when adjudicating commercial cases between two contending parties where neither the authorities nor the political élite are involved or interested—may be relied upon to administer justice according to the law. In this regard, Singapore judges have an overall reputation for the integrity of their judgments. The enthusiastic reports of international organizations, such as the Geneva-based World Economic Forum or the Hong Kong-based Political and Economic Risk Consultancy, have to be read subject to this important rider.
This book, however, is concerned with the other face of justice in Singapore: where these very same judges, sad to say, in politically-freighted cases have repeatedly demonstrated a singular facility at bending over backwards to render decisions favourable to the Singapore government and its leaders. Their judicial contortions have acquired an international notoriety that concerned human rights organizations, such as Amnesty International, the Geneva-based International Commission of Jurists, and latterly the Lawyers’ Human Rights Watch Canada, enough to send legal representatives to Singapore to observe the trial proceedings at first hand.
Their observations confirmed what many Singaporeans have known all along: that the political context of such cases invariably influences the judges in their decisions.
And yet, the Singapore judiciary was historically free and independent of the government of the day or of any other controlling legal authority, until the ruling People’s Action Party—with no viable political opposition to keep it balanced and in check—began to entrench itself in the body politic of the nation. In that time, Prime Minister Harry Lee Kuan Yew, now nominally senior minister but still the enduring éminence grise of the People’s Action Party (PAP) government, systematically gained control over the courts, which he exercises currently through his judicial point man and great friend, Yong Pung How, the chief justice.
In addition, Lee appoints only politically correct lawyers as judges whose loyalty he ensures with princely remunerations—well over and above the comparable market rates for judges worldwide.
Corruption oftentimes takes many forms and disguises: paying obscenely high salaries and bonuses to judges is one, for they inevitably assume the gratifying form of monthly retainers by the government for loyal services rendered or to be rendered. Given that he who pays the piper calls the tune, it is virtually impossible for judges to do justice by the citizens when the state or its leaders are involved as litigants, as this narrative will amply demonstrate.
Unlike previous defamation actions, the legal blitzkrieg herein—masterminded by Harry Lee Kuan Yew—was exceptional in the sheer number of PAP plaintiffs who retained in concert disparate law firms of high-priced lawyers and who, against valid objections and normal procedural laws, were allowed by the courts to maintain multiple lawsuits over the same matter against the defendants: lawyer and unsuccessful opposition electoral candidate Tang Liang Hong, his wife, Teo Siew Har, and, ultimately, his defence counsel, J. B. Jeyaretnam, who was also then the secretary general of the opposition Workers’ Party.
The insidious purpose of this unusual legal manoeuvre was intended to overwhelm the resources in personnel and finances of the defendants, and of Tang in particular, and to hamper their defence—a manoeuvre that was patently obvious to the judges but who, however, chose to turn a Nelsonian eye on these legal shenanigans.
Lee used to assert that the judiciary must be protected against “unjust attacks and slurs,” but, in truth, it is he who has not only disfigured the face of justice in Singapore but undermined its very foundation by politicizing it, as well as that of the legal profession. In the ensuing proceedings, counsel for Lee and the Prime Minister, Goh Chok Tong—Drew & Napier and Allen & Gledhill respectively—not to mention the lawyers for the other PAP plaintiffs, disgraced themselves and sullied the profession of the law by meekly allowing themselves to be led by their noses by the puppet-meister.
In an attempt to win their case at all costs, they not only suppressed important evidence advantageous to Tang but concealed it from the presiding judge, Justice Chao Hick Tin. Nor did they take any steps to correct the judge’s misconception of the facts at the subsequent judgmental hearing, consequently ensuring that the damages awarded against Tang would be humongous: thus perpetrating a travesty of justice by their studied silence. A classic case of the legal maxim, suppressio veri suggestio falsi—suppression of the truth is suggestion of the false.
Given their seniority at the bar, they should have known better. Together with the staff of the Supreme Court registry, they manipulated the practice and procedure of the court and its docket to disadvantage the defendants at every turn in their obscene rush to judgment.
In a closed society where the government has a finger in almost every pie of business and commerce and controls every aspect of community life right down to sporting and even kindergarten activities, it makes sound commercial sense, if nothing else, to keep on its good side for its capacity to distribute lucrative contracts and work to the politically correct.
Insofar as the legal profession is concerned, the cornucopia of legal work dispensed by the government and its many linked companies was, and is, immense and lucrative. It is bread-and-butter work. It is understandably the aspiration of many law firms to be the chosen receptacle of such official favors. The defamation case or rather cases against Tang Liang Hong and his wife, Teo Siew Har—and the opposition Workers’ Party then leader, J. B. Jeyaretnam—bring into sharp focus the reluctance of Singapore lawyers to represent clients who are anathema to the puissant Lee and his government. Even so, this is Asian value at its rawest: one does not muddy the source of business or possible business by being a contrarian.
In the related Jeyaretnam case, a self-conscious judge, S. Rajendran—aware of the allegations that the prime minister and the senior minister and their political confrérie were using the courts to smother their political opponents with a blanket of lawsuits and bereft them financially in order to remove them from the political scene—was constrained to stress, inter alia: Underlying questions relating to the independence of the judiciary and the likelihood of a fair hearing inevitably surface when political leaders resort to the courts to pursue their claims.
There are no private directives to a judge from the executive or from anyone else on how a case is to be conducted, how the judgment is to be phrased, how the law is to be applied or what matters of policy are to be considered. The judge is expected to decide each case impartially in accordance with the evidence and in accordance with the law. Indeed, the Singapore Constitution requires every judge, on appointment, to take an oath that he will discharge his judicial duties without fear or favour, affection or ill-will to the best of his ability and in accordance with law.
I would emphasize that what we have in Singapore is an open system of justice. All evidence and all arguments in all writ actions are presented in public. And the records of the courts are public documents available for public perusal. Hearings being in public, and only in public, any ruling and any judgment made by the court, must stand the test of public scrutiny. Any appeal to the court of appeal is also heard in public and must again stand the test of public scrutiny.
This is one of the great strengths of our system of law. Any judgment that does not stand the test of public scrutiny will tend to destroy the integrity of the judiciary—and will be a disservice to the people of Singapore.
The very fact that the judge felt obliged to descend into the obvious speaks volumes for the sorry state of a judiciary in bondage. It requires no special lexicon to interpret this well-known Shakespearean dictum: methinks the judge doth protest too much. With the best will in the world, is it really conceivable for any judge in Singapore to decide a case against Harry Lee Kuan Yew and his PAP cohorts?
Neither a wink nor a nod is necessary for a judge who values his position to decide in a certain way. Even if Lee’s judicial point man has not intimated the correct decision to his judges, Lee has ensured their loyalty with magnanimous monthly salaries and allowances topping them up with generous yearly bonuses. To paraphrase Vladimir I. Denisov, a Gorbachev-era Soviet parliamentarian: given their princely pay, perks and privileges of office, no Singaporean judge would be mad enough to rule against Lee and his political confrères.
The PAP mouthpiece, the Straits Times, in its news coverage of the visit of Lord Woolf, the Master of the Rolls in England to Singapore, bragged that the visiting English judge was reportedly “especially struck how courts here have built a new legal culture which is highly efficient and technology-oriented. For example, he noted that while court cases here could be heard within six months, quite a few lawsuits in his country were still taking more than two years to be resolved.
“It is very impressive how Singapore courts are so efficient in managing cases and using it.’” Lord Woolf was speaking, be it noted, on the mechanics of the courts system and not on the quality of justice! One should be able to separate the wood from the trees. The technology may be impressive but it is the administration of justice between people, and justice between individuals and state, and vice versa, that really matters ultimately.
The draconian Internal Security Act (ISA), Cap 143, which allows the arbitrary and indefinite detention of Lee’s political opponents, dissidents and media critics, among others, is noticeably being relegated to the back burner, as the courts are increasingly being used to suppress critical comments and viewpoints through threats of defamation actions and the payment of huge damages and ultimately bankruptcy.
Singapore has earned the dubious distinction of being a country whose leaders routinely use the libel laws as a weapon of repression. However, the courts cannot be freely resorted to, unless they are first made reliable tools of government: in other words, the judges chosen must be reliable. Tang’s legal predicament with its scads of lawsuits, and by extension to that of his defence counsel and political colleague, J. B. Jeyaretnam, proves their political reliability, beyond peradventure.
The news media, in the rankling words of Harry Lee Kuan Yew, must be subordinated to “the overriding needs of Singapore, and to the primacy of purpose of [his] government,” a feat he achieved with relative ease but at great cost to his international reputation and stature. The news media was subsequently reshaped into his subservient mouthpiece and that of his pap government. The legal and judicial system is not too far behind.
Once before, Dr. Joseph Goebbels, the Nazi minister of propaganda, dreamt of the same system of justice for the Third Reich where “justice must not become the mistress of the state, but must be the servant of state policy.” But where Adolf Hitler and his enthusiastic minister of propaganda failed, Harry Lee Kuan Yew is succeeding. It is not an idle, but a terrifying prospect.
Francis Seow’s New Book on Singapore Judiciary Thursday, Jan 11 2007
“Once again, Francis Seow has revealed, with his usual rigour and attention to detail, a vital part of Singapore’s repressive machinery, this time by placing his spotlight on its judiciary. Beyond Suspicion? The Singapore Judiciary is essential to understanding the true nature of human rights abuses in that country. Particularly thorough are the chapters dealing with the use of civil defamation suits through the courts by ruling party leaders against political critics. Seow’s meticulous treatment of these suits clearly illustrates that in politically sensitive cases, the Singapore judiciary has not moved to check the Executive’s misuse of the law. Human rights campaigners now and historians of the future will regard it as required reading.”
– Margaret John, Coordinator for Singpaore and Malaysia, Amnesty International Canada
“Francis Seow has not just exposed the judiciary; he has also laid bare the serious limitations of the political system. This is a quite brilliant piece of sustained analysis of how the judiciary is harnessed to political persecution. It is a style and methodology that is more legalistic…., but it is only through this approach that the full magnitude of the judiciary’s emasculation and the PAP’s manic desire to crush the slightest semblance of serious scrutiny become fully clear.”
–Garry Rodan, Director, Asia Research Centre, Murdoch University, Western Australia
“This is an extremely valuable record of many significant cases and events that lay bare the dynamics of the Singapore judiciary and its intersection with political personalities and imperatives. It is an impressive work…of scholarly and public policy interest, providing chapter and verse on the politico-legal nexus in Singapore.”
– Christopher Tremewan, Pro Vice-Chancellor (International), University of Auckland, New Zealand
Folks, Go Get This Book! Friday, Dec 8 2006
I’ve already posted information about a new book called Days of Being Wild: GE2006 Walking The Line With The Opposition.
I just got a copy of the book and I must say books like these are a blast of fresh air in our stifling political environment!! I was one of many thousands of people who experienced the general elections in May 2006 especially attending the rallies held by opposition political parties. This book brings those nights alive in its pages plus much more. I highly recommend buying this book. 😉
Currently, the paperback version of the book which costs S$23.10 (w/GST), is only available at Select Books on the 3rd floor of Tanglin Shopping Centre. I also found out that the book will be available at other local bookshops, eg. Kinokuniya, Borders, in a week’s time or maybe less.
Days of Being Wild Friday, Dec 1 2006
This is truly an iconic photo of a Workers Party rally in Hougang taken during Singapore’s General Elections 2006. This photo has been published in many local blogs, online forums, etc. Even the bias, government-controlled national newspaper, Straits Times, was forced to publish a similar photo when the one by Yawning Bread started circulating via the Internet. Click here to see a larger version.
A new book called Days of Being Wild: GE2006 Walking the Line with The Opposition was launched yesterday. Dana Lam is the author and it’s published by Ethos Books. The book is available in bookshops. The information that follows is from the publisher’s website….
About the book
Days of Being Wild records with words and images, the heady days of GE2006. It reflects the nine days when Singaporeans throw off the visage of their normally reticent selves. They clamber over ditches and down soggy, pitted paths to hear and to see for themselves the measure of those who seek their votes.
It is a story of what ordinary people feel and do as individuals and as collective social groups in a time of relatively unfettered freedom. A fragment of time for Election Rallies.
The book preserves the testimonies and acknowledges the resilience of ordinary Singaporeans who may be unable to articulate themselves in print, and are consequently denied their voice in history. Elections throw up victors and the vanquished. But history should not be written only for the victors. The stories of the courageous men and women who stand up to give us a choice in the democratic process must be given an airing. Our history will become richer, our roots deeper.
Herein lies the purpose of this book, dedicated to our children. They must have this choice preserved for them.
About the author
Dana Lam is a past president of the Association of Women for Action and Research (AWARE) and a member of The Working Committee 2 (TWC2), currently registered as Transient Workers Count Too. Other than getting away with not displaying parking coupons she has been a good citizen most of her life. She is mother to two grown-up children.
Praise for Days of Being Wild
“This book, whilst it is the story of the 2006 general elections, is a significant contribution to our knowledge of the workings of the electoral system in Singapore. Dana Lam has done a remarkable act of service to our understanding of the struggles of opposition political parties, their political process and their perseverance in and commitment to offering Singaporeans alternative views and choices. The book is detailed, interesting and clearly written. It is a book that must be read by those interested in Singapore politics.” – Constance Singam, Writer and social activist, and past president of the Association of Women for Action and Research (AWARE) and the Singapore Council of Women’s Organisation (SCWO)
“Dana argues with hope and passion that a new political consciousness is emerging among Singaporeans. But can it transform PAP-style politics in the future, or will it be cleverly compartmentalised and managed into another unrealised potential by the political elites? We are moved by her quest for the answer.” – Dr Tan Chong Kee, Founder of Sintercom, one of the first websites for election reporting