01 January 2000



1. When Singapore became independent in 1965, the situation looked bleak. Just two years earlier, the people had chosen a merger with Malaysia because they believed that Singapore was too small to survive on its own. Now that we were indeed on our own, almost no one thought we could survive.

2. There were two key issues. One was security; the other, economic viability. We were only 224 square miles in size (or 580 square kilometres – we measured things in miles then). Very small as countries go. Our population was about 1.8 million. We had no natural resources – we did not even have enough water – and we had just been cut off from the Malaysian hinterland. Indonesia was actively pursuing Konfrontasi against Malaysia and Singapore. We had no security force and depended on the UK for our defence.

3. Those challenges, while daunting, were not particularly unique. In fact, they continue to plague many small countries today, in fact even big ones. With a small population, little land and little resources, and a lack of strategic depth,, “ economic and security vulnerabilities are almost inevitable. How did we, in the course of one generation, make ourselves less vulnerable?

4. What we did was basically to break out of our security, resource and population constraints. Instead of allowing ourselves to be boxed in by our limitations, we found ways to enhance our space. This is the approach we continue to adopt. This approach has given us peace and security, and a flourishing economy. By many economic measures, Singapore ranks much higher than our physical or population size would naturally warrant.

5. Singapore also has a role and influence in regional and world affairs that is out of proportion to our physical size. That comes from the value that others see in our contributions to international debates, and from the respect they have for the Singapore model of development and governance.

6. Our defence capability gives us security. It also means that we do not have to succumb to the pressure and bullying that small states sometimes suffer. We can choose to do what’s in Singapore’s best interests and determine our own future.

Security Space – The Ultimate Guarantor

7. The security space that we enjoy today can be traced back to the decision taken in 1965, immediately after independence, to build the Singapore Armed Forces. The challenge was how to build a credible defence force with such a small population. But the Defence Minister at that time, Dr Goh Keng Swee, believed that the potential of a nation to defend itself by making full use of a vigorous, well educated and highly motivated population, albeit a small one, should not be under-estimated.

8. And so National Service was introduced in 1967. We made well-considered investments in military equipment and advanced technology. When we bought the E2C Hawkeye airborne early warning aircraft in 1985, it was like buying ourselves a high mountain on which to place a radar so that it could see further and give us precious extra minutes of warning and reaction time, than placing a radar on the highest of our hills could ever provide us. Most importantly, we invested in people so that we could build an SAF with committed servicemen and servicewomen and able leadership.

9. The SAF that started off with only two infantry regiments, two old navy ships and no air force, has matured into the respected armed forces it is today.

10. This defence capability is the bedrock of our security. It deters potential aggressors; and it allows us to stay calm and maintain an even keel through the ups and downs of regional developments and our relations with other countries. It contributes to stability as those who may not be so friendly are nudged towards take the rational path of diplomacy and negotiations, instead of resorting to the temptation to use force against a small country.

Economic Space – The World as our Hinterland

11. Security provides the foundation of our nationhood, but we also had to make sure we could feed our people. We had to carve out economic space. The need was clear, but in 1965 the solution was not obvious. Land was an important determinant of wealth and represented a country’s productive potential. A country without land simply could not generate sufficient domestic output. So we adopted the strategy of adding value to the output of others. We borrowed their brand names, products, technology and markets – legally of course - by inviting them to invest in Singapore; to set up their manufacturing, distribution, and servicing centres here, bring jobs for Singaporeans, and help upgrade their skills and knowledge.

12. We began by focusing on simple export-oriented manufacturing. Jurong was developed as an industrial park and factories manufacturing a wide range of products were set up. We were no longer dependant on being merely an import-export centre for our one dominant market in Malaysia. By buying and selling globally, the world was now our hinterland. This was the expansion of our economic space.

13. We then moved up the value chain to specialise in higher end manufacturing, such as the production of semi-conductors. We also went into the services sector, such as shipbuilding, port facilities, and oil refining. How far we have come in expanding our economic space, our ability to think out of the box, can be seen in the fact that today we rank 3rd globally as a refinery centre for oil and petrochemicals, even though we do not produce a drop of oil ourselves.

14. We are now moving into the next bound of a knowledge economy, which includes sectors such as telecommunications, biomedical, education, and even design – what Diane Coyle has described as a “weightless economy”, where knowledge matters more than land mass or population size.

15. To ensure that economic activity continues to flow through Singapore, we have also become a source of foreign direct investment, i.e., we invest in other countries, and are not just a recipient of foreign investment. For example, by shifting manufacturing to low-cost countries, we are able to retain higher functions such as design, finance and marketing in Singapore where skilled labour is our competitive advantage. This has allowed us to tap the growth of developing countries. China and India today are areas with great potential for us to focus on.

16. Looking ahead, we will need to continue enhancing our economic connectivity. Hence, the various free trade agreements which we have concluded with key trading partners such as Japan, Australia, the United States and, most recently, in India are important. We have also pushed for multilateral trade liberalisation through the World Trade Organisation. This guarantees access to international markets for our goods and services and helps draw more investments and business operations to Singapore.

Population Space – Immigration and the talent handicap

17. The ability to grow our economy also depends on having sufficient people with the requisite skills and talents. Most countries can meet this demand with their indigenous population. The most able and enterprising are drawn from the countryside into the cities, where they search for and create new opportunities, spurring development and progress.

18. We are a city-state with no natural pool of manpower residing in the hinterland that we can draw on. If we look back in our history, it was periodic waves of immigration from our immediate region in South East Asia, and beyond, that provided that injection of manpower, right from the first days of modern Singapore 200 years ago. The immigrant make-up of our society remains evident. The majority among you, for example, would have either a parent or a grandparent who was not born in Singapore. As we move into a knowledge economy where the ability to meet the demand for people with the right knowledge and skills is key, we will have to continue to keep our doors open. Otherwise we will choke ourselves off from what is necessary for our growth We will educate and train Singaporeans as best as we can, and we will need to supplement Singaporeans with others to strengthen our team.

Geopolitical Space – Enhancing International Structures and Norms

19. As a small country, Singapore can only thrive when there is a stable world order in which all states, large and small, are bound by the same rights and obligations. Otherwise size and might become right. The concept of sovereignty and equality among states is rather an unnatural notion, for through most of human history it has been the dominance of the strong and conquest of the weak. It took two world wars and the United Nations before small states got a voice.

20. Singapore wants to be a responsible member of the international community and we have tried to do our part by contributing to the UN and its peace-keeping operations, or PKOs. We have participated in 14 UN PKO missions over the years, most recently in East Timor when it became newly independent. We have also contributed to disaster relief and humanitarian assistance missions. I am sure most of you would have followed the SAF’s operations in Aceh after the Boxing Day tsunami with some interest given the proximity and human drama of that tragedy. The SAF was able to move quickly and provide effective assistance, and make a difference when it mattered.

21. We must continue to engage and contribute to the key international organisations because these enhance our geopolitical space. Besides the UN, ASEAN, the ASEAN Regional Forum (or ARF) and APEC are other important organisations. The ASEAN norms of consensus and confidence-building serve its members, including Singapore, well.

22. Later this year, ASEAN will be convening the East Asian Summit, which brings the rising Asia-Pacific powers China and India into an important dialogue which will shape the regional architecture and contribute to regional peace and stability in the decades to come.

Challenges and Opportunities

23. We have, over the past 40 years, built a secure and vibrant nation where young people like you can look forward to many opportunities. But life is unpredictable and it is a constant challenge to ensure that Singaporeans will have that security and the economic opportunities to prosper and lead full and meaningful lives. We never know what surprises are waiting for us around the corner.

Radical Islam and terrorism

24. There is a clear and present threat to our security today in the form of radicalism and terrorism. No country is immune and we have just seen the horror of the attacks in London and Sharm el-Sheikh. You would know too of the plans by the Jemaah Islamiyah cells in Singapore to construct seven 3-ton bombs to hit various targets in Singapore. This challenge needs to be addressed at the level of what the security and other agencies can do to prevent attacks, and to respond to and manage the consequences of an attack should there ever be one.

25. But the challenge also needs to be met by the people – in staying vigilant and prepared, in remaining calm and resilient should an attack take place, and, most importantly, in staying cohesive as a society. Because societal cohesion is one of the targets that terrorists and extremists are aiming at.

26. The threat will be with us for a long time. This is an ideological conflict and countering the terrorists will require more than security measures. It will also require social and economic measures. Most importantly, Muslims worldwide and in Singapore will have to wrest back the agenda from the extremists who claim to be Islamic but are only perverting the religion for their political ends.

China and India - Economic Clout and Global Talent

27. The rise of China and India is regarded by many countries, including Singapore, as both their biggest threat and their biggest opportunity. Their increasing power will have an impact on the strategic landscape of the Asia-Pacific region, if not the world.

28. China and India are the two fastest growing economies and major engines of global economic growth. Over the last 20 years, more recently in India, economic reforms in these two countries have unleashed powerful energies which now bind the well-being of a good two-fifths of the world’s population to the international economy. Given their sheer size and weight, the rise of China and India will inevitably have an impact on the economies of countries not only in this region but beyond. We will have to adjust to the new economic paradigm, and our people will have to be flexible and resilient.

29. China and India have abundant talent, and that will propel them up the value chain. Singapore’s domestic talent pool is far smaller. The only way that Singapore can continue to compete is to become a hub for global talent; to make the world our intellectual hinterland and to attract talent to Singapore. Otherwise, we would be severely diminishing our economic space in the long term. Excellence – Our only permanent competitive advantage

30. The ultimate challenge may be to sustain the will to strive for excellence even as our affluence rises and our creature comforts keep improving. We have to stay hungry. Excellence is the thread that ties everything together and explains why we have succeeded while others have not. It is this that has allowed us to break out of our physical constraints, and to become a model that other countries want to learn from. It is this excellence that all of you here, as the future of Singapore, must strive for if you want Singapore to continue to be more than a little red dot.

Thank you.

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