(Click here for "Effective Government in Singapore", Asian Survey August 1996)

contents:

INTRODUCTION

POLITICAL VALUES AND SYSTEMS

DICHOTOMOUS CONCEPTS OF THE POLITICAL ECONOMIC ENVIRONMENT

    Collectivism and Individualism

    Democracy and Totalitarianism

    Economic Systems

POLITICAL ECONOMY

    Paternalistic Authoritarianism

    Patronage

    Stability and Orderly Succession

    Epilogue: Modern Applicability of Pye's Model

APPENDIX A: PUBLIC ENTERPRISES AND PRIVATIZATION IN SINGAPORE

HISTORICAL EVOLUTION

    The Political Economic Context

    Growth of the Singapore Public Enterprise System

PRIVATIZATION

    The Agenda

    Privatization in Singapore

APPENDIX B: CORPORATISM

APPENDIX C: CORRUPTION

The socio-cultural legacy of the Asia-Pacific region has impinged on its political values, of course. The political legacy is described in this chapter in terms of the Confucian cultural tradition, based on the paradigm of “paternalistic authoritarianism” developed by one of the leading American Asian scholars of the twentieth century, Lucian W Pye. Although modern society in Asia increasingly embraces democratic notions of politics and government, Confucian traditions of ancient China have been, and will remain, dominant in the socio-political model of Asia-Pacific countries.

Political economy as an academic discipline covers the interrelationships between political and economic processes. In this chapter it concerns how political values influence the functioning of Asian national economies. Managers of business in the Asia-Pacific region encounter different political and economic systems than we find elsewhere in the world.

Political and economic systems can be analyzed according to various sociopolitical values. The fundamental distinction in values concerns the relative emphasis of a society on government intervention in the economy (in the extreme, adopting socialism) versus a laissez faire (liberal) approach. These imply dichotomous policy approaches. A broad range of value dimensions framed within this dichotomy will be developed in this chapter. The next section will address three related dimensions suggested by CWL Hill as being of particular importance: 

1. relative emphasis on individualism, or alternatively collectivism,

2. relative emphasis on democracy, or alternatively totalitarianism, and

3. relative emphasis on free markets, or alternatively a 'command economy'.

Many other value dimensions might be suggested as important to consider. For example, a noted professor from Princeton University, Gregory Chow¹, offered the following values as areas where Westerners and East Asians sometimes operate from quite opposite perspectives.

1. relative emphasis on private property, versus public property,

2. relative emphasis on a modern legal system,

3. relative emphasis on individualism, versus the common good, and

4. relative emphasis on democracy, versus rule by a one-party hierarchy.

Chow's point was that as a result of East Asian success, these ideas have become the object of much debate as to which value dimensions provide for better economic performance. 

DICHOTOMOUS CONCEPTS OF THE POLITICAL ECONOMIC ENVIRONMENT²

In this section we elaborate on Hill's three value dimensions.

This dichotomy relates to whether individual freedom is more respected, or the needs of a collective such as family, or wider social prerogatives as a whole. The collectivist value is represented in a political sense by socialism, and the classical concept of socialism was developed by Karl Marx (1818-1883). Marx advocated state ownership of productive enterprise to protect labor from capitalist exploitation. The communist formula for socialism originated with the 1917 revolution in Russia, but communism was in worldwide retreat by the late 1980s. Nevertheless, democratic socialism still provides the main political alternative in many West European countries. A central policy platform of the socialist approach was reliance on state-owned rather than private enterprise, but the inherent inefficiencies of these so-called public enterprises led to a major new policy switch worldwide to privatize these enterprises, selling them to the private sector during the 1980s and until now.  [Appendix A provides an analysis of the Singapore public enterprise system and privatization policy.]

Individualism is believed to have emerged in Western Europe around the middle of the second millennium and led to a tradition of individual rights and liberties unique among civilized societies. Samuel Huntington³ listed various attributes of the Western cultural legacy that contributed to a sense of individualism and an increasing tendency to value individual choice. These include, among other institutions and values:

~ A rich classical legacy -- for example, Greek rationalism and Roman law.

~ Western Christianity, including the Protestant Reformation which resulted in what Max Weber famously dubbed "the Protestant ethic" that he argued allowed the "spirit of capitalism" to first emerge in Europe.

~ A highly pluralistic society and the early rise of representative bodies including parliaments.

Individualism can be viewed in both a political and an economic sense. In a political sense it implies liberty, i.e., individual sovereignty and freedom from arbitrary restraint by government. The 'liberal' philosophy is that states should interfere as little as possible in peoples' lives. 

In an economic sense it implies pursuit of individual self-interest through free enterprise and free trade --the classic economic freedoms that have such broad ideological acceptance in the world today. Self interest (rather than altruism) was seen by Adam Smith as the superior concept to govern economies. 

In practical terms, individualism leads to participative, democratic socio-political systems (so-called 'civil society') and free competition within self-regulating market economies. It was based on a concept of limited government --referred to by Frederick Hayek as "the minimal state".

Hill differentiates in degree of totalitarianism, from the most oppressive dictatorships, to "right-wing" governments that allow economic freedom but restrict political freedom. Many East Asian countries have been criticized as repressive in this way, but the varying degrees of political and economic freedom granted does not permit such an easy assessment. China, for example, as a communist totalitarian state, allows little political freedom but now is granting significant individual economic freedom. India is a representative democracy but socialist ideals influenced political policy after the country gained independence from the British in 1947.

The Asian experience might be forcing a realization that individualism and freedom are much more complex issues in practice than we generally think. Scholars since the Enlightenment have identified a distinction that modern liberals tend to disregard, that the ongoing Western campaign for more "freedom from" diverts attention from the more important "freedom to": "We are fascinated by the growth of freedom from powers outside ourselves and are blinded to the fact of inner restraints ['freedom to']."⁴ It is the "positive realization of freedom" --personal growth mentally, emotionally, professionally, to enhance self-actualization-- that may be left untended by society and which leaves the individual isolated and unfulfilled. Asia's concern for education and societal development might represent a long overdue adjustment to the liberal approach. It is quite unrealistic to imagine that the East Asian success story could even remotely influence reform in the West, but it will be interesting and instructive to see how the Asian approach evolves as civil society continues to develop and mature.

Hill identified some well-known types of economic system, and these generally follow from the country's socio-political philosophy. These philosophies are a result of a society's tendencies to value individualism or collectivism, and democratic or totalitarian government control. 

The "market economy" relies on free market supply and demand to underpin the economy. The "command economy" on the other hand relies on government to direct the economy, i.e., to decide on which goods and services are produced and at what quantity, and the pricing and consumption of this output. A "mixed economy" as a taxonomic type generally describes the common situation where governments attempt to control some sectors of the economy (e.g., public utilities) and leave others to the market. Hill depicts this formula as tending to be practiced by the social democracies of Western Europe. 

Finally, Hill uses the term "state-directed economy" to describe those governments which attempt elaborate "industrial policies". Industrial policy, or Strategic Trade Policy, is a major theme of this book, to which we return soon enough. First, we further develop the notion of political economy. 

"Throughout the history of Western political thought, two views of society have stood in conflict. Both these views are intended to explain what has been, and will probably continue to be, the most puzzling problem of social philosophy: how is it that human societies cohere? There is one large and distinguished school of thought according to which social order results from a general agreement of values, a consensus omnium or volonte generale which outweighs all possible or actual differences of opinion and interest. There is another equally distinguished school of thought which holds that coherence and order in society are founded on force and constraint... ⁵

The basic philosophical issue in the world economy pits advocates of social, political and economic freedom against those who emphasize the need for social control of national and international endeavor. Ideologies of the 'left' are associated with the tendency to favor socialism, or the social control element over the freedom of individual enterprise. Those who believe human freedom should be the central concern favor liberalism in other words --the central value of ideologies of the 'right'. Throughout the history of Western political thought, social scientists have been looking for some satisfactory middle-ground between the left and the right. It remains unresolved which particular elements of the left and right are most appropriate for the welfare of nations. The question may be stated: How does a mixed economy best combine competition and cooperation into an effective model for inter-state competition? The ultimate quest is to discover a social system which is conducive to the creation of a better functioning, happier community.

"The key to the discovery of the general good is the concept of community. The severest criticisms of liberal society, both from the left and from the right, focus on the absence of community in even the most efficient and affluent liberal capitalist state."⁶

Viable political economic alternatives have been identified between the dichotomous extremes of socialism on the left and liberalism on the right. A 'third way' was identified by Robert Gilpin,⁷ which he called the Nationalist Perspective. Gilpin proposed that this Nationalist Perspective deserves equal status as a third ideology alongside his Liberal and Marxist Perspectives. The central notion of Nationalist political economy, which has comprised attitudes ranging from mercantilism to protectionism to Fascism, is that an otherwise liberal economy should be subordinate to the interests of the state. Thus, the underlying priority is state building rather than free enterprise per se. Arguably, many of the successful East Asian governments embrace the Nationalist Perspective. It is in the context of this 'third way', an alternative between the simple left-right dichotomous choices, that some Asian political systems represent an interesting, different model of political economy. Lucian Pye⁸ referred to the East Asian political model as it had evolved up to 1988 as "paternalistic authoritarianism", which we discuss below. Before doing that, however, it is appropriate to address the "end of history" argument of Francis Fukuyama.

Fukuyama⁹ contended that we have reached "the end of history" in terms of the evolution of sociopolitical thought. Fukuyama's seminal book was a rendition of the notion that we have already had our best idea, founded in the liberal traditions of the French Revolution. Communism in his view was always doomed to failure eventually, as are all modern political and economic systems that attempt to diverge in any significant way from fundamental aspects of liberalism. In fact, Fukuyama posed American political economic values as representing the model toward which all world societies must ultimately gravitate. In presenting Pye's model of Paternalistic Authoritarianism, we are implicitly making a strong argument that the world has not reached the end of history if there is an East Asian political model that poses a real alternative to Western liberalism. This presumes a political value system that is distinctly different and viable in the long term, i.e., will not simply revert to liberalism. Keep in mind we are merely presenting Pye's argument, not necessarily celebrating 'the return of history'.

While conceding a great variety in the ways East Asian governments manage their economies, and certainly many regional differences in historical experience and type of society, Pye concludes, quite controversially, that certain features among five particular countries (read endnote ¹⁰) represent a common political value system, which he dubs Paternalistic Authoritarianism. Pye enumerates 12 characteristics of the model, which we re-group into the following four:

Pye proposed "both elitism and sympathy" as the 1st characteristic of the East Asian political model. The political elitism embedded in Confucianism is moral elitism, not aristocratic, religious, or any other form of elitism. Those who rise to the top in the distinctively hierarchical Confucian culture are respected as morally the most righteous and spiritually the most advanced; such individuals should share more of the responsibility of government. A Confucian scholar, Tu Wei Ming was quoted by the Straits Times on 5 September 1986: "The first question the leadership has to ask in the Confucian context is whether it can live up to the rules and regulations that it wants to promulgate as a common creed for the society as a whole. There's always more obligation on the part of the leadership to perfect themselves and through moral suasion to enable others to perfect themselves." Moral suasion takes on a paternalistic aspect. Noble aspirations of leadership may be meaningful if such a morality is really inculcated in the political culture.

The 3rd characteristic of Pye's model was technocracy. The elites were individuals who had risen to positions of authority through professional competence, which qualified them to better run the machinery of administration and development in the modern state. Singapore has elevated this to a concept of "meritocracy" as one of its main "pillars of government". (Goh Chok Tong) In this sense, it is less a matter of whether a true meritocracy exists, rather the principle must be inculcated that the most capable individuals should be in charge of the top positions of national leadership.

This is the 2nd characteristic in Pye's model, and it might be considered to also encompass his 7th - 12th characteristics which are:

7. Rule is by a dominant figure (except in Japan).

8. A legal system is secondary to the judgment of officials.

9. Scope is given to lesser authorities.

10. Political legitimacy depends on economic success.

11. A psychology of dependency prevails among the people.

12. The military is a powerful institution.

Most of these would seem to be attributes of authoritarian government anywhere in the world; but when taken together with meritocratic elitism, the entire package has fostered an equality and efficiency which certainly did not happen in Latin America or Africa.

In short, it is Paternalistic Authoritarianism. For government in the Confucian tradition, the ruler was to assume a parental duty. The doctrine of the Mandate of Heaven¹¹ and government by virtue gives rulers authority, and by the same reasoning the people tend to be amenable. This is not to say the people have no right to be angry at bad government, as Pye points out.

An aspect of this dominance by government is a weak establishment. Various top managers in business and bureaucrats in government, pluralist forces such as labor unions, professional associations, the media, etc, have little power. Policy makers thus are not easily pressured by special interests outside the executive branch of government.

The 'weak establishment' idea does not contradict Pye's 9th point, that scope is given to lesser authorities. This scope constitutes an operational decentralization, not decentralization of political power. For example, state-owned enterprises in East Asia are sometimes more autonomous than their counterparts in Europe, for example, the Nationalized Industries of Britain were required to report in minute detail to Parliament and other supervising government bodies.

While the Western transition from mercantilism to capitalism generally promoted the Free Trade Movement, the East Asian development pattern drew on paternalist tendencies of government to foster a 'corporatist' approach. (See Appendix B for a detailed description of this form of political economy.) The priority of national competitiveness of industries led governments to create a tripartite bond between labor, management and government to control costs and disruptions in industrial relations.

According to Pye's 10th point, economic success was the source of legitimacy of East Asian governments. This to some extent replaced the traditional Confucian legitimacy of rule by morally superior men. Most East Asian governments that have managed to retain the same leadership team in power for long periods have done so because these governments are seen by the constituency as successful in nurturing the national economy.

Nationalism, that is, loyalty and devotion to one's nation, is an ancient phenomenon, a force for good or evil. Historically, nationalism has led to all kinds of international conflict, persecution of minorities and terrible atrocities. For example, some blame Japanese nationalism for the outbreak of World War II in the Pacific. Of course, nationalism is generally seen as a positive value because citizen allegiance and government efficiency are mutually supportive. In East Asia, a strong sense of nationalism stems from the traditional, often Confucian, emphasis on the family, or the larger collectivity. Nation-states transcended the collectivity after the Western impact.

The central concern of state-led nationalist fervor in East Asia was to strive for economic growth. "Thus, in East Asia, long before the theories of economic development and nation-building became popular in the Third World, governments were concerning themselves with questions of how public policies might be able to further economic progress and state-building. In this sense, the East Asian countries had a substantial head start over the rest of the non-Western world..." (Pye p88)

For the purpose of national competitiveness in the international economy, some East Asian nations (notably Japan) were bent on strengthening the most powerful enterprises and industries, to build national champions to compete on the world stage. This easily leads to protectionist tendencies. The approach is often for the government to assume major risks normally the responsibility of business itself, compelled by anxiety about possible national failures. This sheltering of business causes a dependency on government unlike Western capitalism --and led to patronage also, to be later discussed.

Pye's 4th proposition was, in brief, a government prerogative to support national competitiveness. His 6th, "setting and attaining national goals", was also part of this Economic Nationalism. Government saw itself as responsible for selecting new industries to be developed, prescribing production targets, and mobilizing the human resources needed. This role of government has been termed 'industrial policy'. Japan's success with industrial policy, at least in its early growth years, versus the absence of such an effective government-business relationship in the USA for example, set Japan apart and explained to a large extent the superior national competitiveness during the 1970s and 1980s of many Japanese industries.

This was Pye's 5th point. Critics of the government in power are brought into line; thus the people are taught to conform. Again, this cooperative attitude tends to foster government support in return for its benevolence to the people. Such a mutual support system easily lends itself to patronage --defined as an ongoing exchange of favors between rulers and the people, their enterprises and other institutions.

Patronage¹²

The patrimonial model was first suggested by Max Weber to analyze early forms of authority. The borderline between patronage and corruption (see Appendix C) is so blurred that neither is condoned in open, mature polities. The types of favors administrators commonly confer on constituencies range from simply sharing power and influence, to official appointments, new roads or other public facilities, access to financial resources, licenses to enter business, and protection from outside competition. A story about the 1995 general election in Thailand tells of one voter in the countryside going berserk and shooting up the town after finding his gift was only a case of chili sauce. Perhaps more insidious was the Suharto family business in Indonesia, or allegations that in Malaysia privatization share flotations were allocated to political insiders. (See Jomo¹³ and Gomez¹⁴.)

When two persons of unequal status, power or resources ally themselves for mutual gain, anthropologists call this a patron-client alliance. Patron-client relationships in politics might be inherently unstable because of the fickle nature of political alignments. This instability can become quite perilous if it extends to a national scale.

Local interest associations cluster around candidates or their parties; networks or pyramids are formed by leaders of local clusters establishing links with higher patrons. Local notables acting as intermediaries link villages to the larger political system. Society thus becomes divided into vertical patron-client clusters, but sociopolitical stability is only as strong as the weakest links in the structure.

Power is based on loyalty rather than competence of leadership. A bureaucrat's authority becomes dependent on his personal following and all these links rather than the official post. The role of leadership focuses on the flow of political resources, and competition among political parties addresses the power matrix rather than particular policies. Rule by patronage may lack real authority because directives from the top may have to be re-negotiated at various points down the hierarchy. Subordinate patrons try to preserve their own clienteles.

In a society structured into vertical patron-client clusters, horizontal affiliations such as social classes have little chance of forming. Thus class analysis --looking at the labor class, farmers, ethnic groups, etc, is less informative about the real political forces at work. Questions of ideology become less important. For some examples: party political competition in the Philippines does not really reflect the agrarian movement among tenants and plantation laborers; intra-party Malaysian politics is less responsive to the Chinese-Malay race issue; and factionalism dominates politics even in modern Japan.

Reform-minded rulers encounter considerable resistance. For example, attempts in Japan to reduce the goodies Japanese politicians have to distribute (to be elected) long failed to excite the electorate, nor do reforms get much support from the ruling Liberal Democratic Party. Japan has been unable to effectively move away from the single-party politics of loyalty and toward a multi-party contest of ideas. 

Patronage may have been the natural, first formula to nurture worthy individuals and enterprises to help the nation compete, especially in Confucian societies where governments are obliged to intervene in the people's lives. A patrimonial system survives to the extent that inequalities of wealth, status or power continue to be regarded as legitimate; insecurity prevails over one's wealth, status or power; and other means, such as kinship ties, do not provide the requisite advancement or security. However, patronage is marginalized with the strengthening of political and administrative institutions. Political development negates the need for patrons because citizens get their sustenance and protection from the 'system', not individuals in power. Open political processes and participatory democracy are also part of the solution.

The Southeast Asian region especially manifests pervasive patron-client structures and weak political institutions. Indonesia, the Philippines and Thailand are perhaps the best examples. Singapore and perhaps Malaysia have relatively stronger political institutions and weak patrimonial structures.

The immense responsibility of Paternalistic Authoritarian governments for all aspects of national development led to a pervasive role which accepts few limits to the scope of government. In Singapore notably, government has been the main entrepreneur. Centralized political power is the norm in East Asia. Pye argues, "government towers over all other institutions, and operates largely without the benefit of a supporting establishment." (p92) The lack of pluralist political forces to keep the government in check and bring out new ideas is of course a major limitation on future progress.

The central priority of Paternalistic Authoritarian governments has been stability, especially since economic enterprise insists on predictability of behavior by government and indeed all national institutions. The Confucian ideal of rule by superior men rather than arbitrary laws might contribute to the uncertainty of a change in leadership. Thus, a major consideration has been political succession through orderly procedures. In the 1990s however, South Korea, Taiwan and Singapore all successfully managed changes at the top. In South Korea, an elected presidency gradually replaced rule by army generals who seized power by coup d'etat. In Taiwan, succession until 1988 was dynastic --from father to son. Taiwan's first presidential election was in 1996. In Singapore, insinuations about dynastic politics in the Western media in 1994 resulted in a successful domestic lawsuit brought by the officials concerned. Lee Kuan Yew's successor in 1990 was announced after an internal party selection process. Hong Kong as a crown colony had a British chief minister, with only a brief democratic experience of legislative elections in 1995 prior to the colony reverting to Chinese rule in July 1997. Only Japan institutionalized the succession at prime ministerial level earlier than the 1990s, having a democratic transfer of power since the end of World War II.

Considerable political development has transpired in Asia during the years since Pye's article was published in 1988. Coincidental with the demise of Communism in East Europe, a global trend seems to be gathering momentum for governments to adopt more open, democratic processes.

Many specific attributes of Pye's model have not entirely borne out with passing time.

--The military stepped back from its earlier position of power in South Korea and Taiwan with the advent of democracy in both those countries. Similarly in emerging Asia-Pacific economies, civilian politicians are putting their military leaders under their control. In Thailand, in response to a popular uprising in 1992 against military rule, the army has withdrawn from politics and also from control over some state enterprises. In post-Suharto Indonesia, once-powerful generals now answer to elected politicians. Being a soldier is no longer the route to the top in Asian politics.

--The rule of law has become more important as independent legal institutions continue to mature in Asia. Nevertheless, courts do indeed share the Confucian mentality of East Asian governments and tend to reach verdicts more supportive of the broader national interest in social order rather than favoring principles of individual freedom.

--A central dominant personality (proposition 7 of Pye's model) is less evident in modern Asia --notably China, among other countries. Personalities are still important in Asia but they are not as omnipotent as they once were. The system itself is more important than the personality in office.

As to whether the ongoing political development means that the East Asian model is becoming essentially the same as Western liberalism, that is not entirely clear. Asian values have their separate merit and legitimacy, in the view of many prominent Asian leaders including Lee Kuan Yew of Singapore, Dr Mahathir Mohamad of Malaysia, and a clutch of academics. The economic success of East Asia demonstrated that fresh models for social interaction can reinvigorate old political economies. Tu Wei Ming of Harvard University spoke of an ongoing academic dialogue to "re-think the Enlightenment heritage", to create space and an equal position for Asian values alongside Western values as mutually consistent global spiritual resources. (Read endnote ¹⁵.) Despite these arguments, without doubt the majority among the world's intelligentsia still would generally support the notion that the Western liberal model is the best choice any modern society can make.

Certainly, Asian political processes are undergoing a transformation, generally to embrace more democracy. And even the most ardent advocate of 'Asian values' would not disagree with the idea that this democratic development is desirable.

The changing government-business relationship

Modern trends in Asia-Pacific politics might be reflected in how increasing democracy has complicated the old ways of dealing with governments in Asia. Unlike the 'old days' when the most important part of the business strategy for investors in Asia was getting the personal seal of approval from the right minister, doing business in Asia has become less straightforward. Pluralism is complicating old corporatist arrangements.

Government ministers in modern Asia have to listen to voices from many emerging power centers: certainly foreign investors themselves have an important voice, but also labor leaders, legislators, the electorate, environmental groups, and many other pressure groups. These groups are today accustomed to operating in a more accessible political arena. Businesses, for example, conduct a continuing dialogue to influence policy.

The most useful channel for business input into policy-making is the investment board --in Singapore for example, this is the Economic Development Board. Investment boards are no longer simply bureaucracies; they are active sales units targeting their efforts at specific kinds of investments. They develop working relationships with investors to help them find partners, do feasibility studies, even facilitate project implementation; and they seek advice from business. Other branches of the public sector are brought in, for example, the telecommunications authority, public works officials, etc. Increasing clarity of the rules and regulations and more open communication with politicians and bureaucrats creates transparency.

Businesses have an array of new skills and strategies to push their projects. On the other hand, the electorate is less tolerant of businesses which support whoever has power to benefit from the old patronage formula. Thus, democratic pressures seem to be bringing about a 'new politics' in Asia.

APPENDIX A: PUBLIC ENTERPRISES AND PRIVATIZATION IN SINGAPORE

This Appendix surveys the historical background of state-owned, or public enterprises (PEs)¹⁶ in Singapore. The purpose is to identify the rationale for PEs, their problems and prospects, and the rationale for privatization. Singapore is selected as a case study because their PE system has been efficient and successful, unlike almost every other case in the world.

The rationale for governments becoming involved directly in business enterprise has ranged from ideological reasons, to rescue takeovers, to a pragmatic design for development. (See Figure A.) The government of Singapore, which was guided by the latter line of thought, has spawned business institutions that are now in many cases keenly competitive in the international arena. Development policies were not only directed at domestic modernization and progress but also --especially with the special attention accorded to export oriented (as opposed to import substitution) strategies-- at increasing competitiveness in international markets.

The Singapore government originally became involved in business enterprise in order to eliminate unemployment and improve the housing situation, which were the major issues in 1959 when the Peoples Action Party (PAP) took office. This purpose soon evolved into a broader design, as government initiative seemed to be the most efficient means to rapid industrialization. The Housing Development Board was established in 1960, the Economic Development Board in 1961; and the pace of government formation of new enterprises continued to accelerate at least until the 'privatization' notion came into vogue in the mid-1980s. By the 1980s and 1990s the government's initiatives were more avant-garde, including, for example, an overseas investment company to manage central bank reserves and industrial science parks to promote research intensive activities.

One lesson that Singapore seemed to have provided to the Third World was that government participation can evolve in two different fashions, only one of which seems advisable for development. First, there is the strategy of nationalizing existing firms, a policy that was disclaimed long ago by Goh Keng Swee. (Read endnote ¹⁷.) Second, which has been Singapore's policy, is public investment in new ventures. In this way the government starts a new operation, thus creating new capital. Initial success then finances more enterprises through internal growth and diversification; and confidence in the government encourages further private investment, often in the form of joint ventures with the government. To take an example, the Singapore government's first major development site, Jurong Industrial Estates, had only two factories in 1963; by 1979, it had 902; and by 1988, 1800. The government's development agency for the Estates, Jurong Town Corporation, itself was a spin-off in 1968 from the rapidly expanding Economic Development Board.

By 1979, one worker in ten was a government employee. Although this figure was the same as for West Germany, the dominance of multinational corporations in Singapore suggests that local participation in the economy was mostly governmental. One local academic expressed "the general view ...that public enterprise may probably contribute about 14-16% of gross output of total manufacturing" (Lee,1978:150). That figure left 84-86% of total output for private enterprise, but that is nearly all foreign. Foreign sources committed about 70-90% of new investment in manufacturing in Singapore, perennially. (See Table A.) Hence, the only really significant domestic capitalist, at least until the 1980s, was the government.

TABLE A: NET INVESTMENT COMMITMENTS IN MANUFACTURING

source: Economic Survey of Singapore

The greatest concern of policy-makers is that PEs may be inefficient and may act as a drag on national development rather than providing the expected impetus which inspired the government to undertake the enterprise in the first place. This has been the case almost everywhere. However, in Singapore PEs have performed very well, contrary to the expectation of mainstream policy makers and academic thinkers. In other countries, problems of PEs stem mainly from the influence of politics and bureaucracy and the imposition of noneconomic goals on management. Singapore seems to be an exception to the general rule. Chan Heng Chee observed that "political leaders [in Singapore] look upon government and politics as an exercise of state management..." and that the "style of government looks for the elimination of politics." (Chan,1981)

The greatest concern of private enterprise, both multinational and domestic, in Singapore and elsewhere, is that PEs get privileged treatment. The Singapore government is at least philosophically opposed to favoritism. According to Goh Keng Swee, PEs should "receive no special privileges". However, there have been instances to the contrary, especially where Statutory Boards are concerned. One example in this connection is the Post Office Savings Bank's (POSB) tax-free savings accounts. In 1979 the Association of Banks in Singapore submitted a written appeal for fairer treatment vis-a-vis the POSB. The government took no action on the appeal.

PEs in Singapore are certainly subject to the rigors of the market. Goh Keng Swee argued that PEs should be run like private businesses. Unsuccessful enterprises have been allowed to fail. Ideologically, Singapore is strongly committed to the free trade movement and hence to free enterprise. Goh Keng Swee had said: "We do not own and run enterprise on ideological grounds." This is tempered by the statement of Prime Minister Lee Kuan Yew in 1965 that Singapore is "half socialist, half capitalist, and let the future be decided by the next generation." One test of the government's ultimate designs is whether its involvement ever reverses itself. In 1979, Goh Chok Tong, then Minister of Trade and Industry, said that "once ...companies succeed, we should in fact divest ourselves of their shares." (quoted in Far Eastern Economic Review,10/8/79:44) This philosophy portended the privatization policy announced in 1985.

Ow(1976:162) presented early data from the Department of Statistics on the relative share of gross fixed capital formation by sector of the economy:

million S$ by:    1960 1965 1973

public sector         67     216   824

private sector        75     260 1793

By 1987, the figures had risen to $5275.2 for the public sector and $9907.3 for the private sector. However, the private sector was becoming increasingly dominant. (See Table B.) Although the more recent figures indicate a relative decline in the public sector, this is not evidence of any reduction in government investment levels. Increases in public sector capital were being offset by privatization and especially were overshadowed by increased foreign investment.

TABLE B: GROSS FIXED CAPITAL FORMATION (at current market prices):

(*) averages for the decade

source: Economic Survey of Singapore

The public sector in Singapore is extensive; it comprises the government and its ministries, statutory boards, and their directly owned PEs. However, not all PEs belong to the public sector. Some are private sector PEs owned indirectly by the government through semi-autonomous holding companies. The continued growth and success of government enterprise led to a complex network of major companies. The government's main holding company, Temasek Holdings Pte Ltd, has continually been expanding and pruning its portfolio, which is therefore constantly changing in rather complex ways.

Although the holding companies generally did not interfere in the decisions of its subsidiaries, decisions concerning shareholder matters were monitored. The means of control was primarily through appointment of company directors. There is also periodic review of past performance and future plans of selected companies through meetings and reports. Equity capital or shareholder loans are provided where required for the development of approved projects.

Lists of government companies have occasionally been published by researchers, but there are often errors and omissions. The major reason for difficulties in reporting on PE activities is because Temasek and defense-related companies are not required to reveal their investments and financial performance for public inspection. "The upshot of such secrecy is that Parliamentary and public access ...as to the activity, structure, scale and range of operations, profitability or otherwise, is beyond the pale of any disclosure..." (Pillai,1983:119)

The growth of the Singapore PE system finally abated somewhat, in relative terms, following the 'privatisation' policy announced in March 1985.

How can the transfer of public enterprises (PEs) to private ownership be justified in Singapore? To a large extent, the answer to this question has been revealed in this examination of the origins of PEs in Singapore and the motivations for their creation. The discussion uncovered an underlying consistency in the Singapore government's reasoning throughout; the original rationale for the establishment of PEs in Singapore is consonant with the logic behind the prevailing privatization policy.

From the mid-1980s, it finally became a customary practice for Singapore policy-makers to decry the role of government in enterprise. Singapore's perspective now is that private entrepreneurship should be the engine of growth to seek out new areas for investment in Singapore's maturing economy.

The first official announcement of the privatization policy on the 8th of March 1985 was made by Dr Tony Tan in his last budget speech as Finance Minister. On 2 February 1986 the government announced the formation of a Public Sector Divestment Committee, charged with deciding which companies to privatize, to what degree ownership should be reduced in each case, and a schedule for implementation.

In February 1987 the Committee Report was submitted to the Ministry of Finance. It recommended a potentially massive sale of government assets, emphasizing that "as many" enterprises and "as much" government equity should be transferred as could be effectively absorbed by the market, within a timeframe of "say, ten years". Statutory boards with commercial operations were also considered eligible for limited privatization. The rationale of the exercise was stated, that is: to "withdraw from commercial activities where a government role is no longer needed", "broaden and deepen the Singapore stock market", and "avoid or reduce competition with the private sector". These purposes were contrasted with "common objectives in other countries": to raise cash or eliminate cash drain, and to eliminate political interference and bureaucratic rigidities, which were considered inapplicable to Singapore.

Privatization commenced in October 1985 with divestment of the government's very small (0.06%) holding of Singapore Press Holdings Ltd. Three more divestments occurred in 1985 including the December flotation of Singapore Airlines shares, which netted Temasek approximately S$236 million and was far the largest divestment until 1993. Six more flotation exercises occurred in 1986, and twelve in 1987, the peak year of the entire program in terms of numbers of firms privatized. After 1987, the number of privatization exercises tapered off, especially stalling during the early 1990s to await better market conditions, but recommenced in 1993 with the privatization of Singapore Technologies Industrial Corporation and, far the largest flotation of all, Singapore Telecoms.

From the outset of the privatization exercise, the government divested only the most profitable state-owned firms and statutory boards to augment the companies' and also Singapore's financial flexibility and development. Privatization meant giving up not just ownership but also management of the companies. A local economist and Member of Parliament, Dr Augustine Tan, argued in Parliament on 27 February 1986 that the change in ownership and control might destroy some of the companies. Lee Kuan Yew expressed a similar concern, reported in Business Times (12/6/87), that future management would be "cut off from the inner sanctum of government" and fail to appreciate the rationale for development policies. Privatization has not had discernible negative effects. Broader ownership, including foreigners, improves market scrutiny and thus management responsiveness; and the government has been careful to maintain enough equity not to dilute their own control if government oversight seems desirable. Furthermore, the fact that the government was divesting some enterprises did not mean that new PEs could not be formed.

Responsibilities undertaken on behalf of the government by its companies, for example Intraco's rice stockpiles, have to either be made contractual or turned back to other government agencies. On the other hand, the government has retained a 10% stake in Intraco which is enough to maintain government-to-government trade relationships that still exist with China (and characterized nearly all trade with former communist regimes in Eastern Europe). Even without a government shareholding, obligations to the state might still be performed because the practice is well established and need not be abandoned. Some responsibilities are still contractual after full privatization, such as National Iron and Steel Mill's obligation to be an assured supplier to the Housing Development Board.

The word 'privatize' did not become part of the local vernacular until the initial plan was announced in Parliament in March 1985, but by that time a form of privatization had already been proceeding in Singapore, as a number of major PEs invited market investment in their equity. For example, Keppel Shipyard and Neptune Orient Lines, both at the time wholly-owned by Temasek, issued shares to the public in 1980 and 1981 respectively. Indeed, DBS had obtained its listing on the Stock Exchange of Singapore at its initial formation in 1968.

However, two new practices emerged in the modern privatization policy. For one thing, now there was actual divestment by the government. Another significant new development was really only a carry-over from earlier practices, epitomized by the ongoing flux in Temasek's portfolio. It was becoming increasingly apparent that Temasek was repurchasing previously privatized shares on the stock market, a practice referred to as 'rolling privatization' (for example, see Low,1991). Privatization in Singapore was not going to be simply a government 'garage sale', but rather the government was itself an active market participant, as both seller and buyer.

The overriding objective of this exercise of state enterprise, as always, has been to channel funds to industry. Brigadier-General Lee Hsien Loong, then Minister for Trade and Industry, put the privatization policy in perspective by explaining on 15/10/86 that the government still intended to be intimately involved in managing the economy. His father Lee Kuan Yew observed in 1988 that the government had no apologies for its past record in targeting new industries for investment, nor in the future was it going to leave it to private entrepreneurs. He argued that even if the government was smarter than the market just once out of three times in choosing industries for Singapore's development, that one winner justified the government's efforts.

The Singapore government has responded to the new information technologies in a "post-Fordism" pattern depicted by Jackson and Price (1994:22). Typically, government loosens control over selective areas of decision making while retaining central control over the making of strategy. The "entrepreneurial state" (Ibid) oversees a periphery of decentralized business and economic centers, serviced by ever more sophisticated management information systems which allow an even greater regulatory role. (By implication, sociopolitical developments are similarly managed by the State.)

Privatization has been the vogue since the 1980s, heralded by the advocacy of Prime Minister Thatcher's government in the United Kingdom. The concept was hardly mentioned in Singapore until late 1985, when almost every government official took up the cry in unison. Before then, few would have disagreed with Pillai's prediction that "the case for privatization of the public sector has not and is unlikely to find expression in Singapore in the near future". (Pillai,1983:107) Well in advance of the privatization policy, and even before Goh Chok Tong's 1979 suggestion of the possibility of divestment of government ownership, several state-owned enterprises had already floated shares publicly. However, privatization now meant the government was actually divesting, even allowing takeovers by domestic and foreign investors. Indeed, the government itself seemed touched by takeover mania, a new wrinkle in the 'public purpose' of state enterprise.

Singapore's privatization policy has had other extraordinary aspects. First, there was the difference in rationale noted earlier. The goals of privatization virtually everywhere else have been stated for example in Lieberman(1993), to relieve the government deficit, strengthen the market environment, and solve the problem of enterprise inefficiency. If there was a concern for efficiency in Singapore, it was for the enterprise after privatization. There was no admission that efficiency had ever been a problem, no hurry to unburden the government. Surpluses accumulated by state-owned enterprises are the problem, not deficits. The government only conceded a "need to withdraw from commercial activities" with the caveat "where a government role is no longer needed". One stated purpose of privatization "to reduce competition with the private sector" was restated by Goh Keng Swee (Straits Times, 23/8/92) as "to avoid false claims of competitors of unfair advantage".

Only one of the classic purposes mentioned by Lieberman motivated Singapore's government, to strengthen the market environment, viz, broaden and deepen local capital markets and provide citizens the opportunity for a stake in the economy. Goh (Ibid) also elaborated on this rationale, that giving Singaporeans a share in the state's enterprises would improve enterprise performance due to increased market scrutiny and pressure for profits, and that Singaporeans themselves would benefit from these profits.

A second remarkable aspect of Singapore's privatization policy was that there was no firm timetable, with clear-cut phases as is often recommended in the privatization literature (for example, Shirley,1991). Seizing the opportune time is indeed an entrepreneurial activity appropriately left to the enterprises.

Third, the policy was a top-down decision, not motivated and pushed by the private sector or other particular interests. Fourth, political consensus was achieved among all concerned. Although workers and managers felt some trepidation about their personal security, an assurance of no net job loss was possible because the enterprises were expanding, not contracting, as a result of privatization. Civil servants were confident they would be more, not less influential because they were turning over enterprises that they had run well and moving back to central government to administer the larger economy with the enhanced prestige of success.

Fifth, there was no ideological transformation, no admission of any past mistakes by the government. Finally, there was no abnegation of responsibility by the government. Ownership was reduced, but not control.

Characteristically, the government retained some equity in key national enterprises. Notwithstanding the past and present participation by private investors, state enterprise remains relatively dominant. In fact, there are few countries where the government has itself been such a major player in the economy. In most free-market economies, the government is content to restrict itself to the more conventional role of managing the overall economy. In Singapore, the government plans strategy, and competes in the game as well.

PEs have played a key role in modernization and development of the economy. They have been efficient, largely because they have not been burdened with pursuing sociopolitical objectives. They are expected to behave like private enterprises and set the standard in a highly competitive open economy. There is little sympathy for weak performance. Political interest has generally coincided with enterprise (PE) interests. The fact that key PE leaders have been recruited from the civil service has not hampered their independence and entrepreneurship, because they have been key members of the national management team. As Michael Porter observed, "When an industry takes on the status of a national priority, and/or a prestigious place to work, talented people flow into it and demonstrate unusual commitment and effort... competitive advantage often results [from] national importance." (Porter,1990:114)

The government has been the chief venture capitalist in Singapore but now feels that local private investors are ready to play a bigger role. In the past, local capital was more attracted by the property market and other non-industrial, speculative ventures (Lee,1978), but with the privatization of Telecoms Singaporeans led the world in citizen participation in shareholding.

So why is it appropriate to privatize, for the government to divest itself of its good investments? The answer to this question has not changed since the 1968 public share issue by DBS. The core of their reasoning is the same as ever: to position the economy for more success, that is, to facilitate and promote the channeling of resources to Singapore enterprise.

There may also be a real concern for the future prospects of the old system. To date, the Singapore PE system has been entrepreneurial and avant guarde. But what of the long term --can past success continue? The factors which have led to the past success of the PE system included a fortuitous circumstance in terms of the particular stage of development. The Singapore formula of decentralization of operations and centralization of control worked well, whereas problems of control and the emergence of a bureaucracy might well arise in the future. Furthermore, political stability and rationality have also been important factors. Powers of pressure groups have been limited and there has been little vociferous participation of the masses and opposition political groups in national decision making. Only in this environment were PEs allowed to be profit-seeking, without political interference or other political orientation. But environmental factors are invariably dynamic.

If the December 1984 election can be seen as a precipitant for the privatization policy announced in 1985, the government may have reasoned that the population would inevitably demand more politics at the expense of economic rationality. Social pressures for more liberalism in the style of Western advanced countries may be irresistible, regardless of the implications.

Therefore, despite past success, it was surely well advised to privatize, to turn over ownership to private investors and make a national profit on the transaction, before the inefficiencies of PE that plague the mixed economies in the West began to manifest themselves in Singapore.

APPENDIX B: CORPORATISM

The East Asian transition to capitalism drew on paternalist tendencies of government to adopt a 'corporatist' approach. Corporatism generally refers to a situation where interest associations are integrated into the governmental decision-making process of a society. The main interests were traditionally aligned with labor, management, or government itself. The basic tenet of corporatism is that interest group politics is subjugated to some central perception of the national interest.

Corporatism as a typological construct denotes an economic system not entirely amenable to market liberalism, rather having strong connotations of managerial bureaucratization, state intervention in the economy and planning. Under the corporatist formula, the major interest groups would be encouraged to conclude a series of bargains about their future behavior and role in an overall national plan, or concept of a desired course for national economic development. Decision making by the government would proceed only after close consultation with major organized interests. If governments frequently made important decisions without consulting the major interests, the system as a whole would not be classified as corporatist; rather it would simply be an authoritarian state.

Corporatism is not a new concept. Schmitter(1974:85) cites an early quote: "The twentieth century will be the century of corporatism just as the nineteenth was the century of liberalism." [Mihail Manoilesco 1934] It has been applied to many varieties of political regimes, from the Fascist regimes of pre-World War II, to South American dictatorships, to modern Scandinavian and West European countries, to anywhere where perceptions of national competitive needs may compel the elites to establish patterns of coordination of government and interest groups.

Corporatism implies a sort of cooperative restraint, or 'reasonableness', by all parties to national operations, a connivance between labor, management, even political participants and consumers, etc, though not all groups are necessarily party to the mutual support and collusion. The point is that things get done not through spontaneous action by individual pressure groups, but rather by agreement to the 'party line', conformity, or other such approaches so denigrated by the Western liberal establishment. It is an explicit alternative to the universally acclaimed system of politics which has completely dominated the conceptual approach of American political science: pluralism.

APPENDIX C: CORRUPTION ¹⁸

Corruption is defined in the dictionary as "inducement to wrong by bribery or other unlawful or improper means". Impropriety may be judged based on international norms or relevant authorities, at the time or upon later review. No country is free of corruption, the issue is a matter of degree. The degree of corruption in major Asia-Pacific countries is periodically assessed by, among others, the Asian Intelligence journal which surveys the views of senior executives doing business in the region. Singapore is invariably assessed as having the least corruption; China, Indonesia, Philippines and Thailand are typically considered to suffer relatively the most corruption.

Singapore is perceived as very intolerant of corruption, but survey responses distinguishing the government's hard-line approach to corruption from the ruling party's strategy for maintaining political dominance are at times ambiguous. Be that as it may, the rampant corruption that prevailed under the colonial administration was effectively redressed when the PAP came to power in 1959.¹⁹ Singapore's reputation as tough on corruption has helped attract capital looking for a safe haven.

China's rapid economic growth seems to have resulted in more exorbitant demands for kickbacks, raising the hidden costs for foreign investors substantially. Personal contacts (quanxi) are important for doing business in Chinese societies, and in China that involves the bureaucracy at all levels. Corruption is one of the biggest risks that China faces, but improved transparency as a result of membership in the World Trade Organization is an ameliorating circumstance.

Thailand's governments continue to rise and fall on the corruption issue. Influence peddling in the Philippines was famous under the Marcos regime, and corruption did not really subside under the Aquino government. Gradually, prospective investors seem more able to push their projects on the basis of economic merit rather than political connections. Even so, corruption continues to block projects and reverse policies, notably during the Estrada era.

Because Indonesia during the Suharto years had more economic success than the Philippines, corruption could be more profitable there, and corrupt individuals more entrenched. Still today, however, Indonesians often receive the worst rating for perceived risk. 

Corruption does not seem to be as institutionalized in Malaysia, South Korea and Taiwan. Corruption is held in check better in societies where such practices are less acceptable. However, the worst abuses can occur at the top where checks and balances cannot be enforced against powerful officials. This would be less likely to effect foreign companies, but there may be implications for political stability. The corruption trials of South Korea's former presidents, as with the continuing investigations of the Suharto family businesses, and other top level cases, seem to indicate that in democratizing Asia there will be a comeuppance even for individuals long regarded as beyond reproach.

In Japan, the politics of kickbacks is systemic, power broking a big money activity. The Recruit Co scandal in the early 1990s led to resignations by many top politicians and a setback for the ruling Liberal Democratic Party in the subsequent election, but the LDP was soon back in power and reform proceeds slowly. Even so, corruption is less tolerated by the modern electorate, and anyway corruption does not extend to foreign businessmen so Japan receives a relatively favorable rating.

Corruption is endemic in the free-wheeling business environment of Hong Kong, and the takeover by China in 1997 --a country with its own serious corruption problems-- inevitably added a new wrinkle to corruption in Hong Kong. This is a major concern as foreign investors need proper mainland connections. However, China's investment in Hong Kong has quite scrupulously conformed to Hong Kong's much more developed system of business law.

REFERENCES

1.      Chow, Gregory (1996) "How Well Does Market Socialism in China Work?” National University of Singapore: Department of Business Policy Seminar, 12 July

2.      Dahrendorf, Ralf (1959) Class and Class Conflict in Industrial Society, London: Routledge & Kegan Paul

3.      Fromm, Erich (1941) Escape From Freedom, New York: Holt, Rinehart & Winston, (1969 printing), page 105

4.      Fukuyama, Francis (1992) The End of History and the Last Man, London: Penguin Books

5.      Gilpin, Robert (1987) The Political Economy of International Relations, Princeton, NJ: Princeton University Press

6.      Gomez, ET (1990) Politics in Business: UMNO's Corporate Investments, Kuala Lumpur: Forum

7.      Hill, Charles WL (2004) Global Business Today, New York: McGraw-Hill/Irwin (3^rd edition)

8.      Huntington, Samuel (1996) "The West: Unique, Not Universal," Foreign Affairs, Nov/Dec:pp28-46

9.      Jomo, KS (1995) Privatizing Malaysia, Boulder, Colo.: Westview Press

10.  Political & Economic Risk Consultancy Ltd (2001) Issue #579, Asian Intelligence, 7 March

11.  Porter, Michael (1990) The Competitive Advantage of Nations, Free Press

12.  Pye, Lucian (1988) "The New Asian Capitalism: A Political Portrait," in Peter Berger and Paul Hsiao (editors), In Search of an East Asian Development Model pp81-98

13.  Tu Wei Ming (1995) "Confucian Ethics, Asian Values and the Emerging Global Community", The Institute of Southeast Asian Studies Seminar, Singapore: 6 October

14.  Wolff, Robert Paul (1968) The Poverty of Liberalism, Boston: Beacon Press, p183

1. Chow (1996) "How Well Does Market Socialism in China Work?

2. This discussion summarizes key points in Hill (2004) Chapter 2, "National Differences in Political Economy".

3. Huntington (1996)

4. Fromm (1941) page 105

5. Dahrendorf (1959)

6. Wolff, Robert Paul, The Poverty of Liberalism, Boston: Beacon Press, 1968:183

7. Gilpin, Robert, The Political Economy of International Relations, Princeton, NJ: Princeton University Press, 1987

8. "The New Asian Capitalism: A Political Portrait," in Peter Berger and Paul Hsiao (editors), In Search of an East Asian Development Model, 1988, 81-98

9. Fukuyama, Francis, The End of History and the Last Man, London: Penguin Books, 1992

10. Pye included Japan, South Korea, Taiwan, Hong Kong and Singapore. Japan set a pattern economically which the others followed to some extent, although political evolution of the five countries differs quite significantly.

Japan is a well institutionalized democracy, though it conforms to Pye's model in most aspects. South Korea and Taiwan have progressed from military dictatorships to democracy. The military influence looms large because both countries are parts of divided nations and confront hostile Communist enemies. Singapore and Hong Kong share a British colonial legacy, Singapore having been guided toward independence and parliamentary government since the 1950s while Hong Kong has been denied that prospect.

11. Wu Teh Yao, "The Traditional Chinese Concept, Strategy and Art of Governance", Nanyang University Occasional Paper No 29, Singapore, July 1976

12. Discussion draws on Bruce Gale, Politics and Public Enterprise in Malaysia, 1981: pp 4-14.

13. KS Jomo, Privatizing Malaysia, Boulder, Colo.: Westview Press, 1995

14. ET Gomez, Politics in Business: UMNO's Corporate Investments, Kuala Lumpur: Forum, 1990

15. Tu Wei Ming presented this argument at The Institute of Southeast Asian Studies Seminar: "Confucian Ethics, Asian Values and the Emerging Global Community", Tu Wei-ming, 6 October 1995. The Seminar was chaired by Chan Heng Chee, then Director of the Institute, who referred to Tu Wei Ming as the world's "foremost Neo-Confucian scholar".

Also see "Enemies of Enlightenment", The Economist, Vol 338 No 7957, 16 March 1996, pages 97-99, which reports the current and historic debate as to whether Enlightenment ideas originating around the time of the French Revolution really give Western liberal values any superior claim to moral legitimacy.

16. The term “public enterprise” (PE) was used originally to denote those companies held by the Singapore government as part of a system of enterprises for state-led commercial and socio-political endeavor. Other acronyms are more popular and seem to be used more consistently in other contexts. For example, we use the common acronym SOE, or state-owned enterprise to apply to the case in China in a later chapter. Writers in Singapore gradually adopted the acronym GLC, or government-linked company because the government stake was often not majority yet the government role was decisive.

17. Goh Keng Swee was a Finance Minister, Defense Minister, and Deputy Prime Minister from the 1960s to the 1980s. He is generally credited as being the architect of Singapore economic policy, including the PE system.

18. Discussion draws on the Political & Economic Risk Consultancy Ltd Issue #579, Asian Intelligence, 7 March 2001. Individual country summaries are also available.

19. Jon ST Quah, "Singapore's Experience in Curbing Corruption", in AJ Heidenheimer, M Johnston and VT Levine (editors), Political Corruption, 1993:841-853