Lee Hsien Loong: We have intimate relation with Indonesia

TEMPO.CO, Jakarta - August 2015 marks a milestone in Singapore's history: the island state turns 50. Big and small events will be held throughout the country as part of the jubilee. But this will be the very first time that Singapore celebrates its anniversary without its revered and influential founding father, Lee Kuan Yew. "Mr. Lee retired as Prime Minister in 1990. He has prepared well and Singapore is set to take further steps forward." said Prime Minister Lee Hsien Loong, in answer to Tempo's questions.

Prime Minister Lee, who is popularly known as BG (Brigadier-General) Lee, follows in the footsteps of his father Lee Kuan Yew, the nation's first president and his predecessor, Goh Chok Tong. "I'm a third generation leader," said Lee. He leads a small nation of just 5.5 million people yet with the highest gross domestic product (GDP) per capita in the Association of Southeast Asian Nations (ASEAN) region and the top third in the world over US$56,000. Given its size smaller than Jakarta its lack of natural resources and its young age, Singapore's story is a remarkable one.

Its service industry, including financial services, banking, shipping and tourism has been the country's economic backbone. More recently, Singapore's casino sector has been drawing in gamblers from many countries, including Indonesia.

But Singapore is by no means a modern-day utopia. The reluctance of its young generation to have children, and with the number of elderly citizens rising steadily, the current birth rate has become a serious challenge, even a possible threat, to the future of the country, and to Singapore's workforce. "Marriage and birth numbers have gone up a little but it's still not where we would like it to be. So we have to consider what we have to do more," Lee explained.

He described relations between Singapore and Indonesia as 'very intimate'. Nevertheless, like close neighbors anywhere, there have been intermittent ups and downs. But as both nations gear up to become part of the ASEAN Economic Community, there will always hopefully be a mechanism to sort out snafus and snarls between the two mutually reliant countries. As the common adage goes: it's far better to have good neighbors than distant relatives.

Still, Indonesians gripe a lot about the country they frequent for their shopping, their medical treatment and increasingly, their children's education. At the back of many Indonesian minds is the thought that Singapore is a safe haven for Indonesian corruptors and is 'closed off' to its trade. "I don't understand how we can be closed off when we are the most open economy," responded Lee, in answer to questions on a variety of issues, from Tempo journalist Hermien Y. Kleden along with a few other editors from the ASEAN countries last June, at his office in the Istana. Excerpts of the interview. 

How do you define the Singapore style of democracy and at what stage is it now after 50 years of independence?

We have a democratic system in Singapore and it works for us: we have elections every five years or so. We have a parliament and an elected president. The system has delivered a stable and competent government one that has a mandate to govern effectively and do what Singapore needs. It evolves over time because our society and expectations change. So the way it operates will gradually adjust. It's a model which Singapore is making work for ourselves.

For the first time, Singapore celebrates its anniversary without its founding father.

Mr. Lee retired as Prime Minister in 1990, and completely retired from the cabinet (as Senior Minister) four years ago. I'm not a second generation leader, I'm the third. Mr. Lee has prepared Singapore for the day when it carries on without him. So, we are well set to move ahead and take our country to further steps forward.

How do you see the economic relationship between Indonesia and Singapore? Were there discussions on a particular issue between you and President Jokowi, on your visit to Jakarta last April?

We have very intimate relations between Singapore and Indonesia; economically, politically and security cooperation. On the economic side our trade is substantial, our investments are very substantial. We are one of the biggest investors in Indonesia and President Jokowi has said that he would like to increase those investments from Singapore and would like to work more closely together. I'm happy to do that. But I think there are also issues we have to deal with when it comes to economic cooperation. For example, Indonesia would renegotiate the investment guarantee agreement. These are things under the sovereign right of countries, but when investors go into a country, they look for reassurance and confidence that there will be a framework.

Do you think we need a better IGA (Investment Guarantee Agreement)?

The better IGA you have, the better the reason for investors to come. I think these are factors that investors will look at when they decide whether they want to invest in Indonesia, when they decide where they want to focus their attention. We hope that they will be able to make progress and both sides will understand how to create the conditions.

There are a number of critics who claim Singapore tends to be closed off in economic and trade relations between Indonesia and other ASEAN countries.

I don't understand how we can be closed off when we are the most open economy. We have low tariffs, we have hardly any non-tariff barriers, we plan to do more. Usually when we cooperate with other countries, the other countries have different rules and we have to take some time to come to some meeting of minds on how we can open up. So we would like to do more, but we need to proceed at a pace which other countries are comfortable with.

Why does Singapore reject Timor-Leste from joining ASEAN? 

We have not rejected Timor-Leste. A working group called the ASEAN Forum studies the question of Timor-Leste joining ASEAN. There are big implications for ASEAN and Timor-Leste. So, before taking a view or making decisions, we need to work out any implications. The working group is looking at the economic, the political-security, and the social-cultural sides. There is always a trade-off between how quickly you expand and how deeply you make your cooperation.

The European Union had this trade-off...

...and there are now 28 (of them), in a very complicated process. ASEAN is now 10 and it has taken us some time to become 10. Even with 10 there is the question of how do the original six countries match with the Indo-Chinese countries, the new members, the development gap and so on.

So, having a new member is not a trivial issue for ASEAN?

It's not a trivial issue but we have to spend some time understanding carefully and decide. As far as helping Timor-Leste get ready, I think ASEAN is doing quite a lot, helping them develop their abilities in a wide range of issues. (*)

Read the full interview in this week's edition of Tempo English Magazine