The Unsung Genius Behind Singapore's Success: Dr. Goh Keng Swee
While Lee Kuan Yew is widely recognized as the architect of modern Singapore, Dr. Goh Keng Swee played a pivotal, often unseen, role in the nation's transformation. Lee Kuan Yew himself acknowledged Goh's immense contribution, stating that he "made the greatest difference to the outcome for Singapore." This article explores the five key areas where Dr. Goh left an indelible mark: the economy, the currency, the reserves, the military, and the education system.
A Reluctant Public Figure
Despite his profound impact, Dr. Goh remained largely out of the public eye. Described as a "hopeless campaign orator but a formidable analytical mind," he avoided self-promotion and even declined to write his autobiography. He preferred working behind the scenes, prioritizing substance over publicity.
Rebuilding the Economy
Addressing High Unemployment
In 1959, Singapore faced a dire economic situation with unemployment reaching 14%. Dr. Goh, as Finance Minister, was tasked with the urgent challenge of creating jobs to combat the rising threat of communism. He recognized three key economic realities: trade alone was insufficient, Singapore's open port status created intense competition, and business expertise was heavily focused on trade rather than industry.
Attracting Foreign Investment
Dr. Goh defied conventional wisdom by prioritizing foreign investment over import substitution. He established the Economic Development Board (EDB) to attract world-leading companies, including Apple, to set up factories in Singapore.
Building Investor Confidence
Recognizing investor hesitancy towards a fledgling nation, Dr. Goh employed a strategic approach to build confidence. He orchestrated photo opportunities and publicized every stage of factory openings, creating the perception of rapid industrialization. This tactic proved crucial in attracting investment, especially after Singapore's separation from Malaysia, a time when the World Bank had written off the country's chances of survival.
Stabilizing the Currency
Implementing the Currency Board System
To attract foreign investment, Dr. Goh prioritized currency stability. He opted for the currency board system, a British inheritance where every circulating Singapore dollar was backed by an asset in Singapore's reserves. This established legitimacy and trust in the new currency.
Using Exchange Rates to Combat Inflation
Facing global financial instability and rising inflation in the 1970s, Dr. Goh pioneered the use of exchange rates as a monetary policy tool. This involved gradually appreciating the Singapore dollar and pegging it to a basket of currencies of its trading partners. This policy proved highly effective, keeping inflation at bay during the second oil shock when other OECD countries struggled.
Managing the Reserves
Establishing Sovereign Wealth Funds
Dr. Goh established GIC and Temasek, now renowned sovereign wealth funds, to manage Singapore's excess reserves. As an export powerhouse with persistent budget surpluses and the Central Provident Fund (CPF) system, Singapore accumulated reserves beyond what was needed to defend the currency. These funds invested in stocks and bonds, generating substantial returns and becoming a crucial source of government revenue.
Utilizing Reserves in Times of Crisis
The investment returns from the reserves contribute significantly to Singapore's annual fiscal budget. During the COVID-19 pandemic, the government drew billions from the reserves to support the economy, highlighting their importance as a lifeline during crises.
Fortifying National Defense
Building a Strong Military
In 1965, Dr. Goh faced the daunting task of creating a Singapore army amidst threats from Malaysia and Indonesia. He secretly sought assistance from Israel, whose officers arrived in disguise, and built the Singapore Armed Forces, emphasizing capability over population size. He aimed to create a "poisonous shrimp" - a small nation too painful to swallow.
Fostering Self-Sufficiency
Dr. Goh emphasized self-sufficiency in defense manufacturing. He established Chartered Industries of Singapore (now ST Engineering) and the Defence Science Organisation (DSO) Laboratories to develop local R&D capabilities and manufacture ammunition and weapon systems.
Reforming Education
Addressing High Dropout Rates
In 1979, Dr. Goh was tasked with reforming Singapore's failing education system, characterized by high dropout rates and low basic competency in languages. He shifted the philosophy of education to provide the best possible education for each student based on their abilities.
Introducing Streaming
Dr. Goh introduced streaming at primary levels, a controversial policy aimed at catering to different learning abilities. Despite the criticism, it dramatically reduced dropout rates. He also advocated for a balanced education, emphasizing physical and moral development alongside academics.
Legacy
Dr. Goh Keng Swee's contributions to Singapore are immeasurable. While Lee Kuan Yew was the face of Singapore's success, Dr. Goh was the brilliant problem-solver working behind the scenes. Together, they transformed Singapore into the successful nation it is today.