Singapore & Malaysia Relied on MNCs and Foreign Investors to Fight Unemployment

From page 66 of LKY’s book “From Third World to First” —

“We did not have a large group of ready-made entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton (Guangzhou), and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved… It is absurd for critics to suggest in the 1990’s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNC’s. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNC’s in Singapore.”

Another quote…

From pages 57-58 of “From Third World to First”, Lee Kuan Yew says:

“The accepted wisdom of development economists at the time was that MNC’s were exploiters of cheap land, labor, and raw materials. This “dependency school” of economists argued that MNC’s continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNC’s controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNC’s to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNC’s could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNC’s.”

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EVEN Mahathir Mohamad of Malaysia said they used Foreign Direct Investments to solve unemployment!

Excerpts from MAHATHIR bin MOHAMAD’s book A Doctor in the House:

From page 308:

“Nevertheless the increase in foreign investments helped to create jobs and so lowered the unemployment rate, which was high at the time. Our approach differed from those of Japan and Korea, where the preference was for acquiring foreign technology for investment by the locals. We did not have local entrepreneurs with the money or the willingness to invest in industries they were not familiar with. It was only after many years that the Malaysians acquired the knowledge and industrial skills to invest in manufacturing. Thus it was through FDI that we succeeded in converting our agricultural economy into an industrial economy and eventually solving our unemployment problem.”

From page 334:

“Managing a manufacturing industry is very difficult and there was no substantial industry in Malaysia at that time that we could take our lessons from. We went for foreign investments because we did not have locals who were willing to take the leap. Locals wanted to stay within their comfort zones. When there is no competition in the mix, it is easy to get away with low quality, bad management, dirty processes and inefficiency. But in a competitive environment, you must always be on guard. You have to look for ways to improve your product and be more cost-efficient. If you do not, you can be very sure that your competitors will be doing exactly that. Tax protection may provide some comfort but it should not make things too easy and discourage effort. It should certainly not cultivate bad attitudes and habits.”

From page 372:

“Creating jobs, especially by implementing policies that encourage the creation of private sector work opportunities, is the proper role of government. That was why when Malaysia invited foreign investment, we did not insist on immediately collecting taxes. We were prepared to forgo taxes if the investors created jobs for our people. In our view, no one who was prepared to work should remain unemployed. In fact, the Government was so successful in creating jobs that there are now more than two million foreign workers in the country. We cannot ourselves meet the demand for labour that our economic development has generated.”