SPEECH BY MR LEE YI SHYAN,MINISTER OF STATE FOR TRADE AND
INDUSTRY, AT PARLIAMENT ON SALARY ADJUSTMENTS FOR MINISTERS AND
SENIOR CIVIL SERVANTS
April 9, 2007
Introduction
1. Our debate today is about fair pay for ministers and civil
servants. Their job is to lead the country, translate vision into
reality. If they do their job well, our economy will grow, society
will remain cohesive and lives of Singaporeans will improve.
2. Before we can come to any conclusions, I think we need to
address three questions:
(a) what is the job about, ie what is at stake
(b) What kind of people do we need to do the job well; and
(c) What is a fair pay for these people.
What is the job about, what is at stake?
3. The job of any modern government is a complex one. It not only
has to address current issues, it also has to plan for the future.
It has to affirm the successful, it also has to encourage and
assist the weak. It has to protect its citizens, but also challenge
them to be responsible. It should not be populist, but should seek
to strengthen consensus and unity amongst its constituents so as to
achieve a common vision.
4. While these job descriptions may seem common for many
governments, the job of governing Singapore is made much more
difficult because of our smallness and vulnerabilities. Despite all
odds, we have accomplished much. Singapore is worth much more now
than forty years ago and the stakes are high.
How much is Singapores worth?
5. Based on our GDP of S$210bil growing at 4 to 6% annually, every
5-year term of good government will produce new combined value add
in excess of S$1 trillion.
6. What about our foreign reserves managed by GIC, savings in the
banks and investments in the SGX? They run into hundreds of
billions.
7. We all know that commercial buildings are worth a certain price.
Likewise, our factory buildings, MRT system, roads, airport and
seaport all have monetary values that can be realised if they are
listed and sold to international investors. Yet, we have not put a
price tag to these assets.
8. Imagine if we go one step further and impute values to the
intangibles of the operating environment in Singapore: safety,
reliability, stability, efficiency and integrated-ness? These are
valuable attributes money cant buy, yet, these values have become
synonymous with Singapores infrastructure.
9. Singapores value is also expressed through other countries
curiosity at our achievements.
10. Just a few months back, a Middle Eastern country actually
wanted to buy over the entire JTC. In Saudi Arabia, one marketing
brochure for a new, 150 sq km City reads Singapore in the Middle
East. Many of the oil-rich middle-eastern countries are
diversifying their economies by building new cities and
infrastructure. Many of them wish they could build an instant
Singapore into their systems. I think if we had offered, they
would have bought up not just JTC, but PSA, CAAS, IDA, MOE and many
other key institutions too.
11. Sir, as far as I know, not a week passes by without a foreign
delegation in town studying our systems, with the aim of adapting
it back in their countries. They come from China to the Middle
East, Russia to India and not to mention officials under training
from Asean countries. They are interested in our urban planning,
environmental protection, medical 3M, eGovernment, workers
upgrading programs, CPF and soon Workfare Bonus Program.
12. This week, the second Jiangsu province delegation, comprising
18 party secretaries and 11 mayors are visiting Singapore. What
makes the delegation unusual is that either the Number 1 or 2
persons of the major cities in Jiangsu are here at the same time.
They are very serious about studying our urban planning and public
administration system.
13. When the first Jiangsu delegation visited us in November last
year, one of the mayors commented to me: In terms of individual
buildings, I believe we have more outstanding architecture than you
have. But when you assemble all our buildings side-by-side, your
city looks so neat and beautiful. They are in harmony. So what is
your secret.
14. Our former chief national planner, now a senior director of RSP
Architects, Mr Liu Thai Ker has been doing architectural and city
master-planning work all over the world. He reminded me that
Singapore is the worlds only brand new, well functioning global
metropolis built up in the past forty years. That is why we are a
subject of case study and analysis, from countries near and
afar.
What kind of people do we need to do the job?
15. Does it make sense now that we know we are dealing with
trillions of assets in Singapore, and we want to relax the system
and allow lesser people to run the country?
16. Consider an executive search firms view below:
Singapore's bureaucrats are seen as "positive minded achievers who
know how to work ethically within the system with a view to
actually get things done and deliver to the population quality
products and services be it in healthcare, public amenities such
as transport & housing, utilities like water & power,
environmental issues and, most important, education.
The current "global initiatives" of Singapore to expand its
presence beyond its shores and into the large emerging markets of
India, China, etc are being watched closely. Singapore's
experiences in setting up SEZs in Bangalore (ITPL) & in China
are practically textbook cases for many countries which are looking
to expand their GNPs by co-investing worldwide. The successes of
Singapores Civil Service Professionals in these areas make them
extremely valuable to countries seeking to repeat these
achievements. So the next wave of Executive headhunting from
Singapore to many other countries in emerging markets could involve
senior civil servants - at salary levels far in excess of the ones
currently prevailing at home. This process could start happening
within the next 2 to 3 years as more and more countries are on a
platform to take off & need high quality governance to ensure
sustainable world class infrastructure is in place.
17. Sir, I am worried that there might be an exodus of talents from
the civil service. If we are unable to appreciate our own talents,
others will express appreciation on our behalf.
18. Of course, I am not trying to over-simplify any career
decisions at the senior level to just a single dimensional
consideration of dollars and cents. In fact, I believe it is most
common for any executive offered a new opportunity to consider 4
key factors: (a) mission and meaning of the job (b) challenge and
growth opportunities (c) environment for self and family and (d)
monetary compensation.
19. In the talent wars out there, firms are competing by raising
the bar in every of the 4 components above. If all that we can
offer in public sector leadership are the first 3 components, and
have a very weak 4th component, it is most unlikely that we can
compete effectively against other career opportunities, much less
convince anyone to take up public sector leadership
positions.
20. For multinationals, they can recruit worldwide for their CEO
and the senior management team members. In Singapore, for positions
of ministers and permanent secretaries, we can only choose from the
limited pool of top local talents. We cannot possibly appoint
foreigners or PRs to the cabinet, least we will end up having many
foreign ministers! This is a severe constraint on our building the
best team from a population base of 4 million.
What is a fair pay for these people - Market Benchmarks
21. The Straits Times reported on 6 April that Mr Wee Cho Yaw was
the best paid banker at $9.25 million last year. DBS Jackson Tai
and OCBCs David Conner were reported to receive around $7.5 and $5
million respectively. In the real estate sector, Capitalands Mr
Liew Mun Leong was paid $5.14 million, City Developments Kwek Leng
Beng received $4.25 million and Keppel Lands Lim Chee Onn $5.5
million. Earlier on, it was also reported that Singtels new CEO,
Ms Chua Sock Koon, would be paid $5 million if she meets her
performance targets.
22. I think our companies paying their CEOs regionally-competitive
salaries is a good sign. As our companies grow in sophistication,
assets and their international reach, their management teams will
also be valuable to other international companies. I am sure their
boards, in deciding the level of compensation, have taken into
consideration the job scope, complexity and the market value of
these leadership positions.
23. Some people argue that running a business is different from
running a country. Running businesses require functional and
execution skills; you also need market knowledge and business
acumen. Hence, you need to pay top dollars for this unique blend of
rare qualities.
24. For political leaders, dont they need to possess strong
functional skills and the political acumen to take into account a
wider range of variables in decision-making? See how the Thai stock
market plunged by 15% and US$25 billion was wiped out overnight on
the announcement of currency control measures.
25. What about anticipative work, such as averting terrorist
attacks, keeping our sea lanes open, keeping drinking water
flowing, ensuring sand and granite supply coming? Do they need
organizational skills and execution skills? Do they need plans and
preparation? Do they need imagination and risk-taking?
26. I believe good political leaders not only need to be rational
and analytical - the head factor, they must also have the
character, empathy and temperament the heart factor. They must
have exceptional abilities to connect with people.
27. It is fair to assume that the top 500 professionals in
Singapore have the basic head factor. Then as we begin the
filtering process, using the heart criterion and relevant skill
sets, removing the PRs and non-Singaporeans along the way, we will
quickly come to a much shorter list of qualified potentials. If we
talk to them, telling them the kind of drastic pay cut they need to
expect, and the heavy burden and nature of the political office, I
think they will consider the 4 components of a career choice, speak
to their family members, and finally, politely decline the
opportunity to serve. We will have very few people coming forward.
With the war for talents intensifying, the situation will be worse
in the future. Should we then lower our standard of selection, by
going down to the next 500 or next 1000?
28. The further down we go, the less capable people we are
recruiting into the team. The less assured will be our
future.
29. Some people argue that business leaders are faced with greater
risks. But wont leaders of nations face the same risks and more?
We just need to remember the Asian financial crisis, 911, SARs,
terrorism, the possible pandemic flu, the rise in oil prices in
recent years, and the more recent shortage of sand.
30. A business can leave a hostile operating environment, retrench
workers and pack up and move on to greener pastures. However, our
government cannot relocate Singapore. We have to accept the
situation as it is, retrain displaced workers, restructure on a
national scale, sustain livelihoods and maintain confidence.
31. Bankrupt businesses can fold up under Chapter 11 and get reborn
with new capital and owner. If Singapore folds up, we would not
even have a place to call home anymore.
32. Some people argue that corporate leaders face fluctuating
incomes every year. They argue that ministerial pay should be tied
to their work performance. Yes, but we should also recognise that
good business leaders deliver strong performance over a period of
time. Likewise, we should look at a cabinets performance in
leading the country in its 5-year term or longer.
33. However, I also want to caution against an over-zealous
performance-based implementation that will encourage short term
behavior. We know that not everything that is quantifiable is
important, and not every important thing is quantifiable. Many
decisions taken for a country must be long term in nature.
Master-planning of the city, the population model, policies on a
social safety net, defence policy etc. Even when to build our new
MRT lines has very long term implications.
34. If we over-incentivise short term behavior, as you see how many
other governments do, we could end up implementing populist
policies, squandering our reserves away and neglecting capacity
building and investments for the future. In the corporate world, we
have heard of CEOs creating short term results or turnaround by
stripping assets, scrapping staff training and trimming R&D
just to maximize profits. A company can be propped up for a few
years but will die of poor nutrition thereafter. This approach
should not be the outcome of our performance-based compensation
system for ministers.
In perspective
35. I met with the Chairman of a large industrial park developer in
a neighboring country two years ago. I was curious at his business
model. I asked him: Industrial park development in most countries
is a money-losing proposition. Government typically has to put in a
lot of infrastructure around the industrial park for it to work.
Roads, water, power plants, sewage system, telecommunications - all
are very expensive investments. In Singapore, we set up JTC to do
just that. How is it that you can develop greenfield industrial
parks and still make money?.
36. The founder-Chairman replied: Oh.. in my country, the
government is not so organised and have people like yours. We the
private sector must organise ourselves to build our own industrial
parks. Besides charging land rental, I also provide utilities,
telecommunications, canteens, workers uniforms, housing
anything
that my tenants need I would provide. We create a revenue model
from our tenants and. we become profitable.
37. Impressed, I asked further: You have created a new industrial
park from ground up. What about your capital city? It is a large
metropolis. But traffic congestion is choking it. Is there any plan
that you or your government has to tear some old buildings down,
widen up roads, build more subway lines and perhaps also bury
overhead power cables underground?. Without much hesitation, is
entrepreneur said: No, if the government attempts to do that,
there will be riots. They will be overthrown the next day. We are
too democratic, too many voices and there are too many interest
groups. Dont forget, our government is weak. Your PAP government
is half a communist! When you say you do, you will do!
38. Sir, whatever others may call us, we deliver benefits to our
people.
39. The latest Merrill Lynch report has this to say about
Singapore: At the risk of being abstract, we would say that
Singapore is amongst the best countries in the world. . . There is
no prescribed way to analyse a states Grand Strategy. But you can
start with its perspective. How it sees its goals, strengths and
fears
. These are key issues for a country
countries with
governments that have strategic vision and the ability to
implement, also have strongly-performing stock markets. Those that
dont, have not.
40. Sir, persuading the ablest men and women to lead this country
must be an urgent priority for the present generation of leaders.
The Prime Minister needs every tool he can have to make it easier,
not harder for talented people with the right character to come in.
We should give our strong support to the proposal to pay ministers
and senior civil servants, and statutory appointment holders
market-based salaries.
41. Sir, paying S$56 million for a cabinet to run a GDP of S$210bil
is cheap. You cant get that anywhere in the world.
42. Conversely, paying a team of $46 million (or $4.6 million as
practised in some countries) can be too expensive, if the result is
a floundering economy, high unemployment, empty government coffers
and a divided people. All these can happen faster than you think,
with an incompetent government.
43. Sir, the choice is clear.
