World
Lee Kuan Yew and the Asian miracle
Lee's leadership was able to raise the standard of living of Singaporeans from a Third World country to a First World one within a generation
 
On March 23, 2015 Lee Kuan Yew breathed his last. Lee was one of the tallest leaders in the past century, not only in Asia but elsewhere. His call for Asian values and an Asian model of capitalism had an impact on rising China. For a country of Singapore’s size, its achievements over the past 50 years have been nothing short of exemplary.
 
Lee’s influence on the history of economic development in the Asian region is profound. His leadership was able to raise the standard of living of Singaporeans from a Third World country to a First World one within a generation. William Gibson labeled his model of economic prosperity with a tight authoritarian rule as Disneyland with the Death Penalty. His tight curbs with respect to free speech and media and a strong sense of duty as opposed to freedom essentially went against the traditional Western thinking on liberty and capitalism
 
With a per capita GDP close to $500 in 1965, Lee took the challenge upon himself to improve governance and the standard of living of people in his country. It shows his true test of leadership that he transformed Singapore’s without possessing any significant natural resources. During the initial years, the focus was on improving public infrastructure, drawing investments and building housing for residents. Lee was able to raise the per capita GDP’s considerably to $14,000 in 1991, a middle-income country by the time he retired as prime minister. Lee managed to pull off an economic miracle as he realized that the country had distinct positives.
 
First, were its hard working, multicultural and disciplined people. The country leveraged them during the period and grew to become a truly competitive economy. Singapore also saw a large influx of migrant workers that came from the nearby economies for a better aspirational life. Second was its strategic location with respect to economic geography. Singapore had a port that became the busiest during the 1980s, as this had been a main port on the Europe-Far East shipping route. It has been extremely important trading port ever since. 
 
Another positive was the ability of Singapore to foster clusters with international support and collaboration. The country leveraged and modernized its strong clusters in various domains most importantly petrochemicals (with its biggest refining complex at that time), financial services, transportation, and communication. The country also believed in trust and cooperation with neighbors. The ASEAN (Association of Southeast Asian Nations) formed in 1967 aimed at accelerating the export-led model of economic growth and social progress. 
 
The period of Lee’s prime ministership also saw him suing opposition leaders for defamation and causing some of their bankruptcies. In addition, conventional wisdom was turned on its head when Lee was able to prove that governments are not essentially economically inefficient. Evidence of it was that the government-owned companies were the largest employer by the time Lee vacated his office and accounted for astounding 20 percent of Singapore’s GDP. 
 
Post the 1990s Lee became a ‘senior minister’ in the cabinet and in 2004 became a ‘minister mentor’ but his influence on Singapore and the city state’s rise continued. Lee resigned in 2011 from the government at the age of 87. The country in 2013 had a per capita GDP of $55,000 - better than most of the developed nations. The city-state has been ranked 1st by the Ease of Doing Business Report 2015 by the World Bank group and the 2nd by the Global Competitiveness Report 2014-15 of the World Economic Forum. 
 
Lee’s greatness is that his influence was not just restricted to the domestic sphere, but he was considered to be a great geopolitical strategist. The most prominent of his impact can be seen in the recent Chinese economy. The period post the rise of Deng in China in 1978 has his strong influence. Deng was visibly impressed with Singapore. He is quoted as having said: "Singapore’s social order is good. Its leaders exert strict management. We should learn from their experience, and we should do a better job than they do." 
 
There is much in this India - not necessarily on social order but essentially on nurturing talent, providing better governance, boosting international relations and improving India’s economic performance. 

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Nifty, Sensex, Bank Nifty to rally further – Monday closing report

Nifty will head higher, as long as, Monday’s low holds

 

We had mentioned in last week’s report that the NSE’s CNX Nifty may put in a rally. Following optimism on most of the Asian indices, the 50-share benchmark back home also showed a positive trend on Monday. The positive opening on the Nifty was followed by a range bound session in the green upto 12.50pm after which it gained further momentum and was pushed higher. By the end of the session, the index hit a three day high and closed near to it.
 
The S&P BSE Sensex opened at 27,656 while Nifty opened at 8,391. The benchmarks moved from the lows of 27,625 and 8,381 to the high of 28,018 and 8,505. Sensex closed at 27,976 (up 517 points or 1.88%), while Nifty closed at 8,492 (up 151 points or 1.81%). Today’s gain on the Sensex has been the highest since 15 January 2015. Bank Nifty too gained momentum today and after opening at 18,160 it moved in the range of 18,089 and 18,393 and closed at 18,362 (up 317 points or 1.76%). However, NSE recorded a lower volume 70.80 crore shares. India VIX fell 1.64% to close at 14.2625.
 
The Reserve Bank of India (RBI), in a discussion paper had said that a bank's Large Exposure (LE) limit in respect of each counterparty, which includes a group of connected counterparties, will be capped at 25% of the bank's eligible capital base. For this purpose, the eligible capital base will be defined as the Tier 1 capital of the bank as against 'Capital Funds' at present. The proposed LE framework will be fully applicable from 1 January 2019. The RBI has placed the discussion paper on the proposed LE framework on its website and has sought comments on it by 30 April 2015.
 
The RBI has relaxed norms for non-performing assets provisioning on Monday according to which now banks can use 50% of their floating provision for specific NPA provision as compared to 33% earlier.
 
Speaking at the Confederation of Indian Industry's (CII)’s 6th Capital Markets Summit in Mumbai BSE chief Ashish Chauhan said that India would need to raise as much as a $100 billion in equity capital a year to meet capital requirements for the country's growth.
 
Credit rating agency Moody’s said the Indian government’s latest plan to revive the stranded gas-based power generation capacity through imports will help save $16 billion worth of investments and banks including IDBI, State Bank of India (SBI) and ICICI are set to be the biggest beneficiaries of the plan.
 
The Railways will increase its freight rates for several commodities including grains, pulses, urea, coal and cement from 1st April as proposed in the Railway Budget 2015-16.
 
Coming back to the Indian stock markets, NCC (9.59%) was the top gainer in ‘A’ group on the BSE. The stock hit its 52-week high today. Rasoya Proteins (4.92%) was the top loser in the group.
 
Bharti Airtel (3.55%) was the top gainer in the Sensex 30 pack. Out of the spectrum sale recently, the company gained capability to provide 4G services across the country.
Hindalco (1.61%) was the top loser in the Sensex 30 stock. 
 
On Friday, US indices closed in the green. Fed Chair Janet Yellen on Friday said that she expects the Federal Reserve to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path. 
 
Gross domestic product (GDP) expanded at a 2.2% annual rate, unrevised from last month's forecast, the Commerce Department said on Friday in its third estimate. The economy grew at a 5% rate in the third quarter.
 
Except for NZSE 50 (0.56%) all the other Asian indices closed in the green. Shanghai Composite (2.59%) was the top gainer.
 
China unveiled more details and projections for its "New Silk Road" plan to boost trade and economic relations with the rest of Eurasia and Africa. In Japan, the latest data showed that factory output fell by a worse-than-expected 3.4% in February.
European indices were trading in the green. US Futures too were trading higher.
 
Greece's creditors are reportedly studying new reform plans put forward by Prime Minister Alexis Tsipras' government in a bid to secure further bailout funds.
 
Global credit rating agency Fitch Ratings on Friday downgraded Greece's sovereign-debt rating to "CCC" from "B", citing "uncertain prospects of timely disbursement from official institutions".
 
The European Commission's economic sentiment indicator rose by 1.6 points to 103.9. Confidence in the euro zone's economy rose for a fourth straight month in March to its highest since July 2011, a European Commission survey showed on Monday.
 

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