File #3398: "ms102_04_01_04.pdf"



April 14, 1967

Dear Homer:
Geographically, Singapore is as integral a part of the
Malay Peninsula as New York City is a part of New York State.

A flat

island of 224 square miles (compared to 22 square miles for the island
of Manhattan), it is a part of the same land mass, separated by the
straits, not nearly so wide or deep as the Hudson River.

To further

the analogy, western Malaysia (the Malay Peninsula) is just about the
size of the State of New York.
But, in any other than geographic terms, the separation of
Singapore and Malaysia is far wider.
The beginning _ this separation dates back to 1819 when
Sir Stamford Raffles, impressed with the possibility of its great natural
harbor (just 80 miles north of the equator) as a trading base to serve all
of Asia and the east coast of India, moved into what had been largely
uninhabitated (except for a few Chinese fishermen), since the earlier
villages had been destroyed by the Javanese in the fourteenth century,
and founded the


City of Lions.



In 1867 the Straits Settlements were incorporated with
Singapore as a Crown Colony (comparable to Hong Kong).

The British

gradually cleared away the semi-tropical forest (except for some twelve
square miles that are preserved as a park) and built a great colonial city
(expanded by thousands of Chinese immigrants) and settled down to a
delightful colonial life, prospering on the tin and rubber trade and fortifying the island to the point that it was impregnable against attack fr om
the sea.
But early in 1942 the Japanese marched down the Malay
Peninsula and were able to fly, shoot and ultimately wade

across the

narrow straits and conquer the guns that pointed in the other direction .
We are told that in the first week they killed thousands of young men of
fighting age (17 to 40 years).

In all, some 50,000 Singaporeans were

Upon the bombing of Hiroshima, the Japanese surrendered
to the British, who again administered the government and continued to
raise the living standard even as they planned independence.
Straits Settlements were dissolved.

In 1946 the

Penang and Malacca were incor-

porated into the Malayan Union and Singapore became a separate Crown

In 1959 it became self-governing.

In 1963 it joined with its

geographical parent, Malaya, and with it, Sarawak and Sabah became


But the non-geographic differences became increasingly

The British were still present with their great naval and

military base which provides one-quarter of Singapore's very substantial

per capita income of $450,

itself a second distinguishing characteristic.

Thirdly, Singapore is primarily (75 per cent) Chinese with perhaps
eight per cent Malays -- in contrast with a more heavily Malay ancestry
on the Peninsula.

Fourthly, Singapore is primarily Buddhist, whereas

Malay is primarily Muslim,
These differences led to unlike attitudes and aims.


Malaysian constitution frankly disting uished b etwee n citizens of different
origin and gave preferenc e to the Malays.
tion of Singapore.

This irked the Chinese popula-

The Singapor eans claim that the Malaysian government

was corrupt, its officials lazy, and that the public funds were spent for
show rather than for useful service.

On the other hand, the Malay govern-

ment felt that the Singaporeans play too close to the communists.


on August 9, 1965, Lee Kuan Yew, a Cambridge-educated lawyer, later
communist trained, aggressive head of the P eople's Action Party, and
head of Singapor e I s provincial government since 1953, pulled his country
out of Malaysia to go it alone.

~:, According to John Scott, it is East Asia 1 s most prosperous


This frightened our government, for we feared a communist

Some of Lee I s statements were not reassuring.
"We are non-communist. We like Mr . Nehru's
attitude. We believe in working with communists
as long as they play by the rules. If they begin
to play in order to abolish the rules, then they
musf be suppressed. This is the situation in the
Federation, But not here in Singapore. The suppression of the communist party here was
Lee, who at one time may have been a communist and initially

felt that he could work with them, reacted to their pressure and, resent-

ful of their attempt to dominate him, elected to pursue an independent
and more central course,
This morning, when I asked our Ambassador Galbraith if he
thought the Singapore economy could achieve viability alone, he replied,

It is viable,


and apparently it is.

Of course, it derives great income

(though less direct employment) as a port, the fifth most active in the world.
Not only Malaysian, but also Indonesian, rubber and tin pass through
Singapore and the hands of the commercial firms established there.
Lee I s .economic advisors recognize, and he accepts, the fact
that, without Malaysia's agricultural and industrial production, Singapore
would be at a disadvantage .

Unlike Sukarno and some other oriental rulers,

Lee operates his government as a team and, having attracted good men, he
listens to their advice and encourages them to carry out thei r recommendations -with excellent results.

-5 -

Sing a pore has a balanced budget.

It has continued to

maintain a pleasant arrangement with the British, who have recently
stated their intention to keep their military base here as long as
conditions continue as they are,
Lee I s government has stimulated foreign investment by
legislative encouragements:

l. Bank accounts of non-residents are taxed
at only one-quarter of the rate on residents I accounts.
2. Interest paid on overseas loans for approved
capital equipment is tax-exempt.
3. Export sales (if over 20 per cent of the total)
are taxed at only one-tenth the regular rate (of 40 per cent).
4. Property taxes are substantially reduced for
urban renewal and waived entirely during construction
(six months plus one additional month for each story
of the building).
The budget, taxes and prices have all been kept quite stable.
After the "confrontation" between Indonesia and Malaysia,
which threatened Singapore with a tragic loss of all of Indonesia's rubber
and tin shipments, such trade is now back to almost pre-confrontation levels.
Indeed, the relationship between Singapore and Indonesia is now very satisfactory.

With Indonesia desirous of having Singapore as the official trading

base for traffic between Indonesia and Hong Kong, and with China and East

::~ Today 1 s STRAITS TIMES reports that Indonesia and Malaysia will
resume full diplomatic ties by the end of this month.


Europe, which find its political climate neutral, its activity is rising
But Lee's interest in business is not to benefit his friends
(his is by all odds the most honest in the Orient - - the slightest suspicion
of corruption causes immediate dismissal).

His purpose is to improve the

lot of his people.

Ten per cent are unemployed

They badly need income,

and, though he has family planning centers in every part of the island
and is achieving a real reduction in births, young people (previously
conceived) are entering the labor market at the rate of about 1,000 per

Lee, anxious to provide them all with jobs , is strongly pushing

to expand industry.

A newly-built area, the Jurong Industrial Estate,

has been developed about fifteen miles outside the city and already has a
steel plant, a sugar refinery, a textile mill, Mobii's oil refinery, and
a cement plant.
Labor rates run from about $1 to $2 (U.S.) per day (low by
our standards, but above those in Taiwan and Korea), but Lee does not
s e e this wage level as a deterrent to industry .

His present disappointment

is that the banks, which are used to self-liquidating commercial bills,
hav e not been willing to provide the long-term loans which his economic
advisors tell him are needed for industrial expansion.
The banks, mostly quite small (even though they may have a
dozen or more branches), are quite liquid and have reasonable ratios of


loans to capital funds.

They have been and are still regulated by the

Central Bank of Malaysia which is soon to be superseded as the regulatory
agency by the Accountant General of Singapore .

It is likely that he in

turn will delegate the supervision to a Commissioner of Banking, though
as yet no such legislative provision has been introduced.

Present regu-

lations call for 20 per cent liquidity and a reserve requirement of 3-1 /2 per

The prime rate is 7-1/2 per cent, but with other loans rising above

10 per cent, the average rate is around 9 per cent .

The banks pay 5 per cent

on time deposits and 3 per cent on savings -- a nice spread.
The government i.s deeply committed to public housing (over
70, 000 units have been built} and to social welfare.

Social services amount

to $275,000,000 (Malaysian dollars, or one-third of that in U. S. dollars)
out of a budget of $560,000,000.
attendance is not compulsory.

Schools have also been expanded, but

Literacy is about 60 per cent.

That is enough economics.

If one came here directly from the United States, Singapore
would be overwhelming, but the visitor who comes here from Hong Kong
finds little that is bigger or more colorful.
Singapore, a city of more than 2,000,000, is literally teeming
with people, at least 80 per cent of whom are Chinese.

They -- and, when

you speak of Chinese, you unconsciously include their business - - spill
out over the sidewalks and onto the streets.

People, food, charcoal braziers,


cooking pots, displays of shoes, a box of dark glasses, bicycles, children
running back and forth, old men sitting in the sun, so crowd the walks that
one has to move slowly just to avoid bumping into hundreds, or walk in the
street where one is likely to be bumped into by hundreds of bicyclists and
dozens of cars.

Once you get off the more important streets, you are

so pressed on all sides that it reminds you of coming out of a football
stadium at the end of a game, except that here the people are going in many
different directions or just standing still.

Alone and unsure of directions

(I manage to get lost for a little time each day). one can even experience
a moment of uneasiness.

Yet, though I experienced cans iderable scrutiny

(I think it is my heavy felt hat on this tropical island), there was not one
gesture of r udeness .

Perhaps because they live every minute in a crowd,

they have learned to avoid giving offense.
It is hot (about 98 today) and humid.

The national costume

for men is slacks and a short-sleeved shirt, but many of the Chinese wear
only a pair of cotton shorts.

Yet I have not been conscious of body odors,

but that may be because of the over-riding stench of food - - food cooking
all around you in the narrow open-front restaurants and on the sidewalks,
old food rotting in the gutters or in the open garbage cans in the street.
The odors, the crowds, the street-side shops, the disintegration of plaster
walls (due to excess humidity), and the presence of numerous Indians along


with the Chinese reminded both Mrs. Freeman and me of our arrival
m Calcutta four years ago.
Also like Calcutta or Hong Kong, Singapore has what
John Scott referred to as "stodgy Victorian buildings and the fauna of
the stubbornly vigorous British Colony, the careful lawns and clubs of a
comfortable suburbia.


The hoards of people and the signs in Chinese are not unlike
Hong Kong, but Singapore is not nearly so much of a tourist center.

In the

central area there are few new buildings and those only up to four or five

The traffic is more pedestrian and l ess hurried.

It is closer to

the equator -- and much further from home .
Singapore Harbor, with berths for 25 ocean vessels, is more
significant than Hong Kong 1 s,but you don't see it from the city (unless, as
Horace Sutton suggests, you climb Mount Taber, "the local Alps -- a
dizzying 350 feet above the sea.


Singapore would like to become (as it claims it is) Hong Kong I s
equal as a shopping center, but it does not have the luxurious shops that
cause the Westerner to believe that the gems are genuine or the gold is
18 carat.

Its watches are Chinese rather than Japanese and, more important,

it does not have the tourists.
Mrs. Freeman reports that Singapore 1 s antique shops have
many beautiful old porcelains, exquisite screens and lovely ol d sculptured


figures, but the United States will not allow any of this to be brought
into our country unless it can be proved to have been outside of China
since before the Korean war.

The certificate of a shopkeeper is not

satisfactory proof.
Mrs. Freeman found the Chinese market most fascinating,
with thousands of items, most of them food, haggled over with great

Chickens are sold live and carried out by the feet.


are sold live, but, if the buyer doesn 1t want the entrails, they are killed
and gutted on the spot.
Lodging and food are good.


There is an Intercontinental

The Singapura," with a cabana-ringed pool, and a Hilton is being

built next door.

Most of the restaurants specialize in such delicacies

as spiced squid, pigs I tripe and gizzard, fish heads in a bowl, stewed
ducks I feet, and sea slugs with rice (which I can get along without), but
at the Raffles Hotel I had a "Singapore S1ing 11 and curried prawns which,
washed down with a decent local beer, were much more satisfying than
Mrs. Freeman 1 s finger sandwiches.
We took a short drive through the country, past banana trees,
palms (for palm oil) and pineapples.

We saw a beautifully kept orchid

farm and such flowers flourish in this high temperature and humidity.


There are some minor aggravations for the tourist.


Japan everything is expensive, but prices are fixed and ther e is little

The Chinese are not so simple.

All prices are subject to

negotiation (and it's imperative to undertake this in advance), tipping
is unavoidable and constant , but, with the dollar worth only
one-third of ours , generosity is not too painful.
As we leave Singapore (after less than 24 hours) for the
45-minute flight to Kuala Lumpur , we are grateful for the opportunity
to have been here, but quite content to move on.

With very best regards,



(1pi11I: Singapore

c,,1111: Kuala Lumpur
A111: 128,430 square miles

Ar11: 224 square miles

,.,,1,1111 (1965): 9,429,000
Doultr: 74 per square mile

,.,,1,1111: 1,840,000
Dtullr:8,214 per square mile

lln1tio1: Hi1•u1 Poli t: 13,455 feet
lowtsl Polit: Seo level

U1nf111: H11•os1 Polit: 581 feet
lawost Ptl1t: Seo level

Prl11ip1l l119H91: Maloy

Prl1dp1l lntHtt:Chinese, Maloy
& English

Prl1dp1I Rtlltl11: Islam
Polltlcol Diw1slo11: 13 States


Gulf of Siam

Prlul,1l ltlitl11:Chinese, Islam
& Christianity







M1l l!S

@ Natio nal Capital

'I>. Capital
----- Railroad












Copytlght by Rand McNally & Co,
and Reproduced with Their Permiaalcm