DYNAMIC GOVERNANCE. Embedding Culture, Capabilities and Change in Singapore. Dynamic Governance Downloaded from

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1 DYNAMIC GOVERNANCE Embedding Culture, Capabilities and Change in Singapore

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3 DYNAMIC GOVERNANCE Embedding Culture, Capabilities and Change in Singapore Boon Siong NEO Lee Kuan Yew School of Public Policy National University of Singapore, Singapore Geraldine CHEN Nanyang Business School Nanyang Technological University, Singapore World Scientific N E W J E R S E Y L O N D O N S I N G A P O R E B E I J I N G S H A N G H A I H O N G K O N G TA I P E I C H E N N A I

4 Published by World Scientific Publishing Co. Pte. Ltd. 5 Toh Tuck Link, Singapore USA office: 27 Warren Street, Suite , Hackensack, NJ UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Neo, Boon Siong. Dynamic governance : embedding culture, capabilities and change in Singapore / by Neo Boon Siong & Geraldine Chen. p. cm. Includes bibliographical references and index. ISBN (alk. paper) 1. Public administration--singapore. 2. Political culture--singapore. I. Chen, Geraldine. II. Title. JQ1063.A58N dc22 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. First published July 2007 Reprinted August 2007 Copyright 2007 by World Scientific Publishing Co. Pte. Ltd All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording or any information storage and retrieval system now known or to be invented, without written permission from the Publisher. For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy is not required from the publisher. Printed in Singapore.

5 Contents vii Foreword ix Preface xiii Acknowledgments xvii About the Authors xix List of Cases Framework for Dynamic Governance: Institutionalizing Culture, Capabilities and Change Conceptual Foundations: Governance, Institutions and Capabilities Context for Development: Establishing Imperatives for Governance Cultural Foundations: Inculcating Principles of Governance Policy Execution: Developing and Implementing Paths Policy Adaptation: Embedding Learning and Adjusting Paths v

6 vi Contents People Development: Recruiting, Renewing and Retaining Leaders Process Innovation: Creating Agile Structures and Systems Sustaining Dynamic Governance: Lessons and Challenges 479 Names Index 481 Subject Index 503 Glossary of Acronyms

7 Foreword What makes government effective? This is among the most important questions facing any society, because the failure of government is all too common and often catastrophic. There are numerous examples of countries that have been saddled by bad government policies, poor implementation, ethical failures, and the inability of government to change when necessary. The victims are citizens, whose lives and livelihoods suffer. In analyzing the effectiveness of government, the tendency is to focus on the many policy choices that any government has to make. Government sets policy in a multitude of areas, ranging from macroeconomics to education to health to personal security. Each of these areas has been extensively studied. In each area, there are best practices that have emerged from theory and comparisons across countries, about which there is often wide consensus. Since so many actual policy choices diverge from best practice, this provides a comfortable explanation for government success and failure. There are several problems with this line of thinking. First, government faces too many policy priorities to realistically address, and too few resources to make progress against all of them simultaneously. Consider the area of economic policy, where there are hundreds of local circumstances that affect competitiveness and the rate of economic development ranging from the condition of the roads, to the quality of the universities, to the efficiency of permitting. No government can ever tackle everything that needs to be improved at once. Instead, the challenge is to set good priorities, tackle issues in a sensible sequence, and sustain implementation over time. Second, the appropriate government policies and priorities shift as a country itself changes. In economic development, physical infrastructure and rule of law are key priorities in early stage vii

8 viii Foreword development. Later on, many new challenges emerge in order to sustain a higher standard of living. Third, the world outside the country changes. New opportunities emerge, neighboring countries improve or decline, international legal structures and institutions realign, and so on. These external changes mean that the appropriate government policy choices change, priorities shift, and standards for performance usually rise. These complexities shatter any notion that good government is a static concept, and that government success depends on any individual decision. Instead, the essential challenges of government are dynamic, cut across many decisions, involve the need for continuous learning, and rest on effective and rapid implementation. This book, Dynamic Governance, addresses these subtler and now decisive challenges of government. The book provides a revealing framework for thinking about how government is able to make good decisions, carry them out, and revise them without a crisis. Singapore provides a marvelous case study with which to examine these questions. When it comes to government, Singapore often seems to defy the law of gravity. It has government organizations that are highly efficient. Decisions in Singapore usually get made on the merits, not because of corruption, ideology, or self aggrandizement. Government ministries are intensely self critical. Singapore changes its mind on highly charged questions, such as whether to legalize gambling. How does this happen? All of it requires a set of government institutions that, to use Neo and Chen s framework, can think ahead, think again, and think across. This book offers a rich and interesting portrait of how this occurs, and the underlying causes. The lessons in Dynamic Governance apply to governments anywhere. Applying the ideas in this book gives us reason to be hopeful that governments in many countries can work, and that citizens lives can get better. Professor Michael E. Porter Harvard Business School 7 May 2007

9 Preface Why do you want to write a book on the civil service? We were asked this question at the start of practically every interview that we did for this book. Our curiosity was initially piqued by the typical response from business managers in the classroom to case studies that one of us had done on Singapore institutions such as TradeNet, the port, the national library, the national computerization effort and even the tax department amazement that government agencies were capable of more than just being efficient that innovation was possible and that organizational transformation actually took place in public agencies. There was a sense that the Singapore experience could have lessons for the business world. Its experience certainly appears to have learning value for other countries, if interest in Singapore-style industrial parks, housing estates and e-government systems is anything to go by. But what exactly is this Singapore model that business managers and overseas officials seemed so keen to understand and apply? Many observers attribute Singapore s success to the strength of its political leadership. But there is an entire administrative body working quietly behind the scenes to create, develop, review and translate policies from perception to paper to practice. What is it about the way it manages its people and processes that others find interesting to understand and worthy to emulate? What are the principles behind the Singapore public sector system that made it work? Is the system good because it has perfected a set of how-to s, or is there something more? Are these principles and practices unique to Singapore? How can the principles and practices be applied effectively beyond the public sector and beyond Singapore? These ideas intrigued us but we did not seriously start developing them until 2005, after both of us completed our terms as Dean and Vice Dean in the Nanyang Business School at the Nanyang Technological ix

10 x Preface University. A chance conversation along the corridors as we were basking in our newfound peace and freedom reignited interest and focused thinking. An to Peter Ho, the Head of the Singapore Civil Service and Lim Siong Guan, former Head of the Civil Service and then the Permanent Secretary of the Ministry of Finance with a go-ahead given two days later, set things in motion. As we began sifting through the published material, it struck us that much of the work on Singapore focused either on its policies, or on its political landscape. Other than a handful of studies of specific institutions such as the Economic Development Board, the Port of Singapore and the National Library Board, remarkably little is known about an institution that has been the vanguard of Singapore s economic and social transformation. As we conducted our interviews and combed through internal data and documents, a picture slowly emerged of the civil service s role in governance and the workings of its underlying system of institutional culture and organizational capabilities. We did not find simple explanations for the effectiveness of Singapore s public service. Its performance cannot be directly attributed to any single individual leader or any one particular cause or policy. Instead we found a working system with multiple interactions and interdependencies. Its unique historical and political contexts were important but so were the ambition and active efforts to create and secure its future. Leadership was crucial but so were the systems and processes that were institutionalized. There were deeply-held beliefs and assumptions but there were also openness to abandon past practices and experiment with new ideas. Social stability was desired but there were also strong commitments and capabilities to change. Agencies operate quite autonomously and yet there were some coherence in overall direction. There were many policy ideas that were learnt from others but there were also significant innovations. Policies were executed efficiently but were also adapted in the process of implementation. There were strong values and principles of governance that officials seemed to have internalized and yet these were mostly transmitted socially rather than formally. What we

11 Preface xi found is a remarkably resilient civil service that has been constantly learning, continually changing, quietly improving and innovating, a civil service that has grown and evolved in tandem with the demands and expectations of the society which it serves. This is the story behind the Singapore story.

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13 Acknowledgments Much of the information for the study was culled from unpublished sources and from our interviews with ministers and public sector leaders, current and retired. The interviews were especially illuminating, injecting a richness and depth to the material that would not have been possible otherwise. We therefore wish to express our thanks to the following individuals for giving us their time and sharing their experiences, perspectives and insights with us. Lee Hsien Loong, Prime Minister of Singapore Teo Chee Hean, Minister of Defence and Minister in-charge of the Civil Service George Yeo, Minister of Foreign Affairs Andrew Chew, Chairman, Public Service Commission Peter Ho, Head, Civil Service and Permanent Secretary, Ministry of Foreign Affairs Lim Siong Guan, former Head, Civil Service and now Chairman, Economic Development Board, Chiang Chie Foo, Permanent Secretary, Ministry of Defence and Permanent Secretary, Prime Minister s Office Lim Soo Hoon, Permanent Secretary, Public Service Division, Prime Minister s Office Yong Ying-I, Permanent Secretary, Ministry of Health Peter Ong, Permanent Secretary, Ministry of Trade and Industry Ravi Menon, Second Permanent Secretary, Ministry of Trade and Industry Philip Yeo, Chairman, SPRING Singapore Lam Chuan Leong, Chairman, Infocomm Development Authority xiii

14 xiv Acknowledgments Ngiam Tong Dow, Chairman, Surbana Corporation JY Pillay, Chairman, Singapore Exchange Limited Sim Kee Boon, Director, Temasek Holdings Lee Ek Tieng, Group Managing Director, Government of Singapore Investment Corporation Eddie Teo, Singapore s High Commissioner to Australia Kishore Mahbubani, Dean, Lee Kuan Yew School of Public Policy, National University of Singapore Su Guaning, President, Nanyang Technological University Lim Hup Seng, Deputy Secretary, Ministry of Finance Rosa Daniel, Deputy Secretary, Ministry of the Environment and Water Resources Andrew Tan, Deputy Secretary, Ministry of Foreign Affairs Yeoh Chee Yan, Deputy Secretary (Policy), Ministry of Defence Lawrence Wong, Principal Private Secretary to the Prime Minister Lui Pao Chuen, Chief Defence Scientist, Ministry of Defence Jimmy Khoo, Future Systems Architect, Ministry of Defence Francis Chong, Director, National Youth Council, People s Association Tan Huck Gim, Deputy Special Representative of the Secretary General of the UN Integrated Mission in Timor Leste Jacqueline Poh, Director, Fiscal Policy, Ministry of Finance Ong Toon Hui, Director, Leadership Development, Public Service Division The late Tan Soo San, Senior Research Analyst, Civil Service College Peter Ho, Lim Siong Guan and Lim Soo Hoon were especially generous with us, meeting us on several occasions to give us their perspectives on what we were observing and to clarify issues. We learnt much from them and appreciate the depth of their thinking and leadership. Because of the dearth of information in the public domain, this book was possible only because of the access that the Civil Service

15 Acknowledgments xv gave us to internal data and documents and to various people of the organization. The Public Service Division was especially supportive, assigning June Gwee of the Civil Service College to assist us throughout the study and hiring back Ho Chui Kee, who came out of retirement to obtain and methodically collate tons of information for us. We want to thank June and Chui Kee for responding patiently to our countless requests for data and documents. June and various civil service staff also helped us verify the factual information on many portions of the final write-up. Our research associates: Asif Iqbal Siddiqui who started the project with us, Lim Wee Kiat who provided support in the initial stages of the project, and Susan Chung who worked hard to help us wrap up the project and manage the publication process. Thanks to Angela Yeo for her tireless transcription of the interviews. Our special thanks to our colleague and friend, Ang Soon, whose sharp insights and outsider s perspective challenged us to look more deeply, which helped us improve our study. Her interest and feedback on what we were observing were instrumental in helping us shape the conceptual underpinning of the study and also to decide (finally) on the title of this book! Seah Chin Siong, Country Managing Director of Accenture Singapore was an enthusiastic supporter for our study and provided initial funding to get the project started. Dean Kishore Mahbubani believed that the study could contribute to a deeper understanding of governance in Singapore and provided support and resources to enable the first author to spend a sabbatical year at the Lee Kuan Yew School of Public Policy to work on the project. That opportunity led to a longer-term association as Boon Siong joined the school in August 2006 to become the founding Director of its newly formed Asia Competitiveness Institute.

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17 About the Authors Neo Boon Siong ( is Director of the Asia Competitiveness Institute in the Lee Kuan Yew School of Public Policy at the National University of Singapore. He was formerly the Dean of the Nanyang Business School, Nanyang Technological University, Singapore. He received a Public Administration Medal (Silver) from the President of the Republic of Singapore in the 1999 National Day Honours Awards. He is a Certified Public Accountant (Singapore) and holds a Bachelor of Accountancy (Honours) from the National University of Singapore, and MBA and PhD degrees from the University of Pittsburgh, USA. He is a leading expert in strategy, process management and organizational change. He has advised many major corporations, facilitated strategy workshops, and led management development programs for global enterprises. His clients include UBS Bank, Microsoft, Hewlett-Packard, British Petroleum, Siemens, BOC Gases, Dupont, Praxair Asia, DHL Air Express, Singapore Airlines, Shangri-la Hotels and Resorts, Singapore Press Holdings, Singapore Petroleum Company, Keppel Corporation, the Mauritius government, Monetary Authority of Singapore, National Healthcare Group, Infocomm Development Authority of Singapore, Trade Development Board, PSA Corp, Maritime and Port Authority, and other government agencies. He has also taught public sector officials of many countries, including Brunei, Cambodia, China, Dubai, Kazakhstan, Laos, Malaysia, Mauritius, Myanmar, and Vietnam. He currently serves as Director on the Boards of OCBC Bank, Great Eastern Holdings Ltd, Great Eastern Life Ltd, Overseas Assurance Ltd, Keppel Offshore and Marine Ltd, J Lauritzen Singapore and English XChange Pte Ltd. He also serves as Member on the Boards of Securities Industry Council, Income Tax Review Board, and the Goods and Services Tax Review Board. xvii

18 xviii About the Authors An economist by training, Geraldine Chen ( edu.sg) was all set to pursue the customary teaching-research career after obtaining her PhD from the University of London. But after a few years, she found something far more enjoyable student work. For four years, she was Sub-Dean, Nanyang Business School s head undergraduate student counsellor, overseeing student academic matters. She then took a detour a 5-year stint in corporate services work, during which she built up the school s professional services and during which time NBS attained both its AACSB and EQUIS accreditations. She is now back to working with students on a range of development activities as well as the undergraduate outreach program. After such a long spell in administration, Geraldine thought it was time to reacquaint herself with her academic roots and this book represented a novel opportunity for her to marry her economic policy training and her liking for writing and storytelling.

19 List of Cases Benchmarking of Public Sector Salaries Central Provident Fund Changi Airport 43 Development of the Biomedical Sciences Cluster E-government Education Fiscal management Building the Esplanade Graduate Mothers Health Care 173, Inland Revenue Authority of Singapore 230, 232 Integrated Resorts 44 45, Liberalization of Financial Services Liberalization of Telecommunications Library National Parks Board Population 37 Public Housing 172 Public Sector Personnel Management System See Chapter 7 Public Service in the 21st Century Public Transportation and Car-Ownership Policy Scenario Planning in the Public Sector Singapore s Budgeting Process Singapore s Economic Growth Water Management Workfare Issue of the Working Poor xix