We dismantled the import barriers protecting our industries, which forced them to hold their own against global competition. We also had to overhaul our labour relations. We had inherited the adversarial style of labour-management relations from the British. Worse, the communists had infiltrated the unions and used them to foment unrest and chaos. After independence, with the Communists defeated, the government worked with the unions and employers to alter the nature of industrial relations. In 1968, we passed the Employment Act and the Industrial Relations (Amendment) Act, to vest the power to hire and fire clearly with employers. We replaced the old adversarial approach with a cooperative tripartite relationship based on trust and confidence. This was institutionalised in 1972 with the setting  BIS Review 19/2003  3  up of the National Wages Council. Since then we have enjoyed harmonious labour relations, a precious and unique advantage in attracting foreign investments to Singapore. Unlike other emerging Asian economies like Korea and Taiwan, we also opened the door fully to MNC investments. It was the fastest way for us to create jobs, penetrate overseas markets and bring in Western and Japanese technologies. Other countries in the region eventually followed, making Southeast Asia a major production location, which in turn benefited Singapore. These remaking and growth strategies succeeded, and brought full employment and steadily rising incomes. Over time, we moved into higher value-added activities. After two decades of robust growth, Singapore had transformed itself into a newly industrialised economy.

These ideas emphasise that private enterprise must increasingly lead growth, and that to continue to thrive, we must be willing to venture into the unknown, explore new ideas, and establish new enterprises. To succeed, the initiative must come from individuals rather than the state. The government's role is to facilitate the creation of wealth and to enable individuals to do well. It is not to provide handouts or excessive social safety nets. 4  BIS Review 19/2003  Many Singaporeans, particularly the workers, feel instinctively that the ERC changes are far-reaching, and worry that we are moving too fast. On the other hand, some analysts and journalists have faulted the ERC recommendations for not being bold enough. I hope that setting the changes within this larger philosophical context will help to bring out their true significance. Much more so than the two previous paradigm shifts of the 1960s and 1985, the current one calls for a mindset change - on the part of everyone. That is the fundamental remaking that we are striving for. Singapore is by no means alone in facing the challenges of a fundamentally altered landscape. The other NIEs also face similar environmental changes, and are also searching for new strategies and policies. South Korea has been revamping its chaebol-centred industrial system and has also opened up its economy to foreign investment and competition. Taiwan is confronting the hollowing out of its manufacturing industries to mainland China, while Hong Kong is adjusting to the deflationary consequences of its currency peg system.