What made all the difference between Malaysia’s and Singapore’s economic achievements, with the latter leapfrogging the former in virtually all areas and sectors, was the differences in approach of two of their longest serving prime ministers.

In last week’s column, we highlighted the similarities between the two countries’ former prime ministers Dr Mahathir Mohamad and Lee Kuan Yew. We explained how they used extraordinary means to stay in power and how they could not let go even after they stepped down from their positions of power. And we contended that they were both racist in their own way.

We now look at how they handled some things differently, which made all the difference really in terms of why Singapore progressed much faster than us in all areas of material development, far surpassing Malaysia to become one of the most developed countries in the world.

While some of us are likely to attribute a large part of the Singapore growth spurt to it being an island, urban state, any comparison with urban Kuala Lumpur and the Klang Valley will still conclusively show that Singapore is far ahead.

Below are five differences between the two former prime ministers which are likely to have accounted for much of the gap over the years between Malaysia and Singapore, which started off at a very similar stage of development decades ago in the mid sixties to mid seventies with their currencies interchangeable up to 1975.

1. Mahathir fostered corruption and patronage, Lee crushed it.

Mahathir used his executive power to promote corruption and patronage, arbitrarily assigning plum contracts and privatisations to cronies, largely Malays but which also included those of other races. He used the excuse of government inefficiency to privatise huge swaths of profitable government businesses, allowing price increases which burdened the public and benefited companies.

lee kuan yew 140910Lee on the other hand crushed corruption and patronage at all levels and single-mindedly focused on getting the best prices and the most efficient companies to undertake government projects. He grew a bunch of ably-managed government-owned corporations (Example: Singapore Airlines and DBS Bank), getting the best, including from Malaysia, to run them.

Government companies are even more strongly present in Singapore than Malaysia, but the difference is they have to compete and get no special treatment.

2. Mahathir promoted incompetence, Lee promoted excellence.

Mahathir thought he knew best (Example: Setting up Proton against all advice and going into heavy industries) and axed those who did not agree with his grand vision. What he eventually got as his key staff were those who merely nodded in agreement with everything he did, there being no debate and discussion over measures contemplated and taken.

His decisions were also coloured by his twisted views on the reasons as to why Malays were backward and his obvious belief that the end justifies the means, even if it meant putting incompetence at the top.

Lee, too, had definite ideas about what he wanted to do with Singapore. But in addition to wiping out corruption at all levels, he put excellence and competence at the top of his list, recruiting only the best into his cabinet and key positions elsewhere. Clean, excellent human capital, no matter where they came from, was at the heart of his programme for change.

3. Mahathir emasculated the civil service, Lee made it super efficient.

Mahathir made the civil service bureaucratic, Lee made it technocratic. The difference is crucial. Under Mahathir, governing became political with very substantial discretionary powers with ministers and civil servants who dished out the dole under a patronage and corrupt system. Lee and his cabinet did the planning, communicated the policies and let a super-efficient civil service go out and do the implementation without fear or favour to any particular party.

Doing business in Singapore was easy - if you met the criteria, you got the go ahead, no ifs and buts and greasing palms.

4. Mahathir protected industries, Lee killed industries that could not survive.

Mahathir promoted and protected inefficient industries such as steel and cars, continuing to give tariff protection for many years after they were set up. Lee killed off inefficient industries and focused on those that could become competitive in the global market.

Singapore no longer has a car assembly industry for instance because cars can be imported whole for cheaper than they could be assembled there. And Singapore basically has no tariffs on any products, plugging it into the world market.

5. Mahathir begun the education rot, Lee raised educational quality to new levels.

Mahathir led much of the the changes in the education system in the seventies when he was education minister, when English was replaced as the medium of instruction, teacher entry standards were dropped, quotas imposed, and the quality of education dropped to get more graduates, especially bumiputeras.

Lee on the other hand raised the educational bar putting resources into raising educational quality at all levels from primary and secondary to tertiary. The National University of Singapore often ranks as among the 20 highest ranked institutions in the world and Singapore’s education system is among the best in the world, generating a stream of highly qualified people for a more productive workforce.

Well, that’s five but there are probably lots more. It would be simplistic to say that these five were the only reasons for the gap between Malaysia and Singapore but they probably account for much of the difference.

Able to match and even outdo Lee

While Mahathir was able to match and even outdo Lee politically in terms of maintaining his power in a more plural and complex system by all kinds of dubious methods, he did very little with the power at his disposal in terms of helping Malaysia. In fact he did substantial damage economically instead.

The material contribution by Lee to his country was much more than Mahathir because of the ways in which he was different. While both were despotic, Lee was more of a benevolent despot with Singapore showing much more all round economic development than Malaysia and outdoing it in virtually every sphere of business activity.

Lucky for Singapore that Lee was not a corrupt despot for he could have done much damage to the republic with the absolute power that he had. The big loss for Singapore was freedom and until today Singapore, despite all its economic development, struggles to achieve full democratic expression.

Singapore holds one dubious record - it is probably the most developed country in the world to be so democratically suppressed, and really it does not need to be despite what Lee continues to assert.

It is time for Singapore to move towards checks and balances in terms of its politics and that means freeing up democracy and legitimate dissent so that the government can be changed easily if the population so wishes. In that respect, Malaysia is ahead, but not by a whole lot.

Dr M vs LKY Part I: How they're similar

P GUNASEGARAM is founding editor of KiniBiz.