The Lee Kuan Yew government announced two days after separation that Singapore would be a republic, with Malay as its national language and Malay, Chinese, English, and Tamil retained as official languages. The Legislative Assembly was renamed the Parliament, and the prominent Malay leader, Yusof bin Ishak, was made president of the republic. The new nation, immediately recognized by Britain, Australia, New Zealand, and the United States, was admitted to the UN in September and the Commonwealth the following month. In the early months following separation, Singapore's leaders continued to talk of eventual reunion with Malaysia. Wrangling between Singapore and Kuala Lumpur over conflicting economic, defense, and foreign policies, however, soon put an end to this discussion, and Singapore's leaders turned their attention to building an independent nation.

The government sought to build a multiracial and multilingual society that would be unified by a sense of a unique "Singaporean identity." The government established a Constitutional Commission on Minority Rights in late 1965, and official policy encouraged ethnic and cultural diversity. Foreign Minister Rajaratnam told the UN General Assembly that year, "If we of the present generation can steadfastly stick to this policy for the next thirty years, then we would have succeeded in creating a Singaporean of a unique kind. He would be a man rooted in the cultures of four great civilizations but not belonging exclusively to any of them." Integrated schools and public housing were the principle means used by the government to ensure a mixing of the various ethnic groups. The government constructed modern highrise housing estates and new towns, in which the residents of the city's crowded Chinatown slums and the rural Malay kampongs (villages in Malay were thoroughly intermingled. An English-language education continued to be the preferred preparation for careers in business, industry, and government; English-language pupils outnumbered Chinese-language pupils 300,000 to 130,000 by 1968. Malay-language primary school enrollment declined from 5,000 in 1966 to about 2,000 in 1969. All students, however, were required to study their mother tongue at least as a second language. Many of the country's British-educated leaders, including Lee Kuan Yew, sent their children to Chinese-language schools because they believed that they provided better character training. The government stressed discipline and the necessity of building a "rugged society" in order to face the challenges of nationhood. A government anticorruption campaign was highly effective in combating that problem at all levels of administration.

At the same time, the government addressed the problem of establishing a national identity, it also tackled the serious economic problems facing the new nation. The hopes pinned on establishing a common market with Malaysia were dead, and it was clear that Singapore would not only have to go it alone but also would face rising tariffs and other barriers to trade with Malaysia. Under Goh Keng Swee and other able finance ministers, the government worked hard to woo local and foreign capital. New financial inducements were provided to attract export industries, promote trade, and end the country's dependence on Britain as the major source of investment capital. The generally prosperous world economic situation in the mid-1960s favored Singapore's growth and development. Confrontation with Indonesia had ended by 1966 after Soeharto came to power, and trade between the two countries resumed. Trade with Japan and the United States increased substantially, especially with the latter as Singapore became a supply center for the United States in its increasing involvement in Indochina.

A serious problem the government had to deal with in order to attract large-scale investment was Singapore's reputation for labor disputes and strikes. "The excesses of irresponsible trade unions...are luxuries which we can no longer afford," stated President Yusof bin Ishak in December 1965, speaking for the government. Two events in 1968 enabled the government to pass stricter labor legislation. In January Britain announced its intention to withdraw from its bases in Singapore within three years. Aside from the defense implications, the news was sobering because British spending in Singapore accounted for about 25 percent of Singapore's gross national product ( GNP--see Glossary) for a total of about S$450 million a year, and the bases employed some 21,000 Singapore citizens. The government called an election for April in order to gain a new mandate for facing the crisis. Unopposed in all but seven constituencies, the PAP made a clean sweep, winning all fifty-eight parliamentary seats. With the new mandate, the government passed in August new labor laws that were tough on workers and employers alike. The new legislation permitted longer working hours, reduced holidays, and gave employers more power over hiring, firing, and promoting workers. Workers could appeal actions they considered unjust to the Ministry of Labour, and employers were obligated to increase their contributions to the Central Provident Fund (CPF). Workers also were given for the first time sick leave and unemployment compensation. As a result of the new legislation, productivity increased, and there were no strikes in 1969.

With labor relations under control, the government set up the Jurong Town Corporation to develop Jurong and the other industrial estates (see Land Management and Development , ch. 3). By late 1970, 271 factories in Jurong employed 32,000 workers, and there were more than 100 factories under construction. Foreign investors were attracted by the improved labor situation and by such incentives as tax relief for up to five years and unrestricted repatriation of profits and capital in certain government-favored industries. United States firms flocked to invest in Singapore, accounting for 46 percent of new foreign capital invested in 1972. Companies from Western Europe, Japan, Hong Kong, Taiwan, Malaysia, and Australia also invested capital, and by 1972 one quarter of Singapore's manufacturing firms were either foreign-owned or joint-venture companies. Another attraction of Singapore for foreign capital was the region's petroleum resources. Singapore was the natural base for dozens of exploration, engineering, diving, and other support companies for the petroleum industry in nearby Indonesia, as well as being the oil storage center for the region. By the mid-1970s, Singapore was the third largest oil-refining center in the world.

The government turned to advantage the British pullout by converting some of the military facilities to commercial and industrial purposes and retraining laid-off workers for new jobs. The former King George VI Graving Dock was converted to the Sembawang Shipyard, employing 3,000 former naval base workers in ship building and ship repair. Singapore also moved into shipping in 1968 with its own Neptune Orient Line. A container complex built in 1972 made the country the container transshipment center of Southeast Asia. By 1975 Singapore was the world's third busiest port behind Rotterdam and New York.

By the early 1970s, Singapore not only had nearly full employment but also faced labor shortages in some areas. As a result, immigration laws and work permit requirements were relaxed somewhat, and by 1972 immigrant workers made up 12 percent of the labor force (see Manpower and Labor , ch. 3). In order to develop a more highly skilled work force that could command higher wages, the government successfully courted high-technology industries, which provided training in the advanced skills required. Concerned that the country's economic success not be diluted by overpopulation, the government launched a family planning program in 1966 (see Population , ch. 2).

The country's economic success and domestic tranquility, which contrasted so starkly with the impoverished strife-torn Singapore of the late 1940s, was not purchased without cost, however. Although not a one-party state, the government was virtually under the total control of the PAP, and the Lee Kuan Yew administration did not hesitate to block the rise of an effective opposition. Holding a monopoly on power and opportunity in a small state, the party could easily co-opt the willing and suppress dissenters. The traditional bases--student and labor organizations--used by opposition groups in the past were tightly circumscribed. Control of the broadcast media was in the hands of the government, and economic pressures were applied to any newspapers that became too critical. The government leadership had adopted a paternalistic viewpoint that only those who had brought the nation through the perilous years could be trusted to make the decisions that would keep Singapore on the narrow path of stability and prosperity. The majority of Singaporeans scarcely dissented from this view and left the planning and decision making to the political leadership. Although five opposition parties contested the 1972 elections and won nearly one-third of the popular vote, the PAP again won all of the seats.

Although admired for its success, Lee's government increasingly attracted criticism from the international press for its less than democratic style. Singapore's neighbors also resented the survival- oriented nature of the country's foreign and economic policies. The aggressive defense policy recommended by Singapore's Israeli military advisers irritated and alarmed Muslim Indonesia and Malaysia, (see Historical Development , ch. 5). Resentful of the profits made by Singapore in handling their commodities, Malaysia and Indonesia began setting up their own rubber-milling and petroleum-servicing industries. In the early 1970s, Malaysia and Singapore separated their joint currency, stock exchange, and airlines.

A regional political grouping, the Association of Southeast Asian Nations ( ASEAN--see Glossary), founded in 1967 by Singapore, Malaysia, Indonesia, Thailand, and the Philippines, had little impact by the early 1970s on the foreign and economic policies of the member nations. However, regional and world developments in the 1970s, including the fall of Indochina to communism and the Vietnamese invasion of Cambodia, steered Singapore and its neighbors toward a new spirit of cooperation.

Data as of December 1989