His 27-Year Affair With Numbers

Source : TODAY, Weekend, April 26, 2008

Straight-talker Dr Tony Tan has never been afraid to air contrarian views on the country's economy

CRYSTAL ball-gazing is a risky business. Miss the mark and it's egg on your face. Hit the bullseye and acclaim follows.

Of course, whether there is a reaction at all can depend on who you are and whether people even remember what you'd said.

With Dr Tony Tan Keng Yam, people remember. They will recall the former Deputy Prime Minister's ominous words earlier this week, when he said the world could be facing the worst recession in 30 years.

Media agencies flashed the pronouncement coming from a man who is now No 2 at the Government of Singapore Investment Corporation (GIC), a major sovereign wealth fund. When the news reached economists' ears, they said the prognosis was too bearish.

Three days later, the newsmaker put in qualifiers.

"Let me state clearly that this is not GIC's forecast for the global economy. It is a scenario which GIC is considering," Dr Tan, 68, who has been GIC's deputy chairman and executive director since retiring from politics in 2006, said in a statement Today received on Friday.

To be precise, it was the gloomiest of three scenarios on the investment firm's radar. One, optimistically, sees the end of the credit crisis and no recession anywhere. The second scenario is a mild US recession and no world recession, while the third is a deep, prolonged global recession.

"In light of the current fluid and uncertain times, the probability of the pessimistic scenario, while not the highest, has risen to a level that warrants serious consideration by GIC," he said, on why he highlighted the scenario during GIC's Staff Conference on Monday.

Dr Tan and his oft-surprising economic talk go a long way back. In his 27 years in politics, he would regularly offer his take on the economy's pulse, even when his portfolio did not include trade or finance.

He also came to be known as having an independent mind, confident enough to air opinions contrary to those of his Cabinet colleagues. One of those watersheds was in 1985.

Singapore was buckling under a global slowdown and a domestic burden: The Government's high-wage policy aimed at moving the labour-intensive industries towards high-tech activities had made the island an unattractive place to do business.

A rescue team was despatched in April 1985. Mr Lee Hsien Loong, then the Minister of State for Trade and Industry, led a committee to dish out remedies including tax breaks. Still, the recession raged on.

In December, Dr Tan — the Minister for Trade and Industry — proposed the unthinkable: Slash employers' Central Provident Fund (CPF) contribution rate, then set it at 25 per cent.

This was resisted initially by many, including Mr Lee.

But cool-headed calculation prevailed and the employer's CPF rate tumbled to 10 per cent in February 1986. The pro-business move was credited with saving the economy and prompting a rethink of CPF as a macroeconomic tool.

"That was brave and correct," says Mr Charles Chong, who served as a rookie Member of Parliament at Sembawang constituency under Dr Tan from 1988 to 1991.

"He was never hesitant to express views that deviated from the mainstream."

Such as in 1999.

Dr Tan publicly called Government scholarships "silly", because employers are forced to hold positions for a scholar, who might turn out to be unsuitable for the job or unwilling to join them after his studies.

Why not give out tuition loans instead, he suggested.

No, came the reply from then-Prime Minister Goh Chok Tong and Mr Lee, the other Deputy PM at the time.

A deviating prognosis

Behind Dr Tan's refreshing views, say those who know him, is his private-sector background.

Before standing for elections in 1979, this nephew of the late Tan Chin Tuan — OCBC's long-time chairman — was the local bank's general manager for 10 years. The stint must have sharpened Dr Tan's keen interest in financial matters and attuned him to the concerns of commercial businesses.

In fact, on wide-ranging matters, Dr Tan could "quickly distil the main issues", said Mr Chong.

One of his passions was scrutinising the economic forecasts of the Ministry of Trade and Industry (MTI). There were times when he stated, on record, his own prognoses — and they would differ from those of the ministry.

In August 1997, for example, he said that while the MTI had predicted full-year growth to be 5 to 7 per cent, the turmoil in Asia's currency markets might result in "slower growth" for the whole region.

Three days after he spoke, the MTI upgraded its forecast range to 6 to 7 per cent because of a rebound in the manufacturing industry.

On how Singapore's economy should evolve, Dr Tan had myriad ideas, some of which involved using words that flew over the head of the layman.

"Sawtooth economy", "growth discontinuity" and "creative destruction" have all been bandied about by the politician, who was once a university lecturer and has a Master's in Operations Research and a doctorate in Applied Mathematics.

'Look after the downside …'

Today, he chairs the National Research Foundation and Singapore Press Holdings.

"He is a very good but serious speaker. Tony Tan never entertains you. He tells you what the problem is," former Prime Minister Goh said in 2001 during the General Election.

Mr Lee Kuan Yew, the country's first Premier, was so impressed that his top-choice successor was actually Dr Tan, who turned down the offer.

In 1995, Dr Tan was called out of retirement. After two other heavyweights, Mr S Dhanabalan and Mr Yeo Ning Hong, resigned in 1994, Mr Goh requested that he return to strengthen the Cabinet.

Dr Tan agreed and rejoined as Deputy Prime Minister and Defence Minister, saying he would participate in decision-making on trade, industry, banking and other areas of the Singapore economy — even though they were not his primary portfolio.

As GIC's No 2, Dr Tan continues to watch the economy. His stated philosophy is: "If you look after the downside, the upside will look after itself."

It's redolent of his cautious demeanour — one that, political commentator Seah Chiang Nee argues, is "necessary in today's Singapore, when everyone's talking about renewal. You need an old hand to come and sort of introduce a jolt of reality sometimes".