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Lee Kuan Yew: Founding “CEO” of Singapore Inc.

Victor Tan
 

Hello and welcome back! In this premium report, you’ll learn about Lee Kuan Yew, who in an alternate history could very well have become Prime Minister of Malaysia. But that was not to be, and he was the founding Prime Minister of Singapore instead. In this premium report, you will get to hear about his story and journey his legacy.

From Third World to First – An Economic Vision Realized

Lee Kuan Yew is revered as the founding father of modern Singapore, the man who transformed a tiny port city with no natural resources into one of the world’s richest and most developed nations. When Singapore became independent in 1965, its prospects looked bleak – per capita GDP was roughly $500, on par with countries like Ghana(review.brunswickgroup.com). Yet within a generation Singapore had vaulted into the ranks of high-income nations, even surpassing its former colonial ruler in prosperity. Under Lee’s leadership, the country’s GDP per capita grew almost 15-fold in real terms from 1960 to 2013(livemint.com). By the early 21st century, Singapore’s income per person exceeded $50,000 – higher than that of Sweden – prompting observers to dub its rise the “economic miracle”(review.brunswickgroup.com). This dramatic ascent, often called the Great Singapore Miracle, was no accident; it was the result of deliberate policies and institution-building that Lee set in motion.

Lee Kuan Yew served as Prime Minister for over three decades (1959–1990), during which he laid out an architecture for nation-building that would turn a vulnerable post-colonial city into a thriving global hub. He identified five key pillars for Singapore’s success: political stability, quality education, attracting investment, rising living standards, and strong security(nlb.gov.sg). 

Throughout his tenure, his government made strides in each of these areas. Lee built a stable, trusted government almost from scratch – a feat in itself given the turbulent conditions of the 1950s and 60s. He cultivated public confidence in Singapore’s institutions and future, often saying that the people’s trust and unity were vital ingredients of the nation’s success(exploringculturaldatablog.wordpress.com). Investors and citizens alike came to believe in the Singapore story, enabling bold long-term plans to take root. This bedrock of confidence allowed Lee to implement tough but forward-looking economic decisions that fueled growth for decades.

Meritocracy, Elitism and Technocratic Leadership

A core tenet of Lee Kuan Yew’s governance philosophy was meritocracy – the conviction that a country must be led by its ablest people, chosen on talent and performance rather than connections or race. “Singapore is a meritocracy. And these men have risen to the top by their own merit, hard work and high performance,” Lee declared in 1971, referring to the cadre of officials and professionals guiding the young nation(nas.gov.sg). He prided himself on assembling a “closely-knit and coordinated hard core” of top talent in government, stating that the fate of millions depended on the “quality, strength and foresight” of these key figures(nas.gov.sg). This emphasis on elite talent led to the recruitment of scholars and experts into politics and the civil service, turning the ruling People’s Action Party (PAP) into a highly educated, technocratic team. Lee himself would later reflect that his “greatest satisfaction” was “mustering the will to make this place meritocratic, corruption-free and equal for all races – and that it will endure beyond me.”(time.com)

But not all that was said about him was beautiful and rosy.

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Petronas: Malaysia’s Historical Cash Cow

Victor Tan
 

Sepupus, not every company in Malaysia can be called the literal cash cow of the country, but that’s effectively what Petronas is. 

It is one of the single largest sources of finance in Malaysia, providing vital funds, jobs, and resources to Malaysia through its contributions in the form of tax revenues, dividends, and various other sources of finance – it is also an important source of discretionary finance in Malaysia, given the fact that it is controlled extensively by the government of Malaysia and the Prime Minister of the country.

But just how large and how important is it? 

In this premium report, accessible to our premium members or purchasable as an individual copy right over here, we will dive deep into that question. Let’s go!

Petronas: History and Symbolism

Petroliam Nasional Berhad (Petronas) was established in 1974 under the Petroleum Development Act, which vested all of Malaysia’s oil and gas resources in this new national company(en.wikipedia.org). Petronas was formed to assert national control over petroleum reserves (which had been dominated by foreign firms like Shell) and to spearhead Malaysia’s oil & gas exploration, production, and development(theimpactlawyers.com)(iseas.edu.sg). 

Over the decades, Petronas grew into a fully integrated multinational oil and gas company with operations in over 100 countries(en.wikipedia.org), becoming a pillar of Malaysia’s economic development and a source of national pride – as of 2021 it was Malaysia’s sole Fortune Global 500 company(iseas.edu.sg). 

Petronas’ success is visibly etched in Malaysia’s skyline and infrastructure: oil revenues funded iconic projects like the Petronas Twin Towers in Kuala Lumpur (once the world’s tallest buildings), the development of the new administrative capital Putrajaya, and the Kuala Lumpur International Airport(iseas.edu.sg). These projects underscore how pivotal Petronas has been in transforming Malaysia’s infrastructure and advancing its economic ambitions.

Beyond symbolism, Petronas has been a key enabler of Malaysia’s economy and public finances(iseas.edu.sg). The oil and gas sector (with Petronas at the helm) has long contributed substantially to Malaysia’s export earnings and GDP(iseas.edu.sg). Critically, Petronas has also been a financial lifeline for the government – often helping to “bail out” or support troubled firms and budgets when called upon(iseas.edu.sg). 

For example, Petronas profits were used in the 1980s to rescue a failing bank and in the late 1990s to weather the Asian financial crisis. This close government nexus means Petronas’ fortunes directly affect national finances. In 2008, Petronas paid a record RM67.6 billion dividend to the government, which astonishingly amounted to 44% of federal government revenue that year(en.wikipedia.org). Historically, oil and gas-related receipts (including Petronas contributions) made up as much as 40% of Malaysia’s government revenue in 2009(iseas.edu.sg). Although this reliance has since moderated – dropping to about 19% of government revenue by 2021(iseas.edu.sg) – Petronas remains an indispensable source of income for the nation.

Petronas in the Federal Budget and Consolidated Revenue

We have spoken briefly about the historical role that Petronas has played within the federal budget, and in this section, we will focus on more recent developments. 

Petronas’ role in the federal budget is significant and multifaceted. Being wholly government-owned, Petronas regularly pays large dividends into the government’s coffers, and it also contributes via petroleum income taxes and royalties. 

These revenues flow into Malaysia’s Consolidated Fund, specifically the Consolidated Revenue Account, which is the main pot of government income used to finance public expenditures. 

“Consolidated revenue” refers to the total annual income received by the federal government from all sources combined – including tax revenues (like income taxes, sales tax, etc.) and non-tax revenues (like dividends from Petronas, licenses, and fees). 

In other words, it is the aggregate pool of funds available to the government for budget spending in a given year. Petronas’ payments, alongside other receipts, are part of this consolidated revenue and thus help fund government operations, development projects, education, healthcare, subsidies and so on, according to the allocations of each year’s budget.

Over the past five years, Malaysia’s government revenue has fluctuated, and Petronas has often been a swing factor. 

Below we provide a breakdown of the major federal revenue sources for each year 2019–2023, in descending order of magnitude, highlighting where Petronas stands among them. This illustrates how critical Petronas’ contributions (primarily as dividends) have been relative to other revenue streams.

2019: Revenue Sources in Descending Order

2019 was a high-revenue year, boosted by an extraordinary RM30 billion special dividend from Petronas (on top of its normal dividend) that the government requested to settle outstanding tax refunds(theedgemalaysia.com). That special payment helped push Petronas’s total dividend to RM54 billion in 2019(en.wikipedia.org), an all-time high. The table below shows 2019’s largest revenue sources:

Revenue SourceAmount (RM billion)
Company Income Tax (corporate profits)63.8
Petronas Dividend (incl. special)54.0
Individual Income Tax38.7
Sales and Services Tax (SST)27.7
Petroleum Income Tax (PITA)20.8
Licenses & Permits (incl. oil royalties)~14.5

Sources: In 2019, corporate income tax was the single largest revenue source (about RM63.8 billion)(assets.kpmg.com). 

Thanks to the one-off injection, Petronas became the second-largest contributor to Malaysia’s revenue in 2019 – its RM54 billion dividend comprised roughly 20% of total government income(en.wikipedia.org). Individual income taxes (RM38.7 billion) were the third-biggest source, followed by the SST consumption tax (RM27.7 billion)(malaymail.com). Petroleum income tax – a profit tax on oil & gas operators – contributed around RM20.8 billion(assets.kpmg.com). Non-tax revenues from licenses and permits (which include petroleum royalties paid to the federal government) added another ~RM14.5 billion(malaymail.com). 

In sum, oil-related receipts (Petronas dividends + petroleum taxes/royalties) formed a large chunk of 2019’s revenue – It was truly Malaysia’s cash cow. 

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Cambridge Economics 9708 Paper 2 and Paper 4 sample answers are out!

Victor Tan
 

Sepupus! 

Those of you who are taking A-levels, listen up! 

There are now sample responses for both Paper 2 and Paper 4 in the Premium Memberships section, and you will find them here!

Go ahead and make use of them and conquer and bathe in the blood of your enemies do your very best to learn the patterns that you need to succeed and achieve that scholarship that UMS, that university admission that you’ve always dreamt of!

The sample answers are tailored to give you a sense of the highest performing essay scripts for the exam across modalities and they include the relevant diagrams and justifications; they are a resource designed to help you achieve the highest possible marks with the least possible effort. If you just take the time to look through them, practice seeing if you can reproduce such a level of response, and then repeat.

Each response is tailored to the official mark schemes and materials which were developed by Cambridge, and they are your perfect companion to conquer A-Level economics! 

I think most of you are aware that A-levels economics is where it already starts getting hard. Writing analyses isn’t easy, and neither is getting ideas. 

Well, hopefully, reading sepupunomics has given you a little bit of insight here and there, and picking up our premium reports as well gives you lots of insight into plenty of issues which you may never have thought about before! 

As with the IGCSE sample responses, these aren’t meant to be used through copying and doing nothing else, but instead should be used wisely. There are a lot more examples and ideas here, and I hope that you will find this valuable and useful. 

Hopefully you will get a sense of how to answer these essay questions appropriately and also the kinds of things you need to do in order to target the highest possible scores!

Learn lots and sign up! 

Yours,

Sepupu.