Lim Kim San became Singapore's Finance Minister on its independence in 1965, and served till August 1967. He brought to the portfolio, during those make-or-break years, an emphasis on prudence in spending that produced a balanced Budget, with a small surplus in fact. He was busy in a period when the republic witnessed a period of legislative activism that reflected its new constitutional position on separation. Changes were made to the law in fields such as tax reliefs to boost exports, income tax, property tax, dual taxation avoidance agreements, and customs. Lim participated in Singapore's reserves and currency negotiations with Malaysia that led to the republic releasing its own currency in 1967; and he helped formulate the nascent state's policies on industrialization and foreign markets that underpinned its strategies of survival and success. One motif of the period was how independence had brought Singapore, now unshackled from Malaysia, new opportunities for industrialization, trade and investment. These were the lifelines of an island-state that would have to make the world its market now that it had lost its traditional economic hinterland, Malaya.

BREAKING WITH MALAYSIA

As Finance Minister, Lim played an important role in Singapore's dealings with Malaysia in the acrimonious immediate aftermath of separation. Kuala Lumpur was dismayed by Singapore's decision to impose restrictions on almost 200 items of mainland-manufactured goods, but Lim justified the action, arguing that post-separation Malaysia must expect to compete on the same terms as any other country in exporting to Singapore. Indeed, the list of Malaysian goods to which quotas applied were the same as had been recommended by the Malaysian Tariff Advisory Board in 1964; there was no question of selective discrimination.

Such arguments received a cold reception in Kuala Lumpur, where the political mood was summed up in Malaysian Finance Minister Tan Siew Sin's argument that Malaysia could prosper even without Singapore because the Malaysian market without Singapore was larger than the Singapore market. Kuala Lumpur retaliated to the republic's restrictions by imposing licensing and quota restrictions on Singapore-made goods.