Relations with Malaysia

After leading the PAP in seven victorious elections, Lee stepped down on 26 November, 1990, and handed over the prime minister position to Goh Chok Tong through handing over his letter of resignation to the then-President Wee Kim Wee at 2.40pm. He was then the longest serving Prime Minister ever.

This leadership transition was meticulously planned and executed. The recruitment and grooming for the second generation leaders took place as early as 1970s. In the 1980s, Goh and the younger leaders started to assume important cabinet positions. Prior to the official transition, all other first generation leaders (the "old guards") were retired, including Goh Keng Swee, S. Rajaratnam and Toh Chin Chye. Being so thoroughly planned, the transition was quite a non-event in Singapore, even though it was the first leadership transition since independence. By stepping down when he was still mentally alert and in good health, Lee set himself apart from other strong contemporary Asian leaders such as Mao Zedong, Suharto, Ferdinand Marcos, and Ne Win, who had stayed in power for too long and left their countries in disarray.

As Goh Chok Tong became the head of government, Lee remained in the cabinet with a non-executive position of Senior Minister and played a role he described as advisory. In public, Lee would refer to Goh as "my Prime Minister", in deference to Goh's authority. Nonetheless, Lee's opinions still carry much weight with the public and in the cabinet. He continues to wield enormous influence in the country and is ready to use it when necessary. As he said in a 1988 National Day rally:
"Even from my sick bed, even if you are going to lower me into the grave and I feel something is going wrong, I will get up."

Lee subsequently stepped down as the Secretary-General of the PAP and was succeeded by Goh Chok Tong in November 1992.

Lee refrained from official dealings with all ASEAN governments, including Malaysia, so as not to cross lines with his successor, Goh Chok Tong. He played a major role, however, with regard to the economy, such as with the agreement of the transfer of public-administration software for the development and management of Suzhou's Industrial Park with then Vice-president Li Lanqing on February 26 1994.