The argument put forward by Lee Kuan Yew (RIP) for exiling communists was that Maoist China was aggressively attempting to expand into the region. For example, see the Hong Kong bombing campaign of 1967 [1]. According to, amongst others, "The Singapore Story" [2], he was initially contacted by the Communists to represent them as a "moderate" leftist. His manoeuvering to win the 1959 election (scaring many businesses away to KL, thinking communism had won) and kick them out relatively bloodlessly thereafter has become legendary in Singapore, and is I think unparalleled anywhere else in the world. Part of winning included controlling the press and winning the PR battle. Whether it was justified depends on your stance on communism (and therefore if you consider the country to have been at war, suspending individual rights).
The second is that the island is racially very diverse, with a majority Chinese when both neighbours - who were also aggressive at the time - were of a different race and religion. Independence came a couple years too early due to Malaysian worries that LKY was not cooperating with their policies (Singapore was openly advocating racial equality amongst other things, against the pro-Malay discriminative policies from KL). Still in the 1960s, there was an explosion of anti-Chinese minority riots in neighbouring countries which involved some lynchings, and some Chinese had the idea of doing the same to Malays in Singapore (e.g. [3]). LKY's response was prompt: he pushed for the Chinese rioters to be made an example of. Restrictions on hate speech grew from a need to quell these tensions. There were no more race riots until the recent incident where a drunk construction worker was run over by a bus and the mob got angry.
It's important to view his actions not as if you lived in the prosperous United States, surrounded by a large ocean and coming out victorious from the largest war known to mankind but as the leader of a tiny island surrounded by enemies big and small, open and insidious. I ask his critics what they would have done differently; I personally agree with those who consider LKY one of the greatest politicians that ever lived, and I admire the Singaporeans for electing him year after year.
[1] http://en.wikipedia.org/wiki/Hong_Kong_1967_Leftist_riots: "Bomb disposal experts from the police and the British military defused as many as 8,000 home-made bombs. Statistics showed that one in every eight bombs was genuine."
