Asia needs tough economic steps: Lee

Asia needs tough economic steps: Lee

SINGAPORE (Reuters): Troubled Asian economies are only
prolonging the agony if they fail to take tough measures needed
to correct fundamental problems, Singapore Senior Minister Lee
Kuan Yew said.

Delaying reform means "dragging out the misery" he told
Reuters in an interview yesterday.

Better he said, "if you face it head on, and bite the bullet,
swallow the bitter medicine, find any metaphor you like but take
the pain and take it quickly. Get it over with".

For similar reasons, an Asia fund aimed at providing financial
support to countries hard hit by economic problems must be linked
to the International Monetary Fund (IMF), he added.

"The Asia fund as a supplement to the IMF, to back up the IMF,
and the rigors that the IMF must impose, that's good. But the
Asia fund in place of the IMF, I don't know what the others
think, but my Prime Minister (Goh Chok Tong) says 'count me
out'," he said.

"Let me put it in a very succinct way. I'd rather the IMF tell
the Thais what they have to do than me and my ASEAN neighbors
clubbing together, putting up US$17 billion and telling the Thais
if you don't do this we won't give you $17 billion. We won't be
friends for a very long time," he said.

The Association of South East Asian Nations (ASEAN) groups
Brunei, Myanmar, Indonesia, Laos, Malaysia, the Philippines,
Singapore, Thailand and Vietnam.

Lee said financial aid, no matter how massive, was meaningless
if countries did not make needed major reforms.

"It's meaningless because without the fundamental reforms in
financial structures, banking, stock market supervision,
disclosures, transparency and getting the macro-economic policies
right, you can throw in a hundred billion, it's down the tube,"
he said.

Lee said Asia's economic woes would have an impact on
Singapore and its economic growth, but it would be limited.

"We'll have less tourists, we'll have less trade, we'll have
less investments, and less return on investments" as the extra
stimulus which comes from neighbors' growth is lost, he said.

"From about seven or eight (percent annual growth) we'll go
down to five or six. I don't think it will be as bad. Maybe one
percent will be lost, depending on how they recover."

"I don't think it will be immediate. It's going to be six to
18 to 24 months from now," Lee said.

He noted Singapore experienced strong growth rates before
regional markets opened up, thanks to its trade with
industrialized countries, and was a manufacturing center for
numerous multi-national corporations selling worldwide.

Earlier on Monday, Singapore reported a 10.2 percent year-on-
year economic growth rate in the third quarter, and projected
1997 growth at about seven percent.

Officials said next year's growth rate was expected to
moderate and gave a preliminary growth forecast for 1998 of
between five and seven percent.

The relative strength of the Singapore dollar, which has
fallen far less against the U.S. currency than some other Asian
currencies, would have a negative impact, Lee said.