Asia's politics challenge Singapore economy: Lee

Asia's politics challenge Singapore economy: Lee

HONG KONG (Reuters): The biggest challenge that Singapore
faces is Southeast Asia's political instability, rather than the
direct economic impact of the region's financial crisis,
Singapore Deputy Prime Minister Lee Hsien Loong said.

In an interview with a German newspaper also published in Hong
Kong's Sunday Morning Post, Lee said: "...the biggest challenge
for us is not the direct economic impact. It is the political
instability and uncertainty in the region which has arisen."

"Here in Singapore, things are calm and stable, but because of
the regional turmoil, investors' perceptions are nevertheless
affected," he said.

"If you look at the Asian currency deposits, you'll see that
the deposits actually shrank. This means that there has been some
departure of capital from Singapore."

He said that most of Singapore's exposure was in Malaysia,
with the six local banking groups totaling an exposure of S$36
billion -- or 15 percent of their total assets -- in Malaysia,
Indonesia, South Korea and the Philippines.

Lee said Singapore was aiming for a 15 percent overall
reduction in wage costs to strengthen competitiveness. He said
Singapore was putting a new banking framework in place and taking
a more hands-off attitude.