Leaner S'pore seizes chances from crisis

Leaner S'pore seizes chances from crisis

SINGAPORE (DPA): A leaner and greener Singapore has emerged
from Asia's financial debacle by loosening up and seizing the
opportunity to move ahead of the pack.

Change has been the byword accompanying the opening up of the
financial sector to foreign competition and ownership combined
with the city-state's increasingly conspicuous international
posture.

The economy has staged a "remarkable turnaround," said the
Political & Economic Risk Consultancy's (PERC) latest survey
ranking Singapore as second only to Japan as the least stressful
location for expatriate business people in Asia.

"Singapore has handled itself well," said Bruce Gale, PERC's
regional manager. The economic crisis that left others reeling
"ignited action" here.

The tiny country of 3.1 million citizens and permanent
residents rushed to invest in e-commerce, high-tech
manufacturing, software development and financial services. It is
hurriedly restructuring the information technology industry in
its bid to become a global info-communications center.

Searching for potentially lucrative ventures outside the
island's borders, Singapore's 1998 cumulative investments in
China at the height of the recession amounted to $14 billion,
making it China's fourth largest foreign investor.

"Singapore is a bridge between the East and the West," said
visiting Chinese Premier Zhu Rongji, lauding it as the financial,
business and trade hub of Southeast Asia as well as a vibrant
force in the global economic arena.

The Development Bank of Singapore (DBS), Southeast Asia's
largest bank, has been putting together a regional empire. It is
certain to remain one of the two major local banks monetary
authorities expect to thrive following the opening up of the
domestic industry.

DBS has snapped up a controlling stake in Thailand's Thai Danu
Bank, taken over Hong Kong's Kwong On Bank, and purchased stakes
in Far East Bank and Trust Company and the Bank of Philippine
Islands. The two Philippine institutions are due to merge to
become the country's largest bank by assets.

"Singapore has survived and prospered by making ourselves
relevant to the world," former prime minister and current Senior
Minister Lee Kuan Yew told a recent awards ceremony for
entrepreneurs. "As the world changed so did we."

Least hit by the turmoil as a result of sound fiscal
management, low inflation and a strong currency, Singapore still
was not immune.

Deputy Prime Minister Lee Hsien Loong slashed business costs
by cutting employer's contributions to the government's pension
plan, opened capital markets to more competition, lifted the
limits on foreign ownership of local banks, liberalized the use
of the Singapore dollar and trading on the securities market.

The 47-year-old Lee, chairman of the Monetary Authority of
Singapore, the central bank, said opening up occurred almost
simultaneously with the start of the crisis.

The eldest son of Singapore's founding father Lee Kuan Yew, he
is widely expected to succeed Prime Minister Goh Chok Tong some
time after the next general election due in 2002.

With the economy's rebound better than expected, the
government lifted its growth forecast for the year 2000 to 6.5
percent and 5 percent for 1999 from 1.5 percent in 1998.

Workers have been told to expect the full 10 percent cut in
their pension contributions restored in five years, starting with
2 percentage points in April.

Long used to what critics call over-regulation by a single
force, the ruling People's Action Party, Singaporeans accepted
the dictates without a gripe.

"As far as Singaporeans are concerned, why rock the boat?"
observed Gale.

They reel off such enviable statistics as an annual gross
domestic product per head of more than 27,000 U.S. dollars, 90
percent of families owning their own home, one in two households
owning personal computers and a garden city hailed by
environmentalists.

The latest financial policy reforms unveiled by Lee included
the merged equity and derivatives market, the Singapore Exchange,
to provide wider access.

Adding impetus to the opening up and need to diversify is the
ongoing slump in the disc drive sector as manufacturers move to
lower-cost countries in the region. Even more ominous for the
Asia Pacific, the world's main electronics supplier, is the
relocation of some operations to countries like Mexico and
Ireland, closer to their major markets in the United States and
Europe.

"Can we buck the trend? I think not," said Ho Meng Kit, deputy
secretary of the Ministry of Trade and Industry.

"What's important is that we have other growth centers coming
up fast enough to take up the slack."