RI could have easily avoided crisis, says Lee

RI could have easily avoided crisis, says Lee

SINGAPORE (Dow Jones): Singapore Senior Minister Lee Kuan Yew
said Thursday that Indonesia could have easily avoided disastrous
domestic consequences if former President Soeharto had listened
to the market.

"What has happened could so easily have been avoided," Lee
said in a written response to a question posed at a press
conference earlier this week. "This was the pity of it all."

Lee said Soeharto's actions set back the progress the country
had made over the past three decades, but that he was confident
that "when recovery comes, Indonesia can resume fast growth."

Asked how the turmoil of the past year has affecting his
opinion of his colleagues, Lee responded, "I was sad that a
strong and experienced leader like President Soeharto did not
understand that after he had opened up Indonesia's financial
system and linked it to the international money markets, he had
to submit to the judgment of that market."

Soeharto resigned from his post in May after a deteriorating
economy triggered deadly riots and looting in Jakarta and other
cities in Indonesia. Soeharto was succeeded by B.J. Habibie.

Singapore Prime Minister Goh Chok Tong visited Soeharto three
times "to explain that, fair or unfair, his country, having made
use of monies from this market, simply had to comply with the
standards that international bankers and fund managers considered
necessary if Indonesia was to get back on track and repay its
loans," Lee said.

"He chose to ignore them with disastrous consequences. It was
an immense personal tragedy," said Lee, who was Singapore's prime
minister during much of Soeharto's time in office.

Lee also said that Singapore was facing its most serious
economic crisis since the British withdrew their armed forces
from the city-state in 1968.

"The damage to the Indonesian economy and the problems in
Malaysia have made for more concerns," Lee, who was once
Singapore's Prime Minister, was quoted in the Business Times
Thursday.

"Their difficulties will affect us through our many trade and
investment links," he added.

To restore its competitiveness and control the rise in
unemployment, Singapore would have to cut costs significantly,
Lee said late Wednesday at the celebration of his 75th birthday
and the launch of his memoirs, according to the dailies.

This couldn't be done simply by letting the Singapore dollar
fall, but requires an all-round cut in rents, fees, taxes, power
and telecommunications rates as well as wages, Lee was cited as
saying.

"These adjustments will not solve our problems and cause us to
recover quickly, as happened in 1985," Lee was quoted in the
dailies. "But they are indispensable if Singapore is to weather
the severe difficulties that will last at least a few years," he
added.

Lee said the current crisis is harder to fix because Japan is
in a recession, leaving only the U.S. and the European Union to
pull Singapore out.

The huge depreciation in Asian currencies, including the
rupiah and the ringgit, has made Singapore's costs, especially
labor costs, less competitive in comparison with these countries,
Lee said, according to the dailies.

"For example, the Japanese are making disk drives in the
Philippines to compete against those made in Singapore, paying
wages and rents in pesos at a fraction of ours," Lee said.