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.