SE Asia to emerge stronger from crisis, says Lee
SE Asia to emerge stronger from crisis, says Lee
SINGAPORE (AFP): Southeast Asia will emerge stronger from the 1997 financial meltdown, but corruption and cronyism will be tough to eradicate, Singapore's founding father Lee Kuan Yew says in his memoirs.
The former Singapore prime minister wrote in the second volume of his memoirs entitled "From Third World to First: the Singapore Story", formally released over the weekend, that a rush to liberalization without adequate safeguards may have contributed to the crisis.
Currency turmoil first erupted in Thailand in mid-1997, snapping the region's phenomenal growth streak. Governments fell, hundreds of banks and businesses collapsed and vast numbers of people lost their jobs or suffered diminished living standards as a result of the crisis.
Most of the 10 members of the Association of Southeast Asian Nations (ASEAN) were rocked by the crisis, but regional economies began to rebound in 1999.
"ASEAN leaders will learn from this setback to build stronger financial and banking systems, with sound regulations and rigorous supervision," Lee said.
"Investors will return because the factors for high growth will remain for another 10 to 20 years," he said.
"Cronyism and corruption will be difficult to erase completely, but with adequate laws and supervision, excesses can be checked."
A similar crisis is unlikely to emerge so long as "the pain and misery" are not forgotten, he added.
In his memoirs, Lee dismissed Western critics' charges that cronyism and corruption were solely to be blamed for igniting the crisis.
Rather, a lack of understanding of the workings of modern financial markets was a contributing factor, he said.
"None of the leaders realized the implications of the globalized financial market of instant communications between the main financial centers of the world -- New York, London and Tokyo -- and their representatives in the capitals of East Asia," Lee said.
"Any wrong step of a government is instantly analyzed and reported to their clients worldwide."
Finance ministers from the Group of 7 (G7) industrial powers who pushed for the liberalization of financial markets in the region failed to explain the dangers found in modern-day financial systems, he said.
"Liberalization should have been more carefully calibrated according to the level of competence and sophistication of their financial systems," Lee said.
"These countries should have installed circuit breakers - controls to cope with any sudden inflow or outflow of funds."
The ongoing structural reforms will see the establishment of stronger financial systems and emergence of new leaders who will "gain stature and respect," Lee predicted.
Analysts say Singapore, known for its clean government and sound fundamentals, has emerged strongest from the turmoil.
Lee said Singapore weathered the crisis better because the market determined the allocation of resources, and he took a thinly-veiled jab at regional leaders who blamed foreigners for their economic woes.
He said that "in the troubled countries, too many politicians and public officials have exercised power and responsibility not as a trust for public good, but as an opportunity for private gain."
"Making the problems worse, many political leaders and their officials refused to accept the market's verdict," he said. "For a long time they blamed speculators and conspirators for the destruction in values. Their denial made many investors pull out."