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."