US Slowdown Won't Eat Into S'pore Growth: MM Lee

Source : The Business Times, January 8, 2008

Temasek, GIC comfortable with Merrill, UBS, he says

A slowdown in the American or European economy will not reduce the rate of Singapore's economic growth, according to Minister Mentor Lee Kuan Yew.

Barring a 'big recession', China and India - where the economies are tipped to expand by 8-10 per cent yearly - will provide the dynamism to pull the rest of Asia's economies along in the next five years, Mr Lee said last night at a dialogue session hosted by the Institute of Southeast Asian Studies (ISEAS).

At the end of the five years, Singapore will reach a new plateau, leaving the 'old Singapore' behind as more Singaporeans can enjoy the finer things in life, including arts and culture.

Mr Lee said the economy should then do well as the two integrated resorts (IRs) will be in full operation to give the tourism and hospitality sectors a big boost.

And if things go well in another five years, he said Singapore will be like Italy or Austria today.

Which is not a bad thing, considering where it had started from - zero resources and given a low chance of survival, according to Mr Lee.

Singapore must now consolidate what it has achieved, and not risk it, he said. When it had few 'chips' in the early days, it could take more risk; now that it has more, Singapore should move cautiously, Mr Lee said.

With no natural resources like oil to fall back on, he said Singaporeans have been toughened and motivated to succeed. If Singapore had been rich in oil, Mr Lee said it would not be where it is today.

Responding to a question on the Government of Singapore Investment Corporation's (GIC) acquisition of a 9 per cent stake in Swiss bank UBS in the wake of the US sub-prime mortgage woes, Mr Lee said Singapore is not averse to American banks or financial institutions.

He noted that Temasek invested US$4.4 billion in Merrill Lynch, the American investment banking giant.

GIC paid $14 billion for a 9 per cent stake in UBS - making it the biggest shareholder - because GIC has confidence in the bank's management and growth potential, Mr Lee said. 'It is comfortable with UBS.'

But he also pointed out that Temasek is also comfortable with Merrill Lynch and believes that the investment bank will recover from the losses it suffered.

Touching on the United States presidential race, Mr Lee said whoever is elected the next US president will have a plateful of foreign policy issues to deal with, including a more assertive Russia and a rising China and India.

Still, at the end of the day, he said the US remains an unbeatable economic and military power. Time and again, the US economy has made a strong comeback after showing signs of faltering.

Mr Lee said the US economy stays resiliently strong and that it is well ahead on the technology front.

The Chinese are keenly aware of this - and would not engage the Americans in a confrontation that would upset China's economic development, he indicated.