US troubles won't hurt Asia for the first time, thanks to investments and region's resilience
SINGAPORE will do well despite trouble in the global economy, said Minister Mentor Lee Kuan Yew.
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And, for the first time, Asia will not tip into recession even though the United States economy is faltering, he said at his annual Tanjong Pagar Chinese New Year dinner yesterday. But while he registered confidence in Singapore's prospects, he was also mindful of the widespread worry among Singaporeans over the cost of living.
Speaking in English as well as Mandarin, he noted that economists have forecast that Singapore will still achieve 4 per cent to 6 per cent growth.
'This is quite remarkable for it will be the first time that when the American economy slows down and reduces imports from Asia, Asia will not go into recession,' he said.
He cited two main reasons for Singapore being able to ride out the financial disturbances.
One, it stands at the heart of the world's highest-growth region. Two, the massive investments that are pouring into the island.
On the region's prosperity, he highlighted the domestic growth momentum in China and India as well as the buoyant economies of neighbours such as Indonesia, Malaysia and Vietnam.
In his Mandarin speech, he said Vietnam will have South-east Asia's most lively economy in 20 to 30 years. Among Asean scholarship students here, he noted, the Vietnamese are the most serious, intelligent and reliable.
As for the massive investments here, he noted that the construction industry will be busy for several years building $20 billion worth of new MRT lines, the two integrated resorts and more.
Foreign investors, too, are here. Citing three billion-dollar projects, he said: 'Huge investments cannot be recovered in a few years but will take decades to get back.'
Mr Lee believes these developments, in the region and at home, can help Singapore 'mitigate' its problems.
'The rise in food and energy prices, and the widening income gap between high and low earners is cause for concern. But we must press ahead and maximise our chances to break through in the coming five to 10 years to reach a higher quality of development.'
He also said that Singapore is into a period of steady growth and transformation that includes the HDB estates.
'We will not leave our heartlands behind,'' he promised, as the 1,200 Tanjong Pagar GRC residents and guests celebrated with yu sheng (raw fish salad) under a white tent at the Farrer Park Primary School.
In the festive crowd was lawyer Michael Chia, 37, who said: 'It's comforting to know that Singapore will continue ticking.'
While assuring people about the days ahead, Mr Lee also warned against overreaching in good times and called it 'a blessing' that the financial crisis had cooled the property market.
'Please remember that property prices go in cycles,'' he added. 'So when they go up, don't believe it's going to go up further and further and you start buying bigger and bigger homes...''
'Boom and bust is in the nature of business cycles. You must be able to ride through a recession and emerge the better for it.'
This is how the Government of Singapore Investment Corporation and Temasek have been able to increase the value of its assets, he said, focusing on opportunities present in dark times.
'In a recession we hang on. As the boom gets too intoxicating, we sell part of our shares and other assets and keep cash.''
So when UBS, Citigroup and Merrill Lynch needed a cash infusion, Singapore invested $22 billion in these distressed international banks.
'When the share prices of these banks recover that $22 billion investments, it will be worth $50 to S$70 billion.''
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