SPEECH BY SINGAPORE PRIME MINISTER GOH CHOK TONG AT THE ASIA SOCIETY ANNUAL DINNER IN NEW YORK ON FRIDAY, 25 SEPTEMBER 1998, AT THE WALDORF ASTORIA AT 7.30 PM (US EASTERN TIME)
Managing The Challenges Of A Global Economy
I am happy to be given this opportunity to share my thoughts with you. The Asia Society has always played a key role in focussing America on Asia. Recent developments have made this role all the more important.
The Asian economic crisis took everyone by surprise. When Thailand floated the Baht last July, no one foresaw the chain of events that followed. The crisis has proven more serious and resistant than anyone predicted. East Asian economies have been badly damaged. Several have slipped into recession. The Indonesian economy is expected to contract by nearly 15% this year and the Thai economy by 7%. Korea and Malaysia will see negative growth of 4% and 2% respectively. Singapore may escape negative growth this year.
Nevertheless, East Asia''s long-term prospects are still good. Over the last 30 years, East Asia achieved the single greatest spurt of economic growth in the history of mankind. Some of the gloss has worn off the miracle. But it was not a mirage. The transformations wrought by three decades of growth are real and permanent.
The fundamentals are still there: high saving rates, enterprising and hardworking peoples, increasing levels of education and a generally pro-business environment. The flaws in these countries'' financial and banking systems have been exposed but can be fixed.
Capital is beginning to flow tentatively back to Thailand and Korea, reflecting these governments'' commitment to reform. The situation in Indonesia is more complex, involving both political and economic problems. The Rupiah seems to have stabilised somewhat, rising 28% in the last few months. President Habibie is trying hard to restore investor confidence. He faces some difficulties in persuading Indonesia''s entrepreneurial and business class, the ethnic Chinese minority, to return with their capital, after the traumatic May riots in Jakarta. Foreign investors will take their cue from this business class. They will hesitate to invest in Indonesia if the Indonesian Chinese do not have the confidence to do so.
Singapore too has been hit. But we are weathering the crisis relatively well because of our sound fundamentals and strong institutions. We remain committed to further deregulation and will further open up our financial sector. We are convinced that this is in our long-term interest. We want to position ourselves to build on our status as the region''s leading financial centre when growth resumes.
But, of course, to get to the long term, we must first survive the present. It has become more difficult