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11 Sep 2013

Asia not headed for repeat of 1997 crisis: PM Lee
Regional economies are stronger now, with more safeguards in place
Source: Business Times
By : Teh Shi Ning 

Asia is not on the verge of financial crisis, despite the recent turmoil in regional equity and currency markets, Prime Minister Lee Hsien Loong said at International Enterprise (IE) Singapore's 30th anniversary dinner last night.

There have been fears that the sharp drops in regional currencies such as India's rupee and Indonesia's rupiah - following talk of an imminent end of economic stimulus from the US Federal Reserve and the expected capital outflows from emerging markets - could trigger a repeat of the 1997 Asian financial crisis.

Asked for his take during a dialogue session with the 600 local and foreign business leaders last night, Mr Lee said that he holds a sanguine view.

"I don't see this being a new global crisis or regional crisis," he said.

"I think the Asian economies are in a stronger position than they were in '97 when the crisis came. I think we've got more safeguards instituted now over the last decade and a half since the Asian crisis, to deal with the likely consequences of big capital flows."

He cited the Chiang Mai Initiative, the multilateral currency swap arrangement among the Asean member states, as an example of efforts that have materialised since to ensure that regional economies can cooperate to support one another in the event of big and destabilising flows in capital.

"Also, I think the Americans withdrawing the QE (quantitative easing), or the Europeans, will be very mindful to do it carefully because they don't want to destabilise their own economies. So, on balance, I would say we're in a safe position," he said.

This is not to disregard the fact that concern runs high in certain economies. "If you have some questions of confidence, whether the country is going quite the right direction or not, or whether the reforms are moving well or not - in the case of India, some investors are questioning it - then you would be quite anxious about your exchange rate and capital flows."

Chinese Premier Li Keqiang, writing in the Financial Times (FT) on Monday, had also expressed confidence that Asian countries have learnt from the crisis of 1997 and significantly enhanced their capabilities to fend off the risks of external shocks.

Asked for his view on China, having met with Mr Li and China's President Xi Jinping on his recent visit, Mr Lee said that he is confident that officials there understand what is at stake with the economic reforms now underway and will support what needs to be done.

China's leadership has shown clear resolve to continue to liberalise China's economy and grow through urbanisation, while making the rural sector more productive through agricultural reforms, Mr Lee said.

It is not just economics either, he added, citing the growing population of Internet users who tend to be unrestrained in their criticism of the government. "These are changes that they are going to have to adapt to and be able to accommodate in their system within the next 10 years. I think it's absolutely necessary for them to do that," Mr Lee said. "We very much hope they will succeed because in China's success we will derive great benefit."

Businessmen in the audience also raised several questions on the future of Asean.

In response to one on the lessons Asean can learn from the European Union, Mr Lee said: "For Asean, the lesson is, there is a lot of benefit in economic cooperation and economic integration but we must not put the cart before the horse, Let's work together, but let's do it in a way which respects the differences in our countries. And also recognising that we are 10 different countries. We are Asean, which is a regional association, not a union."

As for whether the goal of an Asean economic community by 2015 will be attained, Mr Lee said that a lot of the trade between Asean countries is already tariff free, but that in other areas - such as free movement of labour and civil aviation - not all agreements have been implemented yet.

"There will be significant cooperation by 2015, but there will be work to be done after that," Mr Lee said, stressing that there will be opportunities for Singapore's companies in the region.

Shophouse deals slow but prices remain steady

Source: Business Times


While the volume of shophouse transactions has slowed since the Total Debt Servicing Ratio (TDSR) framework was introduced in late June, prices seem to be holding up for now. Based on Savills Singapore's analysis of URA Realis caveats data as at Sept 9, the number of caveats lodged for shophouses eased from 34 in May to 22 in June and 11 in July.