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Rebuilding Asia, repositioning Singapore

Three years after the Asian financial crisis confidence has still not returned to the area. Many investors are sceptical that these countries have done enough to avoid repeating the same mistakes. Singapore’s deputy prime minister, Lee Hsien Loong, outlines the changes that have been taking place in his country and his vision for the future.

Although the Asian financial crisis has passed and growth has picked up, confidence has not fully returned to the region. Investors remain sceptical, believing that the affected countries have done too little to redress the root causes of the crisis. These causes are still a matter of dispute, although weak fundamentals in the countries concerned and panic behaviour in international financial markets were both crucial. But there is no doubt that the affected countries face basic economic and financial challenges, which they must now tackle if they are to restore confidence and prosperity.

Risks of globalization

Asian countries have to respond to the powerful, worldwide trend of globalization. While east Asia was preoccupied with its problems, globalization advanced apace. Technology has continued its breakneck progress. In such industries as telecommunications, semiconductors and some financial services, economies of scale break out of the bounds of nation states, even the largest, triggering a wave of mergers and acquisitions. The cost of opting out of the global economy has become higher than ever.

Asian economies have to find the best way to cope with the risks of globalization. But they must continue to plug into the global grid, progressively open up to imports and foreign competition and seek the foreign investment and technology that create jobs and export markets.