Or it could take up to six years; export model is still the best, says MM
SINGAPORE will take two to three years to bounce back from the recession - and this is the optimistic scenario that assumes the United States recovers next year.
The pessimistic forecast? Five to six years, according to Minister Mentor Lee Kuan Yew, who spoke last night at the launch of an alumni complex at the National University of Singapore (NUS).
MM Lee, who has been saying that Singapore's recovery hinges on that of the US, believes that the American economy is 'fundamentally sound'. Its big companies such as General Motors and
Chrysler are 'sound' despite their requests for further government aid.
He said he was reassured by US Federal Reserve chairman Ben Bernanke's remarks last month that the economy would pick up by 2010, once the government's stimulus package frees up lending to households and businesses.
Also, the same reliance on exports that has put Singapore's economy in the doldrums means that once the world's major economies rebound, 'we are going to bounce back'.
MM Lee took issue with criticisms of Singapore's economic model, such as that from a recent Wall Street Journal editorial which said the Republic needed to refocus on the domestic consumption of goods that are now produced for export.
'Four million people to sustain industries supplying top-end goods to the world? That's rubbish.' Singapore has no choice but to export, he stressed.
What will further stand Singapore in good stead is its free trade agreements with countries such as the US, Japan, China, Australia and New Zealand, he added.
With such conditions in place, 'if we don't prosper, we're stupid'.
Mr Lee made these points as he shared his thoughts on what Singapore would become in 25 years time, with some 300 alumni, students and staff of NUS.
Singapore's prosperity would depend not just on its own efforts, but the state of the world a quarter century from now, he said, offering two possible scenarios.
The optimistic one is that the US and a rising China are on good terms and there is cooperation between Beijing and its neighbours Japan and South Korea.
In this scenario, Singapore and its Asean neighbours will have banded together and achieved the goal of a single market and production base, because 'sooner or later, all the 10 countries will realise, unless we combine our markets we will be sidelined'.
What would be cause for alarm is if there were a clash between the world's major powers such as the US, China, the European Union and Russia, creating 'a more dangerous Cold War'.
'This does not make for a prosperous world, there will be more arguments, more suspicion' and Singapore 'will not prosper so much' as a result.
In this pessimistic scenario, the Asean Economic Community would be 'just a name - people are dragging their feet, never fully commit' and each Asean country would be aligned more closely to the big powers than with each other.
The actual outcome, he concluded, is likely to be somewhere in between the two scenarios he sketched.
Later, in a dialogue, he was asked what would be a viable economic model for Asia as it emerges from the current crisis.
Smaller places such as Singapore, Hong Kong and Taiwan will continue to rely on exports, he said.
As for China and India, while they have the alternative to eventually build up their economies to where they are less dependent on exports, neither country would be able to completely do away with exports, he said.
He was also asked what would happen to Singapore if some People's Action Party (PAP) politicians break away to form a new party and take over the Government.
'If you have capable people then I'm not worried.'
Integrity is crucial, he added, as are ability, experience and willingness to do things for the people.
However, he did not believe the country with its small population could sustain a two-party system as the PAP already has 'to scour the whole country to find the quality we now have'.
'You need character, commitment, drive and (the) ability to connect with people. It's a very tough job.'
Source: Straits Times, 21 Mar 2009