PM Lee Hsien Loong’s Written Interview With JoongAng Ilbo

JoongAng Ilbo: Despite drastic policies and measures taken by major countries, the global financial crisis has continued. Why do you think that the global crisis is going on? What kind of policies and measures did your government take on the crisis? What are the chances that major economic powers also fall into serious recession? Should your country also suffer, what policies and measures would your government take in response? Also, what can ASEAN do in terms of cooperation among members?

PM Lee Hsien Loong: This global economic crisis is the worst since the Great Depression. This is not a cyclical downturn that will be followed by a cyclical recovery. Despite major efforts by many governments, much remains to be done. Banks in the US and Europe have to be rid of their toxic assets and recapitalised. They can then resume lending, and fuel an economic recovery. Businesses will have to undo past mistakes and consolidate their operations. Consumers are understandably cautious, given the uncertain environment. They need more signs of economic recovery before they can feel confident to spend again. Global macro-economic adjustments are also needed – Western countries must save more, and Asian economies like China will have to increase domestic consumption.

All these adjustments will take time. Some say there are signs that the recession has bottomed out. That might be so, but it will take several years before the world purges all the past excesses and comes to a new balance. Only then can growth resume in earnest.

Singapore has been badly affected. Our economy contracted 10% in 1Q09. We have taken decisive measures to help companies cut costs and save jobs, but as a small and very open economy, whose trade is 3½ times our GDP, Singapore cannot stimulate its economy to end the recession.

Singapore launched a S$20.5 billion “Resilience Package” in January, tapping our reserves to fund part of the Budget. One key measure is the Jobs Credit (JC) scheme to help businesses with their employee provident fund payments. This lowers employment costs and encourages businesses to hold on to workers. Jobs Credit complements the Skills Programme for Upgrading and Resilience (SPUR), which supports workers to upgrade their skills and learn new capabilities. We also launched a Special Risk-Sharing Initiative (SRI) to support business loans and stimulate bank lending, so that businesses will have needed capital for their operations.

This is a global crisis, and countries must tackle the difficulties together. The ASEAN+3 countries are working on the Chiang Mai Initiative Multilateralisation (CMIM) to help countries which face liquidity and confidence problems. This scheme will boost the region’s ability to deal with economic instability and we hope it will be launched soon. 

In this crisis, governments will also come under pressure to close their markets to protect domestic producers. But protectionist measures will only invite retaliation and worsen the recession. We must therefore take a collective stand to keep markets open and support free trade.

JoongAng: What was your impression of the G-20 summit in London in April? Did the occasion help calm the instability in the global market? Indonesia is a member of G-20, representing ASEAN. If your country becomes a member of G-20, what kind of role will it take? And also in November 2009, the APEC summit will be held inSingapore and your country is home to APEC’s headquarters. This year marks the 20th anniversary of the APEC. What are your expectations for this year’s APEC summit? What have summits achieved over the past 20 years?

PM Lee: We welcome the pledges of the G20 Leaders to do whatever is necessary to restore stability and confidence to global markets. Governments must now follow up with concrete action to help bring about global economic recovery. We also welcome the strong stance taken by the leaders against protectionism. We support a strong WTO role to monitor and act against trade restrictive practices.

The G20 process must remain an inclusive and representative process. We are glad that Indonesia and the ASEAN Chair (Thailand) were at the London Summit. Singapore is a small economy, and tries to play a helpful role. We are a financial and trading hub and can contribute to meaningful discussions on this front. 

As Chair of APEC 2009, Singapore will work with G20 members, especially Koreawho is the incoming Chair next year, to support a global recovery. There is much scope for APEC and G20 to work together to restore stability and growth to global markets.

APEC Leaders will meet in Singapore in November, at a critical juncture in the global economy. We will discuss measures to address the economic crisis, and prepare our economies and people for recovery. We should also take a strong stand to resist protectionism, and support the multilateral trading system. The crisis must not slow down our efforts for regional economic integration. Instead, our economies must forge a new consensus on trade, emphasising inclusive growth. Hopefully, in Singapore APEC Leaders will commit to opening up our economies and connecting the region more tightly, while strengthening social resilience so that all groups can reap the benefits of globalisation.

JoongAng: Korea and Singapore has had a free trade agreement for three years. Since 2005, volume of trade between Korea and Singapore has increased. What do you expect from the FTA between the two countries in the future? What can be done to ensure prosperity for both sides? And also last year, you actually canceled another event to participate in the ceremony for the completion of the Samsung Electronics industrial complex in Tampines Park. What are reasons that you focus on hosting foreign plants? What are the specific benefits Singapore gains from these foreign factories?

PM Lee: The Korea-Singapore FTA (KSFTA) is a comprehensive agreement covering trade in Goods, Services and Investments. Since it entered into force in 2006, trade and investment between our countries have grown substantially. In 2007, bilateral trade increased 15% to S$35 billion, and last year it rose another 21% to S$43 billion.

We should build on this success, and review the KSFTA to improve market access. Both Singapore and Korean companies stand to benefit. During periods of slower economic growth, companies need to look for new markets and business opportunities. Singapore companies are keen to increase their trade and investment linkages with Korea. And many Korean companies want to expand in Singapore.

Singapore has a good base of established industrial clusters which give Korean companies the opportunity to partner other foreign companies. The Samsung-Siltronic joint venture is Samsung's first manufacturing investment in Singapore and Siltronics' first ingot pulling facility outside Germany. We are delighted that both companies had decided to forge their cross-border and cross-cultural partnership in Singapore.

Singapore can also be the gateway for Korean companies into Southeast Asia and the Asia Pacific region. Samsung uses Singapore as its regional HQ and we see opportunities for other Korean companies to do likewise. Another company, Sunwoo, has set up an animation studio here. These activities widen the market reach of Korean companies. At the same time, they provide good jobs for Singaporeans and make us a more vibrant city.

JoongAng: A month ago, the JoongAng Ilbo ran a story on the successful Singapore education system. Your customised and practical education has had a great impact on Korea. What do you emphasise the most in your country’s education? What should be the final aim for education? And also how has your education in the U.S.helped you as a Prime Minister?

PM Lee: Our goals are no different from those of other countries - to develop the whole person and prepare him well for the future, and to nurture citizens who can contribute to their communities.

We focus on the fundamentals - literacy (English and a mother tongue language), numeracy, and a strong emphasis on science and technology as foundations for building the future. We also emphasise character and citizenship education so our young can understand the past and present, and are confident about the future. We recruit good people to be teachers (from the top one-third of each cohort), train them well, and recognise good performance. Our schools are equipped with excellent teaching facilities. We believe in competition and meritocracy, and encourage our students to work hard.

We encourage young Singaporeans to develop an outward orientation so they can succeed in a globalised, complex and interconnected world. I myself spent three years studying in the UK, and two years in the US. The experience helped me to understand how their societies worked, and to get to know and make friends with my fellow students. So now when I interact with political leaders or investors from these countries, I can appreciate better their approach and way of thinking.

JoongAng:  Tensions are mounting on the Korean Peninsula following North Korea’s rocket launches and nuclear test. What is your view on the current situation on the peninsula?

PM Lee Hsien Loong: The Korean Peninsula remains a flashpoint in the region. We are deeply concerned and disappointed that the DPRK had conducted another nuclear test. This dangerous act will have grave consequences for the region and international non-proliferation efforts.

Peaceful dialogue is the only way to ensure the peace and stability of the KoreanPeninsula. If the international non-proliferation regime is undermined, the security of all countries, including the DPRK, will be threatened. We hope that all parties will exercise restraint and respect each other's sovereignty, and the DPRK will refrain from further provocative actions and return to the Six-Party Talks.

JoongAng: Under the Kyoto Protocol, countries are required to reduce CO2 emission. How is your government preparing for this measure? Some nations in the region want to build nuclear power plants, but can this be the answer to the Kyoto Protocol?

PM Lee: Singapore fully supports and actively participates in international efforts to tackle climate change. We will do our part in any agreement to curb CO2 emissions.

As a small island of some 700 square kilometres, Singapore has to take care of our living environment while growing our economy. We have practised sustainable development for many years. We controlled the car population, greened our island and switched from oil to natural gas, the cleanest form of fossil fuel, for electricity generation. Thus we have kept CO2 emissions under control, even as our economy grew strongly. We are planning to do more. Recently we announced a Sustainable Development roadmap to protect our domestic environment and improve our energy efficiency over the next thirty years. This roadmap brings our public, private and people sectors to work together to preserve our living environment and conserve our natural resources.

If the world is to make progress reducing CO2 emissions, nuclear power will have to be part of the answer. However, many practical and policy issues have to be resolved, before countries can build and operate nuclear power plants safely. This is especially so in our region, which is earthquake prone, and where countries will need many years to achieve the extremely high standards of reliability and safety that nuclear plants demand.