Pre-crisis, Southeast Asia was
favored because it was not xenophobic; it was going with the tide.
Now it is seen as slow to change. The digital divide will be
another problem. Northeast Asia is better educated: higher
percentages of population with tertiary education, compared to
Thailand or Indonesia. The only country that has made preparations
to enter the digital age is Malaysia. The Philippines are not
badly off with a fairly well educated population in Manila, but
then they have other problems. This digital divide will emphasis
the existing differences.
Q: Yet take Japan; it seems unable
to get back on a fast growth path and achieve real transparency.
A: Theirs is a cultural problem. The Japanese are aware of their
problem that they have to change and change quickly. Their
electronic companies, Sony, Toshiba and NEC, have already got the
message and are changing fast, downsizing and restructuring. The
old economy industries, like petrochemical and steel sectors, are
slower to change. They find it very difficult to do.
Change will come in the next five to ten years through leaders who
are now in their forties and fifties, people who understand the
implications of IT and globalization, that their old model has run
its course. They want to find some way to make the
transition less painful. But they are going to make this
transition. I wouldn't write them off.
Q: Coming back to Southeast Asia: the political instability and
uncertainty that we are seeing in Indonesia, the Philippines,
Thailand and even in Malaysia to some extent, do you think this is
a passing phase or does it show that democracy is having problems
taking real root in the region?
A: Sometimes Americans get carried away by their messianic zeal.
Before you can have a working democracy, you must have an educated
population and a fair-sized middle class that will provide a
ballast for society. Does Indonesia or Thailand have that?
they have a thin elite that is tertiary educated. But across their
210 million Indonesian, its very thin. Have they got people
with the means to understand the issues?
Take Thailand's 60 million. Thaksin has been accused of not
disclosing his assets when he was a minister. It made not the
slightest difference to the poll figures, not make any difference
to the results of the voting today.
Look at Estrada in the Philippines. He can be acquitted if
he can get eight senators to vote for him.
I am amazed when American officials tell me that the important
factor is the democratic process, and with a free press, there
will be good government. That has not happened.
The best periods of Thailand's growth since the war were under two
prime ministers, Prem Tinsulanond and Anand Panyarachun, both
non-elected, but both honest and competent.
Q: Governor George Bush is about to take over as president of the
United States. Yet he has very little experience in foreign
affairs. (Rest of question missing at end of tape.)
One senses that this is a moment where real progress is possible
on the Taiwan issue. What do you think?
A: Mr Bush has powerful advisers in place. China will
be a difficult issue for them, because of the positions
Republicans have taken in the eight years they were out of office.
They can't do a quick U turn and abandon their well-stated views.
But I am convinced that after six to eighteen months of testing,
they will discover, as the Democrats have, that there are
certain basic factors which cannot be wished away, and that
therefore it is best to continue the present position, and not
precipitate a crisis over Taiwan.
One good thing is that the Taiwanese people have recognized that
if they go for independence, they will force the mainland into
action. So what the majority want is status quo.
The difficulties may arise in six to eighteen months as the
Republicans probe and test out the basic limits of China's
position. Theater Missile Defense and National Missile Defense
will complicate the issue because they can change the fundamental
balance between China and the US.
Q: And the Korean peninsula?
A: They have got more than what they should have got with
KEDO.
Q: Do the statements from Beijing on Taiwan indicate a real
opening?
A: Yes, I believe so. The Chinese were taken aback by the election
of Chen Shui-bian. Since then their worst fears have not
been realised. First, it is unlikely that the new president
of Taiwan will make a dash for independence. He is cautious and
does not want to provoke them. Also, he is politically not as
strong as former president Lee Teng Hui. His base is too narrow.
Beijing has
now established lines with the Taiwanese opposition, the KMT, the
PFP and the New Party, all of whom stand for eventual
reunification. They represent at least 61% of the electorate they
won in the last election. They want the status quo for as long as
possible, not independence. They know that they cannot ignore the
warning from China that if they do that (go for independence),
they will force China's hand and blood will flow.
To that extent, the situation has improved. Vice-Premier
Qian Qichen has moderated and modulated China's position to make
it easier for Taiwan to respond and begin to talk.
Q: If there is, nonetheless, as you have indicated a period of six
to eighteen months of tension between China and the US, of testing
the limits, and perhaps if TMD goes ahead it gets worse, where
does that leave the other East Asian countries?
A: All will be nervous. China will always be in East Asia.
The U.S. can pull back to Hawaii and Alaska, we can't. And
this is too critical an issue for China. It's as if you tell
the Russians that Chechnya has the right of self-determination.
Then you must be prepared for a massive row with the Russians.
Q: Do you think that message will sink home pretty quickly with
the new administration in Washington?
A: They must know it already.
Q: If you had to name a capital city for globalization, Singapore
might be it. You are in the global economy, you were created by
the fact of the global economy in some ways.
A: We are a reflection, a facet of that economy. We
exist because there is a global economy.
Q: How does the global economy look to you. Financial markets are
reflecting anxiety about the future. Greenspan obviously shares
it. What do you think?
A: I know enough about the global economy to know that we cannot
avoid excesses however careful the regulators are. Let's
hope the excesses have not gone too far, that American consumer
confidence, critical for a soft landing, does not evaporate too
suddenly. That's the key to a soft landing. To avoid a hard
landing the Fed and the Treasury must sustain consumer confidence.
If we get a sudden drop in consumer spending, we are in trouble.
Our (Singapore's) projection of 5 - 7 percent growth for this year
will be out of reach, because that's based on a 2 1/2 to 3 percent
growth rate in the US. If Americans stop buying, that's
trouble.
We are part of this globalised economy. I've seen the
reaction time become faster and faster. In the first oil
crisis of 1973, it was about two or three months before
inventories piled up in the US and the MNCs in Singapore laid off
workers and stopped overtime. As the computer became more
efficient and control was on line, it's reduced to a matter of
days. As inventories pile up, they scaled down operations in
Singapore. Now it's almost instantaneous.
We've just got to accept this. We are part of this globalised
economy. Without international trade and investments, causing the
movement of goods, people and services, Singapore would have
remained a fishing village. Every technological advance brings
both an opportunity and a threat. We need to be alert and nimble
to adjust to the changing environment. If we lose that capacity to
adapt to a changing world, we will be side-lined. We
are price
takers, not price givers. We know what we have to do here. So when
Americans tell me: you ought to govern in this way, I say thank
you very much, I have listened to you very carefully, if I don't
think we are ready for that, I have to do it my way.
|