MM sees 3-5% Asia growth as world recovers

Source : Business Times - 25 Oct 2008

China and India’s growth momentum may spill over to the rest of Asia in the next three to five years

DRIVEN by China and India, Asia will still see annual growth of 3-5 per cent as the world economy recovers in the next three to five years, says Minister Mentor Lee Kuan Yew.

‘It (the 3 per cent to 5 per cent growth) isn’t bad in this condition,’ he said yesterday at the Singapore Human Capital Summit conference.

Employers should use the down-time to build up the skills and knowledge of their workers for the upturn in the economy, he said. ‘You’ve got to be optimistic and realistic enough that this will recover - when? I don’t know.’

The government will push on with the continuing education and training of workers, Mr Lee said.

In the absence of ‘malfunctioning’ in the banking system, he sees the global economy restored - in an upbeat scenario - in 3-5 years to the growth path it was on before it was derailed by the financial crisis.

Asia excluding China and India will, meanwhile, do better than other regions, as it continues to post economic growth of 3-5 per cent a year.

The International Monetary Fund’s growth forecast is 5-6 per cent, but that includes China and India.

According to Mr Lee, while growth in China and India may ease, the two economies are large enough to have growth momentum of their own, with spillovers for the rest of Asia.

While China and India offer Singapore growth opportunities, Mr Lee said they also pose a big challenge to it.

‘We have to decide where is our future, assuming China and India will (continue to) grow,’ he said. ‘We have to accept that what we do they will do as well, if not better.’

So what is it that Singapore can do that China or India cannot do, at least in the next 20-30 years?

Singapore’s comparative advantage over China and India is its system, Mr Lee said. ‘They can have the individuals to catch up with us but they can’t catch up with our system so easily.’

In particular, he cited Singapore’s system of laws and fair play, its meritocracy and patent laws.

He also said that in a globalised world of greater mobility and competition, the ability to attract and retain talent is the key to economic success.

Singapore has won and lost talent, but its important that it ‘wins more than it loses’, he said. ‘Without foreign talent, Singapore would not be where it is today.’

The US has also done well because of foreign talent, Mr Lee noted. But the issue of foreign talent is politically dicey and political leaders must convince their electorate ‘why you need foreign talent to give that extra boost’.