Singapore in ‘better shape’ to face crisis

Source : Sunday Times - 12 Oct 2008

Measures put in place after 1997 Asian financial crisis will help S’pore fare better now: Iswaran

SINGAPORE is in a better shape to weather the current downturn, thanks to lessons learnt during the Asian financial crisis.

This is the view of Senior Minister of State for Trade and Industry, Mr S. Iswaran, who spoke to reporters on the sidelines of the Global Indian Diaspora Conference at Suntec City yesterday.

Last Friday, figures from the Ministry of Trade and Industry (MTI) indicated that the economy shrank in the third quarter, declining by 0.5 per cent from a year ago.

The local economy has contracted quarter-on-quarter in three of the last four quarters, making this the first technical recession in Singapore since 2002.

MTI also lowered its forecast for full-year growth to ‘around 3 per cent’, down from 4 to 5 per cent.

But Mr Iswaran reckons that Singapore is prepared to deal with the downturn.

‘If you look at our economic numbers, there are particular sectors that have been affected by the general economic malaise in developed economies, particularly in manufacturing,’ he said.

‘But at the same time, other sectors are holding up. The services sector is doing reasonably well; there are also business services, transport…and so on.’

He cited measures that were put in place to tighten Asia’s financial systems after the Asian financial crisis in 1997, as a critical catalyst that has helped reinforce Asia.

‘And it’s not just the financial systems but also our corporate sector in terms of the level of debt it took on and how it structured its balance sheets. So from that point of view, (we are) more robust,’ he added.

But he also cautioned that Singapore will not be immune and moderation of growth is expected.

‘When there is a downturn in developed markets like the US, Europe and Japan…we cannot be immune,’ he added.

‘The real economic effect will affect us in Singapore, but yes, I think we are in a better position to withstand it, compared to the period of 1997.’

He said MTI will continue to work with other agencies to monitor the situation.

‘We want to keep our hand on the pulse, and make sure that appropriate steps are in place, or taken in good time to facilitate and help the industries where it is needed.’