PM Lee Hsien Loong interview with CNBC, Post G-20 Summit 2011

EURO ZONE CRISIS

Govts knew they had to act early and decisively: PM Lee
But it is politically hard for leaders to do so, he says
By Janice Heng, the Straits Times, 11 Nov 2011

THE European governments knew that to tackle the euro zone debt crisis, they had to 'get in decisively early, with a big package, and instil confidence', said Prime Minister Lee Hsien Loong in a TV interview.

The approach is not new, he added, pointing out that the world had experienced it during the 2008-09 global financial crisis, particularly in the United States.

'But politically they're finding it very hard to do,' Mr Lee told CNBC in an interview, an excerpt of which was broadcast yesterday.

The need for governments to over-react and instil confidence in a massive way was imperative 'because by the time the markets are moving quickly and the situation is getting out of control, the psychology is probably too late to reverse', PM Lee said.

The full interview will air tomorrow afternoon.

It took place after his visit to Cannes in France for the Group of 20 (G-20) Summit last week, in the shadow of an unfolding debt crisis that had led to Greek Prime Minister George Papandreou stepping down.

Now, it has engulfed Italy, where Prime Minister Silvio Berlusconi - survivor of several political scandals - has offered to resign.

CNBC interviewer Martin Soong noted that the G-20 summit had not yielded definitive solutions to the crisis. He asked if investors should be worried.

PM Lee observed that 'once you have a big meeting, you expect a big solution'. But the European crisis 'is not one that's susceptible to a single, big solution', he said.

The problem is very deep, going beyond Greece to include other countries such as Italy and Spain. Also, there are 'longer term structural questions about the euro, and whether it will go forward or it'll go backwards', he said.

Countries at the G-20 meeting tried very hard to push for further action because what had been done was not enough, said PM Lee.

The final communique recorded what could be agreed upon. But, he added: 'I think all the ministers know that they have to do a lot more work and more action needs to be taken.'

The interview also touched on the Trans-Pacific Partnership (TPP), a free trade deal with Singapore as one of its four members. The others are Brunei, Chile, and New Zealand.

Negotiations to include five other nations - Australia, Malaysia, Peru, the United States, and Vietnam - will take place at the Asia-Pacific Economic Cooperation (Apec) summit, which PM Lee is attending this weekend in Hawaii.

Japan is expected to join the negotiations - a move which PM Lee said would be 'a good idea'.

Japan's inclusion would 'balance the grouping in a strategically valuable way' by adding representation from North-east Asia, he added.

The eventual deal must be balanced: ambitious enough that it 'takes a step forward', but not so ambitious that it is politically untenable.

He did not expect a deal to be reached this year: 'I think we will have some overall framework defined but it will take them a while to work out that package.'

PM Lee said in a media interview that low-end incomes will come under pressure
AsiaOne, 11 Nov 2011

Prime Minister Lee Hsien Loong said on Wednesday that incomes at the low-end will be under pressure soon, while white-collar workers in the middle will also face pressure.

PM Lee told CNBC in an interview that Singapore's economy is slowing down and will continue to do so going into 2012. This is due to global economic conditions getting tough.

According to a Sept 1 economic report by the Monetary Authority of Singapore, economic activity in Singapore is likely to grow modestly in the second half of this year.

Statistics provided by the Ministry of Trade and Industry showed that Singapore's economy grew by 1.3 per cent from July to September after contracting by 6.3 per cent in the previous quarter.

This is on a seasonally-adjusted quarter-on-quarter annualised basis.

PM Lee also told CNBC there will be uncertainties because the economic cycles are shorter.

For the Singapore economy to continue growing at a strong pace, he said Singapore needed more workers, more skills and more talent.

Mr Lee also spoke on the economic situation in Europe.

When questioned by CNBC, he said the problem was deep and involved not just Greece but also other countries like Italy and Spain.

"It's not just the immediate problems but there're also longer term structural questions about the Euro, and whether it will go forward or it'll go backwards.

"They have to make sure that the problem does not spread beyond Greece and cause a run on Italy for example, which would have an implication for the whole world," he said.