How the PAP Government Handled the Asian Financial Crisis

The Asian Financial Crisis of 1997 was a shocker that began in Thailand and soon spread to Malaysia, Indonesia and Philippines. The contagion extended its reach to South Korea, Hong Kong and China and in1998, the crisis had spread to Russia and Brazil as their economies saw a free-fall.

As a small open economy Singapore is extremely vulnerable to external developments. The large and adverse economic shocks of the Asian financial crisis could potentially have had a devastating effect on the Singapore economy.

Singapore, however, withstood the financial storm lashing the region and even managed to maintain a relatively favourable economic performance.

How did the Singapore government do it?

It's strong reserves position, strong macroeconomic fundamentals, sound economic policies and a willingness to take timely and effective policy measures to counter the adverse effects of the crisis, measures which include the exchange rate and wage instruments.

At the start the Singapore Government allowed the Singapore dollar to quickly depreciate in response to the lost of competitiveness that arose from the collapse of the regional currencies.

As the crisis dragged on in 1998, the Government decided not to tinker with the exchange rate but to use direct cost-cutting measures such as wage and operating cost reductions to maintain its competitiveness.

Despite the crisis, the Singapore Government pressed ahead with financial reforms including liberalising the Singapore dollar,
to ensure the long-term competitiveness of its economy.

We are not immune to external developments. One never knows when the next crisis will hit. Vote wisely for a strong and capable government with integrity that is able to steer us through crisis and take care of us. Don't vote for the Wrong Party. This is not a game of cards. This is your life and mine.

Here is a timeline of the crisis:
http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html

Source: Coping with the Asian Financial Crisis: The Singapore Experience
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.8642&rep=rep1&type=pdf