LEAD: Singapore's Lee says AMF should be 2nd fiddle to IMF

Asian Economic News, June 12, 2000

TOKYO, June 8 Kyodo

(EDS: ADDING REMARKS BY LEE, SCALAPINO)

Singapore's Senior Minister Lee Kuan Yew said Thursday the proposed Asian Monetary Fund (AMF) should play a "subsidiary role" to the International Monetary Fund (IMF), noting that Asian governments lack needed clout to push unpopular fiscal disciplines and reforms.

"I do not think it is possible to replace the IMF. If the AMF has to play a role, it has to play a subsidiary role," Lee told the two-day sixth International Conference on the Future of Asia sponsored by the Nihon Keizai Shimbun, an influential Japanese business daily.

At the same forum, Robert Scalapino, professor at the University of California-Berkeley's Institute of East Asian Studies, said the United States should remain involved in the political and economic affairs of the Asian region.

Scalapino, an Asian affairs expert, said he is not opposed to any regional financial or political mechanism, but added "it is important to keep the U.S. engaged in Asia."

Lee said assisting countries in need of financial rehabilitation

is a difficult task. "When you go to a country and impose disciplines, it is painful...chief executive officers rebel, unions rebel and governments are accused of caving in."

The IMF has been accused of being "imperialists," but no Asian government is "capable" of telling other Asian governments "you have to do this, or we will not support you," Lee said.

On the future of Asia, the former Singapore prime minister said Japan and China will contest the leadership of the "Asian group."

He said in 30 years, China's economy will match Japan's based on current forecast and predictions.

Saying he may be called "skeptical," Lee noted the historical problems in the bilateral ties between Japan and China. He said there is "a considerable distance" for Asia "to go to have that capacity to trust."

Scalapino said he sees a "future of great adversity in Asia." He said that in the case of Japan, it has to confront its aging population and fully deal with its economic and financial difficulties.

The professor said China has to deal with peasant unrest now that Chinese students have turned to seeking ways to become entrepreneurs.

He said even Chinese intellectuals are worried instability may rise because the country may be moving too fast and too soon toward democratization.

On China, Lee said its imminent entry to the World Trade Organization (WTO) will have the impact of siphoning investments from other Asian countries.

"There is nothing that we can do that the Chinese cannot do given time," he said, prodding Southeast Asian leaders to speed up full implementation of the regional free-trade pact.

Earlier Thursday, Indonesian President Abdurrahman Wahid said the future prosperity of the Asian region can be attained by collective action.

In a keynote speech at the symposium, Wahid urged Asian countries "to act in collective ways" to establish a common "cultural identity."

He said a firm Asian alliance aimed at greater regional prosperity and stability would not alienate or "antagonize" other parts of the world, but should "enable Asia to communicate with others" and create an atmosphere of competition.

In an opening address, Takuhiko Tsuruta, president of the Nihon Keizai Shimbun, expressed hope the meeting will be a venue for the exchange of ideas where "an Asian voice" can be "delivered around the world."

In a separate address tackling stability on the Korean Peninsula, Gong Ro Myung, a former South Korean foreign minister, told the meeting Japan can play a role in the pursuance of stability and eventual reunification of the Korean Peninsula.

For the first day, the topics included Japan-Korean Peninsula relations and stability on the peninsula and stabilization in East Asia and the role of China.

The second day will deal with the revolution in information technology and the path to Asian revitalization.