Daily Lessons from Life 23 May 2009

MM Lee says immigration is more viable, long-term solution
By Channel NewsAsia's Japan Bureau Chief Michiyo Ishida Posted: 22 May 2009 2102 hrs

TOKYO: Singapore's Minister Mentor, Lee Kuan Yew, said India and China are the only countries in Asia that will not need to depend on exports to the US. He also debunked views that the rest of Asia could have a consumer-led economy.

Mr Lee, on Friday, gave his take on what some see as "common sense advice" on how to stimulate demand and boost the economy.

Monetary authorities and economists called for each economy to stimulate domestic demand. But many Asian countries are dependant on exports to the US and when the US economy weakens, many Asian economies do too. However, Mr Lee said that there are exceptions. He said: "One (exception) is China, another is India. Both have huge domestic populations. They need a lot of infrastructure - in China, particularly in western provinces, and in India, throughout the country. "Their need for consumer durables, refrigerators, microwave ovens, air conditioners is enormous."

In the first three months of this year, Japan - the world's second largest economy - recorded its worst ever annualised GDP fall. The country also faces a fast aging population and declining birthrate - similar to the problems faced by Singapore.

Mr Lee said: "Unless you change man's attitudes, this declining birthrate will be a disaster for Japan and for Singapore. And it is happening all over Europe. So they are getting migrants from North Africa, Turkey, black Africa, Muslims, pagans, all sorts of new entrants. "Japan doesn't want these immigrants. It is part of the culture of the country.

In Singapore, if we have not taken immigrants, the economy would have become slothful." Japan has only recently begun to hire foreign workers from Indonesia and the Philippines for jobs such as nurses and day-care workers. But Mr Lee said this will not solve the problem, and believes that immigration is a more viable, long-term solution."

MM Lee is a wise man. He speaks the truth. Hopefully the rest of Asia can also see the truth that he spoke of in this particular area.

Lessons for me are:

1. A market economy needs consumption. Asia is probably going to enter into a 'consume like there is no tomorrow and on borrowed money and borrowed time', like the 'old' American consumers, to have double digits growth all round. But is this the right thing to do? To learn a 'bad' habit whose consequence is now painfully plain for all to see, and feel!?;

2. Asian needs to leapfrog and do a quantum leap. Asia has to look at sustainable growth instead of just high growth. The income and wealth distribution imbalance has to be tackled early and with vigor. When majority of the people are poor and some are rich beyond imagination, and flouted it. You have cause to be worry! Instability will destroy all prosperity;

3. I have not seen any NEW economic theories emerging yet to replace the old rules. People are still talking about restoring growth and grow the old fashion way. I think it will be futile. The growth now should come from benefiting the largest spread of people with a small improvement investment in their health generally, and the education, etc. The magnitude will be huge when you multiply ALL the individual and family that benefited. Otherwise, you will still continue to witness unequal concentration of wealth in a small number of people at the expense of the majority!

4. Increasing the size of your population so that you have a viable domestic market is just economic consideration. Other factors, just as critical, must be considered too. e.g. harmony of the new and old citizens, sense of belonging of the new citizens, the need to prove loyalty to the old citizens, etc. Any government that want to boost the size of its domestic market with this strategy better plan something to get the new and old get together!!