Is Asia on the mend?

While gloom persists for the banking sector, there are signs that the Asian financial crisis has bottomed out and that economic recovery is in the offing. Chief Executive invited CEOs from North America and Southeast Asia to Singapore to meet with Prime Minister Goh Chok Tong and Singapore's business leaders and senior ministers to see the early stages of renewal for themselves.

With worldwide interest rate cuts and changes in perception about Japan, emerging markets have been showing signs of renewed investor confidence. Since the beginning of the year, the Singapore stock market has risen 19 percent, Korea is up 21 percent, and Mexico is up 39 percent. Net foreign equity flows to emerging markets are still down from the 1993 peak, but should reach $45 billion in 1999, up from about $38 billion last year, according to Cross Border Capital.

Speaking to roundtable participants over dinner at the Four Seasons hotel in Singapore, U.S. Ambassador Steven Green outlined how Asian currencies have stabilized and even appreciated moderately from their August 1998 lows. "Looking at equity markets," he said, "it's hard to tell there was a crisis." Green noted potential dangers on the horizon, however, such as a U.S. market reverse, a devaluation by China, a weakening by Japan, or political uncertainty in Malaysia and Indonesia.

Despite - or even because of - these factors, Green sees Singapore as a safe haven in the region. If Hong Kong is the New York of Southeast Asia, Singapore is its Geneva. He points to its sound corporate governance and bankruptcy laws, political transparency in decision making, and a fair and credible judiciary. Over 60 percent of all imports are trans-shipped to other destinations in the region through its well-managed logistics, distribution, and networking systems. Most U.S. firms establish a presence there with the intention of conducting business throughout Asia.

During the 1990s, many countries in Asia did not have effective systems of bank supervision to regulate local institutions' use of large amounts of foreign capital. Ratios of debt to GDP rose sharply in countries such as Thailand, Malaysia, and Indonesia. In addition, many Asian companies over-leveraged themselves with short-maturity dollar debt. Historically, these countries' economic links to the dollar gave them an anchor for monetary policy as well as a stable exchange rate. The unintended effect was to encourage dollar over-leveraging. Because the capital allocation in many of these countries is subject to political favoritism, companies developed an unhealthy insensitivity to profitability.

These factors became pronounced in places such as South Korea, where aggressive corporate investment was financed by bank lending. When domestic central banks were unable to play the role of lender of last resort, the financial debacle became a rout. Economies in the region are now adopting policies to help their corporate sectors cope with the recession and to regain access to foreign capital. But restructuring is not proceeding at the same pace throughout. Korea has repealed many restrictive labor laws in order to permit companies to restructure operations and restore profitability. Singapore has cut taxes, including property rates and electricity charges, and enacted 15 percent wage roll-backs.

After seeing Japan's economy shrink for two years, the Obuchi government introduced tax cuts and public works schemes totaling $198 billion. But critics wonder if these measures will be enough. Many doubt Japan is ready for fundamental banking reform. David Hale, chief economist for Zurich Financial Services, reckons the Japanese banking system has close to $1 trillion in problem loans as a result of the great deflation, which has occurred since the 1980s. Its gross public debt will rise to 140 percent of GDP - the highest level of any OECD country ever. Confronted with challenges on so many fronts, Japan has no simple recourse, he believes, but he does see the rise of pension funds as an important constituency in equity markets that will move that country from stakeholder capitalism to shareholder capitalism.

Country Comparisons of Productivity Levels

Labor Productivity (GDP in US$ per employee per hour, 1997)

Switzerland     $35.27     Hong Kong       $22.31
US               32.27     Taiwan           13.25
UK               26.10     South Korea       9.22
Singapore        25.94     Malaysia          5.62
Canada           23.12     Thailand          2.54

Although many see a recovery in Japan as a crucial catalyst to lift the other Asian boats, Chinese and Singaporean business leaders also point out that as the world moves toward a knowledge-based economy, the winners will be those countries that invest in human capital and resources. In the following roundtable discussion, part of a two-day symposium held by CE in partnership with Deloitte Touche Tohmatsu, Singapore's business and political leaders emphasized the country's attempts to be in the forefront of knowledge management, such as its "wired island" investment that will link every home to a broadband Internet connection.

While acknowledging that Singapore's economy is fundamentally sound, some CEOs expressed concern over the recent downturn in productivity growth. (Reflecting a cyclical downturn in global electronics in general and the regional financial crises in particular, 1998's productivity growth decline of 1.3 percent was the first ever recorded in Singapore.) This masks positive productivity growth of 4.3 percent for the five-year period from 1993 to 1997. Direct comparisons reveal that the country's productivity level is comparable to that of the U.K. and Canada and higher than those of Hong Kong, Taiwan, and South Korea.

Update on Regional Crisis: Impact on Growth

                GDP Growth (%)     GDP Growth (%)
                     1998              1999(*)

Indonesia           -13.6             -3.3
Thailand             -7.7(*)           0.7
South Korea          -7.9              2.3
Malaysia             -6.7              0.7
Hong Kong            -5.1             -1.2
Singapore             1.5             -1.0 to 1.0
China                 7.8              7.3

Source: Singapore EDB. * Estimates/Forecasts
Economic Growth

                                                   1960(*)    1998p

Population                                          1.5m        3.2m
GNP (US$)                                           0.7b       88.4b
GNP per Capita (US$)                                435       22,900
Total Trade (US$)                                   2.5b      211.8b
Balance of Payment (US$)                            0.5b        3.0b
Gross National Savings (% of GNP)                  -2.4        53.1
Unemployment Rate                    [greater than]10%(**)      3.2%

Source: Singapore EDB.

At current market prices * annual changes refer to averages for the
decade ** Census of Population 1957

EVOLUTION OF AN EPIDEMIC

Prime Minister Goh: In July 1997, Thailand was struck by a currency crisis. The virus spread very quickly, and several economies landed in the ICU. The worst is over, and the patients have gone home. It's a good time to examine how each country reacted, which tells you about its character. If you understand its character, you can better make your business strategy.

Thailand and Korea invited the doctor - the IMF - in, took the bitter medicine he prescribed, and are now on their way to recovery. Led by a new prime minister and a new president, respectively, they took the opportunity to restructure financial and corporate sectors and are now moving forward into the new millennium.

Indonesia was forced to invite the doctor in. They reluctantly accepted the prescribed antibiotics, but stopped when they thought they were cured. Today, Indonesia is in a dire situation.

Malaysia decided to self-medicate. Capital controls bought time to stabilize its economy. When the one-year limit on the repatriation of foreign capital is up in September, we will see whether investors will pull funds out of Malaysia.

Singapore was also exposed to the virus, but we were healthy and so were less affected. The priority now is to get out of the short-term recession by creating jobs. To offer short-term relief, we cut costs, lowered rentals of industrial land, cut taxes, and reduced rates for power and telecommunications. We are confident that we will recover in two to three years.

However, to position ourselves for the region's recovery, we need to create an adaptable workforce with long-term capabilities. We have to train and retrain our workers so that people will have not only one skill. Singapore students get high scores and make good implementers, but they lack that something extra to create new wealth. We need to get our students to ask questions. But it could take 10 years or more to bring about more technopreneurship and entrepreneurship. We are prepared to invest. Funds are not a problem. But money does not create money. Talent creates money.

The world after the crisis will be very different for Singapore. South Korea and Thailand will be more formidable. We will also have to face a new China and the changes brought about by the euro. We want to be there to compete.

Ed Kangas (Deloitte Touche Tohmatsu): Central Europe has in place sound financial infrastructure, sound government, sound regulations in financial markets, securities trading, sound and properly regulated stock markets, transparency, sound accounting and auditing standards, proper disclosure laws, properly regulated banking, financial credit facilities. All these are necessary for a nation to withstand the occasional virus. In ASEAN, only a few countries - Singapore is one - have these.

Goh: Thailand is making an effort to change, but it will take quite some time. You must start from the top - the Central Bank. I think China has understood the need to restructure its financial system, but I am not sure whether other countries have.

Arnie Pollard (CE): What could derail the region's recovery process?

Goh: Two factors. One is external markets outside the region. If the U.S. economy declines, it would not be able to absorb more exports from this region. Japan may take one or two years to recover. Then exports from the troubled economies, necessary for the recovery, will not be as robust as we would like them to be. I am also concerned about whether there's a bubble in the U.S. stock market. Two is that things may go wrong within the region and Singapore will be caught in the eye of the storm.

Mark Grobmyer (ICS): How can Singapore encourage more SME initiatives?

Goh: American SMEs need a contact point to help them penetrate this region. They don't have the knowledge, capital, or personnel to do it on their own.

Lim Hng Kiang (Republic of Singapore): The French and Germans have set up business centers in Singapore to help their SMEs find structured support to start operations in the region. The U.S. can do something similar.

Pollard: What can Singapore do to assist other countries in the region in recovery?

Goh: We can act as a catalyst. When Indonesia was in big trouble, I spoke with Japanese PM Ryutaro Hashimoto, German Chancellor Helmut Kohl, President Clinton, and Prime Minister John Howard about helping. When stability returns to Indonesia, we can help bring in investments. Our training courses are also made available to them. We offered Thai students who could not finance themselves through their tertiary education in the U.S. scholarships and places in our university. I also suggested a joint road show to the U.S., Europe, and Japan for Indonesia, Malaysia, the Philippines, Thailand, Brunei, and Singapore.

Steven Jay Green (U.S. Ambassador): Is there a possibility of creating a fund managed by private enterprise that would act as a form of guarantee for companies wishing to invest in this region?

Goh: Indonesia can continue to get funds from the IMF. Singapore can also get a few countries to guarantee funds raised by the Indonesian government. Through the guarantee, we can shave as much as 2 percent off borrowing costs.

Lim: This is effectively a credit enhancement scheme. It would be the private sector equivalent of the Miyazawa Plan, and the funds could either go to sovereign governments or private companies.

Peter Seah Lim Huat (Overseas Union Bank): One of the difficulties is that guarantors might want the borrowers to fulfill certain criteria, which could be seen as an infringement of sovereignty.

Goh: Guarantors can never be completely confident of getting their money back.

J.P. Donlon (CE): The IMF has been severely criticized for its handling of the crisis. Do we still need an IMF?

Goh: The IMF has had years of experience managing crises. Do we want continuity or should we change that? To have a new institution with new people will take too many years and it may not be better. The IMF is still the lender of last resort. The fundamental issue is to have more transparency and new rules.

Khor Hoe Ee (Monetary Authority of Singapore): The IMF programs seem to be working in Thailand and South Korea. They understand the financial market better now. It is a valuable institution, the only one with a mandate for surveillance. It might be better to build on the existing structure rather than start anew.

Goh: Transparency alone is not the cause. The U.S. and WTO forced many markets to open up their financial sectors. These countries liberalized their financial sectors without a proper understanding of the system and without having robust institutions. At the first sign of trouble, everybody pulls his funds back.

Green: Will the rebound in the regional stock markets actually turn out be a setback for the region?

Goh: There is a real danger. In Singapore, some workers are already asking whether their wages could be revised upwards.

Pollard: Unemployment is a new experience for Singapore. Is the existing safety net adequate?

Goh: Singapore's policy has always been to use the immediate and extended family, instead of the government, as the first safety net. If that failed, and unemployment were widespread and deep, the government might contemplate allowing premature withdrawal of CPF funds on a case-by-case basis. After finding employment, the individual would return the amount of CPF funds withdrawn with low interest. But this is a last resort.

GOOD NEIGHBORS

Bernard Rethore (Flowserve): Singapore has been referred to as a good house in a bad neighborhood. How do your neighbors react to you?

Goh: This is an ongoing concern. It is important to add value to the countries around us. We never yield under threat. When threatened, we stand firm. We must, however, be careful not to over-highlight our wealth and GDP growth.

Gerald Glenn (Chicago Bridge and Iron): What role will American firms play in the economic future of Singapore?

Goh: Singapore and U.S. companies can cooperate in the manufacturing sector. We can work with U.S. firms to make Singapore the region's IT hub. Most importantly, the U.S. has to maintain a security presence in Asia. The current security balance in the region is good. Some might question why the U.S. should maintain a presence. You have a geo-political interest here. The more economic interests the U.S. has here the better, as you then also derive benefits from the region.

When the government cut wages by 15 percent, it was aware that this would affect the ability of Singaporeans to make mortgage payments. To resolve this, we set up a fallback scheme for those who need bridging finance.

Donlon: How do you view the growing sentiment in Japan to rearm?

Goh: Japan shouldn't move into that position. We need to assure Japan that the U.S. will stay. If you don't give them confidence, they might rearm, and this would trigger concern in China.

Donlon: How do you expect China to develop?

Goh: In the next 20 to 30 years, China will increasingly become a responsible member of the international community. If China does otherwise, it will be isolated from the rest of the world. China's priority now is to develop its economy, and it needs investments from the U.S. and Europe. However, once China arrives, it may put more resources to military spending. Whether it spends more will partly depend on the Taiwan issue. If China decides to peg its military capability to the U.S.'s, the whole region will be in trouble.

Wong Kok Siew (SembCorp): For Singapore firms, it's also been difficult to make money from China.

Seah: China is the wild card, but how do U.S. businesses see Hong Kong?

Eduardo Castro-Wright (Honeywell Asia Pacific) We recently made the decision to move our regional headquarters from Hong Kong to Beijing, China. Hong Kong needs to releverage on its creativity and entrepreneurship. It lacks talent in fields like engineering technology.

Robert Campbell (Deloitte Touche Tohmatsu): In post-1997, American companies do not see Hong Kong changing too much. However, Hong Kong may face an identity crisis.

Donlon: There's still a strong entrepreneurial spirit in Hong Kong that Singapore doesn't have.

Terence Crouch (IMI Cornelius): Yet Hong Kong's recent policy to stop teaching English in its schools is a setback for its competitiveness.

Rudolph Schlais, Jr. (General Motors Asia Pacific): For us, Hong Kong plays an extremely important role as an eye between Taiwan and China.

Goh: China would favor Shanghai as the financial hub for China. However, Hong Kongers are clever people and, with their entrepreneurial ingenuity, will probably carve out another niche.

ASIA RESTRUCTURES

Lim Hng Kiang, Singapore's Minister of National Development, led a discussion about Singapore's role in the region's recovery.

Lim: As societies move from an agricultural base to an industrialized society, there's a tremendous increase in productivity, and that translates to economic growth. Many countries in Asia are undergoing this transformation. The financial crisis in the last two years has disrupted this change, but the overall trend is still there. The only way Singapore can contribute to the recovery is to put our own economy on a stable basis. First, we must make sure our currency, costs, and interest rates are not out of sync with what's happening in the rest of the world. We do not try to support the Singapore dollar artificially; neither are we devaluing it artificially. We let the market adjust so that today the Singapore dollar is 15 to 17 percent lower compared to the U.S. dollar since July '97. We are comfortable with this level.

Second, we also recognize that this adjustment process is sticky. That's why the labor unions, the businesses, and the government together put forward a package to bring the cost of business in Singapore down by between 10 percent to 15 percent across the board, not just in wages and statutory contributions, but also in government charges, costs, utilities, power, and telecom charges. We have also recalibrated our fiscal policy. Last year we came up with two off-budget adjustments - one in June and another in November - to resuscitate the economy. Going forward, this year our budget is in the deficit to the tune of 3.5 percent of GDP. This is a comfortable level, as we expect the economy to recover towards the end of this year so that next year the budget can return back to its typical budget surplus position.

Third, we undertook important structural changes. We recognize we have to be more competitive. We have made fairly significant changes in liberalizing our financial sector over the last two years, and we intend to do so going forward. We are training our older workers and investing heavily in the education of our young. By next year we will have one computer for every kid in school.

The first thing we have to do in Singapore is to get our act right. The second is to help our neighbors while recognizing Singapore is only 3 million people, whereas Indonesia, for example, is more than 200 million. We try our best. We prefer to extend help on a multilateral basis, and there must be conditions involved because we have to answer to our electorate about why public funds are being extended to other countries during this period of difficulties. Also, we want the assistance to be in an effective way that helps to resuscitate economic activities.

S. Dhanabalan (Development Bank of Singapore): We do see quite a gap between the best practices in Singapore, which again is behind the best practices in the world, and the best practices in the other countries around us. So where we can team up with institutions and banks in the other countries we would like to do so on a commercial basis. It's not just a question of assistance but of joining with them to improve their approach to businesses so that both we and they can benefit. As we recover from the present economic crisis, what will emerge in Asia will be leaner institutions, companies, and economies. And as far as Singapore is concerned, that means a lot of investment in education - not only educating people in the schools now but reeducating and retraining those in the workforce. It is no longer possible for a person to come out of school, get a job, and be at that job until he retires. In a man's life he probably will do at least two or three different types of jobs, and that requires investment in retraining.

Seah: Singapore's ability to withstand the regional turmoil over the last two years attests to the fact that our systems, rules, and regulations - while not necessarily of world class standard, are far superior to our neighbors'. The region needs infrastructure and financing development.

Stephen Lee (Great Malaysia Textile Mfg.): From the regional manufacturing point of view, we've seen an opening to go into financial raw material. There were confident factories in Thailand and Indonesia, and to a lesser extent Malaysia, but because of the financial crisis, the critical link in the chain that broke first was finding hard currency to finance imported raw materials. So there was an opportunity for us to pick up manufacturing capacity at very competitive prices if we could finance the raw material. We do it out of business opportunity, not charity - but it keeps jobs for the host country.

Lim: Companies made the best decisions possible for themselves given the situation that arose since the crisis. Prior to the crisis, China had the competitive advantage in terms of manufacturing in the electronic industry. Today, it is much cheaper to operate in Malaysia and in Thailand than in China. As a result, the investment flows are beginning to change. U.S. companies are telling their suppliers in Asia, "Look, the cost structure is so much lower, I want you to build this product in Malaysia," because from the customer's perspective, he's not putting in the capital, he is forcing his supplier to put in the capital and give him a Malaysian cost structure. As a result, there is an increasing flow of technology and electronics investments into Malaysia and Thailand.

Donlon: The conventional wisdom is that Asia cannot recover till Japan revives its economic engine pushing the region.

Koh Boon Hwee (Wuthelam Group): In the technology industry, most of the suppliers here are more tightly linked to the U.S. than to Japan, because Japan's dominance is primarily in consumer electronics and those of us who are operating from, say, Singapore, long ago were priced out of that market. So any recovery in Japan can only be helpful, but I don't think it will necessarily be the single most important determinant.

Campbell: We've found changing expectations of the accounting profession as a result of the crisis. There's been a need to provide restructuring and corporate finance to countries where we traditionally provided just accounting and tax services, so we have had to invest significantly in the region to respond to the new challenges and change the nature of business significantly as a result.

Donlon: What about the recent downward trend in productivity in Singapore?

Cheng Wai Keung (Wing Tai Holdings): We are driving to a knowledge-based economy, and the government is investing in both IT and infrastructure re-education or continuous training. In the past, English has been the commercial language. Computers will probably be the business language of the future. And Singapore is geared up for that. Singapore has been a country for international trade because we are an English-speaking population. In the 21st century, we will be far ahead of other countries as the computer-language population. Also, sometimes we look at Asia thinking that all countries in this region are the same, but each is affected differently; so we have to look at the basic fundamental strength of each individual country and assign risk assessments.

Lee: Regarding last year's negative productivity growth, when demand falters we should compensate and retrench, but in reality we don't get rid of the corresponding number of people. So because the drop in demand affects figures, productivity went down because we use more workers to produce less. In the last recession, we saw a time lapse on productivity and then the following year we had higher productivity because firms started shedding workers. So perhaps that explains the short-term effect.

Lim: We are trying to achieve 4 percent to 6 percent long-term sustainable growth for the economy. The population is not growing by more than 1 percent a year. The rest of that macro group must come from growth in productivity - knowledge, networking, adding value to whatever we do, and new sectors of growth in the economy, whether in financial services, IT, or other services.

Khor: Singapore has enjoyed about 2 percent to 2.5 percent productivity growth for the last 10 years. But as you get closer to the frontier, that gets harder to sustain. I think that's the kind of potential you see in countries like China today - where they have a massive amount of labor and we just put them to better use. But for countries like Singapore, which has already become much more developed, it's going to get harder if we don't step up our investment in R&D, education, and training.

Patrick Kelly (PSS/World Medical): In a knowledge-based economy, as you bring your constituents on-line technologywise, the measurements of productivity are changing dramatically. A year ago, when you would have a hip replacement, you were convalescing for 60 days and couldn't produce anything. Today, you have a hip replacement and you're at work the next day. As a health care provider in America and Europe, I was ecstatic about some information that came out of the EDB today - claiming that Asia accounts for 34 percent of total worldwide health care expenditure - and that statistic is going to 45 percent in the year 2005. So there's a big opportunity.

Lim: As people get more affluent, they will want better health care. In many Asian societies the per capita of the country may be low, but there's a growing middle class group. Health care would be one of the key priority items in this middle-class group, who will come to Singapore seeking medical services.

Castro-Wright: Not often measured today, because of the major volume of business in the area is the shift toward outsourcing - of basic engineering work, for example - to low-cost centers, such as India. The cost of basic engineering services in Singapore is four to five times what it would be in India or China.

Lim: The way we see it from the Singapore government is to provide the framework to facilitate the businesses. We try to encourage companies on their own or in joint ventures to go into the region and tap into these resources there. We bring talent into Singapore, mostly from India and China. We all recognize that this is the talent that you can draw, although we pay a big political price in trying to explain to the Singaporeans that this is necessary to be more competitive. We have been doing this for the last three years. This is something we are trying to encourage our population to embrace as a competitive element for the future.

Norman Livingstone (American Standard Thailand): Is it safe to say that in the last 10 or 15 years, investors who made investments in Asia didn't manage those investments with the same fear that they might have had in other parts of the world, and when the crisis occurred, many were shocked that we're experiencing the difficulties we are experiencing now? What will enable investors to regain global confidence of the Asian community?

Lim: There were excesses, but by and large those who have invested in Asia have done so sensibly. I don't think those who are in it for the long tenn were much discouraged by this recent episode; they see the potential, they see their returns, and they are in it for the long term. That's my guess. Maybe those in different industries may have different experiences.

Green: The investment community is looking for changes in terms of corporate governance and transparency and other types of protection to create a more even playing field. If any major blemish has been exposed, that's certainly been it. Those countries that do have corporate governance and are looking to create a more even playing field are re-attracting capital. That's going to be necessary to win long-term investment.

Kangas: It's interesting that Central Europe - Hungary, Czech Republic, Poland, etc. - has not had those problems, and there's no indication that they will. The fundamental difference is that those countries are sound in terms of financial affairs. They have sound codes of commercial law and core systems so they will resolve those kinds of problems. They have sound regulation of the financial markets and stock exchanges with the appropriate oversight and regulatory supervision. They have transparency, sound accounting standards, sound recording standards, appropriate use of independent CPAs to audit all public trading companies, appropriate disclosure, and the use of boards of directors and audit committees to properly oversee what has taken place. They have a banking system that is properly regulated with a group of bankers who are properly trained and in fact read financial statements. You put that infrastructure in place and systems don't collapse. Singapore systems are reasonably strong. Korea has made major changes in this arena, and you can already see the results. Thailand is trying with great difficulty, imposing bankruptcy regulation, trying to change their systems. People in the West are still concerned about Indonesia, about Malaysia, and the jury's really still out on Thailand. Singapore has done the things. The question is: Will we get the rest of these nations to put the safety net and the infrastructure in place to ensure that this problem isn't going to happen again.

A Who's Who of Roundtable Participants

Robert A. Campbell is regional managing partner and chief executive in the Asia Pacific region for Deloitte Touche Tohmatsu, a $9 billion global professional services firm.

Eduardo Castro-Wright is president of Hong Kong-based Honeywell Asia Pacific, part of Honeywell, an $8.4 billion provider of control components, products, systems, and services.

Cheng Wai Keung is chairman of Singapore-based Wing Tai Holdings, and real estate, manufacturing, retailing, and investment company with assets of $3.42 billion.

Terence Crouch is managing director of the Asia Pacific region for IMI Cornelius, the beverage dispensing systems division of U.K.'s IMI plc.

Nicholas de Boursac is a managing director, and head of the corporate banking group in Singapore, of The Chase Manhattan Bank, a financial services provider.

S. Dhanabalan is chairman of Singapore-based Development Bank of Singapore, a full service bank with assets of approximately $58.2 billion.

Michael J.F. Gillespie is president of Lincoln Electric Asia Pacific, responsible for the region's sales and manufacturing operations of Cleveland, OH-based Lincoln Electric, a $1.18 billion machinery and equipment company.

Gerald M. Glenn is chairman, president, and chief executive of Plainfield, IL-based Chicago Bridge and Iron Co., a $775.7 million global engineering and construction company.

Goh Chok Tong is the prime minister of the Republic of Singapore. Lim Hng Kiang is Singapore's minister for national development and second minister for finance. Khor Hoe Ee is the senior executive director of economics of the Monetary Authority of Singapore.

Steven Jay Green is the U.S. ambassador to the Republic of Singapore. Jonathan Bensky is counselor for commercial affairs; Stephen J. Helgesen is first secretary-commercial affairs; and Herbert W. Schulz is deputy chief of mission at the U.S. Embassy in Singapore.

Mark W. Grobmyer is chairman and chief executive of Little Rock, AR-based ICS, which specializes in a wide range of international commercial services.

Ho Kwon Ping is president of Singapore-based Wah Chang/Tai Wah Group, a regional conglomerate of companies engaged in hotels and property management and development, and agriculture and food products.

E.J. "Jay" Holm is chief executive of Australia's Epic Energy, a $213.2 million gas transmission company.

Edward A. Kangas is chairman of Deloitte Touche Tohmatsu, a $9 billion global professional services firm.

Patrick C. Kelly is chairman and chief executive of Jacksonville, FL-based PSS/World Medical, a $1.3 billion distributor of medical supplies, equipment, and pharmaceuticals.

Koh Boon Hwee is executive chairman of Singapore-based Wuthelam Group, a $1 billion corporation with businesses in paints, real estate, and electronics.

David J. Law-Smith is chairman, president, and chief executive of Singapore-based Caltex Corp., a $14 billion oil refining, trading, transportation, and marketing company.

Stephen Lee is managing director of Singapore-based Great Malaysia Textile Mfg. Co., a textile manufacturer.

Norman Livingstone is chief executive of Bangkok-based American Standard Thailand, a joint venture between Thai businessmen and American Standard, a $6.7 billion manufacturer of air conditioning and plumbing equipment.

Po'ad Mattar is managing partner and chief executive in Singapore for Deloitte & Touche, a $9 billion global professional services firm.

John T. Olds is vice chairman and chief executive of Singapore-based DBS Bank, a full service bank with assets of approximately $58.2 billion.

Bernard G. Rethore is chairman, president, and chief executive of Dallas, TX-based Flowserve Corp., a $1.2 billion provider of industrial flow management services worldwide.

Rudolph A. Schlais, Jr., is president of Singapore-based General Motors Asia Pacific, as well as vice president and group executive of General Motors, a $161.3 billion maker of cars and trucks.

Peter Seah Lim Huat is president and chief executive of Singapore-based Overseas Union Bank, a leading regional bank with over $25.5 billion in assets.

Andre Sekulic is president for the Asia Pacific region for MasterCard International, a $1.23 billion global payments organization.

Richard Vissers is president and chief executive of Wilmington, DE-based CTS Corp., a $500 million software company specializing in bulk fare, business-to-business travel.

Wong Kok Siew is president and chief executive of Singapore-based SembCorp Industries, a $2.3 billion engineering and infrastructure group.

RELATED ARTICLE: EXPORT: NOT JUST FOR THE BIG GUYS ANYMORE

Steven Jay Green, U.S. Ambassador to Singapore, discussed Singapore's potential as Southeast Asia's marke hub.

We've been talking about the way business was done in the past and the way business is being done today, but the real question is how it will be done in the future. Those of us who see things today we couldn't even have imagined five years ago will see things five years from now we can't imagine today. The U.S. business community has an opportunity to help reshape the way business is done and will be done in the future in emerging markets, and in particular in southeast Asia.

One way that will happen is through technology. Technology is changing the rules of business. We've already seen companies with more than $10 billion in market capitalization, with practically no fixed assets and no earnings.

Since 1992, companies with 500 employees or less created 12 million jobs in the U.S. At the same time, there was a net loss of 650,000 jobs in companies with 500 or more employees. So the U.S.'s economic miracle was driven by small and medium-sized enterprises (SMEs). Unfortunately, SMEs remain largely disenfranchised from the benefits of globalization. SMEs employ 53 percent of the U.S. workforce; they account for a whopping 97 percent of the 13 million active U.S. corporations; yet they contribute just under 30 percent of the value of exported goods. The opportunity to enfranchise that and to connect these SMEs all through the emerging markets and in particular this region will be an enormous factor in how business is done in the future.

It's technology that will allow that to happen. Five years ago, I might have agreed that it was impractical for most U.S. SMEs to engage Asian markets. The Internet was a relatively new phenomenon, and transportation and delivery systems throughout the world were underdeveloped. Today it's a different story.

Looking ahead, tremendous opportunities will be available to U.S. businesses through advanced technology. U.S. companies are placing their regional headquarters in Singapore because of its commercial links to the rest of Asia. Today, you can order a product in Singapore that's manufactured in Wisconsin and have it here in two days on Federal Express or UPS. That's going to dramatically change opportunities in Asia.

Physical size may not matter so much in the future. Smaller countries like Singapore, which can position themselves to adapt to change and embrace new technology will have the potential to develop into commercial leaders. Singapore has good corporate governance and bankruptcy laws and a credible and fair judiciary to execute them.

To be successful exporters, SMEs need to understand overseas markets so they can tailor their design, production, and marketing efforts. They need local contacts - perhaps even business partners - who understand the market, the regulatory environment, and can tap existing distribution and delivery systems within these markets.

In August of last year, the Singapore-U.S. Business Council was set up in part to help U.S. SMEs invest in Asia by collaborating with Singapore companies. As a regional hub, Singapore has many firms with established networks that can provide access and delivery to the region's markets.

Singapore also aspires to be a service-oriented, financial and commercial hub for Southeast Asia in the 21st century. To accomplish this, its leadership realizes that Singapore must bring in more foreign expertise, embrace change created by technology, and establish a legal framework in which e-commerce can work effectively.

The U.S. and the U.S.'s business community are going to be in the forefront of that. How we choose to deal with it will make a significant difference to business in this region.

RELATED ARTICLE: SINGAPORE BOUND

Formerly based outside Dallas, TX, Caltex Corp. decided to relocate its headquarters to Singapore in 1998 to be closer to its predominantly Asia-Pacific customers. David J. Law-Smith, chief executive, explained the rationale behind choosing Singapore over other possible locations, including Hong Kong, China, and Kuala Lumpur - and how the move has affected Caltex.

When you select a headquarters location, you're likely to be dominated by the environment around you. One of the reasons we chose Singapore is that unlike China, it's so small that you don't really risk being overwhelmed by the local environment in the same way.

"Another really impressive thing is its ability to be neutral and its willingness to work with businesses, which make it more of a level playing field for foreign companies. The government here is responsive to suggestions and criticisms. For example, one of the things that we asked for and got that was very important - particularly on an island where real estate is limited - was the right to own one's own land."

"A few things have hit me since we've been here, one of which is that there's a certain sophistication of infrastructure at higher levels. Yet, below a certain level, overall productivity isn't as strong as it should be and a lot of tasks are still being handled manually. When I walk through my office, I'm astounded by the amount of paper floating around.

"Also this is not an inexpensive place to do business. There might be certain tax advantages in Hong Kong that don't exist here."

RELATED ARTICLE: SINGAPORE SUMMARIES

At a luncheon at the Singapore Cricket Club, representatives from the Singapore Ministry of Foreign Affairs briefed symposium participants on the revitalization of Asia. Their comments are excerpted below. Also in attendance were Tan Tee How, principal private secretary to the prime minister; Khor Hoe Ee, senior executive director of the monetary authority of Singapore; Syed Noureddin, assistant director of the ministry of foreign affairs; and Lim Lee, country officer of the ministry of foreign affairs.

Alan Chan (Deputy Secretary): Singapore is a small country, so there is only so much we can do to help our neighbors through this crisis. But one way is in the form of joint investments. If a friend from Texas is to start a factory in the Southeast Asia region, and it is a good project, we are prepared to be a minority shareholder. With the sensitivity of our neighbors we cannot be waving the flags too much, but we can bear the risk together with you and help you in entering these neighboring countries and establishing yourselves in these markets.

Ho Meng Kit (Deputy Secretary, MTI): The medium-term outlook for ASEAN remains good, but in the short term, of course, there are difficulties for our neighbors to get through. ASEAN remains committed in further trade liberalization and further investment liberalization. We are very serious about wanting foreign capital back into this part of the world and very serious in wanting to partner with American businesses to further their business in this part of the world.

We must be a bit more specific in terms of collaboration because the U.S. is a large and diverse economy, and there are only some areas of mutual interest. Certainly we are not in the agricultural or resource extraction industry. But if we can narrow down to specific centers, we can find ways to collaborate. We have identified a few industries where we could collaborate our industries - manufacturing, IT, the life sciences area.

Tay Thiam Peng (Deputy CEO of TDB): For us the initiative to wire every home for broadband connection to the Internet is very much a leap of faith because a lot of service applications are not yet commercially viable. But we believe that the areas of information technology, knowledge management, knowledge dissemination, leveraging of knowledge, will be key areas in a new economy - and we want to be a part of that. We are changing our mindset to see intellectual property as being as important as physical property. So whether it's the education system, business-to-business applications, business-to-home applications - we want to be prepared to become the hub of such services.

Bilahari Kausikan (Deputy Secretary/Southeast Asia): Regarding the decline in productivity in Singapore, we are still, after all, a developing country, and the infrastructure you see around can be a little bit deceptive. There is a very high level of sophistication at the top, but beneath the strata the mass population is still that of a developing country.