Singapore shares Asia's economic woes Potential hostility from Malaysia, Indonesia looms over city-state


SINGAPORE -- There has always been an element of fear -- some would say paranoia -- in Singapore's 30-year effort to become one of the world's most prosperous nations.

Few expected the predominantly Chinese island state to survive after it was cut loose from Malaysia in 1965. With few resources and occasionally hostile neighbors, the fear of failure became a major motivator for Singapore's hard-working population.

That fear also helps explain why the tiny country of 3.2 million people maintains a 300,000-strong military, including 250,000 reservists, and a paternalistic government that discourages political opposition and public criticism.

Some of the fear faded as Singapore transformed itself into one of Asia's most prosperous cities. The Asian economic miracle did wonders for Singapore's confidence.

No more. The economic contagion sweeping across Asia has spread to Singapore Inc. And to some extent, the fear is back.

In the past three months, more than 14,000 Singaporeans have lost their jobs, bringing total unemployed to more than 30,000 in a city that for years had to import thousands of foreign workers. Property values have plummeted more than 30 percent in the past six months. Tourism has fallen, while domestic consumption and investment have weakened.

In addition to the economic fallout, Singaporeans may have to confront a host of new security concerns.

To the north, Malaysia is struggling with continuing political turmoil brought on by the economic crisis and Prime Minister Mahathir Mohamad's sacking of his deputy, Anwar Ibrahim.

To the south, Indonesia's 200 million people are facing severe food shortages, skyrocketing consumer prices, massive unemployment and continuing political uncertainty as new President B. J. Habibie tries to consolidate control.

Some analysts fear further disintegration in Indonesia could lead to a Yugoslavia-style breakup of the far-flung island nation, posing a security threat to Singapore and some of the most strategic sea lanes in the world.

Deputy Prime Minister Lee Hsien Loong said in an interview that further instability in Indonesia would affect the rest of the region.

"This happened in the 1960s before Suharto took over," he said. "Then, the center didn't really hold, leaving the outlying parts of the country to do their own thing.

"We will have problems, like illegal immigration and piracy. There will be a climate of uncertainty and unease which will affect the whole region. But I don't think it will be a military problem. It's not that sort of situation."

A Ministry of Defense official agreed. "Everybody is worried that there could be a mass exodus of boat people, refugees flooding our shores," said Chua Siew San, deputy secretary for policy. "We could also see an increase in piracy."

From a security standpoint, Chua said, the government of former Indonesian President Suharto was good for the region. She is not so sure about Habibie.

"Indonesia was always seen as the big guy in the neighborhood, but Suharto didn't try to intimidate anyone," she said in an interview.

Habibie, on the other hand, "doesn't like us," Chua said, because of some negative comments Lee Kuan Yew made about Habibie when it was rumored he would be named vice president by Suharto.

As to Malaysia, Singapore has a long history of tensions with the nation dating back to Kuala Lumpur's insistence on race-based quotas favoring Malays over Chinese, Chua said. Singapore officials now fear those underlying tensions will be exacerbated by Mahathir's current domestic problems and lingering jealousy over Singapore's success.

Pub Date: 10/11/98

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