Singapore - PM Lee urges Europe to act swiftly on economic reforms

VIENTIANE: The Asia-Europe Meeting (ASEM) opens in Vientiane, Laos on Monday with Singapore Prime Minister Lee Hsien Loong urging European economies to act swiftly on their structural reforms.

Painting similarities between the Asian financial crisis in the late 1990s and the current debt crisis in Europe, Mr Lee said one takeaway from the Asian experience is that if solutions were postponed, problems would only get larger.

The ASEM started 16 years ago with the aim of bringing the two regions closer.

Past ASEM summits took place in challenging times.

For example, at the Brussels' ASEM 8 Summit in 2010, it was on the back of a global economic recovery but countries were dealing with how to achieve inclusive growth for its people.

Now here in Vientiane, it's on the back of an impending global economic slowdown and the European Union still dealing with its debt crisis.

The leaders are taking the opportunity to take stock, exchange views and hopefully devise new strategies for sustained economic growth.

At the session on economic and financial issues, Mr Lee spoke on the pressing challenges for Europe to make sovereign debt good and recapitalise troubled banks.

Mr Lee said the actions taken by the European Central Bank so far have calmed markets but only temporarily.

Key credible fiscal reforms, he said, are needed to make debts sustainable especially for the long-term.

He said European economies need to focus on underlying structural deficits and not headline fiscal deficits which reflect the economic cycle.

He added delaying the recapitalisation of banks will only lead to graver problems and political difficulties.

Addressing these urgent priorities, said Mr Lee, will buy time for more fundamental changes such as increasing labour market flexibility and restructuring the social welfare model.

The key, he said, is to convince the population that pain is necessary for the economy to come out better.

Mr Lee said Asia cannot settle Europe's problems but it can help, for example, by boosting consumption in Asia and promoting trade through bilateral Free Trade Agreements (FTA).

The EU is already in talks with Singapore, Malaysia and Vietnam for an FTA.

These deals are seen as a building block for an eventual wider EU-ASEAN FTA.

Monday's summit opening also saw ASEM formally welcoming three new members: Bangladesh, Norway and Switzerland.

This brings the group to 51 member economies -- accounting for about half of the world's GDP and some 60 per cent of global trade.

- CNA/fa

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