SINGAPORE - The prospect of quantitative easing tapering off has forced many Asian countries to recognise their weaknesses, but despite these weaknesses, Prime Minister Lee Hsien Loong believes that the world - especially this region - is in better shape than it was before the 1997 Asian financial crisis.
He noted that banks are now more capitalised, and have kept their non-performing loans at below 3 per cent. Their external balances are also generally stronger, though countries like India, Indonesia and Thailand have slipped into deficits.
A smaller chunk of debt is now denominated in foreign currency, with external debt half of what it was, and reserves are much higher, he said.
Add to this the fact that exchange rates are more flexible and firewalls have been put in place.
Mr Lee was speaking at the opening of the Singapore Summit, a three-day gathering of officials and analysts from think tanks.
At the event at Shangri-la hotel, he said the influx of cheap money had glossed over Asian countries' weaknesses, such as excessive dependence on capital inflows, flagging current account positions and infrastructure and shortcomings in governance.
But as the possibility of the money tap closing looked more real, the leaders in Malaysia faced up to the need for their government to beef up their fiscal and macro position.
Over in Indonesia, there was acknowledgement that development hurdles had to be cleared, while the Indian government realised it needed to be more open.
Mr Lee said, however, that these were largely challenges specific to those countries, and that deeper issues were at work, shaping the future of all Asian economies.
He identified these as issues of demographics, generational change, economic and social transformation and peace and security.
How countries in the region - Singapore included - deal with them will determine how well they do over the long term.
On balance, he said, he was confident about Asia's future.
Turning to demographics, Mr Lee said that Asia was home to some of the fastest-ageing societies, which will have to find ways to support and care for their aged while maintaining economic vigour.
But Asia is also a region with youthful societies, which pose challenges of providing adequate education and creating jobs for youth who would threaten to create social and political problems if unemployed.
Generational changes will mean coping with changes in values, experiences, attitudes and aspirations that are happening faster than ever.
And technology is widening gaps between "digital natives" and "digital immigrants", with this being particularly noticeable in Asia, where people are among the world's most IT-savvy and most wired, he said.
This is a positive force, but he said he believed it still necessary to strike the right balance between the old and the new.
In economic transformation, he said major Asian economies have reached a point where existing strategies have run their course - and continuing high growth will rest on further structural changes.
There is also a need to build social safety nets to protect the vulnerable, and to update and evolve government systems and practices to keep up with changing economic and social conditions.
Mr Lee said his upbeat outlook for Asia is predicated on the region remaining peaceful and stable, "or else all bets are off".
There are potential hotspots - the various territorial disputes in the region which can blow up.
But in the longer term, he said, "the single biggest determinant of regional security is China's peaceful development and integration into the regional order".
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