Lee Kuan Yew visits to Indonesia (2007)

July 27, 2007

Singapore’s Minister Mentor Lee Kuan Yew has brushed aside allegations that the Defence Cooperation Agreement with Indonesia would allow Singapore to infringe on Indonesia's sovereignty.

He said this during his five day visit to Jakarta which ended today. Shereena Sajeed with this report.

Singapore and Indonesia negotiated the Defence Cooperation Agreement and Extradition treaty as a package.

They were signed in April this year but the DCA has run into problems.

Some Indonesian legislators have said they'd reject it.

One legislator recently said it was akin to selling off the state to foreigners.

On this point, Mr Lee said that Singapore has been training in Indonesia for years.

"We were here by your leave and licence. In fact your president at that time, Pak Harto, told me don't be afraid to us because he knew that we're a small country. Here a big country and we afraid that we're be eaten up he said. Don't be afraid to us."

Mr Lee also stressed that the agreements must be honoured.

"We reach an agreement and I think we should stick to agreements. Otherwise, everytime you want something from us you said ‘if you don’t do this we do that’. At the end of the day you’re the very big country and we’re a little red dot. But please, give a red dot a certain breathing space. We need to have our obligation honoured.

On the Extradition Treaty, Mr Lee said Singapore's fund industry would not go into steep decline if Indonesia were to pull out the money allegedly being hidden in Singapore.

He clarified that only about 30 billion of the 890 billion dollars in foreign funds managed in Singapore is from Indonesia.

Earlier in the week, Minister Mentor Lee also met Indonesian Vice President Yusuf Kalla.

The region's economy and in particular the economy of Indonesia topped discussions during the meeting

Mr Lee told reporters that he sees Indonesia having good economic growth in the next two years.

But he added that its also important for Indonesia to make good use of the five years after that in the next presidential election.

He said Jakarta should go at the same speed as Vietnam when it comes to economic policies.

Mr Lee said the Vietnamese can push ahead very fast as they have younger leaders who have abandoned old policies and welcomed investments.

MM Lee: So Indonesia can grow as fast because it’s got a huge population underemployed, and therefore wants the labour conditions, industrial conditions put in order. I think investments can flow in. Indonesia can recover its buoyancy as before the financial crisis in 1997.

Touching on Singapore-Indonesia ties, Mr Lee described the relationship between the two economies as complementary .

MM Lee: I think nothing basically has changed. If anything the complementary nature of the two economies and the two countries is probably as strong as it ever was before. I mean we are small but we are nimble. We move swiftly and change much faster than they can change because we are a smaller craft to handle and we are connected with high-credit ratings around the world, in all the major banks in Singapore. The assessments of the Singapore fund-managers and the security agencies, I mean financial security houses is a factor in how the international financial community sees Indonesia’s growth. So we play a complementary relationship with Indonesia’s economic growth. I mean otherwise why should they say come and invest. I mean they tell us frankly if you come and invest, others will come and invest but we came and invested when they were down and out and they said sell back. We got to go in accordance with the law.

MM Lee also spoke about the importance of minimizing wastage

MM Lee: We turned around what was a loss-making into breakeven and made profits because we put financial controllers in charge which cut down wastage. That’s how it turned around. You know the Singapore model. First thing we do is to cut waste. So that’s why the Gulf States employ Singapore professionals as their financial officers. I mean you can go to any of the Gulf States, Abu Dhabi Qatar Dubai any number of CFOs are Singaporeans. One, integrity. Two, good governance. Three, cost-cutting. So we cut down a lot of wastage in the purchasing and other leakage of funds and turn it around.