can afford a certain amount of very long - term infrastructure projects which may not offer attractive financial returns. in indonesia, abdurrahman wahid has just been elected as the fourth president, with megawati as vice - president, in indonesia ’ s first truly democratic presidential election in over thirty years. it is a good outcome, after two traumatic years of upheaval and chaos. but the road ahead for indonesia is not easy. the new government faces many urgent priorities. it must work out a new political balance, redefine the role of the military, lay the basis of a civil society, and strengthen the rule of law. then confidence will return and the economy will revive. in this arduous task of national reconstruction and reconciliation, indonesia has the good wishes and support of its neighbours, including singapore. north east asia in north east asia, japan is finally recovering from its prolonged recession. public investment, private consumption and housing investments are all improving. we are also starting to see real financial and corporate restructuring in japan. sony, nissan and ntt have recently announced sizeable cuts in their workforces2 – a significant departure from the lifetime employment system. and following the big bang measures, japanese banks are merging, even across different keiretsu groups, forming two of the world ’ s largest banking groups. 3 there has also been a wave of strategic alliances between japanese and foreign financial institutions. 4 the government has nationalised three commercial banks and absorbed three others into the state - owned krung thai bank. four commercial banks have been sold to foreign investors thus far. sony, nissan and ntt have planned to slash 17, 000, 21, 000 and 20, 000 jobs, respectively. other japanese corporations such as nec and hitachi have also announced large layoff plans. the daiichi - kangyo, fuji and ibj group, and the sumitomo - sakura group. including travellers group and nikko securities, daiichi kangyo bank and j p morgan, and goldman sachs and socgen with ibj and nomura. in korea, financial sector restructuring is generally on track. korea took a hands - on approach. the government aggressively bought and disposed of the non - performing loans in the financial system. it pushed for bank recapitalisation. forced closures, mergers and acquisitions have removed many weak institutions from the financial sector. korea is also pressing for reform and restructuring of the chaebols. this will take time, effort and political will,

##ans today are more educated, better informed, and keen to take part in the national debate. the government is adapting its style and approach to fit these aspirations of a new generation of citizens. our strategic challenges have not fundamentally changed. we still have to make a living for ourselves, ensure the security of our homes and families, and build a better future for our children in an uncertain world. but the way singaporeans mobilise themselves to respond creatively to these challenges has changed. the government will still play an active role, defining the issues, setting the agenda, and influencing opinions. but we also actively solicit opinions and proposals from outside the government. we are involving people much more in discussing and tackling national and community issues, whether it is managing their housing estates or reforming the financial industry. this will help strengthen singaporeans ’ sense of ownership and commitment to singapore. conclusion i have focussed on what singapore and the other asian countries are doing to get themselves back on track. but the region ’ s prospects also depend on the strategic backdrop – the relations among the major powers, namely the us, china and japan, and particularly the role of the us. we have reasons to hope that us - china relations will remain stable. the us will not want a new version of the cold war against china. and china ’ s over - riding priority for some decades to come will be to modernise and develop its economy and society, for which it needs peace and the cooperation of other countries. in the region as a whole, the us plays a vital, constructive role, moderating tensions and keeping potential flash points from boiling over. “ can asia make it? ” a year ago, many analysts and investors would have said no. the asian miracle appeared to have been an illusion, built on flimsy foundations. today, in light of the rapid economic rebound, the rank of the sceptics is thinning rapidly. my own view has been an unequivocal “ yes ”. asia will recover its former dynamism. not automatically, and not all at once ; but as countries rebuild and put things right, recovery will come. the fundamentals which supported two decades of high growth in asia have not disappeared – a sturdy work ethic and high savings rates, skilled and disciplined workforces, and an entrepreneurial culture. in time, these strengths will enable the countries to grow and progress again. the recovery will create new investment opportunities. asian governments have recognised the need