This time last year the currency crisis had started in Thailand and was spreading to Indonesia and Malaysia. But no one foresaw the devastation that spread from Thailand to Indonesia, to Korea. Now Japan is in recession.

Singaporeans are worried by the worsening economy, with more retrenchments, increasing unemployment, a sharp drop in share and property prices, higher interest rates, increased burden on home owners paying mortgages, and business slowing down all round. This is the most serious crisis Prime Minister Goh and his team have faced since they took charge of the government in 1990.

Indonesia has gone through a traumatic downturn. The new President has to tackle a deepening economic crisis and at the same time resolve political pressures for democratic reforms. Malaysia is in a healthier position but its economy is being battered by the market. Both Indonesia and Malaysia expect Singapore to offer help. Frictions have increased because they expect more from us than we can deliver. We will help within our capabilities and where it can make a difference. But let us not forget that Singapore has only three million people. We know our limitations.

High morale is crucial in a crisis. Faintheartedness in the face of danger must mean disaster. This crisis has been building up for the last few months. I have seen the Prime Minister and his colleagues come under increasing pressure since January this year as the Indonesian situation deteriorated. When the Prime Minister spoke privately to community leaders at the Chinese New Year function in February - six months ago, he foresaw the troubled situation that was in store. He did what he could to avoid this unfortunate outcome but did not succeed.

Singapore’s leaders have not melted and will not wilt in this crisis. However, they need to get more people to know the problems facing us, not just community leaders, but all opinion formulators so that when they know what is at stake they will help mobilise the people. Together, leaders and people, we have to grapple with our problems firmly and decisively. This must be done without undermining confidence in Singapore and the region. Frank talk is best done in private, not in the media. More guarded language is necessary when talking publicly, but this blurs the picture.

A time of crisis is when Singaporeans, people and leaders, are put to the test. It is the duty of leaders to instil confidence in the people so that they will stand up to be counted, otherwise all is lost. No army, however brave, can win when its generals are weak. Leaders must have the ability to plan and chart the way ahead, the fortitude to stay the course, then the people will rally around them. When together they fight against all odds and win, a bond will be forged between people and leaders, like the deep unshakeable feeling of trust between an army and its generals who have been in battle together.

This was what had happened between the leaders and people of my generation, people who were in their 20s and above in the 1960s, and are now in their 50s and above. Together we faced communist threats and communal intimidation and bloody riots. We faced Confrontation and acts of terrorism together. Together we faced the insecurity caused by British withdrawal. Either we had the guts and gumption to make the grade together, or we fail together. We made it, and our shared experience forged a life long bond between that generation of leaders and people.

Troublesome times lie immediately ahead. But we have the capability and can manage these dangers. Keep our nerve, stay on a safe and steady course and we shall pull through. We have lived through more perilous days when we had less resources, and we made it.

Singaporeans have seen from this crisis how other countries have suffered because of KKN, collusion, corruption and nepotism. All the speeches in the world about the vital importance of having honest and capable leaders in charge of government cannot bring home the lesson as vividly as seeing what has happened to millions of people in countries where they did not have such leaders.

We are the resource poorest country in the region, and therefore we cannot afford to be other than honest, efficient and capable if we are to stay out of trouble.

Keep our economy competitive by keeping costs down. Do everything possible which is within our power domestically to make ourselves competitive. We will have a budget deficit this year, next year, and maybe the year after. We have to bring all major infrastructure projects forward. Though they will not be immediately needed, they will generate increased economic activity.

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