The rapid development of the regional crisis and the regional outlook for 1998 contains two important lessons for Singapore.

First, even while the external environment appears favourable, things can deteriorate rapidly. We cannot assume that the external environment will remain benign forever. We should never be complacent. Policy vigilance is necessary. We must save and invest wisely in good times, to build up a deep and firm economic foundation.

Second, the regional crisis has reaffirmed the importance of preserving and instilling confidence internationally and domestically for continued stability and economic growth. International and domestic investors determine demand, investment and hence the level of business activity. The Government must therefore build up the confidence and trust of investors through credible, consistent and pro-growth policies

During crises, we must be responsive and ready to effect rational measures judiciously and promptly to restore market confidence.