SINGAPORE, April 24 (Reuters) - An extradition pact between Indonesia and Singapore agreed late on Monday won't frighten rich Indonesians away from Singapore or hurt the island's property and banking sectors, Singapore senior statesman Lee Kuan Yew said on Tuesday.

"It's laughable. Do you believe that any Indonesian who was likely to be extradited would be here at all?" Lee said in an interview with Reuters.

"It does act as an inhibitor. It does give an extra barrier for any would-be escapee from their system," Lee said.

The two countries reached an agreement on the treaty after several years of wrangling over the issue, although no details were released ahead of the signing due to take place in Bali on Friday.

Indonesia has long expressed a desire for an extradition treaty with Singapore because of its concerns that some Indonesians, for example those who owed money to the authorities following the 1997-98 financial crisis, had taken refuge in the neighbouring city-state.

Lee said Singapore had very strict rules to prevent money-laundering.

Singapore is home to a large number of wealthy Indonesians. They are key players in the property market and big business for private banks.

One third of Singapore's high net-worth investors -- those with net financial assets of more than $1 million -- are of Indonesian origin, Merrill Lynch and Capgemini said in a report, adding that these 18,000 Indonesians had total assets of $87 billion.

In January, Indonesia banned sand exports to Singapore, citing environmental concerns and the need to protect its borders. Two months later, Jakarta said it was also considering banning granite chip exports to the city-state.

However, some Indonesian officials were quoted in the local media as saying the sand export ban was intended to put pressure on Singapore to speed up talks on the extradition treaty.

The sand ban has forced Singapore to look for alternative sources of sand -- including China, Vietnam and Myanmar -- to feed a construction boom.

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