Remarks at Straits Times Asia Future Summit 2022
Minister for Manpower and Second Minister for Trade and Industry Dr Tan See Leng, Raffles City Convention Centre
Mr Wong Wei Kong, Editor-in-Chief of SPH Media Trust's English, Malay, Tamil Media Group
Mr Jamie Ho, Editor of The Straits Times
Mr Sunny Quek, Head of Global Consumer Financial Services, OCBC Bank
Distinguished Guests,
Ladies and Gentlemen,
1. A very good afternoon to all of you. I am happy to have this opportunity to be here and share my thoughts on Asia and the future with you.
Uncertainties Ahead
2. Even as we emerge from the pandemic, there remain significant uncertainties for Asia. Not all is sunny and earlier on I was really heartened to hear of the degree optimism in this room. Let’s hope to continue that perpetual optimism amongst all of us.
a. Geopolitical tensions, including the war in Ukraine, and protracted supply chain disruptions have led to strong and persistent inflationary pressures, which have in turn resulted in synchronised monetary policy tightening around the world. This is likely to cause a pullback in consumption and investment spending, thus dampening growth in major economies such as the US. Any further escalations in the Russia-Ukraine conflict could lead to a further rise in food and energy prices, and exacerbate already high global inflationary pressures.
b. The World Bank has projected a slowdown in China’s GDP growth in 2022 due to its COVID-zero policy together with the property market downturn. This has China’s growth behind the rest of the Asia-Pacific region for the first time in more than three decades1.
c. Given these headwinds, the International Monetary Fund or the IMF has characterised the global economic outlook as gloomy and uncertain2.
d. Just last month, the Organisation of the Petroleum Exporting Countries (OPEC) cut its 2022 forecast for growth in world oil demand and has trimmed next year’s figures. The International Energy Agency said that this would further drive up prices and could push the global economy into recession.
3. What does this environment mean for us here in Singapore?
a. MTI has announced that based on advance estimates, the Singapore economy grew by 4.4% year-on-year in the third quarter of 2022. And this is easing slightly from the 4.5% growth in the previous quarter.
b. On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 1.5%, and this is a turnaround from the 0.2% contraction in the preceding quarter
c. Barring the materialisation of downside risks, the Singapore economy remains on track to expand by 3.0% to 4.0% for the whole year of 2022.
d. Singapore’s GDP growth in 2023 is expected to remain positive but moderate from 2022’s level, ostensibly due to the projected slowdown in the global economy.
e. Should the major economies slow down even more sharply than expected, the slowdown in our economy could be more significant than anticipated. We will continue to monitor the situation very, very closely.
Securing the future of Asia
4. That’s how we see the immediate challenges before us, as well as the global economy. But even as we tackle these challenges, we must also set our sights further to seize opportunities to secure the future of Asia for ourselves. I would like to share with you three key areas which I think will define our longer-term growth.
5. First, growth potential of Asia.
a. Asia as a region has shown much resilience during the pandemic. During the global pandemic, Asia has contracted less compared to the world economy. Asia is also expected to rebound faster.
b. Asian countries are also expected to be amongst the world’s fastest growing economies given the rise of the middle-class demand.
c. Currently, the region already makes up more than half of the world’s middle-class population and this will continue to grow rapidly over the next decade. This means that the bulk of the world’s consumer demand will soon pivot towards Asia, turning the region into an engine of growth for the global economy.
6. Our immediate region in Southeast Asia is a shining bright spot, with many growth areas that serve as opportunities for Singapore as well as the entire region. With a combined population larger than the EU and sound economic fundamentals, working collaboratively together will allow us to collectively seize the opportunities afforded by the current world order. The region’s potential is immense, and we need to partner with one other to capture these opportunities.
7. Second, climate change is the defining challenge of our time.
a. With many low-lying coastal cities exposed to floods and typhoon risk, expected increases in heat and humidity across the region, and anticipated drought in some areas and extreme precipitation in others, Asia is one of the regions most vulnerable to climate change globally3. In 2021 alone, over 57 million people were affected by climate disasters in this region4.
b. These challenges also mean that there are tremendous mitigation and adaptation opportunities here in Asia.
c. Investments in clean energy and enhancements to infrastructure to support the deployment of renewables and new energy technologies will be pivotal to mitigate the impact of climate change. Investors are increasingly accounting for climate risks as well as environmental, social and governance factors in their decision making. Economies and businesses which are early in the game in shifting towards low-carbon and sustainable solutions will have not just a clear competitive advantage but also first-mover advantages.
8. International cooperation will be the key to co-develop renewable energy sources and low-carbon solutions, facilitate cross-border electricity trading, and electricity markets collaborations.
a. This is where we will need to work closely as a region to achieve mutually beneficial outcomes, mutually win-win-win outcomes for all.
b. Since June this year, Singapore has started importing renewable energy from Laos through Thailand and Malaysia using existing interconnections.
c. This is made possible because of the collaboration of partners across different countries, supported by the Governments of the four ASEAN member states.
d. This is a major milestone and is a significant big step forward. We hope that this will serve as a pathfinder towards realising the broader ASEAN power grid vision.
e. Having a regional power grid will be beneficial for the region – not only will it help to unlock the region’s renewable energy potential, it also has the potential to catalyse economic growth by stimulating clean energy investment flows, generating new green jobs across all of these ASEAN economies.
9. Third, ladies and gentlemen, is digitalisation, which has been accelerated by the COVID-19 pandemic.
a. Digital trade and the digital economy will continue to play an increasingly important role in our economies, as we saw the acceleration of digital adoption by both businesses and consumers during the pandemic globally as well as in Asia.
b. It has transformed consumer behaviours, business models and created new opportunities and markets.
c. Indonesia, for instance saw 21 million new digital customers since the start of the pandemic, 72% of them were actually from non-metro areas5. Its digital economy is now sized at US$70 billion and is expected to grow at a Compound Annual Growth Rate of 20% to US$146 billion by 2025, just under 3 years away.
d. The outlook for Southeast Asian digital economy is on track to exceed US$363 billion which will become one of the world’s fastest growing digital markets with opportunities in areas such as e-commerce, cloud services, fintech and payments solutions for cross-border online consumption as well as in food delivery.
e. Digital technologies such as Artificial Intelligence (AI), the metaverse and Web 3.0 which are more nascent will also have the potential for businesses.
f. To ride on new growth opportunities and create certainty for businesses, Singapore has also pioneered a Network of Digital Economy Agreements or DEAs with partners including Chile, New Zealand, and Australia. The DEAs seek to establish international rules, frameworks, and standards to foster inter-operability and to facilitate seamless digital trade in areas like invoicing and payments, as well as to enable the free flow of data underpinning the digital economy.
10. All these developments will mean more opportunities and easier access for start-ups and companies around the world to tap on the strong market potential of Asia, harnessing the rising middle-class demand that I mentioned earlier.
Three Key Thrusts to Seize Opportunities
11. So, what do all these developments mean for Singapore? How do we navigate the uncertainties and seize these new opportunities for our advantage?
12. I am an optimist at heart. I have every confidence that Singapore will be able to overcome the short-term challenges and continue to make a good sustainable living and livelihoods for our people.
a. In fact, we are moving, we are growing from a position of strength, with strong fundamentals.
b. Last year, despite the challenges posed by COVID, we managed to enhance our reputation as a reliable and trusted hub for businesses and investments.
c. EDB met its medium- to long-term goal to secure investment commitments amounting to S$11.8 billion in Fixed Asset Investments and S$5.2 billion in Total Business Expenditure per annum.
d. Approximately 17,000 jobs will be created when these projects are realised.
e. This is testament to our strategic location and connectivity, our rule of law, good governance frameworks, and a highly skilled, talented and educated workforce.
13. However, these do not guarantee our continued success in the future. To remain relevant and to be firmly anchored as a key node to Asia and the world, we must continue to refresh our economic strategies. We must continue to stay open, and continue to invest significantly in our people. Allow me to share what I mean for these three broad thrusts.
14. First, we must constantly keep an eye on the future. We must constantly think and reinvent for long-term about how we can grow sustainably.
a. To this end, we have set out our economic strategies for the decade ahead under the Singapore Economy 2030 vision. This vision outlines our ambition, direction, and strategies across the key pillars of Manufacturing, Services, Trade and Enterprises. Together, these efforts will put our industries, enterprises, and workers on a firmer footing for long-term, sustainable growth.
b. To remain competitive and anchor ourselves as a global hub, we must continue to attract the best companies and top talent to Singapore, so that we can ensure dynamism and innovation in our economy. Our foreign work pass moves such as the introduction of the Overseas Networks & Expertise (ONE) Pass from next year will reinforce our global competitiveness. This will in turn help us create more opportunities for Singaporeans at every level of the workforce.
c. We have also committed to invest in infrastructure to expand our air and sea cargo capabilities.
i. The first berths at Tuas Port are now operational. By its targeted completion sometime in the 2040s, it will be the world’s largest fully automated port, almost doubling today’s volumes.
ii. We have also announced the resumption of development for Changi Airport Terminal 5. This will cater for air traffic growth and expand our air cargo handling capacities to 5.4 million tons per annum. In fact, Changi Airport Terminal 5 will be as large as Changi Airport Terminals 1, 2 and 3 combined.
iii. In addition, we have developed plans for the air cargo hub at Changi to be faster, smarter and greener with the use of data and technology.
15. Second, we will maintain our longstanding commitment to open and free trade and multilateral cooperation to keep our doors open to investors, ideas, and talent. Against the backdrop of heightened geo-political tensions, it is even more important to ensure greater integration and cooperation with our partners in Asia, and the world.
a. We will need to continue our support for multilateral institutions like the World Trade Organisation, IMF, the International Energy Agency, and the World Bank. These organisations continue to drive globalisation and multilateral cooperation to address a wide range of global issues ranging from climate change to food security, which impact all of us in the region.
b. We will continue to deepen our connectivity with the rest of the world through regional free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP)_ and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
c. The US has also signalled its commitment to strengthening its engagement of Asia, including through the Indo-Pacific Economic Framework for Prosperity or IPEF. The IPEF is a forward-looking initiative intended to go beyond traditional trade rules to address new and emerging economic issues. These include areas that resonate strongly in the region, such as the digital and green economies, and supply chain resilience.
16. Third, we will invest and develop our people. This will allow our fellow Singaporeans to excel and succeed in the careers and aspirations they choose to embark on.
a. We will invest in skills training and career health for our people, developing more Singaporean specialists and leaders across all sectors of our economy.
b. We will work with our tripartite partners to build fairer and more supportive workplaces, with the upcoming workplace fairness legislation.
17. Some Singaporeans wonder if these moves, collectively, will be enough to prevent excessive competition, widening skills gaps and rising inequalities. Many of them also wonder whether we are doing enough to ensure that we do not leave certain segments of the population behind?
18. Through the Forward Singapore Exercise, we will engage Singaporeans on these issues, so that collectively we can have a better idea of where we are today, where we want to be in the future, and how we can get there.
a. We have been and we will continue assure Singaporeans that we will walk, travel and shape this journey together – Government, community, businesses all together. No one Singaporean will have to walk this path alone.
b. In particular, the ‘Empower’ pillar on Economy and Jobs seeks to chart out the roadmap to create a brighter future for Singaporeans amidst an open economic environment of churn and competition.
c. All of our moves act in concert to equip, to empower and to assure Singaporeans and businesses, to create collectively the best chance for us to do well and seize the opportunities ahead.
Conclusion
19. To conclude, by constantly refreshing our economic strategies, by staying open, and by continually investing in our people, I am confident that we can create a vibrant global city and a society of opportunities for Singaporeans, now and in the many, many years to come.
20. And I know that this is also the case for Asia. Every country will want to build on their own strengths, to put themselves in the best position to capture the opportunities ahead. The intense competition for talent regionally and globally, such as the introduction of the “high-potential individual” visa scheme by the United Kingdom, and the Top Talent Pass scheme by Hong Kong recently, demonstrates very clearly to us that every economy is upping the ante and stepping up their game. And as their economies and people benefit from this growth, so will Asia collectively as a whole. This is why it underscores my optimism for the future of Asia.
21. On this note, I look forward to hearing your views later at our dialogue. I also wish everyone a fruitful time at the forum today. Thank you very much