DPM Heng Swee Keat at the 2nd Asia New Vision Forum

Ms Hu Shuli, Chairwoman of Caixin Global and Co-chair of the Asia New Vision Forum
Ladies and gentlemen, 

Thank you, Shuli, for your introduction. I am very happy to meet everyone at this 2nd Asia New Vision Forum, and also to see how the forum has grown in size, and with your clear articulation of the vision. A vision that is about global, a vision that is about home, a vision that is about tech, and a vision that is about green.

Global Challenges

Let me first speak about the three big mega trends in the world and how it is changing – globalisation, the advancements in science and technology, and the changing demographics. And in turn, not just how each of this is important, but how they interact with one another, changing the nature of jobs, the nature of skills and the nature of income and wealth distribution. And in turn, the stresses that these are causing not just in Asia, but around the world. 

Now to look at where we are today in the first 24 years of the 21st Century, it is useful to look back at the last century. The 20th Century had unfortunately been marked by two World Wars. And following the World Wars, by the very fierce competition between a Soviet-led USSR and Eastern European countries, and an American-led Western modern. Around the period of World War II,  we had Bretton Woods Institutions, IMF, World Bank, and GATS – the General Agreement on Trade in Services – which then evolved into the World Trade Organisation (WTO). And following that period, there was a period of globalisation, and I would say global prosperity.  The fall of the Berlin wall, and Mr Deng Xiaoping’s reform and the opening of China in 1978 essentially changed the global economic landscape. I think China’s entry into the WTO is one of the biggest events in history. I was fortunate to be at Doha to witness this moment, as well as the launch of the Doha Development Round. 

But when you look at what has happened since, there has been essentially very little movement in terms of further globalisation. But on the other hand, China’s entry into the world economy and the entry of many other countries have really ushered in a very different period of globalisation. China is now the second largest economy in the world, and if you go by Purchasing Power Parity (PPP) terms, the largest. In the case of Singapore, I would say that we are a microcosm of all these developments. 

The 20th Century was also a period of decolonisation in many parts of the world. Colonial governments were overthrown, or they gave up, and you have many more new nations born out of that decolonisation process. Now Singapore became independent in 1965 and I was glad that Mr Lee Kuan Yew, Dr Goh Kheng Swee, and our first generation of leaders decided to embrace globalisation, decided to bring in US, Japan and Europe to help us jumpstart the economy. And when the Asian region started to develop, Singapore embarked on the regionalisation strategy, so from being one of the ‘Four Dragons’ and later on joined by the ‘Tigers’ in Asia, I think the Asian region has grown very significantly in economic contribution in the world. Millions of people have been lifted out of poverty, particularly in China and many parts of Asia. And I think we had a fairly good run in the last maybe 30 to 40 years, and Singapore is a witness to that, the beneficiary of that good run. But today, I think we are in a state of the world where things are very different. 

First, there is a backlash against globalisation, because globalisation is just very stressful for many. If you benefit from globalisation because you are able to shop for a cheaper good that is produced in Asia, you are not likely to say thanks to globalisation, I now have cheaper goods. But if I lose my job because of globalisation, I may begin to blame others. Therefore, a political rhetoric – that I will bring the jobs back to you, and do not worry, because you have been treated unfairly – resonates deeply with voters. And in countries where voting is critical, it is a very negative force against globalisation. 

Now the other big change that has happened is science and technology. We would not be here today if not for the mRNA vaccine against COVID-19, produced in nine months – a world record. The pandemic has shown us the huge advances in science and technology. Of course, we also have the advances in digitalisation, the use of blockchain for a whole variety of transactions. Digitalisation of almost everything is going to be a big theme in the coming years. And on top of digitalisation, you now have the next wave, which is AI. And AI is going to be a general-purpose technology that is going to affect every sector of the economy and of our society. It has got tremendous potential but can also cause big harm. 

Now the other big change in the science and technology area is biotech and the whole development, our understanding of genetics has now allowed us to develop new treatment methods. So mRNA is one big area, but beyond mRNA, cell and gene therapy is another big change. The biotech revolution is also going to be a major change. In turn, this will lead to rising lifespan. But rising lifespan does not mean rising healthspan. An American research shows that the last 10 years of everyone’s life is spent in some kind of a chronic condition. 

So the question is, “How can we stay healthier for longer and stay active?” I was just speaking to some of you earlier about the rise of Alzheimer’s disease, dementia and so on in many parts of the world, but particularly, in Asia and China. That is going to have a huge impact on finances, and on how we deal with this. It would be particularly stressful for countries with a rapidly ageing population, such as China. For example, because of the one child policy, if both your parents and parents-in-law have dementia, it is going to be a huge burden. These are issues that we will have to really think hard about. How do we resolve this? 

The other is the green revolution. I think climate change is real and we do need to do our part to tackle this. And in that regard, I must say that China has made very significant progress in this area. Solar power, hydro and now electric vehicles (EV). And the world is also searching for new sources of energy. I understand that researchers around the world, including in the US, UK and China are working to develop fusion energy. So, the second major theme is really about how science and technology and innovation is going to reshape the world in very significant ways.

The third big theme is ageing. In developed OECD countries, the average lifespan has gone up a lot and will continue to rise. At the same time,  pension funds are going to be under tremendous pressure, because the calculations , particularly of a defined benefit system, is going to be broken. How do you deal with this? And after the Global Financial Crisis, we have ultra-low interest rates. So how do you deal with that, when pension funds were projecting on certain rates of return. And if the world deglobalizes and returns for companies go down, I think this problem will be even worse in the coming years. 

The ageing issue and its impact will have a tremendous effect on many societies. And in Asia, the countries which are ageing rapidly – China, Japan, South Korea, Singapore, Thailand, and it is important for us to come together to see how we can tackle the many dimensions to this ageing challenge. 

Jobs are changing so rapidly, to think that we will have a job for life is no longer valid. And companies that promises a job for life, find that there are great difficulties. What it means for the individual is that it will be very stressful too. Because you are no longer guaranteed that after you graduate from your school, you have a job for life. So, continuous learning, relearning and unlearning is going to be the norm. But this also means that it will be very stressful, and especially when you have to take care of your parents and children. This is a reason why in many of the developed countries, including in Singapore and South Korea, fertility rate has been going down . This is going to compound the problem because it makes the demographic problem even worse.  

I think the stresses of globalisation is one aspect. The other aspect is the rise of the internet and in particular the rise of social media. If you look at the mental health conditions of young people today all around the world, but particularly in countries for which internet usage is very high, mental health challenges among young people is rising. I asked a very prominent American researcher what he thought were the likely causes. His number one reason was social media, because you now begin to compare yourself with other people in ways that you were not able to before. Someone has a nicer dress, someone looks a little better, and so on. The stress on the teenager is enormous. I think it is a very stressful time for the world. 

Of course with the internet, you also have fake news. The Singapore government had to take action against someone who asked others not to take the COVID vaccination because it was going to kill you. 

The other stress that all of us, all societies will face is the rising healthcare cost, both on the part of the government and on part of the individuals. So, we have to rethink what it means to live longer and to work longer, to save more money and to take care of our own healthcare costs. 

So those are going to be major stresses. At the same time, the world also has very uneven development because economic migrant issues are prominent everywhere. The US-Mexico border problem is just one facet of it. In the EU, this free movement of labour is causing a lot of stresses in many countries. This acceptance of refugees from other countries is causing societies to be quite polarised. How do we be humane and accept refugee, but at the same time keep your society together. You see riots even in very developed societies in Europe. 

Finally, I think the more interlinked our economies are, the greater the risk of financial instability. Our financial markets and economic systems are far more interlinked today than it has ever been. We have been through the Asian financial crisis, the Global Financial Crisis, and the COVID crisis. While we got through the COVID crisis reasonably well, but governments have put in huge stimulus to get the economy back. How are we going to pay for that stimulus in the coming years? It is an issue that has not been resolved. Those are some of the problems.

Asian Solutions

Let me say something about Asia’s solutions. My own view is that if there are global challenges, we need global solutions. It is important for us to bring the world together. It is a more fragmented word than it was 30 to 40 years ago, but it is important for us to deal with common problems through cooperation. A good example is climate change. None of us can solve climate change on our own, but I think everyone should do our part, even Singapore. Our emission as a percentage of the global emission is less than 0.1% but we must do our part. If everybody does their part, that will be a major step towards achieving net zero targets under the Paris Agreement. The private sector can step up too 

Also, there is the issue of food security due to climate change. We have to think about alternatives, including plant-based meat, genetically engineered food and action to improve crop yield, etc. 

The other global issue that requires a global solution is managing pandemics. During COVID, everybody said “no one is safe until everyone is safe”. But once we got over COVID, everyone has forgotten that, and it is everyone for yourself. We now have Mpox that is going on in Africa, and if we are not careful, if we do not provide adequate support to the African nations in dealing with this, Mpox will spread around the world.

Third global challenge is sustainability, that we do need to each do our part on how we can deal with this sustainability issues. At the same time, Asia must also do our part and make our contribution to this. One big contribution that I think we can make is to make sure that globalisation benefits people, that we need to be more people-centred in our approach. We are not pursuing growth for growth sake, but growth in order to uplift the lives of people in our country and around the world. We are not pursuing growth at the expense of the environment. But really without growth, we do not have the resources to then get into new solutions to care for the environment. 

This balance between human needs and the planet’s needs. This balance between what we do at home and what we do abroad is something which I hope you will address in your global vision and home vision. Many of you will be speaking on this issue. 

I believe the best solution is in deepening global economic cooperation and trade relations, and while I do not foresee a major breakthrough on these fronts in the short-term, we must not lose the momentum. This is why Singapore started Free Trade Agreements, and continued to work on new ones such as Digital Economy Agreements with like-minded partners, to continue the momentum of globalisation. 

Because Singapore is a small economy, we do not threaten other big economies in any big way, and so are our ASEAN economies. The ASEAN economic community is a very important one for us to bring ASEAN closer together, but it is also not an exclusive community. We have the ASEAN-China Free Trade Agreement, ASEAN-India, ASEAN-Japan, ASEAN Korea and so on. I hope that this configuration allows us to do more. So number one, momentum for free trade.

Number two, if we want to take part in this global economy, every economy must transform. We cannot stick to our old competitive advantage and say you cannot do that because I am now a new economy, I do not want you to grow. I think that will be selfish, and not workable. It is important for us, as we develop, to look at how can other economies benefit from that growth? What is it that I can do uniquely which allows us to make a living? I think this is a message that we need to carry to every one of our businesses. 

In the last eight years, Singapore has gone through this industry transformation, where 23 sectors of the economy have gone through a lot of changes, and for which, for the first time, we had a very significant improvement in productivity per worker. Wages of workers have gone up across the board. Investing in transformation, investing in retraining, in SkillsFuture which is a major Singapore effort to train, retrain our workers, is going to be important. I am very happy that in Singapore our trade unions are not an obstacle to change. Instead, they are a partner for change, working with companies to change. 

We must also accept that however hard we try, there will also be sectors of our people who are left behind. If economic growth is going to be for the benefit of our people, we have to ask how do we support people who may be left behind? Let me just mention two things that Singapore has done, which we serve as useful reference. 

The first is, we have started a progressive wage model. Many countries have minimum wages. We decided on progressive wage because we think that there is scope to continue to improve productivity, even in manual work. So, a progressive wage model incentivises people not to take your salary for granted, that I must get this minimum, but rather I will make my contribution to increase the use of machines or other ways, to improve productivity, and I get a better wage. The progressive wage model has been implemented for a number of years, and I think the workers in those manual jobs have benefitted and are a lot happier. 

The other is that we have to take better care of our growing number of seniors. The older people in Singapore, and I will say around the world, had less education. More than half of my schoolmates failed their examinations after six years of primary school, and they did not have a chance to continue with formal education. Today, you are in the AI age. So, how do we ensure they can take part in the AI age? So, I think the biggest investment we can make is in education. At the end of the day, it is how well our people are educated, whatever your age, in order to cope with changes. 

A big change the Singapore made a few years ago is to create a Pioneer Generation Package to take care of the healthcare needs of our older people., and we also have the Merdeka Generation package to take care of our slightly younger seniors. It is very important for us to work together with our people, to take care of them and take care of these changes. 

But we can do all this, only if our economy grows and generate the resources for every one of us to be able to do that better.

Conclusion

In conclusion, I would say that as Asian countries, being so close together in this same geographical region, we should come together and discuss these solutions. 

At the same time, we must also respect that although we use the term Asia, Asia is actually hugely diverse in terms of history, culture, heritage, ways of doing things, system of governance. Respect that diversity and make the best use of it, and do not be too judgmental that one system is better or the other. To quote Mr Lee Kuan Yew, “At the end of the day, whether a system is good or not, is whether it works.” 

On that very pragmatic note, let us look for solutions that work and let us work towards the solutions. 

Thank you very much.

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