DPM Heng Swee Keat at the S Rajaratnam Lecture on “Fostering Growth and Stability in an Age of Complexity”

DPM Heng Swee Keat | 30 November 2021

Speech by DPM Heng Swee Keat at the S Rajaratnam Lecture on “Fostering Growth and Stability in an Age of Complexity” on 30 Nov 2021.



Minister Vivian Balakrishnan,

2nd Minister Maliki Osman,

Your Excellencies,

Ladies and gentlemen,

Good afternoon.

I am honoured to deliver this year’s S Rajaratnam Lecture. Much has changed since the last Lecture in 2019. COVID-19 has upended the world as we knew it. Alongside a public health crisis, the global economy has been disrupted by supply chain constraints and a labour crunch. The world faced its worst economic crisis in a century. Almost two years into the crisis, we are still learning to live with the virus and the evolving situation. The emergence of the Omicron and other variants has cast further uncertainty on the road ahead. COVID-19 will not be the last disruption. Before the pandemic, structural shifts were already accelerating. New challenges and fault lines were emerging. So even as we deal with the current crisis, all nations must plan beyond the near term and work together to create a better future.

Global peace and prosperity

The global economy and international security are inextricably linked. After the Second World War, a new world order was established based on the ideals of multilateralism and the rule of law. The United Nations and other multilateral institutions were established. The General Agreement on Tariffs and Trade or GATT was formed to reduce barriers to international trade.

Despite the Cold War and several small hot wars, major powers have avoided an all-out conflict for more than 70 years. Some historians called this period the “long peace”. This “long peace” has provided the basis for unprecedented global economic integration and growth. In wars, there are winners and losers – and even then, victory often comes at a huge expense. But economic growth is not a “zero sum game” – all parties can gain collectively, as we grow the pie. Global economic integration – through GATT and, later on, the WTO – has benefited many countries. Since GATT was established, world exports increased more than 300 times. Cross-border net capital flows increased by a similar magnitude over the same period. The expansion of trade and cross-border investments enabled economic growth of an unprecedented scale all over the world.

Economic growth in turn serves as a foundation for political stability, within and between countries. Take the collapse of the Soviet Union. The Cold War was marked by a buildup of nuclear weapons on both sides, with a combined arsenal that could destroy humanity many times over. But the fall of the Iron Curtain was not precipitated by military conflict. Among the factors that led to the fall of the Soviet Union, a major reason was economic stagnation – due to a misallocation of resources, poor productivity, and the inability to innovate and modernise. On the other side of the Cold War, the US provided generous support to aid countries in recovering from the devastation of war, including through the Marshall Plan. The countries in the US-led alliance managed to provide a better life for their people.

Between countries, we have seen how greater economic integration has broken down walls and encouraged greater and more efficient flows of capital and goods. There is also a significant increase in people-to-people exchanges and the dissemination of ideas and technology. This has forged mutual understanding across countries – a better appreciation of how to work, live and trade with each other. All of these are important ingredients in maintaining peace and stability between nations.

But this virtuous cycle of peace and prosperity is now under strain. The turning point came after the Global Financial Crisis, which devastated economies and societies. Cross-border capital flows and global merchandise trade have come down from the pre-Global Financial Crisis peaks. Sovereign debt piled up as many governments ran large budget deficits, hitting unsustainable servicing levels in some countries.

Further global challenges have emerged. Technological advancements have created new opportunities for some. But they have also disrupted livelihoods and widened disparities for others. The climate crisis has become much more urgent, threatening to disrupt industries, especially carbon-intensive ones. The degradation of biodiversity is threatening food supplies, worsening poverty and hunger, especially in the least developed countries.The threat from terrorism remains high, as the influence of extremist ideologies spread online.

Adding to the growing list of global challenges is COVID-19. The pandemic has exacerbated many of these challenges. COVID-19 is another sharp reminder of how inter-connected we are across borders. With stronger economic integration, so too our inter-dependence on one another and the interwoven fate of humanity. Almost two years into the pandemic, the global economy is now on the mend, and is forecast to grow strongly this year and the next. This will help to regain the ground lost during the pandemic. But recovery is uneven across economies and industries. New variants may further complicate the process. We must work together to sustain the momentum of economic recovery and better tackle the global challenges confronting us.


Even as global economic recovery remains uncertain, strategic competition between the US and China – the two largest economies in the world – has added to the fragility of peace and prosperity. It was only twenty years ago that the US supported China’s entry into the WTO, on the mistaken belief that greater economic integration would somehow transform China politically and socially into a system more like the US. But as China’s economy and influence grew, so did doubts about this symbiotic relationship. While this was initially characterised by differences on trade, tensions have spilled into other domains. It is also worrying that voices of restraint – traditional stabilisers of the relationship – have diminished. This is partly due to disappointment felt by the US business community, who used to be advocates for greater economic ties with China. People-to-people ties have also weakened, especially after the onset of COVID-19. The blurring of lines between competitive domains – economic, technological, security and ideology – has also made it harder to find common ground for cooperation.

But as recent events have shown, it is not an impossible task. Both countries have recognised the need to work together on issues of global concern. For instance, the US and China issued a joint declaration on climate action at the recent COP-26 in Glasgow. High-level exchanges, including the recent dialogue between President Xi and President Biden, are welcome signs that both countries want to manage competition responsibly, and put in place necessary steps to ensure that the relationship stays on a stable footing.

It is imperative that the US and China come to a new equilibrium. Unlike the Cold War environment, the US and China are competing within the same inter-connected and inter-dependent economic system. The cost of decoupling will be very high. Doing so will lead to mutually assured economic value destruction. At best, neither can fulfill their maximum economic potential. There could be a regression in living standards, not only for the US and China, but also the rest of the world. At worst, economic decoupling is a slippery slope towards strategic miscalculation and a disastrous conflict.

A new equilibrium will take time. Differences cannot be bridged overnight. The US and China should not let strategic mistrust overshadow opportunities for mutual progress. In supporting China’s entry to the WTO, then-US President George Bush said that “China is a strategic competitor, but that does not mean we cannot find areas in which we can partner.” The US and China will compete where they must, but it is critical that there are safeguards in place to ensure that competition does not veer off course into conflict. Any clash between the world’s two largest economies will only be to the detriment of themselves and the world. Alongside competition, it is crucial that, they also cooperate where necessary. There are many areas of complementarity in economic development between the two largest economies which are at different stages of development. By working together to exercise global leadership to tackle shared challenges, and tapping on their vast resources of talent, capital and innovation, they can lead the charge on international progress and development. This will enable the world to better address the climate crisis and realise the UN Sustainable Development Goals by 2030.

The future is complex and uncertain, but there is opportunity to build a future for a better world.

Fostering growth and stability in an age of complexity

As with many previous S Rajaratnam lectures, the focus turns to Singapore – how can Singapore contribute in this age of complexity? What role can we play in restoring global growth and stability? Globally, the multilateral system will need to evolve and be fit for purpose. Singapore can be a pathfinder to create building blocks with like-minded partners, and generate momentum to strengthen the rules-based multilateral order. Our region, at the time of Singapore’s Independence, was marked by conflict and instability. But we are now a stable and fast-growing part of the world. We must continue to work with our neighbours to realise the region’s potential. Within Singapore, we must make globalisation work for our people and businesses. We must continue to keep our economy open and prepare our people to thrive in a more global world.

Catalysing global change through collective action. Fulfilling Southeast Asia’s potential. Making globalisation work at home. These are three ways we can contribute to building a better future. I will cover each in turn.

Create New Building Blocks

First, we must find creative ways to catalyse global change through collective action. Small states in particular feel the constraints and pressures of global challenges more than others, whether of great power competition, natural disasters and health crises, or other transnational threats. This is why we must continue to strengthen a rules-based multilateral system so that all countries, big and small, will have their voices heard and their sovereignty respected. As the world evolves, so too must the global rules and norms that govern our actions. However, the process of refreshing these rules is often protracted, especially when global leadership is being contested. Individually, each of us may not be able to shape the course of global action. But by working collectively, we do have agency, and we can create new building blocks for meaningful change.

One important area where Singapore has made an impact is global trade, especially after the Doha round stalled. Trade underpins the global economy, and is especially crucial for Singapore as we are a trading nation. In 2000, we concluded our first bilateral FTA with another small and like-minded partner – New Zealand. The Closer Economic Partnership between New Zealand and Singapore entered into force in 2001, and was upgraded last year. Building on that, Singapore and New Zealand, along with Brunei and Chile went on to start the Trans-Pacific Strategic Economic Partnership Agreement – hence establishing the P4. This eventually evolved into the CPTPP. Seven more countries joined the P4 in this expanded trade agreement, including several large economies.

The CPTPP signaled the desire for greater economic integration and the further liberalisation of trade and investment at a global level. It also pioneered commitment to higher standards in areas such as e-commerce and intellectual property rights. More economies have applied to join since, and this has catalysed momentum for global change.

Digital trade has now become a new source of economic growth. We need greater collaboration to harmonise standards, enable trusted flows of data,
and allow cross-border transactions to take place seamlessly. To advance these emerging areas, three of the P4 countries – Singapore, Chile, and New Zealand – came together to establish the Digital Economy Partnership Agreement or DEPA. DEPA is a building block for new forms of economic engagement and trade in the digital age. But more than economic advantages, DEPA has become strategically important for rallying cooperation in a period of greater fragmentation. We welcome more like-minded countries to be part of this effort to build a new consensus around the digital economy.

It is noteworthy that China has recently indicated that it wishes to join the CPTPP and DEPA. The example of P4 shows how a few determined small states can, over time, create building blocks to catalyse meaningful change in global trade. With conviction and perseverance, like-minded countries can come together to create momentum for global convergence. This approach applies as much to trade as it does to other common challenges.

Building momentum for change is one part of the equation. We must also ensure that change within the multilateral system takes on board the voices of smaller states. Thirty years ago, the Forum of Small States was established for small countries to make common cause together. This Forum has now grown to over 100 members, well over half of the UN membership, and includes both developing and developed nations. In the wake of the Global Financial Crisis, we formed the Global Governance Group – an informal grouping of small and medium states – to broaden the inclusiveness and transparency of the G20 process. When COVID-19 broke out, Singapore was an early supporter of the COVAX Facility. Together with Switzerland, we co-chair the informal Friends of COVAX Facility group to generate support for this important effort. We also worked with like-minded partners to keep supply chains open.

No country will be able to recover from this crisis alone. Like-minded countries must come together to catalyse momentum for consensus on the way forward. Building on a shared outlook, we can create new building blocks for convergence. The purpose is not to form an exclusive bloc to compete with other groups or powers, but to be pathfinders for global change. While these initiatives often start small, we must be prepared to partner all like-minded countries – big and small – to create a better future. The P4 is a clear example of how small states can exercise collective power, not just in asserting their own interests, but in a way that has a larger multiplier effect. This is a timely lesson given the geopolitical and economic challenges of today. Asymmetry in size does not equate to asymmetry in agency to catalyse substantive and positive change. We must continue to believe in our principles, and exercise this agency to build a better world.

Fulfilling ASEAN’s potential

This brings me to my second point on how Singapore can work with our neighbours to realise the region’s growth potential. Southeast Asia has come a long way since 1965. From an economic backwater, we are now a fast-growing region. Today, the ten economies of ASEAN constitute the fifth largest economy in the world. The potential for growth is significant, given the relatively young population and fast-growing middle class and the adoption of digital technology.

Southeast Asia’s economies are now much more integrated than before. There was “top down” effort from governments to facilitate the region’s integration. Starting with the ASEAN FTA, this was followed by FTAs between ASEAN and other trading partners. Recently, ASEAN and five of our FTA partners signed the Regional Comprehensive Economic Partnership or RCEP. This is the largest agreement of its kind in history. The reduction in trade barriers, and investment in physical infrastructure and connectivity, led to more foreign investments. This further integrated our economies into global value chains, driven mainly from the “bottom up” as multinational and local companies found opportunities and forged connections.

But the peace and stability that the region’s growth is built upon are not a given. The region continues to feel the pulls and strains of major power competition in the region. In his speech at the United Nations in 1965, Mr S Rajaratnam described Southeast Asia as a “battleground of big power conflicts”. The risk is still present today. For ASEAN to remain stable and prosperous, we must remain open, inclusive, and outward-looking – to the US and China, and to any country that would like to work with us.

Over the past decades, the US’ security presence has brought stability and peace in the region. But for this to continue into the next decades, the US cannot afford to be absent from the region’s evolving economic architecture. While US has revived the Quad and stepped up security cooperation through AUKUS, it is just as, if not more, important for the US to be economically engaged. If not through the CPTPP, then it must have an equally substantial alternative. President Joe Biden announced an Indo-Pacific Economic Framework during his virtual summit with ASEAN leaders. We look forward to the details and to the US’ substantial and inclusive engagement in the region.

China’s economic success has been a boon for growth in the region. Thirty years ago, economic cooperation was minimal. But as China’s ‘reform and opening up’ policy accelerated, its trade with the world, and Southeast Asia in particular, flourished. ASEAN and China are now each other’s biggest trading partners. This year marks the 30th anniversary of ASEAN-China Dialogue Relations,
and it is most timely that we recently elevated our ties to a comprehensive strategic partnership. China’s Belt and Road Initiative is an important effort for greater economic integration and mutual gains. There are many other areas of cooperation that ASEAN and China can pursue, especially in further enhancing connectivity and in addressing healthcare challenges post-pandemic.

But it is not just the US and China that ASEAN have close ties with. Japan and the Republic of Korea have been major investors in Southeast Asia. We want to continue to partner them to seek out greater opportunities to invest productively. The EU is one of ASEAN’s oldest dialogue partners. Over the years, economic ties have progressed steadily and cooperation has broadened. There is much more we can do to deepen this partnership. Southeast Asia will also do well to strengthen linkages with India, South Asia, Australia and New Zealand, while remaining open to Latin America and Africa.

ASEAN must work with any country that wants to work with us, where it is in our interests to do so. We must continue to make choices that will advance the well-being of our people. We look forward to greater economic integration when the RCEP comes into force, making it the largest FTA in the world. We must continue to welcome global investments to help the region realise its potential. To do so, it is also important for ASEAN to maintain our credibility. The position that ASEAN has taken on Myanmar shows that we can hold our own against external pressures. We have taken a principled position to forge consensus, and urge other countries to do likewise.

On our part, Singapore is committed to keep ASEAN open and inclusive. We are also in a good position to contribute to the region’s economic growth. We are a Global Asia node, with strong rule of law and international connectivity. We have a workforce that understands the culture and norms of the region. As a global financial centre, we play a key intermediating role in financing the needs of Asian enterprises. Working with the World Bank, ADB, AIIB, IMF, other multilateral institutions, and the financial industry, we can also crowd in global private capital for much needed regional infrastructure and other investment projects. Singapore can also harness the power of finance to promote cleaner and greener forms of energy and activities in the region. In so doing, we can play our part to strengthen both peace and prosperity in the region.

Make globalisation work for our people

This brings me to my third point – making globalisation work at home. For any country, political and economic consensus struck abroad can only last if there is broad-based support at home. To sustain globalisation and greater economic integration, people must ultimately feel that their lives have improved. They must, over time, have access to better job opportunities, with better progression and better wages. They should enjoy greater purchasing power, with globalisation offering consumers more choices at better prices. Our children should have better prospects, building on the foundation and legacy that we confer on them.

We have seen how support for globalisation has waned in recent years, because the benefits of the global economy are not well distributed within and across countries. The acute pain felt by disrupted workers and the angst of wage stagnation have come to dominate sentiments on globalisation. Domestic disgruntlement has hampered the ability of governments to engage in free trade and to come to agreement on much needed reforms in the multilateral system and institutions. COVID-19 has further deepened societal fault-lines. The lack of unity has made it harder for governments to carry out international engagements coherently.

Being one of the most open economies in the world, Singapore has reaped the benefits of globalisation. Trade is three times our GDP. Our openness has led to improved salaries,
more job opportunities and a more vibrant economy. Many of you might be familiar with the names such as Secretlab, Old Chang Kee, TWG, Prima Taste. These are our homegrown brands that have thrived and gained popularity on the world stage – not least due to globalisation and greater economic integration.

But with greater globalisation, our people are also concerned about competition from abroad and disruption to their livelihoods. This does not mean that we should turn inward. To continue to improve the lives of our people, the only way is to remain useful and relevant to the world. We must therefore continue to transform our companies and upskill our workers.

Adapting our economy and equipping our companies and workers for a more globalised world is a continuous journey. It is also hard work. But we have an early start. Singapore embarked on our Industry Transformation Maps since 2016. In the three years since we started our ITMs: Our labour productivity grew 2.7% per year, up from 2.2% in the preceding three years. Over the same period, real median income grew by 3.7% per year, higher than the 3.2% in the preceding three years. We are now refreshing our ITMs – developing new strategies for new economic realities. We also have strong tripartite partnerships – between government, unions, and employers – that have been the bedrock for economic transformation and growth over the years. As we recover from this crisis, we are also updating our brand of tripartism – from confrontation, to collaboration, and now partnership in transformation. In a more globalised world, we hope to share and learn from others, and forge new collaborations with partners from around the world to ride the next wave of globalisation.

A globalised world is not just what Singapore needs to survive and thrive, it also reflects what we stand for as a society. As a multi-racial, multi-religious, and multi-cultural society, embracing diversity and growing what we share in common has become, and must always remain, our way of life. We partner like-minded countries to tackle common challenges, build bridges, and grow the economic pie. At the same time, we must appreciate the diversity of global views and the differences in history, heritage, and culture. The aspiration for Singapore to be “one united people, regardless of race, language or religion” is enshrined in our National Pledge, for which Mr S Rajaratnam was the main author. As a small nation, we knew since Independence that we had to stay open to the world, welcome talent from abroad, and integrate those who choose to assimilate and become one of us. Mr S Rajaratnam once said “being a Singaporean is not a matter of ancestry. It is conviction and choice”. This remains true today. In fact, Singapore’s first three Deputy Prime Ministers were not born here. Mr Toh Chin Chye was born in Perak, Mr Goh Keng Swee in Malacca, and Mr S Rajaratnam in what is now Sri Lanka. George Yeo, our former Foreign Minister, said this of Mr Rajaratnam, “How fortunate we in Singapore are that he came to our shores
and made Singapore his home and calling”. We must continue to attract the best talent from around the world to complement our local workforce. And welcome those who share our conviction and values to settle here.

But we have to work hard to keep these values alive at home and abroad. The more Singaporeans are with us on globalisation and the more united we are as a nation, the better we can chart our future with confidence, while contributing to the global commons, including in the fight against COVID-19.


Let me conclude. Learning from our past, we must never forget that peace and prosperity are deeply intertwined. Political, economic and technological disruptions have strained global stability in this age of complexity. COVID-19 has piled on the pressure. So too the intensifying strategic competition between the US and China. But in every crisis, there is opportunity. We must partner one another to ensure continued prosperity and growth. Singapore can contribute to these global efforts to foster growth and stability, and at the same time create a better future for ourselves. We can do so in at least three ways: Globally, we can be pathfinders with like-minded partners to catalyse change. Regionally, we can work closely with our neighbours for Southeast Asia to realise its growth potential. And within Singapore, we can most definitely make globalisation work for our people and businesses. As importantly, whether we can effectively contribute to these efforts depends on many of you in the audience – our MFA officers and the diplomatic community in Singapore. I hope you will continue to push the boundaries of cooperation, and that you inspire the next generation of global diplomats.

To my fellow Singaporeans, I hope that you continue to remember the importance of remaining open to create a better tomorrow.

I am confident that we will not only survive but thrive in new global economic realities. I look forward to the dialogue.

Thank you.