DPM Heng Swee Keat at the Singapore APEX Business Summit

DPM Heng Swee Keat | 22 March 2022

Speech by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at the Singapore APEX Business Summit on 22 March 2022.


Mr Lam Yi Young, 
CEO, Singapore Business Federation, 

Your Excellencies, 

Ladies and Gentlemen, 

I am glad we can have such a major summit this morning. We are now into the 3rd year of COVID-19. We have been through multiple twists and turns. When COVID-19 struck, our economy – like the rest of the world’s – took a beating. At the peak of the crisis, our GDP shrank by 13%. Thankfully, our economy rebounded beyond pre-COVID levels last year, though the recovery was highly uneven across sectors. At the start of this year, business sentiments were optimistic. GDP growth was forecasted at 3 to 5%.  

Just as we were looking to exiting one global shock, another struck – the ongoing armed conflict in Ukraine. The risks to global inflation and growth have increased considerably. Oil and commodity prices have shot upwards, adding to global inflationary pressures and the risk of stagflation. The IMF cut the global growth forecast for 2022 due to the Omicron wave. It expects to further do so because of the crisis in Ukraine. It is too early to tell the full impact of these developments on Singapore. But it will certainly cloud our economic outlook. Like the rest of the world, our businesses and households will have to contend with higher inflation, including for electricity and petrol. We will continue to watch this carefully, and will provide more support to businesses and households if necessary. 

Global Shocks in the New Normal 

The world seems to be lurching from one crisis to another. Some may have hoped that we can return to a pre-COVID world, one that is marked by relative peace and stability. But that may be wishful thinking. The reality is that the global environment has changed in fundamental ways – with more frequent global shocks, as well as greater economic and financial volatility.

First, the economic clock speed has become much faster. The pace of creative destruction will mean that companies and entire industries can get disrupted. At the churn rate prior to COVID-19, one study estimates that half of the S&P 500 companies will be replaced over the next decade. And in a global economy that is interconnected and interdependent, any disruptions will ripple quickly far and wide. 

Second, the effects of rising temperatures are already upon us. The world is not on track to keep global warming within 1.5 degrees. Much more will need to be done. The recent IPCC report has warned that some of the impacts of global warming are already irreversible. The extensive loss of biodiversity will have greater spillovers. Disease X is not a matter of if, but when. With more extreme weather events, we can also expect more frequent natural disasters and disruptions to supply chains. 

Third, even as our shared challenges are growing, multilateralism has weakened significantly. Even before the invasion of Ukraine, the multilateral world order was already under considerable strain from the strategic tensions between the big powers. The current crisis will further accentuate these rifts, and pose a grave threat to the international rule of law. This comes at a time when the world has a full agenda dealing with the pandemic, climate change, the trade system, and many other shared challenges. We made some good progress last year, with global cooperation on the pandemic, and with COP-26 focusing minds on the climate crisis. But with the world’s attention now squarely on the crisis in Ukraine and with the weakening of multilateralism, it will be much more difficult to deal with our common challenges.  

But it is not all doom and gloom. Global shocks can open new possibilities. COVID-19 has accelerated digitalisation, beyond any CTO’s wildest imagination. It has also spurred transformation in companies, as they were faced with manpower and supply disruptions, and as consumer demand shifted.  As Yi Young mentioned, I am glad that many of these new opportunities will be discussed this week at the Apex Summit. 

But if we expect global shocks to become a regular feature of the endemic world, we will need to prepare ourselves for this volatility. This will require us to strengthen the resilience of our economy and our companies. Not just to absorb these shocks when they come, but also to swiftly respond to opportunities when new doors open.   

Industry Transformation Maps 

Our economic transformation efforts – encapsulated by the Industry Transformation Maps – have put us in a better position to face more frequent global shocks. When we started the ITMs back in 2016, we knew that we were entering more uncertain times and a period of rapid technological advancement. We made a concerted effort to tap on growth sectors, but there was no certainty of knowing which industries will succeed and which new ones will emerge. So we invested in strengthening our macro-economic fundamentals and the micro-economic foundations of each industry. To implement the strategies in a coherent and integrated way, we started the ITMs. As importantly, we made partnering each other key to multiplying our efforts and encouraged our TACs to step up. In fact, many of you here have been deeply involved in this. I am glad many of you, especially SBF, did. 

Hence, instead of seeking to pick winners and losers, we promoted the foundations of a “networked eco-system” involving all stakeholders – from the business community, to our workers and unions, to government, and also researchers and the media. We built stronger foundations for every industry, stronger linkages within and across industries, and stronger bonds between stakeholders. This approach enabled us to better withstand the COVID-19 shock. Even though we planned for greater uncertainty, none of us expected the scale and extent of disruptions brought about by COVID-19. But what we had set in motion enabled businesses to more nimbly adapt, respond, and pivot to the changing operating environment. We have seen how digitalisation has picked up pace – from hawkers, to small business owners, to larger enterprises. Faced with a shortage of manpower, companies invested in automation and transformed their operating models.  

The outcome of transformation at the national level has been encouraging. Let us look at productivity numbers, which is an imperfect but useful proxy. In the three years prior to the ITMs, our productivity growth stood at 2.3% per annum. This was better than that of most other advanced economies. In the three years since the launch of the ITMs – between 2016 and 2019, productivity increased at 2.7% per annum, an improvement from before. Despite COVID-19, we continued to see productivity increases. Between 2019 and 2021, productivity increased by 3.9% per annum. 

I will not dwell on the multiple factors behind the productivity improvement, and there may also becyclical elements. But suffice to say that our productivity performance is heading in the right direction, despite the headwinds. 

A Resilient Economy

In a post-pandemic world where global shocks become a more regular feature, we need to build an even more resilient networked ecosystem. We need to further strengthen our ITMs, as we put the worst of the crisis behind us. There are many ongoing efforts to do so – from investing in new capabilities and upskilling, diversifying our supply chains, to strengthening trade connectivity. But strengthening resilience goes beyond hard skills and capabilities. It requires us, as part of a networked ecosystem, to have a shared vision and a common set of beliefs in how we can get there.   

In the next bound of resilience, four key attributes will matter most. These are: Openness, innovation, sustainability, and trust. Let me elaborate. 


The first attribute is our openness. Openness has been foundational to our success. I cannot stress this point enough. At a time of rising nationalism and xenophobia in many parts of the world, Singapore is not immune to these forces. We must not lose sight of this foundational attribute, especially for a nation that is so dependent on trade. 

We must in fact double down on openness and connectivity. We must diversify our supply chains and markets, which enhances trade connectivity. 
To enable cross-border digital trade and ride on the wave of digital growth, we must further strengthen digital connectivity. For example, ASEAN is working towards a Digital Economy Framework Agreement, which will digitally join up the fifth largest economy in the world.  

But there is an even more critical component of openness – talent. For an economy with no natural resources, human capital makes all the difference. With the emergence of new industries and growth areas, Singapore must have the skills and talent to take on these new opportunities and manage this transformation. We will do all that we can to bring out the best in all Singaporeans. But realistically, with a small and ageing workforce, we will not have all the skills, and in sufficient numbers, to meet these new demands. Hence, we must remain open to drawing from our region and around the world, to enhance our local workforce. Openness to talent must primarily be viewed from the lens of quality and complementarity. We need to bring in talent that can complement our local workforce and plug skill gaps in areas of demand. It is with this in mind that we raised qualifying salaries and introduced the COMPASS point system for EP applications.  

Many business leaders told me that they hope Singapore will continue to remain open to talent. Indeed we want to do so, and we must. For this to happen, our businesses must do their part too, by developing your Singaporean workers and bringing in workers that are of the right quality, complementarity, and diversity. In this way, we can sustain this foundational attribute of openness that is critical to our success. 


The second attribute is innovation. In a world with more frequent disruptions, the best way to face them is to make the change before we are forced to change. We need to constantly adapt and innovate, try out what works, and scale what is successful. This is not always comfortable, as there is no fail-safe formula. But as Dr Goh Keng Swee once said “The only way to avoid making mistakes is not to do anything, and that will be the ultimate mistake”. In some ways, our decades of emphasis on innovation have given us higher capacity to experiment and handle change.  In school, we are encouraging greater self-learning and discovery.  I am glad more are seeking to be entrepreneurs. More companies are also encouraging intrapreneurship, so that they continue to maintain the “Day 1” spirit of experimentation and innovation.  

But we have some way to go. To fully embrace the attribute of innovation, we need a further mindset shift in how we perceive fellow industry players. Companies often see each other as competitors, rather than as potential collaborators. But collaborate with your competitors, and you can grow even further. Companies should compete, based on their distinctive value propositions. But collaborate to tackle common challenges and unlock synergies. For example, to build a high-power EV charging network across Europe, German automakers and Ford Motors came together to form a consortium. Apple and Samsung might be competitors, but Samsung manufactures touch screens for iPhones and Apple offers its streaming content on Samsung smart TVs. Closer to home, the TechSkills Accelerator, or TeSA, brought together industry partners across different sectors, to overcome our shortage in skilled tech workers.  

There is no single approach. But one promising approach is the Alliances for Action, or AfAs. We started the AfAs as a pathfinder to emerge stronger from the pandemic, bringing together private sector, academia, and regulators to rapidly prototype new ideas, and scale those that are successful. AfAs have led to some significant breakthroughs – including Climate Impact X, a global carbon exchange based in the region, and the digitalisation of supply chains through SGTraDex. Not all AfAs will lead to breakthroughs. But even for those which did not, the process would have strengthened the spirit of innovation and the foundations for future partnerships.  

SBF has been an active driver of this. SBF is embarking on the Boost Up initiative, to help companies innovate by redesigning their products and services, and strengthening branding and marketing. SBF is supporting these companies holistically, in partnership with our researchers, institutes of higher learning, government agencies and the private sector. SBF is also initiating new collaborations, including an AfA on sustainable spaces that has the potential to reduce volatile organic compounds in our indoor environment. I look forward to SBF catalysing even more partnerships and collaborations in support of innovation and to build a more resilient economy. 

I encourage all of you to embrace innovation. Not just with stakeholders within our shores, but also with like-minded partners from abroad. The Global Innovation Alliance network and the Open Innovation Platform have been effective channels for our companies seeking to work with partners from overseas. You can also form new AfAs or new collaborations as part of your ITMs. Or you can simply work with partners outside of structured platforms. Embracing innovation is not always easy, but in a fast-changing world, it is critical for our success.  


The third attribute is sustainability.  In the last two years, the global climate action has accelerated significantly. The new climate pledges have brought us closer to achieving the 1.5-degree goal, but still fall short. At COP-26, countries agreed to achieve global net zero emissions by mid-century, to keep our 1.5-degree goal within reach. Making the green transition is not straightforward. For many countries, the energy crisis last year highlights the intricacies of making this major transition. Energy security concerns and higher energy prices arising from the Ukraine crisis will further add to the complexity. Singapore has committed to raise our ambition to reach net zero by or around the middle of this century – to do our part for the planet, and to leave behind a greener future for our children. To achieve this, we have revised our carbon tax, to signal our commitment and to send the appropriate price signal for individuals and businesses. 

For business leaders, the immediate concern is often cost – both the upfront investments to lower carbon emissions, and the higher cost incurred while making the transition. This is understandable. On our part, the Government does not expect to derive additional revenue from the carbon tax increase in this decade. The revenue collected will be used to help households and businesses manage the carbon tax impact and transition to a low-carbon future. We have paced the carbon tax increase in consultation with the industry. By working with you and by supporting you, I hope we can make the green transition early at a pace that is practical and achievable. In fact, by being a lead mover, we can take on a diverse range of opportunities.  As part of ITM 2025, we have made sustainability a key priority across all sectors. We will also focus on developing key sustainability-related sectors, such as environmental services, water, agri-food, carbon services, and clean energy and solutions. Just like how our original ITMs made a strong push for digitalisation, sustainability is now a centrepiece of our collective ITM 2025 response – one that will enable us to move decisively on our climate commitments while opening new opportunities. 


The fourth attribute is trust. Trust is important in normal times, even more so in times of crisis and uncertainty.  Our fight against COVID-19 is a good example. The strong bonds of trust in our society have enabled us to implement difficult but necessary measures to mitigate the impact of COVID-19. Trust will be even more important in the post-pandemic world, where more frequent shocks would mean more ups and downs. There are many dimensions of trust. But there is one that I would like to highlight – the trust between companies and their workers. 

An economy will not be resilient if only a small group benefits from the gains. Inequality will widen over time, leading to social instability. Workers will also not have any incentive to work hard, innovate and adapt. In turn, companies will not be able to transform, much less excel, if workers are not with them. Over time, instead of working together to transform and enlarge the pie, workers and businesses will be disputing over a shrinking pie. Successful business leaders whom I spoke to invariably cite the trust and support of their workers as a key factor for managing crises and for transformation. For workers to rally behind business goals, they must see the benefits of constantly adapting and upskilling. They must feel that our openness to talent does not come at their expense. They must see their lives improve. This is how trust is built up.

Strong tripartism in Singapore has contributed to growing trust. Businesses take an interest not just in transforming their capabilities and operations, but also in their workers. And unions take an interest in helping companies transform. While the starting points are different – the end goal is the same – enterprise transformation and worker upskilling come together. SBF approaches this through the Industry 4.0 Human Capital Initiative, while the Labour Movement does so through the Company Training Committee. 

SBF and our business community can further work with the Labour Movement, SNEF, government agencies and other stakeholders to strengthen trust, not just at the firm level but also at the sector level. Tripartite academies are one way to do so, pulling together capabilities and resources from sectoral stakeholders. Through stronger partnerships, a tripartite academy can better help companies and their workers transform and upgrade, in a way that is localised to the sector’s needs. One example is the recently formed Tourism Careers Hub, a partnership between industry associations, unions, STB and WSG to catalyse the recovery of this hard-hit sector through better jobs matching, and intensifying tech transformation and skills upgrading. 

More broadly, bonds of trusts can also be strengthened during crisis. Many employers did all that they could to retain workers, with the support of the Jobs Support Scheme, or JSS. It is not just larger companies, with perhaps more resources at their disposal, that are doing so. We also heard heart-warming stories of how smaller firms did likewise. Many also took the opportunity to retrain their workers and help them adapt to the challenges ahead, with generous support from Government.  All these are important in showing that management is committed to go the distance with their workers, regardless of the curveballs that may come our way.

Trust is difficult to earn but can be easily lost. But as long as business leaders have the interest of workers at heart, I am confident that we can strengthen this attribute and build a more resilient economy in times to come.  


Openness. Innovation. Sustainability. Trust. These are the attributes that make for a much more resilient economy in a  complex and volatile world. And these are attributes that we must collectively embrace as a business community. As the apex business chamber in Singapore, SBF plays a critical role in fostering these attributes across industries and building a more tight-knit and collaborative business community. Over the past two decades, SBF has been a beacon of our business community and has left an indelible mark in the making of our economy. It has also been at the forefront of mobilising our business leaders to do more and to work together. Many of you here are involved one way or another, through its various committees or by participating in their industry consultations, roundtables, and dialogues. More recently, SBF has also undertaken to partner TACs to strengthen their capabilities and bench strength. As we brace ourselves for more global shocks and fast-moving opportunities, we must further strengthen business leadership and fellowship. This is critical to building and anchoring more resilient enterprises in Singapore. So on this occasion of SBF’s 20th anniversary, I challenged SBF to do more. I am glad that SBF is stepping up and will be forming an AfA on business leadership development, working with TACs, corporates, education institutions and government agencies. This collective effort will sharpen our leadership edge, and I look forward to the good work of this Alliance.   

In closing, let me congratulate SBF for a very successful first twenty years. I thank Chairman Ming Yan, all previous Chairmen Tony, Stephen and Siong Seng, and their committee members. I also thank all our business leaders and TACs for contributing to a more vibrant and dynamic Singapore economy. I look forward to even bigger contributions from you in the decade ahead. Thank you