DPM Lawrence Wong’s Interview with Nikkei Asia (May 2023)

PM Lawrence Wong | 24 May 2023

Transcript of Deputy Prime Minister and Minister for Finance Lawrence Wong's interview with Nikkei Asia on 24 May 2023.


Global Affairs

Nikkei Asia: Geopolitical uncertainties are increasing. The Russian invasion of Ukraine continues. With so many possible causes for conflicts, the rule-based order, which Singapore strongly upholds, needs to be observed more now than ever. However, the UN Security Council is paralyzed with Russia’s veto power. How do you see the Russia-Ukraine war developing and what needs to be done by key players to bring the situation to the best possible direction?

DPM Lawrence Wong: The war has been deadlocked for more than a year. As the war drags on, we cannot rule out the possibility of the conflict escalating. This will have unpredictable consequences not just for Europe, but the world.Russia’s invasion of Ukraine is a gross violation of the UN Charter, and of a country’s sovereignty and territorial integrity. This is why Singapore opposes Russia’s invasion of Ukraine. To ensure a comprehensive, just, and lasting peace, any resolution to the conflict must be in accordance with the principles of the UN Charter. We hope all the parties involved, including Russia and Ukraine, can eventually come to such a settlement.

Nikkei Asia: The tensions between the US and China continue over supply chain, high-tech products like semiconductors, and other issues. What kind of policies are required from the US, Japan and ASEAN countries?

DPM Wong: Many countries have been looking for ways to diversify their supply chains, and make their economies more resilient. This is understandable. But even as countries work to do this, we must be careful not to undermine the rules-based multilateral trading system which continues to underpin global prosperity. If we are not careful, steps taken to achieve self-reliance can inadvertently lead to a broader fragmentation of the global economy, and unintended consequences. This will leave all countries worse off.

Small and open economies like Singapore rely on the free flow of trade and investments and a common set of rules for our lifeblood. The multilateral trading system remains critical, and priority should be given to reforming and strengthening the WTO, so that disputes can be resolved expeditiously, and rules applied consistently.This will ensure that all countries continue to have a stake in supporting the international trading system, and a stake in each other’s economic success.

Countries must also continue to find ways to collaborate and do business with one another, even when there are differences. This is also the approach that ASEAN is taking. We will continue to engage all external partners, and collaborate with them on areas of common interest.

Nikkei Asia: How does Singapore plan to build a relationship with China and US?

DPM Wong: Like most countries in the region, Singapore has longstanding bilateral relations and deep economic links with both the US and China. The US played a vital role in underwriting the post-war global order, paving the way for stability and prosperity in Asia. This is one of the reasons that Singapore has long supported the US’ presence in our region. We are a Major Security Cooperation Partner of the US and the first Asian country to have signed an FTA with the US. At the same time, we have supported China’s continued reform, and participated in China’s development journey over the decades. Last month, Singapore and China upgraded our relationship to an “All-Round High-Quality Future-Oriented Partnership”.

We will continue to foster close ties with China and the US, and strive to be a consistent and reliable partner to both. Our foreign policy is neither pro-US nor pro-China, but rather grounded on Singapore’s national interests and key principles such as adherence to international law and a rules-based multilateral system. Over the years, both countries have come to understand the principles that Singapore stands for, and this has allowed us to build good relations with both countries.


Nikkei Asia: Growing US-China contestation has an impact on all countries in Asia, including those in ASEAN. How can ASEAN maintain its relevance and Centrality in the evolving regional architecture?

DPM Wong: Most ASEAN Member States have deep historical and substantive connections with both the US and China. There are also many other major powers with stakes in our region. It is therefore more important than ever for ASEAN to maintain its centrality in this evolving regional architecture.

ASEAN has been able to do this in a few key ways. First, we have ASEAN-led mechanisms like the East Asia Summit, ASEAN Regional Forum, ASEAN Plus Three, and the Plus-One summits. These bring the major powers and regional players, including the US, China and Japan, to the same table and offer neutral platforms for constructive dialogue and engagement.

Second, ASEAN has worked systemically to build a dense network of cooperation and interdependence with its external partners and give them a genuine stake in the region’s stability and success. Examples of this include agreements such as the RCEP, and cooperation with our partners in emerging areas like the digital and green economies. This makes for a more stable and resilient region.

Third, we have adopted the ASEAN Outlook on the Indo-Pacific (AOIP), which sets out how external partners should engage the region on its own merits. It also explicitly rejects zero-sum regional competition and regional dominance by any single power, and provides a framework for collaboration in areas of mutual interest. This will ensure that the regional architecture remains open and inclusive, while maintaining ASEAN Centrality.

Nikkei Asia: What can ASEAN and its external partners do to help address the current situation in Myanmar?

DPM Wong: Unfortunately, the situation in Myanmar remains dire. There has been little progress in the implementation of the Five-Point Consensus which ASEAN adopted two years ago.

ASEAN will continue to hold firm to the Five-Point Consensus. With ASEAN’s support, the ASEAN Chair, Indonesia, is doing its utmost to call for the cessation of violence, engage all stakeholders, and facilitate the delivery of humanitarian assistance to the people of Myanmar. Beyond ASEAN, Myanmar’s neighbours and our external partners, including the UN, also have important roles to play in working with ASEAN to address the crisis and facilitate national reconciliation in Myanmar.

The implementation of the Five-Point Consensus ultimately depends on Myanmar stakeholders, especially the Myanmar military authorities. ASEAN will continue to press the Myanmar military authorities to cease violence and implement the Five-Point Consensus swiftly and fully. Only constructive dialogue amongst all key stakeholders in Myanmar can facilitate a peaceful solution in the interests of the people of Myanmar.

Bilateral cooperation

Nikkei Asia: In what areas can Singapore and Japan further deepen their relationship?

DPM Wong: Singapore and Japan enjoy excellent relations, underpinned by frequent high-level exchanges, robust economic cooperation, and deep people-to-people ties.

At the political level, we continue to have many exchanges. On the economic front, our trade and investment links continue to expand. We welcome more Japanese firms, including SMEs, to use Singapore as a base to expand in the region. Singapore and Japan are also close partners in the multilateral fora, with both our countries being parties to the RCEP, IPEF, and the CPTPP.

There is scope to do more in the digital economy. We can support digital trade by setting common standards on personal data protection and facilitating secure and seamless cross-border data flows. We can also collaborate further on smart cities, 5G, artificial intelligence, and other digital services.

Singapore is also keen to collaborate with Japan on low-carbon solutions. That is why we have supported Japan’s Asia Zero Emissions Community (AZEC) initiative, and we look forward to working closely with Japan in this area.

As old friends, there is much we can do together and learn from each other. We both face similar geopolitical, economic and demographic challenges. We can therefore work together to innovate and sustain our competitiveness and dynamism.



Nikkei Asia: GDP growth slowed to 0.1% growth in the first quarter 2023. While tourism is recovering, the manufacturing sector has been hit by the global economic slowdown. Inflation remains high and the cost of living in the country is rising. MAS has paused its continued tightening of monetary policy. What is your view of the economic outlook?

DPM Wong: The external economic environment is expected to remain uncertain. There are headwinds and downside risks to the global economy.

The Singapore is highly reliant on external demand, with trade more than three times our GDP. Hence, we are feeling the effects of the external slowdown, especially in the manufacturing sector. For this year, we are looking at slower and below trend economic growth in Singapore. Inflation has remained elevated, but we expect it to progressively ease over the rest of the year.

While the risk to growth remains titled to the downside, our economic fundamentals remain strong. We continue to see strong flows of investments, capital, and talent into Singapore. We will take full advantage of these opportunities to ensure a competitive and vibrant economy for the future.

Nikkei Asia: How do you intend to balance your response to inflation and the economic slowdown?

DPM Wong: We had moved to tighten Singapore’s monetary policy fairly early in the inflation cycle compared to most other central banks.

Since our last tightening move in October 2022, there is now greater certainty that inflation has peaked, and a disinflationary process is in train. The tension between growth and inflation has also eased somewhat, as global supply chain bottlenecks have eased, and commodity prices have moderated.

For now, we are maintaining our current monetary policy settings. But worldwide, the fight against inflation is not yet done. Hence we continue to be vigilant to signs of a resurgence in inflation, and will carefully monitor the balance of risks around growth and inflation.

On the fiscal front, we have tapered down the highly expansionary stance adopted during the height of Covid-19, and shifted towards more targeted measures to help lower-income households cope with the cost of living.

We are continuing to monitor the external environment and economic situation closely. We have drawer plans in place that can be activated to provide some stimulus to the economy if necessary. But in the event of cyclical downturn globally, Singapore will not be spared. We will then have to ride out such a downturn, while taking steps to minimise scarring of the workforce, and to ensure human capital is not eroded.

Nikkei Asia: How do you think Singapore's industrial structure needs to be remodeled for mid- to long-term economic growth?

DPM Wong: In this rapidly changing environment, we cannot afford to stand still and rest on our laurels.

This is why we are redoubling our efforts to restructure and transform our economy, focusing on growth sectors where we can be highly competitive – as a leading financial centre in Asia; a global trading hub with strengths in transportation and logistics; and a vibrant advanced manufacturing node supported by key segments like electronics, chemicals, and biomedical science. Across these areas, there will also be new opportunities from digitalisation and the greening of our economy.

We are continuing to enhance our overall productivity and the skills of our workforce. With rapid technological advancements, we expect more rapid churn in the economy. Existing roles will be redefined. But new and higher value jobs will be created. That is why we are investing more in national programmes to reskill and upskill every worker.

Increasingly, Singapore has to differentiate itself in terms of quality and value. So we continue to invest heavily in R&D and to make innovation more pervasive across our entire economy.

All these moves will be necessary to position Singapore well for the future.

Green / Sustainability

Nikkei Asia: Last October, Singapore announced a new goal of virtually zero (net-zero) CO2 emissions by 2050. You have talked about plans to expand the introduction of hydrogen power generation. Rising sea level due to climate change is also a serious issue. Please tell us about how you plan to achieve the emission reduction goal. What can Japan do to cooperate?

DPM Wong: As a small and densely populated island less than one third the size of Tokyo, Singapore has limited options when it comes to renewable energy. Nonetheless, we will do our part to tackle global warming and achieve net zero emissions by 2050.

A major part of this effort is to decarbonise our power sector. This means maximising the deployment of solar energy, and also importing renewable energy to meet our needs. At the same time, we will need cleaner fuel sources for baseload power generation. This is why I announced Singapore’s National Hydrogen Strategy last year. We have since launched an Expression-of-Interest to solicit proposals to develop an end-to-end solution for low-carbon ammonia for power generation. Beyond this, we will support hydrogen research and development, and work with industry and international partners to facilitate global trade in hydrogen and the establishment of supporting supply chains.

We are keen to collaborate with Japan on all these aspects. For example, on hydrogen, we can work together to develop international standards and certifications for production and trade which are currently lacking. We can also develop a supply chain for hydrogen through the exploration of cross-border pilots and demonstration projects. There is also scope for Japanese and Singaporean research institutes and companies to explore feasibility studies and technology testbeds across the hydrogen value chain.

Digitalisation / Innovation

Nikkei Asia: Singapore has become an innovation hub for digitalisation in ASEAN. What digital technologies, such as AI, IoT, 5G and cyber security, do you think are important for the region's industries in the future?

DPM Wong: It is hard to predict the winners in the technology race. In fact, many of the technologies highlighted are interrelated. For AI applications to take off, we will need better connectivity infrastructure, the internet of things, as well as good cyber-security so that the data are protected, and systems are secure.

What is important is not just the technologies themselves, but also the conditions for their adoption across the economy. This will require a multi-pronged approach. We need to equip and re-skill our workforce for a digital future. We have to ensure that new technologies such as AI develop in a trusted and safe manner, so that they can be deployed to the benefit of society. We must also ensure that digital technologies remain accessible to all citizens, including the elderly and more vulnerable groups.

Achieving all of these will not be easy. When it comes to the development of new technology, no one country will have all the answers. So I hope Singapore and Japan can collaborate together on these issues, and learn from each other’s experiences.

Nikkei Asia: How do you attract investment from all over the world?

DPM Wong: We recognise that competition for global investments will get tougher in this new environment. Nonetheless, Singapore remains an important hub for trade, capital, talent and innovation in Asia. Our reputation as a reliable and trusted node has also been enhanced from our handling of the pandemic.

We will therefore double down on our strengths. We will continue to invest in our global connectivity. We will significantly enhance our airport and seaport capacity, so that we remain a key node in global logistics and supply chains. We will deepen our capabilities in R&D and innovation, and work with global companies to anchor more of such cutting-edge activities in Singapore. We will also continue to stay open as a business hub, so that people and talent from all over the world can come to Singapore, and we can form the best teams to compete with the rest of the world.

Singapore will always be a small island without any natural resources. But if we focus on our capabilities and strength, and find ways to provide value to the world, we can continue to earn a good living.

As a leader

Nikkei Asia: You have become the leader of the fourth generation of the PAP. It is widely believed that you are the most likely candidate for the next Prime Minister. Please tell us about your leadership style and what you value as a leader. The values and opinions among Singaporeans are becoming increasingly polarized. What qualities do you think are required for the next leader who will lead the country?

DPM Wong: I see my role not just to lead but also to serve my country and fellow citizens, together with the other members of my team. The good thing is that my colleagues and I have been working together closely for several years. So we know each other’s strengths and how we complement one another. For my part, I will ensure that the contribution from the entire team is greater than the sum of the individual parts, and we can collectively achieve the best outcomes for Singapore and Singaporeans.

As our society evolves, we are also hearing more diverse views and aspirations from our people. That is why my colleagues and I have been stepping up our engagement with Singaporeans – listening to their feedback and suggestions, and co-creating solutions together with them. We want every Singaporean to know and feel that they have a place in our society, as we chart our new way forward together.