PM Lee Hsien Loong’s dialogue with Mr Ho Meng Kit, CEO of the Singapore Business Federation, on “The Future of Global Growth” for the APEC CEO Dialogues 2020 on 19 November 2020.
Mr Ho Meng Kit (Moderator): Welcome. My name is Ho Meng Kit, CEO of the Singapore Business Federation and a member of ABAC Singapore. We warmly welcome Prime Minister Lee Hsien Loong to the APEC CEO Dialogue 2020. Welcome, PM Lee.
I want to start a little bit more broadly in this dialogue with you, talking about COVID-19. It has really immensely affected not only the way we work, (but) the way we live, we are talking to you about how it has affected, even personally, as a leader managing COVID-19. What is your sense of the impact of COVID-19 on the global economy, and how have you, as a leader, found it easy or difficult to manage COVID-19 in the last 10 months that we had this crisis?
PM Lee Hsien Loong: This year, the impact has been enormous, because the international travel has closed down, the tourism businesses (are) at a halt, and many countries have had to lock down or have various forms of circuit breaker to tamp down COVID-19 in their societies, and that has had a massive impact on their economies, on jobs, on earnings, on the confidence and outlook of the population at a time of great uncertainty.
In Asia, many of the countries have brought COVID-19 under control, and are now gradually trying to open up again, but very cautiously because they are very concerned about the rebound, which you can see happening in Europe, and we can see happening in America. Because of that, although things have stabilised, the outlook is very guarded. Numerically, next year will be better than this year, because next year, hopefully we avoid a lockdown, and hopefully the vaccines start to come online, and gradually things begin to come back to normal. But I think that it will take quite some time and there are many risks along the way. That is how we are treating it in Singapore.
Moderator: You mentioned about Asia being able to manage the crisis a little bit better in terms of stabilising the domestic situation of COVID-19. For example, in Europe and America, they had (a) lockdown, and then they opened their economy during the summer. I think their economy was less affected, but now they are into their second wave. Whereas in Asia, I think we were a little bit more conservative. We locked down but that has greater economic impact. Do you think that that the Asia way of managing COVID-19 is the way to go?
PM Lee: We do not know. Time will tell because the battle is far from over. So far, we are trying our best to keep our guard up and to keep the enemy at bay. You cannot keep him out all together, but when you see cases popping up in our society and our community, we try our best to knock them out before they can become a big cluster and a big cluster can become a major outbreak. But we do not believe we have one, because firstly, within our community, you do not know where it may be hiding, and it can pop up again. It is a very wily bug and very hard to eradicate.
Secondly, we cannot keep our borders completely closed forever. There has to be traffic, there has to be business, people need to travel. Therefore, we are exposed to the outside world and COVID-19 is all over the world. And so, we must expect cases to keep on coming in, and we have to be vigilant in dealing with them when they pop up. I think that we are trying very hard to avoid having a second outbreak in a big way, and having to have a second circuit breaker or a second lockdown. I think the psychology on the population, if we had to do that would be a very big impact, and people will be discouraged, maybe demoralised, certainly will be angsty and fractious. It is not easy to maintain solidarity in the face of a threat, which keeps on being there, going away and coming back again, going away and coming back again. We are trying our best to avoid that rollercoaster.
Moderator: Is this made more difficult because as a national leader, the toolkit that you have to tackle the crisis is mostly national –were you able to call on (an) international toolkit and collaboration to manage the crisis?
PM Lee: The scientific collaboration is international. People are researching COVID-19 all over the world, papers are being published, everybody is reporting on their experiences, what is working, what is not working, where the unexpected pitfalls are, and we are all trying to learn from one another. That part is international.
In terms of international cooperation, looking after our borders, working out safe travel arrangements – I think there is a good amount of that. In terms of medical arrangements, like planning for what to do when vaccines become available, the World Health Organization (WHO) is coordinating arrangements internationally, so that we can have the vaccines available even to countries which cannot quite afford them, and so that you have a rational distribution to the places where it can make the most difference to the global pandemic – that means the most vulnerable people and the first responders should get it first. We are participating in those initiatives. We have made a contribution and we are also what is called Friends of the COVAX (Facility), which means working together with other countries and with World Trade Organization (WTO) to sort out these arrangements and to make sure that those who need it are not deprived of vaccines because they cannot afford it.
Moderator: We had in the earlier part of the crisis, disruption to supply chain, particularly for medical supplies and essential medical supplies. It was disappointing for us to see.
PM Lee: What to do, it was a scramble. Everybody is short, and every country bends the rules as far as it can, and sometimes even further, in order to grab and get first claim on stuff which is within their control.
Moderator: Were you disappointed that a regional organisation did not play a part in making sure that those rules are observed?
PM Lee: I think it is very hard for a supranational organisation to make sure that the rules are observed because finally, governments are sovereign, and if the government decides it wants to do something within its own territory, there is not much you can do about it. But there is certainly a lot more scope for cooperating between governments because the next time it happens, we will need to work together better. If each time we are going to scramble for Personal Protective Equipment (PPEs), gloves and masks, then each one of us must set up factories to make PPEs and manufacture gloves and masks, and stockpile them. It is an awfully expensive business. Within ASEAN, we are talking about possibilities of cooperating to stockpile, to ensure supplies of these essential items in emergency. But of course the test will be: will it work when the emergency comes? I hope so.
Moderator: PM, you mentioned about COVID-19 and whether we would be able to return to normal. At the Singapore Business Federation, we are telling our members that you might not be able to return to the normal, even post-COVID-19. Do you share that view?
PM Lee: I think it will take some time and some time meaning several years. There will surely be changes from where we were in the new normal. In the short term, I do not see us getting away from the precautions and the risks which are present right now overnight. It is not possible. Winter is coming in the Northern Hemisphere, their cases are currently continuing to grow. Even if you start having a vaccine by beginning of next year, by the time it gets rolled out to a significant proportion of the population and has an impact in slowing down the spread of the disease, it will be probably 2022.
We must continue to be prepared for this kind of situation for some time. I think travel is not going to return to normal next year. Maybe in two years’ time, it would be possible to extend in a bigger way. But that is down the road. I think that will take time. And I think even after COVID-19 is gone, there will be lasting changes. People have gotten used to working remotely, doing business online, trading, buying things, making commitments online, and traveling less. I think those will be lasting impacts.
Moderator: Did you feel that even at the leaders’ level, because you were all meeting virtually online, were you missing something?
PM Lee: For the meeting proper, it is not so bad because the meeting proper tend to be formal events and we each say our piece. So online or not, you listen to one another. But what you miss is informal interactions, the chance to chat, a bit of corridor serendipitous meeting, when you just bump into somebody and you have a useful exchange and he picks up something useful, or you share a tidbit of information. Those human contacts, unfortunately, are lost. For the leaders whom you have known before, you are carrying on the relationship, continuing that is okay. But for the leaders whom you have not yet met, to get to know them for the first time, I think that is more difficult. I met Mr Abe, for example, the Japanese Prime Minister many times over a dozen years when he was Prime Minister. And now there is Mr Suga, and I have spoken to him on the phone. I have met him virtually at the ASEAN meetings, but I have not met him in person, and you do need to engage in person for him to know what you are like, and for you to feel what he is like, and become comfortable with one another.
Moderator: I think it is the same perspective from businesses – to sign a new contract or to develop…
PM Lee: It is really the feel of the person – can I trust him, does he over promise, or does he over deliver? If I sign, will I get satisfaction? If I run into trouble, will I have a reasonable counterparty? It is very hard to answer these questions just by looking on the screen.
Moderator: Do you look forward to a physical meeting next year?
PM Lee: Yes, I do. But I hope that there will be a good combination, because not all meetings need to be physical. I think in their own arrangements, perhaps we were travelling around the world more than was ideal. And we could cut that back some. We still maintain the contact, but perhaps not quite as intensely – that would be ideal.
Moderator: I think we will get to a nice compromise, post-COVID-19. If I may turn to the situation in Singapore, amidst this very difficult 10 to 12 months, I think Singapore has not done too badly. Our COVID-19 numbers are very low. There is almost no community transmission in the past few days, we have the lowest fatality rate in terms of COVID-19 in the world. Businesses are looking forward to a reopening of the economy at the end of the year, hopefully, if not early next year. We are doing some job matching, and actually, even hotels, and people in F&B are rehiring. There is a little bit of buzz in the street now. This is coming at the back of a very robust response, I think not only by the Singapore government, but by many governments of putting fiscal support to workers as well as to businesses. PM, if you could share with our audience, Singapore's COVID-19 response for businesses and workers, and what drives those responses?
PM Lee: First of all, a disclaimer, we do not claim victory. The battle is not over. We are taking it very seriously and we are very aware that things can still go wrong very quickly. All you need is one super spreader, and we will be chasing our tails again. It can easily happen. But what we need to do is to keep up our precautions, build up what we are able to do in terms of testing, in terms of contact tracing, in terms of our systems to respond, in case the cases grow again, and then be able to open up cautiously with precautions, so that I can take steps one-by-one safely, and not just take steps and hope for the best and then become in a more normal state.
The attitude we took from the beginning was that we do not want to let the disease burn through our population. We wanted to keep our population safe. At the same time, we knew that this would have a big impact on the economy, and therefore the government had to step up in a major way in order to preserve jobs and to make sure our businesses survive to the extent possible. We have taken varied major fiscal measures, one budget package after another – this year, we have had the main budget plus four more supplementaries, altogether five budgets. We have spent a vast amount of money. We have taken not just money from what resources we have, but we dipped into our reserves, into the piggy bank, and we have taken S$50 plus billion of protected reserves, with the permission of the President, which we had to seek specially, in order to help pay for salaries through a Job Support Scheme in order to support companies, particularly the companies which are in very badly hit sectors like tourism and travel; in order to have job growth initiatives, to subsidise companies to hire new workers for new jobs; and to also look after the self-employed people because they particularly were very badly hit when COVID-19 came. Many of them are tour guides, some are taxi drivers, some are freelance coaches, trainers, they may be entertainers. They all desperately needed help. The first thing to do was to keep body and soul together, and that took a lot of resources. I think it has prevented a lot of hardship and kept the economy at least nose above water, afloat.
Now that the situation is stabilising, and we cannot continue this very large infusion of government resources indefinitely, and we have to gradually tail this off, and to get things onto a sustainable footing – which means that the businesses which are able to resume, should resume; the businesses which need to transform or to pivot to a new orientation, because it is a new normal, and the old way of doing things will not work anymore, we will help you to do that; and for the few businesses, which are likely to be in suspended animation for some time – like tourism, travel – then we will have to make special arrangements for them. But eventually, this has to be sustainable and we have to adapt ourselves for what is to come, rather than freeze a position which reflected what was pre-COVID-19. Right. Otherwise, we will end up with zombie companies and an unproductive economy, and I think that will lead to more trouble for us later on.
Moderator: Talking to our members, I think they are all deeply appreciative of the government support. We in the Federation, of course, worry that this support is not sustainable going forward. As you said, we have given S$52 billion of our reserves to support. We worry about the transition when those support is scaled down. We have no sense of how many companies will fall out as a result of the transition.
PM Lee: Some industries are not doing badly. If you look at manufacturing, it is doing quite well. In fact, we have growth in manufacturing this year, compared to last year – even electronics for example, or pharmaceuticals. If you look at the technology industries, they are doing well – IT, the technology companies like Google, Facebook, in fact, they are doing brilliantly during this period, and some of them have presence in Singapore. There are sectors which are doing well. There are other sectors which will resume, there will be business, but it will not be quite at the old level like construction, where there will always be a demand because there is so much of public construction, which is necessary – trains, schools, houses, new housing estates, hospitals – they need to be built, and we have to get the industry restarted in a safe way, which means testing, which means segregation, means additional costs, it means the government has to step in and help to get things done as efficiently as possible, and we may need to adjust the cost structure as well. There will be those industries which need specific attention.
I think the ones which are most anxious are the entertainment and tourism businesses, and we are trying experiments to see how we can allow the entertainment outlets to open up safely, but it is very challenging, because the whole point of entertainment is that you go to let your hair down, whereas here, we are trying to keep our guard up. Even if you have rules, when you want to relax and have a drink and then sing some song, or dance in an entertainment lounge, karaoke, it is a completely different mindset altogether.
Moderator: I think we are aided by innovation, in the sense of having apps like contact tracing, safe distancing…
PM Lee: We have apps to track you, to track who has been close to you, to track the places where you have gone to, we will know if you have been there. So that is helpful. But if in that place where you have been, you meet a few hundred people, and then you are close to them and exchange germs with them, by the time I find out, even if I know whom you touched, a few hundred people are ill and I will be running around.
It has happened in Seoul, it has happened in in ski resorts in Europe, it has happened in pubs in London, it has happened at birthday parties and funerals in America, and it happened to us too – we had a Chinese New Year party just at the beginning at SAFRA Jurong, and suddenly we had an outbreak of dozens of people from one event.
Moderator: We are also telling our businesses that actually as much of their future can be decided by what they do themselves, in terms of the safe management measures that they themselves put in place.
PM Lee: We want to do this. I see a lot of businesses have put up their SafeEntry QR codes so that their customers can check in and keep a log of what has happened, where they have been. I think the businesses want to keep their own staff safe too, because if their staff are sick or (are on) Stay Home Notices (SHNs) and quarantined, it is very disruptive for them.
Moderator: Prime Minister, we move on to Asia Pacific, APEC. I think coming out from a very successful ASEAN Summit, and then over the weekend with the East Asian Summit and of course, culminating in the signing of the RCEP, I think the attention will now shift to APEC, as well as to the G20.
With RCEP, I think certainly as far as the business community is concerned, that is really something that we cheer because this is part of our ABAC recommendation to the leaders that we must have deeper economic integration, and the FTAP must remain our goal and one of the important pathways was RCEP. With the signing of RCEP, and also with the change in the US Administration to the Biden Administration, what is your sense of APEC? My sense has been in the last couple of years that APEC is a little bit in what I would call personally, in a suspended animation as well. Do you see things coming back on track?
PM Lee: RCEP is a big step forward. We spent eight years negotiating it, working on it. Finally it is signed. We were hoping for 16 members but we had 15. India decided not to join in towards the end. We are disappointed, but we hope one day India will join in. Because it makes strategic sense for them, and I think in the long term, it makes economic sense for them too. But they have political considerations, and I can understand that, but I hope that they will find their way into it at some point. RCEP is an important signal that in Asia, the countries do want to deepen regional integration, do want to free up trade further, do want to work with one another on a plurilateral basis – that means in a group and not just bilaterally, one on one. It does not matter what happens in the rest of the world, (but) in Asia – there is that determination to work together and to prosper together. I think that is a very good signal.
For APEC, as you say, in the last few years, progress has been very slow. One of the reasons is because I think the US approach has been that they want to deal with issues bilaterally, rather than in a multilateral basis with multiple partners together in a group. Also, they have not been supportive of trade as a win-win proposition. The attitude of the Trump Administration is that this is a win-lose proposition. If I have a trade surplus with you, that is good for me. If I have a trade deficit with you, that is bad for me. Trade is not like that. Trade is win-win – I may have a surplus with you, I have a deficit with somebody else, but it does not matter, as long as overall it balances out. But that has been this Administration's view, and this Administration is still in charge until 20 January. I do not think that they are likely to change their position at this late stage, but we will have to see how the new Biden Administration plays it. I think there will be more multilateralists. I think that they will be more supportive of the WTO, and of APEC. I am not sure that they will be more keen on throwing the doors wide open, or joining the CPTPP, because that depends on domestic politics too. Once the restrictions are in, it is a very delicate matter rethinking your position in deciding whether you want to go back to where you were, or how do you move forward. I think that will take a while, but I hope that there will be a more constructive approach – one where countries work together rather than against one another, and one where we aim to harvest win-win gains, rather than treat this as a win-lose proposition.
Moderator: What about the US’ relationship with China? Because I think that is very important.
PM Lee: That is crucial. In terms of the overall tenor, I suspect that there will remain many difficult issues to deal with, because on both sides in the US, as well as in China, attitudes have hardened a lot in recent years. Many people in the US see China as a strategic threat to them, and this is bipartisan. Quite a number of observers in China think that the US is out to thwart their development and rise, and they are determined not to let the US stop their development. And so, attitudes have hardened on both sides, whoever is in power in America, in Washington. But I hope that it will be a more coherent, systematic approach, one which will take into account a broader range of US interests, not just a trade balance, but also their overall relationship with China and the overall interest which the US has in the Asia Pacific and in the world, to be setting the standard, to be showing the way, to be playing a leading role as the most powerful country in the world, playing a leading role, showing how the world can be a safe place for countries big and small, and taking care of America's interests does not mean having to ride roughshod over other countries’ interests.
Moderator: One of APEC’s strength is the ability for like-minded countries – advanced as well as not advanced – working together on common interests and issues. To me, I think some of the important issues going forward as a result of COVID-19 is the collaboration that we can come together on the digital economy, and also things like safe travel. I think APEC provides that platform for you to do these kind of things. Do you see that as important platforms for APEC and important priorities for the future?
PM Lee: There are important things for APEC to discuss. I am not sure that we will make an arrangement which will involve all of the APEC participants – 21 countries simultaneously – but APEC is a forum where we can talk about them, and then subgroups of the countries can come together and can work things out.
The digital economy particularly is an area of considerable potential, because as volume has grown, a lot of business is done there, then you need to have countries talking to one another to standardise rules, to make sure that the interfaces can connect with one another, we can transact with one another, digital documents can be shared and recognised, and I can have information flows with rules regulated – what needs to stay within the country, what can be stored abroad. We have digital partnership agreements now being signed, and it is important to set the rules there in a new area which is still growing, and therefore there is the chance to get things right, rather than to try and put right things which have developed and gone to a certain way over a period of time. Digital is important.
Travel is also important. You need rules – you cannot just go back to the old days where you just buy a ticket today, and within a few hours you get onto a plane; you turn up and you do not need a visa, and then you have a weekend somewhere in the region, or maybe across the world, to do some business. You need agreements on what is safe, how to have corridors, how to have green lanes, how to have travel bubbles, how to do the testing, how to track, how to adjust your rules, when circumstances change, for example, if you have a travel bubble with somebody, and then I have new cases pop up, or he has new cases pop up – what do we do? We cannot be frozen, say the bubble is blown. I have to have some way to say pause, and I squeeze down for a while until things stabilise again, then I can open up again. These are all things which need to be discussed, and I hope will be discussed in APEC.
Moderator: One of the points that struck me when I looked at the ASEAN (Comprehensive) Recovery Framework documents that was issued as a result of the ASEAN Summit last week, was the emphasis placed on human security – protecting lives, protecting jobs – do you feel that this is an area because I think as businesses, to be fair, it is not really very high up in the business priority?
PM Lee: For the government, it is very high up the priority. People need to feel safe, and then they can put their energies and their attention on to their work and their businesses. Their business, of course wants to keep their business going, but from the government's point of view, it has to be a balance, and keeping people safe, their jobs, their health, as well as their families, is a very big emphasis.
In America, that is one of the divides. The Democrats tend to emphasise keeping people safe from COVID-19 and health-wise. The Republicans and their supporters tend to talk about the economy and keeping businesses going, even at the risk of COVID-19 bursting out and it costing lives. I would say on Singapore's behalf, I would come down on the side of making sure that people are safe and healthy, and well-treated medically. Having secured that, I make sure that I look after my economy. But we will not forget the businesses.
Moderator: In Singapore, we are all looking forward with anticipation, this air travel corridor between Singapore and Hong Kong.
PM Lee: Travel bubble. That is supposed to start….
Moderator: On 22 November, and most of the flights are booked already.
PM Lee: I hope the cases remain low.
Moderator: We are trying to advocate this arrangement for some of the APEC economies. If we can do that, I hope we can travel next year.
PM Lee: It is possible, but both sides have to be confident in one another and the situation has to be quite tightly controlled on both sides in order for this to happen. If you have a difference – I have few cases, you have many cases, I am afraid of you; if I have more cases than you, you are afraid of me. Once you have that kind of relationship, it is very difficult to open up. Even if both sides’ cases are low, having been there before and experienced the trauma of a major outbreak, the population may be neuralgic and will be very anxious if you open up. Will that mean cases will come in and therefore put us at risk again? We have to take this political reality into account. It is not just a political reality – it is a very understandable human reaction. We have to reassure people not to worry, we are moving step-by-step, there are some risks and likely you will see some cases, but we are doing our best and we will keep those cases under control. Provided we can do that, then we can move a little further.
Moderator: Thank you Prime Minister. The last question I want to ask is on behalf of the participants, many of the CEOs here. They are facing very much, an uncertain future. It is still foggy and murky. What would be your advice for business leaders in this time?
PM Lee: I am not a businessman, I hesitate to preach, but in this situation, you have to look forward – not back to what (it) was. COVID-19 will have a very big impact on all kinds of businesses – some for the better, some for the worse. Make an objective assessment of what does it mean for your business and how you can best advance it. You may have to pivot, you may have to transform, you may have to right size, you will have difficult decisions to make, but take good care of your people and remember that your people are also stakeholders and are an important resource for you. Look after them during this difficult period. Do not just make a short, quick decision – I am saving cost and I must drop so many headcount – but take care of them, retrain them if possible, redeploy them if possible, and they (will) repay that to you and to your company and in the process, we will strengthen our cohesion, and one day we will prosper again.
Moderator: Thank you PM for giving this very important insight to our participants. You have spent this morning talking about an important subject for all of us. Personally, I have a couple of wishes. One is that in 2021, I do hope to be able to travel. That is one. I hope that we will rebound a lot stronger, particularly this part of the economy. My last hope is that APEC leaders get to meet physically in 2021. That would be my hope, I hope that these wishes will come true next year.
PM Lee: I look forward to that. I hope so too.
Moderator: Thank you PM.
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