Speech by Deputy Prime Minister, Coordinating Minister for Economic Policies and Minister for Finance Heng Swee Keat at The Straits Times Global Outlook Forum 2021 on 11 January 2021.
I am very happy to join all of you for the ST Global Outlook Forum.
No one could have predicted the scale and disruption of COVID-19 in 2020. We now have 90 million cases and nearly 2 million deaths. Business and travel have been hit, and jobs lost. The picture in East Asia has been relatively better, but there have still been subsequent outbreaks. Our economies have not been spared.
The outlook remains highly uncertain.2020 saw massive government stimulus to support jobs and businesses. But this cannot continue indefinitely, and we will need to find a more sustainable path to recovery. Much will also depend on our collective will to implement effective national interventions, and collaborate across borders.
2021 begins with some hope. Vaccination programmes are beginning, and scientific cooperation has taken great strides in a short period of time. But the emergence of more infectious variants reminds us that the fight is far from over. If the vaccine rollout is successful, and with continued policy stimulus, we may see the beginning of global economic recovery in the second half of this year.
Pandemic in the Age of Globalisation
This is not the first time the world has confronted a devastating pandemic. A century ago, the Spanish Flu swept the globe. A third of the world became infected, and nearly 50 million people died. Back then, there was no coordinated global response. The science of virology was far less developed. So was our ability to develop vaccines. Basic information-sharing and international cooperation for the pandemic was almost non-existent.
It was only after the Second World War that our present rules-based multilateral system emerged. The United Nations and other institutions were established. The WHO is one such institution. Without it, smallpox, polio, Ebola, and even influenza would be bigger problems.
Our global order has laid the foundation for progress. Globalisation has powered the world’s economy for most of our lifetimes. However, its fruits have not always been evenly spread, within and across countries. Unhappiness over inequality has polarised politics in some places. Support for global trade and integration has weakened. But it is not useful to simply reject the system wholesale. On the contrary, we need greater cooperation to adapt the rules-based multilateral system and make it work better for all.
We must accept that there will be no return to the pre-pandemic era. It is up to us to chart the course towards a new normal. COVID-19 has accelerated structural shifts that were already taking place. Digital and technological disruption have accelerated. US-China tensions have intensified, with no equilibrium in sight. Global trading rules have not kept pace with current realities. However, the pandemic has also given us common cause to work together. Early in the crisis, China’s scientists shared genetic data for the virus. This allowed the swift development of diagnostic tests, including by Singapore. Institutions are cooperating across borders on treatments and vaccines. 190 economies are participating in the COVAX Facility, which seeks to secure fair and equitable access to vaccines for all. In short, through global cooperation, the world has an opportunity to rebuild and emerge stronger from this crisis.
The Great Powers: Competition, But Also Common Ground
The US-China relationship is a key factor shaping global cooperation. They are the world’s two largest economies, top spenders on defence, biggest sources of international patents and top researchers, and two largest emitters of carbon dioxide.
In many ways, we must be prepared for sharper competition between them. There has been a fundamental shift in attitudes – not only in the US, but also elsewhere. China is now regarded as a strategic competitor. In the US, there is now bipartisan support for a tougher stance on China. The incoming Administration will be taking office next week. But they may not reverse some of the moves that the previous government put in place. Strategic rivalry will colour this relationship for a long time to come. There will be disagreement and friction. Despite this, they can still reach a more measured tone of engagement, and greater predictability in decision-making.
While the US and China will compete, conflict is not inevitable. Competition and cooperation can co-exist. It is in the interest of both to remain engaged with each other, and with the global system. There are challenges that the US will not be able to manage alone. China has been a major beneficiary of the global system, since it undertook reforms and its entry into the WTO two decades ago.
It is useful to remember that even in the depths of the Cold War, a minimal level of practical cooperation prevailed. As one example, the US and the Soviet Union worked together through the WHO to eradicate smallpox in the 1960s. Even in the contested area of space, the 1975 Apollo-Soyuz mission developed compatible rendezvous and docking systems, which remained in use for decades. The key is that both sides must take a rational view, and find common ground. To compete when necessary, and cooperate wherever possible.
The current global order did not come about naturally. It was created through strong leadership and purposeful decisions. There is now an even greater imperative for pragmatism and cooperation, given how inter-connected and inter-dependent we are. There are early signs that the US and China could be willing to seek common ground on some key global challenges like climate change and public health. Much will depend on whether they are able to find a framework for cooperation.
The state of US-China relations will have a significant bearing on our region. Asia’s share of global GDP has been growing steadily. It is projected to recover faster than the rest of the world, and will contribute 60% of global growth by 2030. But an Asian century is neither inevitable nor foreordained. Economic recovery will be uneven across countries. Divisive, tit-for-tat competition between the US and China may also impact growth.
To secure the region’s potential and address risks, leaders need to work together to take action. One example was the signing of the Regional Comprehensive Economic Partnership last year. This was initiated by ASEAN nine years ago, well before US-China tensions over trade emerged. It showed how we could catalyse regional cooperation in concrete ways. We continue to welcome India’s participation when it decides the time is right.
Another example was the conclusion of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Beyond reducing costs for business, the CPTPP will help safeguard intellectual property rights, and high labour and environmental standards across the region. The door remains open for the US and other like-minded partners to join. These regional partnerships are not exclusive regional economic blocs. They are building blocks that canenhance capacity and confidence towards broader global integration.
ASEAN Centrality and Cooperation
Within Southeast Asia, the fundamentals for growth are strong. We have a growing middle class and a fast-growing digital economy. We are in a good position to benefit from the reconfiguration of supply chains.
Both the US and China’s active presence are important for ASEAN to progress. The US’ presence underpins regional stability, which creates a hospitable environment for business and investments. American investments also drive many key industries. China has deep economic interdependence with ASEAN. It is now the largest trading partner for eight ASEAN countries, and ASEAN has overtaken the EU to become China’s largest trading partner.
ASEAN has and will continue to feel the tug of US-China competition. We cannot determine the trajectory of this contest, but we can stand together to advance ASEAN’s collective interests. And ASEAN’s interests must be defined by ASEAN, not by others who seek to define them for us. It is not a question of choosing sides, but rather, retaining our ability to make choices for ourselves.
To safeguard our independence and agency, our region must remain anchored on ASEAN Centrality. ASEAN must play a proactive and central role in engaging external partners, always working inclusively and pragmatically, and transcending disagreements between external powers. One example is the negotiation of a Code of Conduct in the South China Sea, which will help keep our region open, and avoid miscalculation and misunderstanding.
Within ASEAN, we must continue to support one another. ASEAN’s greatest success has been to maintain peace in a very diverse region, which has historically been in conflict among ourselves. Five decades on, in the middle of a global pandemic, many of us donated test kits and equipment to one another, and helped each other repatriate citizens stuck overseas. Despite the pandemic, we have pressed on with the ASEAN Economic Community Blueprint 2025. Trade has continued, and goods still move across borders. All Member States have joined the ASEAN Single Window Live Operation, which will further expedite cargo flows. Under Brunei’s Chairmanship this year, we will continue to strengthen resilience and deepen cooperation.
Global Cooperation: A Way Forward
At the broader level, global cooperation will be especially important as we seek to exit the pandemic and rebuild. Let me highlight three important areas.
Public Health Cooperation
First, in public health. The COVAX Facility is a major step in the right direction. With vaccines authorised for use and in mass production, the next step is to work together to transport them swiftly and safely, and distribute them equitably. A further step is safe resumption of the movement of people, by establishing common protocols and standards for safe international travel. In the longer term, we need to strengthen our collective response to future pandemics. Disease X is not a matter of if, but when. We must lock-in and strengthen the unprecedented level of information exchange – in science, research, and best practices. Learning from the asymptomatic nature of COVID-19, we can more quickly develop and scale diagnostic testing. The WHO will also review its work, to better respond to future crises. Public health cooperation can also expand beyond pandemic response. Collaboration on healthcare innovation will enhance the resilience and effectiveness of our healthcare systems. Several societies have ageing populations, including Singapore. We can cooperate on research and the sharing of experiences, to enable our seniors to say healthy and active for as long as possibl.
The second area for global cooperation is climate change, which affects all countries, especially small island states like Singapore. We need a global effort, and multilateral solutions. So I am glad that the US will be recommitting to the Paris Agreement. This is also an area where cooperation in science and technology can propel us towards a green recovery. Innovation and technology can offer solutions to achieve both economic growth and sustainability. There is great potential to improve resource efficiency for energy, water, and food production, develop nature-based solutions for climate change, and employ biophilic design to build greener, more sustainable, and liveable cities.
A third area is in digital governance. The digital revolution was well underway before COVID, and sped up during the crisis as life shifted online. But global norms and rules in cyberspace have not been fully worked out. As technology becomes ever more pervasive in our daily lives, cybersecurity will be even more critical. International collaboration is crucial to maintaining a safer and secure cyberspace. We will also need stronger tech governance, to ensure that technology progresses in a fair and ethical manner.
For example, Singapore is a founding member of the Global Partnership on AI. This international initiative was started last year to support the responsible use of AI, data governance and how AI can be used to empower workers.
As digital trade grows, we will also need common standards to enable trusted data flows across borders. There is an ongoing effort by a group of WTO members to update global trade rules to facilitate digital trade. The G20 is also looking at important issues like the free flow of data and cybersecurity. Singapore has pursued Digital Economy Agreements with our partners, to develop new approaches for the cross-border digital economy, such as e-payment across jurisdictions. As with trade, such agreements build a common framework for progress, especially in this new and rapidly evolving field.
COVID-19 has brought us to a crossroads. The forces of change will take their course, whether we act or not, in the three areas that I have just spoken about, and in many other areas. If we do not come together to tackle these common challenges, we will be headed towards a more fractious, more unequal world. Our planet will be less habitable, and we might not be able to achieve the Sustainable Development Goals, which all UN member states have committed to.
COVID-19 has given us common cause to work together. Let us build on the momentum of cooperation from this crisis, to make the best of this moment, and lay the foundation for a more resilient, more sustainable and more vibrant future. It will not be easy. COVID has laid bare many of our vulnerabilities. But we can take small concrete steps, especially in the areas I have just highlighted.
Each country will also need to adapt how it works externally with others – in an open and more inclusive way. At home, each country will need to undertake structural reforms, to build new competitive advantages to benefit from globalisation, and to ensure that social policies are sustainable. If we succeed, each country can grow new strengths and complement one another, achieving more together than we could on our own, and giving us a stake in one another’s success.
Singapore’s Place in the World
Now, what do all these mean for Singapore? As a small country, our openness underpins our economic success. Today, trade is three times our GDP. We are also a global transport, manufacturing, and financial node. If we close up, we will soon lose our value and relevance to the world. This is why, even with COVID-19, we are actively looking for ways to reopen safely, while remaining vigilant. Being small and open means we feel the tugs of external events more keenly, especially as the multilateral system comes under pressure. Even so, being small has its advantages. We can be more adaptable, flexible, and innovative in tapping opportunities brought about by global cooperation.
In climate change, Singapore is putting sustainability at the core of what we do. Climate change is an existential threat for Singapore, but can also create new opportunities. For example, through international scientific collaboration, we are deepening our understanding of climate science, especially for a highly urban environment like Singapore. We are also developing creative solutions to decarbonise our economy, including carbon-capture utilisation and storage, and low-carbon hydrogen. As a global financial hub, we can also contribute to a green recovery in Asia. For example, we are exploring how we can serve the region as a marketplace for high-quality carbon credits, and provide technology-enabled verification systems for carbon solutions.
As the world grows ever-more digital, the tech sector is also a bright spot for businesses and workers in Singapore. We will continue to grow our tech and start-up eco-system, and nurture unicorns like Sea and Grab. We will continue to invest in innovation, deepen our capabilities in technologies like AI, which already has widespread applications, and develop emergent areas like quantum computing. We will also continue to grow our partnerships with tech giants from around the world.
But our ability to make the best of these opportunities and our relevance to the world, ultimately depends on our strengths at home. As we strive to remain open and grow, we must ensure that the benefits of growth are spread more equitably. We do so by helping our businesses to transform, while attracting more companies to set up operations here.
We are also investing significantly to bring out the best in our people, while complementing our workforce with expertise from abroad. Above all, we must continue to strengthen national solidarity, and push back against the division and polarisation seen elsewhere. We must continue to grow what we have in common, and deepen our shared commitment to do what is right for the longer term.
The stronger we are at home, the more we can contribute to the global commons and create opportunities for Singaporeans.
COVID-19 has given the world a sharp shock. But it has also given us common cause to work together. The world must build on this momentum of cooperation, to tackle our common challenges, and lay the foundation for a better future. Global cooperation will be shaped by US-China relations. There will be friction. But competition and cooperation can co-exist, and there are early signs that both could be willing to seek common ground. The prospects for ASEAN remain bright, but the region can realise our potential only if we work together to advance our collective interest. As for Singapore, we must remain open to stay relevant and thrive. We must resist any tendencies to turn inwards.
A decade from now, in the 20th edition of the ST Global Outlook, I hope we can say that while COVID-19 was a dark chapter, the world was able to rally together and turn the page, laying the foundation for a more resilient, sustainable and dynamic future. Thank You!
Explore recent content
Explore related topics