DPM Gan Kim Yong at the Economic Society of Singapore 70th Anniversary Dinner

President Quah,
Ladies and gentlemen,
My colleagues and former colleagues,
ESM Goh, Mr Heng Swee Keat

Good evening to all of you.

Let me first begin by congratulating the Economic Society of Singapore on your 70^th anniversary.

How Singapore Got Here

This month, we are also celebrating Singapore’s 61^st Anniversary. It is therefore an opportune time for us to look back on how far we have come and think about where we are going from here and how do we get there.

First looking back, Singapore’s progress and economic development are not inevitable. During a time when most countries decided to focus on building and protecting domestic industries, we decided to take a different path. We opened ourselves to the world. We attracted investments, brought in technology, and built up our infrastructure. We created new markets and moved decisively into more sophisticated and higher value activities. At the same time, we helped our workers acquire the necessary skills and know-how and supported our enterprises to grow and become globally competitive.

But none of this was inevitable at that time.

Singapore did not have scale, natural resources or a large domestic market. We could not choose the world around us. We had to understand it, find our place within it, and adapt as circumstances changed over time.

We have indeed come a long way. Over the last 6 decades, our economy grew from $3 billion to almost $800 billion. In real terms, the average annual growth rate was close to 7% over this period. GDP per capita also increased from about $1,600 to about $130,000.

A More Difficult World

Fast forward to today, the basic constraints and factors have not changed, but the world we are facing has. The global economy is becoming more contested and fragmented. Economic decisions are increasingly shaped by national security and domestic politics. Technologies such as AI are rapidly changing how value is created and how work is organised. The transition to a low-carbon economy is tilting competitive balance and shaping investment decisions. At home, our workforce is ageing and growing more slowly.

What makes this world difficult is not just uncertainty alone. Uncertainty makes it difficult for companies and governments to make long term plans and policies.

But more than uncertainty, today we see many legitimate objectives pulling against one another. Countries want the benefits of trade, but also more security and control over their supply chains. They want faster technological adoption, but also they want to have secure jobs. They want to decarbonise, but they also want to have affordable energy and competitive industries.

Large economies can leverage on the size and power of their markets and control over new technologies to influence their partners. They can also subsidise their industries, and require supply chains to organise around them.

Singapore cannot respond in the same way. We do not have the scale. But we do have agency.

Our task is more fundamental: to preserve our ability to choose our own path, even as the world changes around us.

For a small economy, that ability does not come from isolation. It comes from being connected and valuable to others, keeping our options open, and ensuring that our people can keep pace with economic change.

Smallness is not automatically a disadvantage. It can instead give us an advantage: the ability to adapt quickly, move early, and adjust swiftly when conditions change.

For Singapore, agility must do some of the work that scale does for larger economies. This is why the Economic Strategy Review identifies agility and adaptability as a central economic imperative. Our institutions, firms and workforce must be able to move fast, take calculated risks, and find solutions to challenges quickly.

From Openness to Relevance

Singapore’s answer to smallness is openness and this is critical. Our total trade is more than three times our GDP. Outward-oriented sectors make up the bulk of our economy. Our firms and workers depend on markets, capital, technology and ideas from beyond our shores.

Turning inward would therefore not make us more secure. It would narrow our options, constrain our opportunities, and leave us even more vulnerable.

But openness alone is also not enough.

In a more fragmented world, trade and investment will still flow, but not always along the most efficient route. Factors like reliability, security and strategic alignment will play an increasingly significant role. A hub that is merely convenient or efficient can be bypassed for many of these considerations.

Singapore must therefore move from just being open to being relevant.

We cannot do everything. We must concentrate on areas we can build hard-to-replicate advantages, and become integral to companies’ supply chains and their operations.

That means deepening the capabilities we already have in high-value manufacturing and trusted services. It means anchoring investments more firmly through partnership with local enterprises and research institutions, and by building up a strong base of local and foreign talent here.

It also means evolving our role as a hub – from being a place through which goods, capital and data pass, to one where these flows are decided, managed, financed, governed and translated into value.

In simple terms, we must move from moving things to determining how things move.

This is how a small economy creates leverage: by being useful to many, while being difficult to replace in a few important areas.

But relevance depends not only on the strengths that we have today. It also depends on how quickly we refresh them to stay relevant. We must encourage and support new firms, businesses and business models to emerge and grow. We must help existing firms to restructure or pivot before their problems become entrenched. With scarce land, manpower and capital, we need these resources to move more readily towards their most strategic and productive areas.

A dynamic economy must therefore support both growth and renewal.

Relevance too must be constantly renewed. We must continue to demonstrate the value Singapore creates for our partners, so that we can continue to stay relevant to them.

Building Resilience

But we must also recognise that the same openness that creates opportunity can also transmit shocks. A change in export controls, an interruption to energy supplies, or a new requirement imposed by a major market can alter the economics of an industry very quickly.

For Singapore, resilience means having alternatives. We must diversify critical sources and markets, maintain strategic buffers where necessary, deepen trusted partnerships, and develop alternatives. The Economic Strategy Review describes the ability to combine resilience with efficiency as a competitive advantage in itself.

Resilience buys us time. Agility allows us to do the necessary during that time.

The low-carbon transition is a practical example of how this works.

The direction is not in doubt. Carbon constraints will increasingly shape customer requirements, financing and market access. Our enterprises must prepare for this reality.

Our carbon tax provides a price signal for businesses and consumers to improve efficiency and invest in lower-carbon alternatives.

But the trajectory must remain pragmatic and calibrated, taking account of the progress of decarbonisation technologies, the cost impact on our businesses, and international climate developments, including the progress of other countries in meeting their decarbonisation commitments.

We will help our firms transform – to produce more value with less energy, less carbon and less resources; to adopt cleaner processes; and to build new capabilities that will be valuable in a carbon-constrained world going forward. As we strengthen our resilience against climate change, we need to remain nimble and adjust our approach as we go along.

AI, Growth and Good Jobs

So far, I have spoken about Singapore’s room to manoeuvre in the world. But our ability to adapt also depends on our confidence at home. An open economy can remain open only if the people benefit from it. A country can only adapt if its people see economic change not simply as something done to them, but as something in which they have a meaningful stake.

AI is the clearest illustration of this.

AI is often discussed as a contest over models, compute and investment. But for society, the deeper question is about the relationship between economic growth and jobs.

We cannot assume that the same rate of growth will generate the same number of jobs as before. AI and automation will allow firms to produce more with the same or fewer workers. For sure, new tasks and roles will emerge, but some existing ones will change, shrink or disappear.

There is no need to be alarmist. This is not likely to lead to immediate, economy-wide job losses.

But neither should we be complacent. We need to manage this transition well.

Ultimately, technology must enable workers to do more valuable work, take on broader responsibilities, earn better wages, and progress in their careers.

In adopting AI, firms should pay attention not only to cost savings, but also to job redesign, training and worker outcomes.

We need to identify early roles that are potentially exposed to AI, and create effective career bridges into work that builds on existing skills, combining targeted training, guidance, job matching and actual placement.

For workers, adaptability cannot rest on individual effort alone.

The system around them must also respond faster, using better labour-market information, linking training more closely to real jobs, and helping people adapt before disruption turns into prolonged unemployment.

This requires employers, training institutions, unions and the Government to act together. Learning must remain closely connected to work, and support must begin before workers are affected. This is the task of our tripartite partners.

Our strategy must also cover a broader range of jobs. Not everyone will – or should – become an AI engineer. Care, allied health, early childhood education, skilled trades and essential services will continue to provide good job opportunities. Many of such roles depend on judgement, dexterity, trust and human interaction that technology can support but not easily replace.

The task is not merely to preserve these jobs as they are. It is to raise their productivity, improve their design, strengthen progression, and support better wages.

Redistribution and social support will remain necessary. But they cannot be the only answer.

Productive work provides more than income. It gives people agency, dignity, social recognition and confidence that their effort will lead to progress and success.

This is why good jobs are not simply a social outcome to be addressed after economic strategy is decided. They are part of economic strategy itself.

Small State Realism

Taken together, these choices and options amount to a particular form of small-state realism. It is not realism in the sense of accepting outcomes passively. Nor is it an excuse to lower our ambition. It means being clear about the few things we must secure, be selective about where we compete, and be flexible about how we will get there.

It also means using our small size well: bringing Government, businesses and unions together to spot opportunities early, take calculated risks, move quickly, manage change carefully, and scale decisively.

We need a clear long-term direction, and we must be prepared to adjust the path and pace along the way.

Agility does not mean changing course all the time. It means having the capacity to change when necessary, while focusing sharply on our direction.

The role of Economics in a Messy World

This is where this Society has an important role to play. In the messy world we are in today, the most useful analysis will not always produce a single optimal answer. It must show how decisions in one domain affect another; distinguish immediate efficiency from long-term objectives; identify who bears the costs and who benefits from it; and recognise the value of preserving options given the uncertainties ahead of us.

The role of economists is not to make these tensions disappear, but to make them clearer, and to help society choose with a clearer understanding of the consequences and the trade-offs. For 70 years, the Society has provided a place where economists, policymakers and practitioners can test ideas against evidence and against one another. That task is even more important now, when old assumptions are constantly being challenged and new realities are evolving very quickly.

Singapore cannot choose the world we operate in. But we can choose how we position ourselves within it.

We can remain open without being vulnerable; build resilience without turning inward; pursue technology and decarbonisation without losing sight of competitiveness and good jobs; and use our agility to keep adjusting quickly as conditions change overtime.

Our advantage has never been that we could control the world around us. It has been that we understood our circumstances, we acted early, adapted quickly, and retained the ability to choose.

In a messy world, preserving that ability may be the single most important economic task of all.

So once again, I want to wish all of you a great evening. And congratulations to the Economic Society of Singapore on your 70^th anniversary. Thank you very much.