SM Lee Hsien Loong's Dialogue at the 69th Economic Society of Singapore Annual Dinner

Moderator (Professor Euston Quah): Good evening everyone again. I trust everyone is enjoying your dinner and good conversation all round. Now we have come to the highlight of tonight's event. So apart from the Distinguished Fellowship, the first highlight, the second highlight is this one, which is a dialogue with our Senior Minister. Now I am mindful of time, so I am going to set the format. I will be asking a series of questions to Senior Minister, and these questions are basically centred around three broad areas which I have in mind. The first is on geopolitical things. And the second issue is on climate change. As you know, I am an environmental economist, and so I would be interested to ask questions on the environment. And the third one has to do, I think everyone would be interested, which is domestic issues. So we start out with the external environment and then move on, finally, with the Singapore local environment.

Now, after the dialogue, when I finish conversing, I will then open it to the floor for a few of you to ask questions. Again, I am mindful of time, so please, we all keep our questions short and targeted.

So let us begin. Senior Minister, again, thank you very much for spending time with us and coming to this event. And I want to start off with the first question, which is, as you know, you look at the Liberation Day of Trump, mainly the tariffs. That was actually in April this year, and we have seen major shifts and departures from what we used to see as past norms.

So as an economist, we would like to ask a question, is comparative advantage dead, in view of all the trade protectionism and so on, and how does that impact international growth? Please.

SM Lee Hsien Loong: Well, first of all Euston, thank you very much for inviting me and also for honouring me with the Distinguished Fellow award, now giving me a high reputation to live up to. I shall try my best.

On Liberation Day and international trade, I do not think comparative advantage is dead. America has decided that they want to take a more narrow, bilateral, transactional view of international trade. Other countries still have a framework of the WTO – imperfect in many ways, but enabling quite extensive and quite free trade amongst them – and I think many countries want to preserve as much of that as possible. We will have to see whether that is possible. Because when you have one of the biggest economies in the world taking a radically different approach, and really not just withdrawing from, but expressing its disapproval of the WTO system; that will have repercussions, and we will have to see how the eventual situation shapes up.

But one thing I have learnt in government is that you can fail to follow economic principles, but you cannot repeal an economic law. Whether you follow it or not, the economic law exists. That is just the way the world works; that is just the way human societies work. And if you do not follow it, well, you may have your reasons, and you want to override it and do something different; but market forces, incentives for people to act in certain ways in their own interests, for countries to act in their own interests, are very powerful and very difficult to just chop off. You close here, it pops up somewhere else. You close there, it pops up somewhere else again. You think you have achieved an objective, something else happens, and you are chasing your tail. So I think that we are not as good. We are certainly, from an economic point of view, worse off now than before 2nd April, globally. But it is yet to be seen how things will turn out.

Moderator: So I am glad you mentioned that, well you said that comparative advantage is still on. But it is evolving. I think it is evolving. What do you think is the new framework on the global economy, and what can we do in Singapore too?

SM Lee: I suppose the best framework is the world, temporarily minus one. Meaning the framework mostly remains. America − it still has to do business with the world – you still need rare earths, you still need all sorts of things from the rest, from the other countries. But, well, for the time being, you wish the rules were different, and you are trying your best to change it. Temporarily, meaning maybe at some point you can come back and participate again in a more open and constructive way. But that is the best possible scenario – it may or may not happen.

Meanwhile, what can countries do? Well, you can make friends with like-minded partners within a region, like ASEAN; within a broader area, like RCEP (Regional Comprehensive Economic Partnership); or with economies which complement each other and have a broader range, like the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). And I think we can also work together on the WTO (World Trade Organisation) framework – like-minded countries – how to make the WTO work without being paralysed by consensus gridlock, which has been one of the big problems – whether or not the Americans are part of the party. And to be able to participate and have enough of a consensus of countries to say, “We move ahead.” Not everybody comes along, and some countries are not comfortable. Well, that is alright. The rest of us, let us move ahead. And we have got some progress on that in a few modest areas, and I hope that more of that can be done. We should try and make the multilateral framework less bad, rather than write it off.

Moderator: I think however much we like economic principles to apply, and how much we worship economics, we are limited by geopolitical constraints, as always. So these are reminders to us that we have to work within political constraints as well, not just focusing on economic efficiency. But this suggests that we need a lot of diversification of our reliance to the usual sources like the US and so on. There are lots of markets which are unexplored at this point in time, and I think this gives us an opportunity to look at all these markets.

SM Lee: We should do that. You should diversify within the region. You should diversify to fresh markets. Latin America, we have talked about, has not gone very far with us yet. The African continent is a very diverse continent — it is 50 plus countries, but some of them are promising, and we should explore all these new opportunities.

Moderator: So anyway, I mean, this impact of tariffs, could it be temporary, meaning that as long as Trump is in office, when he goes out, it ends?

SM Lee: No, I do not believe that. I do not believe that. It will not remain like this, but it will not go back to the status quo ante. In trade policy, in economic policy, once you make a move, you cannot take it back. There are consequences. When you first put in the tariffs, everybody complains. The people who need steel say, “Why is the steel so expensive?” The people who make chips say, “Why can’t I sell to China? Why can’t I import my chips from Taiwan?”

But once you have put in the tariffs, and once new players come who depend on the tariffs, and need the tariff protection, and you say “I am taking the tariffs away, we are going back to where we were”, it is politically not possible. And politically not possible because the businesses with vested interests will complain; politically not possible because then you will be attacked and say, “Your predecessor did this to protect us, why are you unilaterally giving away a chip? You must bargain for something.”

Which is what happened when Biden took over from Trump Number One. Trump Number One put in tariffs against China. Biden did not take them away; in fact, he tightened the screws on China more. And when there was a debate between Trump and Kamala Harris last year during the campaign, Kamala says, “You know, if Trump comes in, (there will be) so many tariffs and the world will turn upside down.” And Trump's answer was “Well, in my first term, I put on tariffs on China. It is now three and a half years into (the) Biden (administration), tariffs are still there. How is that?” There was no answer.

Moderator: Well, anyways, I think Singapore is not so badly affected yet.

SM Lee: Well, the Chinese have a saying, 五十步笑百步 – the person who retreated 50 steps from the battle laughs at the person who retreated 100 steps, and says, “You are worse off than me.” But actually, we have a Free Trade Agreement with the US. We have imports from the US – zero percent tariffs. Now the US has decided that Singapore gets 10% tariffs, like everybody else. And we console ourselves, that that is the best rate, and we hope that we stay there. I suppose if you treat the world as the way it is and ask, "Could it be worse? " It could be worse. But is it better than we were before? I am more skeptical.

Moderator: Alright, I think there is a lot to be said on tariffs and so on. I want to move on to another related concept to the external environment, which is the subject of global warming. Global warming and climate change has always challenged us – us meaning mankind. And in fact, right now, it is even worse because we have all this deglobalisation in trade, all this protectionism, non-global cooperation, where precisely we need global cooperation for something as wide, and broad (as climate change). And the whole world must be involved. But we are not having it, so we are retreating. So a few countries have managed to get together and they say, “Let us try to do something.” But I do not think that is enough. Do you agree?

SM Lee: Well, first of all, global warming is an inherently very difficult problem to solve. If you just look at it from an economic perspective, you would call it a Global Commons problem. Meaning it is a resource which we all share, which we all benefit from, but which we are not personally paying for. And you therefore need to solve it by coming together, in order to do it collectively. But when you do it collectively, there is always the risk of somebody opting out and saying, "Sorry, you carry on. I will just free ride on your hard work and your sacrifices and your belt-tightening". And that is called a free rider problem.

And whether or not one big country opts out from a Paris Agreement, we have the risk of a free rider problem. What do we do about it? Well, in principle, even if one country opts out, the other countries should do the sensible things. And there are some studies which show that China is big enough, that even without counting benefits to the rest of the world – just costs and benefits to themselves – they should cut emissions in order to reduce the impact on themselves. What more if it is possible for China? Maybe India, maybe EU, maybe Brazil? This is a dream package. But in principle, what more if other countries can come together, like-minded, agree amongst themselves on rules which would reduce their emissions – whether they do a carbon tax, or whatever rule. And then have some mechanism to deal with free riders – such as Border (Carbon) Adjustment tariffs – so that amongst ourselves, we abide by rules. If you are selling it to me and you did not cost your carbon, when you want to come into my market, I will tax you. And that way, hopefully you reduce the free rider problem and you can get a bit further.

So economically, you can get maybe three quarters of a solution. But politically, it is very hard, because then the other countries will say, "Look at that fellow. He is free riding on us, and I cannot quite levy enough price on him. Why should I tighten my belt?”

In fact, some Southeast Asian countries have already said that. "If America is going to be like this, I have to reconsider my commitments."

In fact, Singapore has to take a practical view of it. And we have made commitments to go to net zero by 2050, and halve our emissions by a certain date before that. And we have had to say, we are doing this on condition everybody else is playing ball. But if other people are not playing ball, then it does not make sense for us to stop breathing in order not to generate CO2. Because even if we did that in Singapore, it will not save the world.

Moderator: That is right. Actually SM, you are very right. Not many people appreciate this – that Singapore actually is quite exemplary in our contribution to the global cause. We are contributing only 0.11% of the carbon emissions. So even if we stop everything, it makes not much impact you know. But yet, we are doing it, and we have put in the right measures I think with adaptation and so on.

SM Lee: We are trying to be a good global citizen − do our part so that we are in good standing; we are not free riding on other people. And we should try and do it in a rational way. We have put in a carbon tax. It is going up, I think it is going to be about $50/tonne by 2030. It is going to be a cost on the economy. It may cost some businesses to have to reconsider their plans if they are not able to abate their emissions. But if we are serious about wanting to peak before 2030 and to decline progressively after that, then there is really no alternative to some businesses, to many businesses really – emitting less or some businesses deciding, "I cannot emit less. Well, I have to reconsider my plans altogether". There is no way out. If everybody can do it without pain, then you probably have not done very much.

Moderator: That is right. The other thing, SM, is that we recently discovered geothermal energy source. And this time, it is possibly deep enough and with the right temperature. So it might be a game changer.

SM Lee: Well, I hope so. But our electricity production is about 10 gigawatts. And if we are lucky, if we work very hard, you can get 50 megawatts out of the ground. So it is helpful, but I think we need to work harder.

Moderator: Ok, I mean these are really tough issues for us. But let us move on to a topic I think probably everyone is eagerly waiting for SM at least to discuss some of these local issues, domestic issues. So we have a room full of economists. Well, most are economists – studied economics, career in economics, applying economics. So SM, do you think understanding economics by government officers, officials, and also by people in general is very important for the country?

SM Lee: Yes, of course. Not just because I am here, but that is the reason I am here. It is not the only perspective on the world, but if you do not understand that, you are going to have a lot of misunderstandings which are going to cause you a lot of problems. In the government, many of the ministries must understand the economic forces at work and consequences of what they are doing. It is not just MTI and MOF but MSE, looking after climate and water supplies. MOM, looking after manpower. MND, looking after land planning, housing. Ministry of Health. All of the ministries actually ought to have inside them, somewhere in their thinking, inner core, an element of economic input. So that they can understand the economic forces at work, what are the incentives they have to deal with, what are the externalities of their policies, how they can use market forces and harness these incentives. Rather than disregarding the market forces and say, “You just stop doing that”, and think that that solves the problem.

So amongst the government, you need that.

Amongst the population, you also need that. Because then when the government imposes a policy or implements a policy, people can understand what it is about. And you may not like it, but at least you have some feel for the explanation, and you accept that okay lah, cannot be helped.

One of the things we have to explain, for example, is why is water so expensive in Singapore? And the economist’s answer is, because we are pricing water to its marginal production price, not the average price. You take water from the reservoir − reservoir built 100 years ago is cheap. But you take one extra litre, the reservoir has run out of capacity. I must produce one extra litre, I must build a new reservoir. I may need to make NEWater; I may need to make desalination. It costs me $2 per cubic metre. I have to price that – the marginal incremental unit price – and everybody should pay that, even for your first cubic metre. So the economists understand that. The public, not so much.

And so we have these debates, not just with the public, but even in Parliament. And we have to explain this. And we also have to do things which help people to accept the policy, beyond just swallowing the explanation. For example, we have U-Save. I did U-Save when in 1997 or thereabouts, we made a radical price revision to water. It was 50 cents per cubic metre, and over a period of two or three years, I pushed it to $1.50, because it had to reflect scarcity. And at that time, there were questions being raised about the security of our water imports. Quite fierce statements were being made. And so people understood we needed to do it, but to soften it, ease it in, we said, “Ok, U-Save – you pay for the water, but I give you a grant.” Every month you save X-dollars for those who need it – I think middle income and below thereabouts – so many dollars. You need the water, this helps you to pay for it. You do not need the water, just keep it, it is for you. So I do not distort your incentive, I have not made the water cheap. Water is expensive, but you are ok. Now that is quite a complicated argument, but tonight this is the Economic Society, so I am trying it on you.

Moderator: That is why you see, SM, understanding economics is so important from basic principles of trade-offs, opportunity costs, incentives, and now you just mentioned marginalism.

SM Lee: If we had not done this, we could not have done NEWater or desalination. Because, actually, that is what it is costing us to make the additional supplies. And if people are not paying that amount for what they are consuming, those projects would not have been economic.

Moderator: Precisely. Anyway SM, I want to pick up on your earlier point when you mentioned market principles. I mean, if we look at government policies, decisions over the past decades and so on, much as we like, guided by the best of market principles, and we teach that to our students as well, the beauty of the market, but there are instances where you need state intervention, where market outcomes may not coincide with social objectives. So can you elucidate, at least tell us some of the examples where you think that the market sort of fell short and need intervention?

SM Lee: Well, the big ones – health, education, housing – where we have intervened in massive ways. And yet we have tried to continue to use market forces in order not to completely diminish, remove the incentives for efficiency and for doing better.

Healthcare, for example – if you just leave it, if you have a state system like a National Health Service, you run into very serious difficulties. The British spend a lot of money on national health, and they are not very happy with the results. If you leave it completely to the private sector, which nobody quite does, but the Americans do it quite a lot, the market does not work very well.

Health economics is a massive subject, and in health, normal markets fail in so many ways that you end up paying a lot of money and not getting good healthcare. So somewhere, not just in between the two, somehow you have to structure a system with enough state intervention to prevent the private sector from running off on its own; and yet enough costing and pricing in order to encourage efficient running of our hospitals and clinics; and yet, and at the same time, the users, the patients, the population are not overusing the healthcare because it is free at point of use.

And I think that we have a balance which works not badly now, although this is a continuing challenge, because healthcare technology and costs keep on moving year by year. And from time to time, we have problems. For example, with our IP (Integrated Shield) plans right now, which is, to a very large extent, free at point of use, and that is causing market failure. So, it is not that insurance companies are profiteering from you. It is that you make a system that costs get out of control; you raise the prices, costs rise further, everybody is unhappy. And taking it away also makes people not so happy, because they have already paid, and I may get sick tomorrow. And yet you have to do something about it. But when you invite the Health Minister, he can tell you more.

Moderator: SM, let us pick a little bit more of something related to markets. Let us talk about the COE. I mean, there have been a lot of calls from what I hear, that there are deserving cases. Why some categories of people who apply for car ownership should be treated more kindly, to pay less for the COE, such as families. So what do you think, should we have–?

SM Lee: There are many good arguments like that. That is the trouble. There are so many good arguments like that, that it becomes very difficult for the government to design a system which takes into account how many kids you have; how young they are; whether you have got somebody disabled in the family; whether you have an old folk; whether your job requires you to go place to place delivering supplies, meeting customers; or whether you are driving to a place at work very far away (where there is) no bus, I need a car. I think if you want to design a scheme which worries about all those things, it will fail. So let me just give you a bit of perspective and explain to you where we stand.

What is this about? It is about allocation of a scarce resource, trying to use economic principles. Allocating a scarce resource using economic principles. What is the scarce resource? In the first instance, road space, using the roads. The COE is a proxy for the road space. So we are also rationing the COE in certain numbers, and then you have to allocate them. How do you allocate them? And the answer is, we would like to distribute them in a fair, efficient way. And that means, I set the price, people come to buy it, and then those who bought it get full value, those who did not buy it do not feel like they missed out on a windfall.

What does that mean? I must price it – fair market value. Fair market value, which is also (what) economists will say, the market clearing price. Okay, I put a price, people come to buy, turns out I have 100 COEs, 100 buyers, just nice. If I have got 100 COEs, 101 buyers, I put up the price a little bit. 99 buyers, I bring down the price a little bit. How do I do that? Well, I need a price discovery mechanism. Those of you in the finance business will know what is price discovery – when companies issue shares or bonds, you go around, you make the market, you make an estimate. Well, that is where the market roughly is.

What is our price discovery mechanism? It is the COE tender system. And every two weeks you can read it, just like you read the 4D results in the newspapers every weekend. Sometimes it goes up, sometimes it goes down. When it goes up a bit more than people would like to see, you get many requests to say, “How about we change the system and make it not go up so much?”

And one of the things which they say is, “How about pay-as-you-bid because right now, you know, you just submit a bid and then everybody pays just the lowest successful bid. So maybe people are being reckless.” But actually, if you look at how we are making our COE tenders work now, in fact, we are almost pay-as-you-bid. Why do I say that? Because previously, when we started off – you name your number, you seal your envelope, you submit your envelope. It is a tender. It is closed. After the tender closes, after the time closes, you open all the envelopes, and you decide what the outcome is. But now, because it is online, even as people are submitting their bids, we show you what the price is – at that moment, clearing price, moment by moment, until the bid closes.

I have not done this, but I have seen the charts. Normally it is open for 10 days or something (like that), the price is about zero, because most people have not bidded yet. Until about half an hour before the tender closes, then the real money comes in. It comes up, price rises, and everybody can see where everybody else is. And by about five to 10 minutes before the bids close, more or less, everybody has put their bids in. So actually, everybody has bid more or less according to what he wants. So actually, it is pay-as-you-bid.

In fact, what people do not understand is that we have a system, it works quite well. You would like the outcome to be cheaper, but as long as I am allocating, a certain number of COEs, there is a certain market clearing price. For that number, there is only that market clearing price. If you want the price to be lower, then you must put out more COEs, which is what the government is now doing. We took from the future, we are putting out 5, 10% more, and therefore the supply is higher. And I hope that the price will be a bit more moderated.

But there is really no easy way to make something which is valuable be distributed fairly and at the same time, very cheap. Other cities sometimes give up trying to do that, and they decided it is politically too difficult. They practically say, “I have set a nominal price, anybody can apply.” And it becomes a raffle; meaning we all apply − no harm, I may win in which case I get something. Beijing used to do that for some time, but I do not think that is the right solution for Singapore.

Moderator: I think to add on to that is the appeal to get lower COEs for special categories. So where does it stop, because there are so many categories that you can think of.

SM Lee: Well, I think there are two more direct answers to that. One, I can guarantee every Singaporean affordable, convenient transportation. I cannot guarantee every Singaporean an affordable car. It is different from houses – HDB houses. Every Singaporean can get one, maybe three-room, maybe five-room, maybe two-room, but every Singaporean household can get one. But cars, no. Transportation, yes. That is number one.

Number two, if in fact you have a special need, for example you have a kid, it is better (that) rather than I give you a cheaper COE, I give you a bigger baby bonus. If you want, you can use that to buy a baby seat or help to pay for a little bit of a car. Directly help the group you need to help in cash, rather than make complicated schemes, which then end up with all kinds of contradictions and wrong incentives.

Moderator: SM, let us change the topic from transport cars to maybe the cost of doing business. Rental rates – I have been hearing that SMEs are asking for help in the rental rates market. Should the government intervene?

SM Lee: Well, I think we have to watch the market, we have to watch whether it is competitive, whether there is collusive cartel behaviour and if there is, then we have to intervene to break that up. But generally speaking, rentals in Singapore, they are not low because I think Singapore is a small place and there is a limited supply. And if you go across the Causeway or across the Singapore Straits, of course it is much cheaper. But the rentals adjust to the market, not as fast as we would like, because they have a period − if you sign a lease, it is two years or three years. And sometimes when the market comes down, the landlord prefers to give you a private discount rather than tell everybody the rents have gone down. So that has to be taken into account. But I think generally the market works reasonably well.

Some cities have tried rent control; it does not work. The result is even fewer units, even fewer landlords, maintenance goes down, and everybody is affected. Who benefits? The person who happens to be there when the rent control was put in place for some time. After that, well, we are all in a worse position.

Moderator: Yes, that is very true. Now I am mindful of time, so I need to reserve some time for the floor to ask questions. But I think it is a very interesting discussion on the constraints of the markets. Even though the markets can produce wonderful outcomes, they are constrained by certain things and the government needs to fulfil certain social objectives, so that is the point.

Okay, I think we just have enough time for a few questions. Otherwise, we will go on and continue on, to talk about more and more things. So let me have a show of hands, I would like to maybe put two or three questions together. Please state your name, your affiliation, and keep the questions targeted. No long comments please.

Audience question: Hello, Dr Phua Kai Hong from Lee Kuan Yew School. Can I just ask this question? 25 years ago, you actually mentioned at the National Day Rally speech that we will kick the can down the road because of healthcare. And healthcare has a big problem here now in Singapore with the ageing population and so on. So what is your comment about distribution of healthcare of 80% to 20%. Now it is going to 90% public healthcare because of the problems in the private healthcare right now.

Moderator: Okay so one is on healthcare, healthcare cost and so on. This gentleman, professor, Dr Prakash in front.

Qn: Thanks very much SM for those remarks. I think listening to you, you know some characteristics of in a way, part of the success of the Singapore Story, which is policymakers are able to think long term, to kind of take risks, to go against the grain. The question I have is what are the risks that you see of these traits changing, that we are become a little bit more short-term, a little bit more risk-averse, moving away from marginal pricing to average pricing. What are the risks that of that scenario playing out and how can we ensure that does not happen?

Moderator: Thank you. So question one on health, one on changing risks. The lady raising your hand now. Please state your affiliation.

Qn: Hi, my name is Wioletta from GIC. Thank you Senior Minister, I would like to ask about Generative AI. I was wondering what are your thoughts on, what the key skills are for the future generations of Singaporeans in the light of this transformative technology in order to kind of stay competitive and resilient in the many decades to come? Thank you.

SM Lee: Okay first question on healthcare, I do not remember saying that we should kick any cans down the road. Maybe I misheard you but if we kick cans down the road, usually we meet them later on and they become more difficult to handle. And in Singapore we do not like to do that because in Singapore it is quite likely that the person meeting the can down the road would be the same person who did the kicking some time ago.

And so that is one of the reasons why we raised the GST (Goods and Services Tax) rate over the last couple of years from seven to nine percent, so as to address healthcare costs rising up. The public-private share of healthcare, whether it should be 80-20, 90-10, you can argue where it needs to be, but I think there is a role for private healthcare in Singapore. And I think Minister (of Health) has said – we also would like different models of private health care – and we would like to see if we can help make that happen. That is a kind of influencing the market without intervening, but we will see if we can find some way to help make that happen.

Prakash asked about the risk of leaders becoming short-term and not taking the economic rational approach and just looking for short-term political dividends. That honestly, is always there. Because most of the time, in most circumstances, it is easier to be a leader who oversimplifies issues and say, “I have a good solution. Follow me. This is the way. And after two days, everything will be solved.” Rather than somebody will give you a long exposition more suited to the Economic Society.

So it is very hard, and what you need is somebody who internally understands what the Economic Society thinks, but publicly is able to express it in terms which are maybe stripped down, maybe simplified, maybe presented in an analogy, but sufficient for people to accept and to have really have animal faith in the leader and the leadership teams – “I believe you. Not because I understand all the ins and outs of what is a ‘marginal incremental cost’ as opposed to ‘average cost’. But because you have shown results, and I trust you. And therefore, I give you the benefit of the doubt, and I will go along. And I think you have my interests at heart.”

I would like everybody to learn some economics. I would like everybody to also see it from the perspective of the government looking at the economic problem, which is not the same as an individual looking at the same problem. But really, to have good leadership, you need to have that trust and to be able to have that political debate in the public arena which is anchored on logic, on realities, on what the evidence shows, as opposed to being based on what is politically expedient − I speak my book if I am in opposition; I try to propound something which sounds nicer than what the government is prepared to offer. And if I am in the government, I try to do things which are nicer than what the country really needs.

There is no certainty that Singapore can do that forever. So we just have to know that, and therefore conclude, let us try to do our best to make it last as long as we can.

Third, what are the generative AI skills needed? I do not know for sure. The technology is moving very fast. Some people say it is going to shoot through the roof. It is already quite good for a good number of applications. If you are doing a medical diagnosis, it is very respectable. If you are doing image processing, it is very good. If you are passing law exams, it is also respectable. But whether that goes to AGI – Artificial General Intelligence – that, the jury is still out. It may be you carry on in this way and just add more CPUs and processing power and data, you can get there. But it may be that you need further insights and breakthroughs in order to go beyond just what the current statistical models are able to produce.

So we cannot say. But what you have already in some professions, is already making a big difference. I think that is a fact. And we should in Singapore, do our best to understand it and understand how we can use it. Even if I am not at the leading edge, generating the next DeepSeek, I should be able to make use of DeepSeek and other things in order to do our jobs better, deliver services better, to be more efficient, be more productive. And I think that is within Singaporeans’ capabilities. And we can train Singaporeans to be able to adapt to this and to be able to move – either to do their job better using the new tools, or in some cases, if those jobs are no longer there, you are really moving up to do a different job, or moving to another industry to do a different job. And that will need a lot of government support. That is one area where to say, “I leave it to the market”, or “I leave it to laissez-faire”, I do not think it is going to work. We need government resources, encouragement, exhortation, leadership by example – it makes a big difference. But one day you will have an AI bot here answering questions during your dinner. So far, I think, I still have a job.

Moderator: I think I am mindful for time, and so I do not want to press on. Except I think we have a young professionals wing somewhere, and I would wish they would ask a question. Do you have any pressing question for SM? Where are the young professionals? Raise your hand. Oh, okay. Do you have a question?

Qn: SM Lee, thank you for sharing. My name is Benjamin Lau. I am the Chairman of the ESS Young Professionals Wing, and I'm honoured to ask the question on behalf of the Youth Wing. For many young Singaporeans today, the definition of success is shifting. When I grew up, I have been hearing about earning money, home ownership and climbing the career ladder. But increasingly, some of us care more on purpose, sustainability, mental health and making a difference, and this is in addition to earning a lot of money and starting a family. My question is, how should young Singaporeans define success in today's society, and what mindset should we adopt for the future of Singapore? Thank you.

SM Lee: I think it is for the young Singaporeans to define what they would like success to mean. You are born with all the advantages which your parents’ generation did not have. If you are 35 years old, 35 years ago, the Internet existed, but social media did not. AI certainly had not made the breakthroughs yet, and it was a completely different world. The cadence was different. In 35 years, our standard of living has gone up in Singapore – probably I would say at least 50%. Your opportunities for education have gone up, from maybe 30% of people going to university, now nearly half of the cohort is going to university. They come out, there are jobs available for them, and the world is their oyster. You have a Singapore degree from an AU (Autonomous University), you can go anywhere in the world and find work. We are in Silicon Valley. We are all over China. You go to deepest Africa, you will find Singaporeans there. In Rwanda, there is one young lady who is running an advanced chicken farm, and doing very well. So, what do you want to make of your life, for yourself, for your family, for your country, for your fellow human beings? There are so many things you can do.

Do not lie flat. It is such a waste, that your parents will be disappointed in you – it is neither here nor there. If you lie flat after a while, I hope you are ashamed of yourself. But we did all these for you, make use of it and show us that actually, you are better than us.

Moderator: Thank you. So, do you not think that economics is such an exciting discipline? Even our current Prime Minister is an economist, right? Like the Youth Wing, I would say that you should live, breathe and think everything economics. With that, I think let us all thank SM Lee for spending time with us in this dialogue. Thank you everyone.

SM Lee: Thank you.

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