DPM Tharman: Look outward to hit Asia's full potential

Tharman urges region not to be protectionist and to make education about lifelong learning
By Fiona Chan, Deputy Political Editor, The Sunday Times, 12 Apr 2015

Asia's economic ascendancy should not be taken for granted, Deputy Prime Minister Tharman Shanmugaratnam said yesterday, as he urged policymakers in the region to give serious thought to reforms that will ensure sustainable broad-based growth.

These include adopting an outward orientation instead of protectionist inclinations, and making education systems less academically focused and more conducive to the lifelong learning of skills.

Amid the current "despondent" mood about global economic growth, Asia has "a bit more of a tailwind" in the form of favourable demographics and a growing middle class.

"But it's important to remind ourselves that nothing is preordained," Mr Tharman said to around 250 current and former Asian ministers, corporate bigwigs and thought leaders at the inaugural Singapore Forum.

The two-day event to discuss issues facing Asia's development, held at the Shangri-La Hotel, began with a dialogue and dinner with Prime Minister Lee Hsien Loong on Friday. Former Indonesian president Susilo Bambang Yudhoyono was the keynote speaker at the conference yesterday.

In his remarks at a lunch dialogue, Mr Tharman, who is also Finance Minister, said that Asian nations are not meeting their potential to converge with the developed world.

For countries in the region to achieve their full potential, they must overcome the instinct to cater only to growing domestic markets and to replace imports with locally produced goods and services.

"The new mantra is that of moving away from export-oriented growth towards domestic demand. And on the face of it, there's some sense in it because... domestic demand in Asia is growing," he said.

But this mantra has been "vastly overstated" as demand is only part of the equation.

"What fuels growth at the end of the day is not demand but supply - skills, entrepreneurial ability, technological progress, productivity," he said, adding that international engagement is a clearly superior strategy in these areas.

Protecting domestic markets from imports also tends to favour "the existing elite" of incumbent producers, Mr Tharman said.

He also advocated re-looking the current approach to education in order to create a workforce equipped with skills relevant for the future.

Such a move is crucial to prevent Asia's "demographic dividend" - a third of its population is below the age of 20 - from becoming "demographic distress" when these young people need jobs.

Across Asia, education tends to be too academically focused, leading to many university graduates having trouble finding jobs without further training in specific skills, Mr Tharman observed.

Learning should also not be "front-loaded" in the first two decades of a person's life, as that fails to prepare workers for a future of machines becoming exponentially cheaper and smarter, he said.

Instead, he proposed a system of lifelong learning "that's integrated with the real world, developments in technology".

Economic obstacles aside, Asia also faces the challenge of keeping its societies together at a time of increasing sectarian conflict across the world, Mr Tharman said.

He suggested giving each group "the pride of their own religions, beliefs and cultures", but also developing a larger common space and a common identity to ensure better integration.

Discussions about smart cities and the quality of life are not just about economic opportunities, he said. "It is about shared futures. We have to place that foremost in our minds as our objective."

Watch the Dialogue session with Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, on 11 April 2015. The session was moderated by Ho Kwon Ping, Executive Chairman, Banyan Tree Holdings.
Posted by Singapore Forum on Wednesday, April 29, 2015

Tharman on social cohesion, state-owned companies
The Sunday Times, 12 Apr 2015

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on:

The most important policy that was a major stabilising factor for Singapore

"The most intrusive social policy in Singapore has turned out to be the most important one... And that is a rule on ethnic balance in every single block of HDB flats. Every single block and every single precinct has a rule on ethnic balance, which means that on the same floor and taking the same lifts up and down every day, you have a certain interaction that's quiet, unstated and normal.

But it also means, critically, that the kids go to kindergartens and primary schools that are largely integrated, because kids tend to go to schools that are quite close to where they live.

And when you grow up together, you're not just in the same classroom together, you play some sports together, you just become more comfortable with each other...

We can never think that the natural workings of society would somehow produce cohesion - usually, the opposite happens in most societies."

Why state-owned enterprises (SOEs) work in Singapore

"If you subject state enterprises to the competition of the market in every sense, there is nothing inherently wrong with state enterprise.

The reason why state enterprises in Singapore are by and large profitable, are competing internationally, and by the way as a norm tend to have significant private shareholding as well as foreign shareholding, it is because they are subjected to the marketplace of competition...

As a shareholder (of Temasek Holdings), we (in the Ministry of Finance) want returns for the long term so we can spend them on our Budget. For us to get these returns on a sustainable basis, we've got to preserve the independence of SOEs and subject them to competition in the market economy."