How Singapore can thrive in the new globalised environment: PM Lee
By Zakir Hussain, News Editor, The Straits Times, 23 Jan 2020
DAVOS (Switzerland) • At a time when globalisation is under pressure around the world, Singapore has to continue to bet on countries cooperating closely with one another, Prime Minister Lee Hsien Loong has said.
It has to up its game, raise its capabilities and bring in new investments that will connect it to centres of vibrancy and prosperity worldwide, and enable it to make a contribution to this growth, he added.
"We can do things in Singapore, which are not so easy to be done, all together in one place. That means we have to upgrade our companies, our people, education, skills, and have the environment where we can welcome in very high-quality investments, operations, R&D centres, places where high-quality people want to live, work, want to be.
"It is not just costs, it is also the whole environment - the safety, the security, the confidence, the opportunities, the vibrancy," he said.
But the system must also work for Singaporeans, he stressed at a 30-minute dialogue with World Economic Forum president Borge Brende yesterday. "If it doesn't work for them, the system will fail," he added. "And in Singapore, we must not fail because we only have one chance to succeed."
"We have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore, but benefit Singaporeans - across the board - so that they are able to take advantage of the jobs that we create, so that they are able to fend for themselves against global competition," said PM Lee.
"So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills, and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own, that the system is not on their side."
PM Lee also spoke about challenges posed by the US turning inward and a rising China, and how Singapore plans to navigate its way in a more challenging environment.
By Zakir Hussain, News Editor, The Straits Times, 23 Jan 2020
It has to up its game, raise its capabilities and bring in new investments that will connect it to centres of vibrancy and prosperity worldwide, and enable it to make a contribution to this growth, he added.
"We can do things in Singapore, which are not so easy to be done, all together in one place. That means we have to upgrade our companies, our people, education, skills, and have the environment where we can welcome in very high-quality investments, operations, R&D centres, places where high-quality people want to live, work, want to be.
"It is not just costs, it is also the whole environment - the safety, the security, the confidence, the opportunities, the vibrancy," he said.
But the system must also work for Singaporeans, he stressed at a 30-minute dialogue with World Economic Forum president Borge Brende yesterday. "If it doesn't work for them, the system will fail," he added. "And in Singapore, we must not fail because we only have one chance to succeed."
"We have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore, but benefit Singaporeans - across the board - so that they are able to take advantage of the jobs that we create, so that they are able to fend for themselves against global competition," said PM Lee.
"So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills, and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own, that the system is not on their side."
PM Lee also spoke about challenges posed by the US turning inward and a rising China, and how Singapore plans to navigate its way in a more challenging environment.
PM Lee Hsien Loong's dialogue with WEF president Borge Brende in Davos
PM Lee talks about navigating US, China ties
It's vital to understand that Singapore is acting on its own behalf, he says
By Zakir Hussain, News Editor In Davos, Switzerland, The Straits Times, 23 Jan 2020
Strains in the US-China relationship have meant that where it was previously effortless for a country to say it was friends with everybody, including the United States and China, now, from time to time, one is pushed to be better friends with one side or the other.
Prime Minister Lee Hsien Loong drew laughter from the packed room of 200 business leaders and officials as he made this observation at a dialogue yesterday in Davos, Switzerland, with World Economic Forum president Borge Brende, a former Norwegian foreign minister.
Mr Brende quipped: "A lot of Europeans understand that."
PM Lee replied: "Well, the smaller you are, the better you understand it."
He noted that when Singapore does have to make a stand, it is important that people understand Singapore's choices are on its own behalf.
"Because we are making decisions for Singapore, and not because we are a cat's paw for one side or the other," he said. "That means you must have the courage to stand up and call things as they are and, from time to time, you will incur, well, at least a raised eyebrow and sometimes more than one raised eyebrow from one side or the other, and occasionally both.
"But it is necessary to do that because once people no longer think that you are a serious interlocutor, calculating on your own behalf, you are written off, you are finished."
PM Lee noted that America's benign engagement in Asia as well as China's rise and growth had enabled the region to prosper over the past 50 years.
World trade was also buoyant.
But today, the US is concerned it is footing too much of the burden, and that other countries are taking advantage of it.
China's influence has also grown, as has its role in the global economy.
How the relationship between the US and China would play out and its impact on the global economy was a key theme of the 30-minute session.
"Singapore hopes that we will be able to cooperate with them and participate and encourage them to engage in a way which leaves space for other countries to prosper, to set their own path," said PM Lee.
"And in the long term to welcome a new major player, and not feel that this is an elephant in the room that may not notice who else is there and what else may be underfoot."
Asked whether he felt US-China trade tensions had peaked with the phase one trade deal reached this month, PM Lee said he did not think they had.
The issue of how an incumbent hyperpower accommodates a rising new power whose economy is set to grow and eventually become larger than that of the US - although not for years to come - will remain.
Uncertainty has also meant that investments have been affected, and business decisions are being put off. And the prospect of a bifurcation in technology, whether on 5G networks or the entire supply chain, remains, he added. This will have a significant negative impact on long-term growth, and create mutual suspicion and anxiety.
PM Lee noted that some optimists say global supply chains are so closely integrated that pulling them apart is unthinkable.
He said he did not take such an optimistic view, noting that European countries were integrated before World War I, but this did not stop miscalculations and tensions from breaking out. "We have had 50 years of peace. Can you bet on another 50 years of peace? The odds are not negligible."
The discussion turned to the possibility of a prolonged slowdown.
PM Lee said: "The key thing is, if you have the strategic tensions not being resolved and flaring up again downstream, which can happen, then it is not just an impact on the business cycle, it is an impact on the long-term trajectory of the world."
He noted the Group of 20 forum decided after the 2008 global financial crisis to try and coordinate monetary policy. "We cannot all be running trade surpluses. Whom are we going to be having surpluses against? Antarctica?"
On whether he saw a silver lining, PM Lee cited the tech sector, pointing to its tremendous vibrancy and optimism. But he added that while new opportunities will be generated, so will new problems.
"When social media came along, everybody said this is marvellous, this is a way to democratise debate, and everybody has a voice and now we shall have an egalitarian, participative, basically nirvana will have arrived," he said.
"Now, we see what it is like. It does not look like it is nirvana."
PM Lee noted that human societies had, over centuries, developed circuit breakers to deal with the spread of new views and ideas, but these are now transmitted in a fraction of a second.
"When you speed up the operating cycle like that by 100 or 1,000 or 10,000 times, the operating system will malfunction. Human beings are not meant to work like that. Your brain does not speed up 10,000 times," he said.
"You need time to hoist things in, to mull it over, to think it, discuss it, to test it and gradually to get some grey hair, and then you have some better decisions about it."
As for how smaller countries can cope with the platform economy, PM Lee noted that Google and Facebook are in Singapore, with data centres and engineers. "We do not have very many unicorns of our own but we are part of the global economy and part of these major participants," he said.
"If there are proper rules which protect participants, big and small, in this environment, then, I think we can make a living. If there are no rules, and all of a sudden you have a Twitter storm or something befalls you in the middle of the night, next morning you wake up and you find you have been devastated. It can happen."
PM Lee talks about navigating US, China ties
It's vital to understand that Singapore is acting on its own behalf, he says
By Zakir Hussain, News Editor In Davos, Switzerland, The Straits Times, 23 Jan 2020
Strains in the US-China relationship have meant that where it was previously effortless for a country to say it was friends with everybody, including the United States and China, now, from time to time, one is pushed to be better friends with one side or the other.
Prime Minister Lee Hsien Loong drew laughter from the packed room of 200 business leaders and officials as he made this observation at a dialogue yesterday in Davos, Switzerland, with World Economic Forum president Borge Brende, a former Norwegian foreign minister.
Mr Brende quipped: "A lot of Europeans understand that."
PM Lee replied: "Well, the smaller you are, the better you understand it."
He noted that when Singapore does have to make a stand, it is important that people understand Singapore's choices are on its own behalf.
"Because we are making decisions for Singapore, and not because we are a cat's paw for one side or the other," he said. "That means you must have the courage to stand up and call things as they are and, from time to time, you will incur, well, at least a raised eyebrow and sometimes more than one raised eyebrow from one side or the other, and occasionally both.
"But it is necessary to do that because once people no longer think that you are a serious interlocutor, calculating on your own behalf, you are written off, you are finished."
PM Lee noted that America's benign engagement in Asia as well as China's rise and growth had enabled the region to prosper over the past 50 years.
World trade was also buoyant.
But today, the US is concerned it is footing too much of the burden, and that other countries are taking advantage of it.
China's influence has also grown, as has its role in the global economy.
How the relationship between the US and China would play out and its impact on the global economy was a key theme of the 30-minute session.
"Singapore hopes that we will be able to cooperate with them and participate and encourage them to engage in a way which leaves space for other countries to prosper, to set their own path," said PM Lee.
"And in the long term to welcome a new major player, and not feel that this is an elephant in the room that may not notice who else is there and what else may be underfoot."
Asked whether he felt US-China trade tensions had peaked with the phase one trade deal reached this month, PM Lee said he did not think they had.
The issue of how an incumbent hyperpower accommodates a rising new power whose economy is set to grow and eventually become larger than that of the US - although not for years to come - will remain.
Uncertainty has also meant that investments have been affected, and business decisions are being put off. And the prospect of a bifurcation in technology, whether on 5G networks or the entire supply chain, remains, he added. This will have a significant negative impact on long-term growth, and create mutual suspicion and anxiety.
PM Lee noted that some optimists say global supply chains are so closely integrated that pulling them apart is unthinkable.
He said he did not take such an optimistic view, noting that European countries were integrated before World War I, but this did not stop miscalculations and tensions from breaking out. "We have had 50 years of peace. Can you bet on another 50 years of peace? The odds are not negligible."
The discussion turned to the possibility of a prolonged slowdown.
PM Lee said: "The key thing is, if you have the strategic tensions not being resolved and flaring up again downstream, which can happen, then it is not just an impact on the business cycle, it is an impact on the long-term trajectory of the world."
He noted the Group of 20 forum decided after the 2008 global financial crisis to try and coordinate monetary policy. "We cannot all be running trade surpluses. Whom are we going to be having surpluses against? Antarctica?"
On whether he saw a silver lining, PM Lee cited the tech sector, pointing to its tremendous vibrancy and optimism. But he added that while new opportunities will be generated, so will new problems.
"When social media came along, everybody said this is marvellous, this is a way to democratise debate, and everybody has a voice and now we shall have an egalitarian, participative, basically nirvana will have arrived," he said.
"Now, we see what it is like. It does not look like it is nirvana."
PM Lee noted that human societies had, over centuries, developed circuit breakers to deal with the spread of new views and ideas, but these are now transmitted in a fraction of a second.
"When you speed up the operating cycle like that by 100 or 1,000 or 10,000 times, the operating system will malfunction. Human beings are not meant to work like that. Your brain does not speed up 10,000 times," he said.
"You need time to hoist things in, to mull it over, to think it, discuss it, to test it and gradually to get some grey hair, and then you have some better decisions about it."
As for how smaller countries can cope with the platform economy, PM Lee noted that Google and Facebook are in Singapore, with data centres and engineers. "We do not have very many unicorns of our own but we are part of the global economy and part of these major participants," he said.
"If there are proper rules which protect participants, big and small, in this environment, then, I think we can make a living. If there are no rules, and all of a sudden you have a Twitter storm or something befalls you in the middle of the night, next morning you wake up and you find you have been devastated. It can happen."
An open global trading system key for small countries like Singapore: PM Lee at World Economic Forum panel
By Zakir Hussain, News Editor, The Straits Times, 24 Jan 2020
DAVOS (Switzerland) • An open global trading system where every country plays by the rules of the game is of great help to a small nation like Singapore, Prime Minister Lee Hsien Loong said on Wednesday.
"If I am arm wrestling one on one, Singapore versus whoever the other side is, chances are the other party is bigger than us," he told a panel on sustaining multilateralism at the World Economic Forum's annual meeting.
To strengthen this system, Singapore is working to maintain domestic support for openness, doing its part to support the World Trade Organisation (WTO) and working with regional groupings to deepen economic integration, he said.
The session, Leading A New Multilateralism, was moderated by Financial Times editor Roula Khalaf, who asked PM Lee how Singapore navigated conflicting pressures in free trade and globalisation.
PM Lee said it was important to maintain support for an open policy within Singapore "because if you do not have support within the Singapore population, then you may have principles and ideas, but it cannot work".
On the WTO, he said Singapore tries to nudge progress in areas like electronic commerce, where a good number of willing parties have signed on to a Joint Statement Initiative to negotiate rules for this growing sector.
He added that the Republic is also working intensively on closer integration within Asean, where modest progress is being made, as well as with wider groups.
These include the Trans-Pacific Partnership, which became the Comprehensive and Progressive Agreement for TPP after the United States withdrew near the finish line, and the Regional Comprehensive Economic Partnership, which India has said it will not be able to join - although Singapore and others are hopeful it will one day.
Asked about the impact of the US-China trade war on Singapore, PM Lee noted that exports are down, confidence in the region is down, and growth last year was less than 1 per cent.
"It is partly because of this Sturm und Drang (storm and stress, in German) and atmospherics in the world economy and the uncertainty and doubt on which way we are going," he said. "Are we heading in the right direction? Will there be further big bumps in the night? That is holding back business confidence and investments, it is bound to."
PM Lee also elaborated on two things Singapore was doing to strengthen support for openness in an uncertain environment.
One, promote growing sectors like technology, and get established companies to do more in Singapore. He cited how the Fangs - Facebook, Amazon, Netflix and Google - are setting up engineering teams and data centres in the Republic.
Two, help sections of the economy which are not doing so well with globalisation to cope. This includes companies and people who are uncertain about their jobs and future.
"You may say, on average, your chances of being retrenched are not very high, but they only have to read one story of 100 people retrenched, and a few hundred thousand (people) can be very agitated by this," said PM Lee.
"We have to develop the support scheme so that we will give you the training, we will help you have the employability skills, and if you do lose a job, help you transition into a new job, possibly in a different career altogether," he added, referring to SkillsFuture, a national programme to encourage lifelong learning.
This entails not just reskilling, but also upgrading existing skills, PM Lee said.
"Even if you are in the same job, let us say you are a coder, what you learnt five years ago is already five years out of date. The young person graduating from school today knows certain things which you do not," he added.
"Unless you learn it pretty soon, he or she may take your job. That becomes not just a problem for you but on a scale, it is a social and political problem."
Also on the panel were South African Minister of International Relations and Cooperation Grace Naledi Mandisa Pandor, India's Bharti Enterprises chairman Sunil Mittal and Western Union president and CEO Hikmet Ersek.
Ms Pandor noted that African nations have launched a continent-wide free trade agreement which seeks to increase intra-African trade, while Mr Ersek added that groups like the European Union were a model of regional integration.
But Mr Mittal noted that given the role the US continues to play in the global economy, change will be hard to come about if it is not going to be an active and willing partner.
Citing him, PM Lee said: "We have not worked out the right mechanism to reflect a new balance in a global economy, as Sunil says."
The Prime Minister added: "New participants are now a bigger part of the economy, but not a commensurate influence - I would say we speak candidly, not the commensurate change in their mindsets to participate in the international system, with a view towards making the whole system prosper, as opposed to just (asking), 'What are my traditional interests and how do I safeguard them?'"
By Zakir Hussain, News Editor, The Straits Times, 24 Jan 2020
"If I am arm wrestling one on one, Singapore versus whoever the other side is, chances are the other party is bigger than us," he told a panel on sustaining multilateralism at the World Economic Forum's annual meeting.
To strengthen this system, Singapore is working to maintain domestic support for openness, doing its part to support the World Trade Organisation (WTO) and working with regional groupings to deepen economic integration, he said.
The session, Leading A New Multilateralism, was moderated by Financial Times editor Roula Khalaf, who asked PM Lee how Singapore navigated conflicting pressures in free trade and globalisation.
PM Lee said it was important to maintain support for an open policy within Singapore "because if you do not have support within the Singapore population, then you may have principles and ideas, but it cannot work".
On the WTO, he said Singapore tries to nudge progress in areas like electronic commerce, where a good number of willing parties have signed on to a Joint Statement Initiative to negotiate rules for this growing sector.
He added that the Republic is also working intensively on closer integration within Asean, where modest progress is being made, as well as with wider groups.
These include the Trans-Pacific Partnership, which became the Comprehensive and Progressive Agreement for TPP after the United States withdrew near the finish line, and the Regional Comprehensive Economic Partnership, which India has said it will not be able to join - although Singapore and others are hopeful it will one day.
Asked about the impact of the US-China trade war on Singapore, PM Lee noted that exports are down, confidence in the region is down, and growth last year was less than 1 per cent.
"It is partly because of this Sturm und Drang (storm and stress, in German) and atmospherics in the world economy and the uncertainty and doubt on which way we are going," he said. "Are we heading in the right direction? Will there be further big bumps in the night? That is holding back business confidence and investments, it is bound to."
PM Lee also elaborated on two things Singapore was doing to strengthen support for openness in an uncertain environment.
One, promote growing sectors like technology, and get established companies to do more in Singapore. He cited how the Fangs - Facebook, Amazon, Netflix and Google - are setting up engineering teams and data centres in the Republic.
Two, help sections of the economy which are not doing so well with globalisation to cope. This includes companies and people who are uncertain about their jobs and future.
"You may say, on average, your chances of being retrenched are not very high, but they only have to read one story of 100 people retrenched, and a few hundred thousand (people) can be very agitated by this," said PM Lee.
"We have to develop the support scheme so that we will give you the training, we will help you have the employability skills, and if you do lose a job, help you transition into a new job, possibly in a different career altogether," he added, referring to SkillsFuture, a national programme to encourage lifelong learning.
This entails not just reskilling, but also upgrading existing skills, PM Lee said.
"Even if you are in the same job, let us say you are a coder, what you learnt five years ago is already five years out of date. The young person graduating from school today knows certain things which you do not," he added.
"Unless you learn it pretty soon, he or she may take your job. That becomes not just a problem for you but on a scale, it is a social and political problem."
Also on the panel were South African Minister of International Relations and Cooperation Grace Naledi Mandisa Pandor, India's Bharti Enterprises chairman Sunil Mittal and Western Union president and CEO Hikmet Ersek.
Ms Pandor noted that African nations have launched a continent-wide free trade agreement which seeks to increase intra-African trade, while Mr Ersek added that groups like the European Union were a model of regional integration.
But Mr Mittal noted that given the role the US continues to play in the global economy, change will be hard to come about if it is not going to be an active and willing partner.
Citing him, PM Lee said: "We have not worked out the right mechanism to reflect a new balance in a global economy, as Sunil says."
The Prime Minister added: "New participants are now a bigger part of the economy, but not a commensurate influence - I would say we speak candidly, not the commensurate change in their mindsets to participate in the international system, with a view towards making the whole system prosper, as opposed to just (asking), 'What are my traditional interests and how do I safeguard them?'"
Singapore must stay open to foreign business and talent: PM Lee
Need to explain importance of staying open to talent
Singaporeans must feel they are taken care of as nation progresses, he says
By Zakir Hussain, News Editor In Davos (Switzerland), The Straits Times, 24 Jan 2020
Staying open to business and talent from around the globe is key for Singapore to prosper, and the Government will have to explain this to citizens while making sure they are taken care of, Prime Minister Lee Hsien Loong said yesterday.
It is not hard to make the argument that Singapore needs business, markets, investments and technology from abroad, he said in an interview to round up his participation at this year's annual meeting of the World Economic Forum (WEF).
"But we have to bring this down in terms which individual Singaporeans can relate to in terms of their lived experience - at work, in the community spaces, in the crowd they meet - and that they feel they are taken care of and in Singapore, this is a Singapore for Singaporeans," he added.
"We are open, but this is our home."
PM Lee acknowledged that this is not an easy balance to strike, because globalised companies draw on talent from many parts of the world that come together to be creative and break new ground.
And they need to have this talent in order to develop new products and reach new markets, if they are to generate new opportunities for Singaporeans, he added.
The backlash against globalisation in societies around the world was a key topic at this week's meetings, which brought together corporate, political and social leaders to discuss ways to address common challenges, such as climate change and migration.
At two sessions on Wednesday, PM Lee also shared how Singapore was investing in efforts to upskill its people to stay competitive amid technological disruption.
Yesterday, he shared how a young Chinese start-up entrepreneur he met in Davos had a workforce in Shenzhen that was 40 per cent foreign, and he wanted to double this to 80 per cent because he needed that diversity of talent.
"This is in China - you are drawing from 1.4 billion people, bringing in talent to one city, and you still need to have that diversity and that mix from around the world," said PM Lee.
He noted that many companies that are breaking new ground have a similar talent mix, and Singapore wants them. But, he said, when they come and workers see that only 40 per cent or 60 per cent in the company are Singaporeans and many of their colleagues and their boss are not Singaporeans, they will ask: Why is it here?
"It is here because that is the way our economy can prosper, and that is where we can generate jobs for the 40 per cent of Singaporeans who are working (in the company)," he said.
"If they were not here, those jobs would not exist. And if you said, 'We want Singaporeans to take over the jobs, which the non-Singaporeans are holding', I'm not sure that we will be able to make it work."
This is a reality that has to be brought home in a way which people can understand, he added.
Singaporeans must also feel assured that if they are working in such a company, they are fairly treated.
If they are not, there is a process and fair employment watchdog - the Tripartite Alliance for Fair and Progressive Employment Practices or Tafep - which has guidelines and a procedure for them to appeal and to put things right, said PM Lee.
He noted that some opposition parties were trying to create a divide between foreign and local workers.
He cited the Singapore Democratic Party's recent claim that professionals, managers, executives and technicians are getting unemployed, and the Workers' Party pressing on about how many local employees are citizens versus permanent residents.
Said PM Lee: "They think they see a divide there, and they want to make it wider and exploit it. It's our job to make sure that we don't allow a divide. And even if that is a weak point, it doesn't get exploited."
He added: "It's important for us to explain to Singaporeans that we are doing this to make things work for Singaporeans, and this is the best strategy for Singapore to prosper."
Asked for his take on this year's WEF meetings, PM Lee said the strategic situation, particularly where China-US relations are headed, was on people's minds. Climate change was also a big concern, as was the global economy and sustainable growth.
He met Hong Kong Chief Executive Carrie Lam, Pakistan Prime Minister Imran Khan and Dutch Prime Minister Mark Rutte, as well as Mongolian President Khaltmaagiin Battulga, German Chancellor Angela Merkel and former US secretary of state John Kerry.
PM Lee also met several business leaders of companies with a presence in Singapore at a lunch arranged by the Economic Development Board. Some of the companies have significant projects, and Singapore last year attracted a good flow - $15.2 billion - of investments.
Given the pressures globalisation is facing, Singapore has to up its game if it is to continue attracting high-quality investments and operations that create high-quality jobs, he added. This was a message he had for the people he met, he said. "That is what we are doing, and we hope that they can be part of our plan."
Need to explain importance of staying open to talent
Singaporeans must feel they are taken care of as nation progresses, he says
By Zakir Hussain, News Editor In Davos (Switzerland), The Straits Times, 24 Jan 2020
Staying open to business and talent from around the globe is key for Singapore to prosper, and the Government will have to explain this to citizens while making sure they are taken care of, Prime Minister Lee Hsien Loong said yesterday.
It is not hard to make the argument that Singapore needs business, markets, investments and technology from abroad, he said in an interview to round up his participation at this year's annual meeting of the World Economic Forum (WEF).
"But we have to bring this down in terms which individual Singaporeans can relate to in terms of their lived experience - at work, in the community spaces, in the crowd they meet - and that they feel they are taken care of and in Singapore, this is a Singapore for Singaporeans," he added.
"We are open, but this is our home."
PM Lee acknowledged that this is not an easy balance to strike, because globalised companies draw on talent from many parts of the world that come together to be creative and break new ground.
And they need to have this talent in order to develop new products and reach new markets, if they are to generate new opportunities for Singaporeans, he added.
The backlash against globalisation in societies around the world was a key topic at this week's meetings, which brought together corporate, political and social leaders to discuss ways to address common challenges, such as climate change and migration.
At two sessions on Wednesday, PM Lee also shared how Singapore was investing in efforts to upskill its people to stay competitive amid technological disruption.
Yesterday, he shared how a young Chinese start-up entrepreneur he met in Davos had a workforce in Shenzhen that was 40 per cent foreign, and he wanted to double this to 80 per cent because he needed that diversity of talent.
"This is in China - you are drawing from 1.4 billion people, bringing in talent to one city, and you still need to have that diversity and that mix from around the world," said PM Lee.
He noted that many companies that are breaking new ground have a similar talent mix, and Singapore wants them. But, he said, when they come and workers see that only 40 per cent or 60 per cent in the company are Singaporeans and many of their colleagues and their boss are not Singaporeans, they will ask: Why is it here?
"It is here because that is the way our economy can prosper, and that is where we can generate jobs for the 40 per cent of Singaporeans who are working (in the company)," he said.
"If they were not here, those jobs would not exist. And if you said, 'We want Singaporeans to take over the jobs, which the non-Singaporeans are holding', I'm not sure that we will be able to make it work."
This is a reality that has to be brought home in a way which people can understand, he added.
Singaporeans must also feel assured that if they are working in such a company, they are fairly treated.
If they are not, there is a process and fair employment watchdog - the Tripartite Alliance for Fair and Progressive Employment Practices or Tafep - which has guidelines and a procedure for them to appeal and to put things right, said PM Lee.
He noted that some opposition parties were trying to create a divide between foreign and local workers.
He cited the Singapore Democratic Party's recent claim that professionals, managers, executives and technicians are getting unemployed, and the Workers' Party pressing on about how many local employees are citizens versus permanent residents.
Said PM Lee: "They think they see a divide there, and they want to make it wider and exploit it. It's our job to make sure that we don't allow a divide. And even if that is a weak point, it doesn't get exploited."
He added: "It's important for us to explain to Singaporeans that we are doing this to make things work for Singaporeans, and this is the best strategy for Singapore to prosper."
Asked for his take on this year's WEF meetings, PM Lee said the strategic situation, particularly where China-US relations are headed, was on people's minds. Climate change was also a big concern, as was the global economy and sustainable growth.
He met Hong Kong Chief Executive Carrie Lam, Pakistan Prime Minister Imran Khan and Dutch Prime Minister Mark Rutte, as well as Mongolian President Khaltmaagiin Battulga, German Chancellor Angela Merkel and former US secretary of state John Kerry.
PM Lee also met several business leaders of companies with a presence in Singapore at a lunch arranged by the Economic Development Board. Some of the companies have significant projects, and Singapore last year attracted a good flow - $15.2 billion - of investments.
Given the pressures globalisation is facing, Singapore has to up its game if it is to continue attracting high-quality investments and operations that create high-quality jobs, he added. This was a message he had for the people he met, he said. "That is what we are doing, and we hope that they can be part of our plan."
World Economic Forum: Winning hearts and minds on the benefits of globalisation
Important to ensure system of open borders and free trade continues to work for everyone
By Warren Fernandez, Editor-in-Chief, The Straits Times, 24 Jan 2020
For a small country like Singapore, being open and connected to the world is not exactly a matter of choice. With no resources, and neither land nor hinterland, it was always, to put it simply, a matter of do it, or die.
Most Singaporeans know this instinctively. But while the head might say this is so, the heart still needs to be won over.
Making the case for globalisation, at a time when it is under severe threat all round, is therefore critical to ensuring the system continues to work. As recent elections and events around the world have shown, political leaders - and societies - that failed to recognise this have paid a heavy price.
This was a point Prime Minister Lee Hsien Loong returned to in several discussions here in Davos, where business and government leaders are meeting at the annual World Economic Forum.
"We have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore, but benefit Singaporeans - across the board - so that they are able to take advantage of the jobs that we create, so that they are able to fend for themselves against global competition," he said.
"So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills, and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own, that the system is not on their side."
In his wrap-up interview with the Singapore media yesterday, Mr Lee went on to add that it was important that people not only understood this in the abstract, but also sensed the benefits of economic openness in their daily experience. They also needed to be confident that their leaders had their interests at heart, and would look out for them, at a time of major economic change and transition.
He cited the example of a young Chinese entrepreneur he had met in Davos who had set up his tech company in Shenzhen, with 60 per cent of his employees being Chinese and the rest from abroad. But he was seeking to raise the proportion of talent from overseas to 80 per cent, in order to have the diversity of talent needed for his company to scale up and compete globally.
If this was the case in China, with 1.4 billion people to draw on, what more in Singapore, said Mr Lee, adding that attracting such companies to Singapore created good jobs for Singaporeans, even if some of their colleagues or bosses were from abroad.
Some opposition parties were trying to seize on unease about immigration on the ground and exploit it for electoral gain, he said, pointing to the Singapore Democratic Party and the Workers' Party, both of which have taken up the issue in recent statements.
"They think they see a divide there, and they want to make it wider and exploit it. And it is our job to make sure that we don't allow such a divide. And even if it is a weak point, it doesn't get exploited.
"That is why I think it is important for us to explain to Singaporeans that we are doing this to make things work for Singaporeans. And this is the best strategy for Singapore to prosper."
A day earlier, speaking on a panel titled Leading A New Multilateralism, Mr Lee had cited globalisation as one of the key underpinnings of the Republic's success over the past 50 years, but also pointed to it as a risk to its future prospects should the system unravel in the face of populist pressures.
He said: "If 5½ million or six million people in Singapore have to grow our own food, and make our own computers, and make our own banking and living, I think we will starve, it is not possible.
"But to prosper in such a new globalised but troubled environment, we have to up our game, raise our capabilities, bring in new investments which will connect us to centres of vibrancy and prosperity all over the world."
Yet, making the political case for globalisation is as important as the rational economic arguments. Parties and political leaders everywhere have drawn the lessons from recent events, such as the British vote to leave the European Union, and the surprise election of United States President Donald Trump on a wave of support from disgruntled blue-collar workers.
Even last year's thumping victory by Britain's Conservative Party led by Prime Minister Boris Johnson has been attributed by some commentators to a sense among many working-and middle-class voters that he was more in sync with their concerns and aspirations than the Labour Party led by Mr Jeremy Corbyn.
Popular protests around the world, from France to Chile, have also broken out because workers there had begun to wonder if the global liberal economic order and their leadership elites who upheld it were acting in their interests when they pushed for free trade and open borders.
Taking up this point in a separate discussion later, Foreign Affairs magazine editor Gideon Rose noted that the critical factor that underpinned the globalised system was trust.
Voters needed to have trust in their leaders, and believe that they were defending their interests, for them to "buy into the project".
That project - the liberal global economic order - stemmed from a belief in the US after World War II that it was "part of an international team". It was in the US' own interest to shape the rules of the system such that all members of this team could rebuild and prosper together.
The America First approach now being pushed by Mr Trump has upended this, Mr Rose said, adding that it was critical to rebuild that trust, both within the US, and also among America's allies, so that they did not lose faith in the liberal economic order the US has fostered and which had brought so much prosperity to the world.
This polarising issue looks likely to be coming to a polling booth near you before long.
With a general election looming in Singapore - some think it could be held within months, even though it is not due till April next year - there are signs that this is shaping up to be a key point of political contestation.
So, as in several other recent elections, bread and butter issues such as jobs and the cost of living are likely to be on many voters' minds.
But much will also depend on how well political players on all sides are able to sway voters on the issue of whether the system of open borders and free trade that underpins globalisation really works for them.
For Singapore, which has just marked its bicentennial as a free trading post and thrived as a node for global trade over the decades, this is nothing less than an existential question.
Prime Minister Lee Hsien Loong's interview with Bloomberg Editor-In-Chief John Micklethwait
Singapore's economic rebound depends on global calm: PM Lee Hsien Loong
He says 2020 growth relies heavily on US; is relieved Singapore escaped recession in 2019
The Straits Times, 25 Jan 2020
DAVOS (Switzerland) • Prime Minister Lee Hsien Loong said Singapore's economy could improve this year only if any number of global risks do not materialise, particularly any emanating from the US.
Mr Lee said in an interview with Bloomberg's editor-in-chief John Micklethwait that he is "relieved" the Singapore economy escaped recession last year. The Government's growth forecast for this year - anywhere from 0.5 per cent to 2.5 per cent - indicates "we really don't know" how things will pan out, he said.
"That's the range of what our economy is capable of, but whether we realise that capability, that potential, depends on international conditions," Mr Lee said on the sidelines of the World Economic Forum's annual gathering in Davos, Switzerland.
"If there's a blowout between China and America, or if there's something happening in the Middle East, either with Iran or with Syria, then all bets are off."
Singapore is poised to rebound from last year, when a potent mix of trade war disruption and an electronics cycle slowdown pulled growth in the export-reliant economy to its weakest level in a decade.
There have been some recent signs of recovery: last month's purchasing managers' index signalled an expansion in factory output after seven straight months of contraction, while exports gained for the first time in 10 months.
"The electronics cycle seems to be turning, which is an important part of our manufacturing industry," Mr Lee said. "But it depends on the global economy, and particularly on the US."
Mr Lee said US growth has been better than many had expected, noting comments from US President Donald Trump in Davos earlier this week that the American economy is "marvellous".
Mr Lee warned, though, that it was not clear whether imbalances might build up, and that it is "not a negligible chance that you could have a change of direction within a year or two years".
Singapore's position among the world's most trade-reliant economies has left it vulnerable to each twist and turn of the trade war, but South-east Asia more broadly has seen some benefits as businesses shift their supply chains. Vietnam has been one of the region's biggest gainers.
Ultimately, businesses will probably opt for a "China-plus-one strategy", the Prime Minister said, maintaining a presence in China as well as other locations, for example in South-east Asia, India, Bangladesh or East Africa.
Singapore's gains from these supply-chain moves probably will not be significant, Mr Lee said, given the limited overlap with China on the kinds of industries that are shifting away from there. However, Singapore sees a unique role for itself as China's presence in the region continues to grow.
"It could be manufacturing presence, it could be infrastructure, it could be part of their Belt and Road projects," he said.
"We have a role in financing it, in hosting regional headquarters for it, in working with them, providing expertise, making sure that the projects go well."
BLOOMBERG
Important to ensure system of open borders and free trade continues to work for everyone
By Warren Fernandez, Editor-in-Chief, The Straits Times, 24 Jan 2020
For a small country like Singapore, being open and connected to the world is not exactly a matter of choice. With no resources, and neither land nor hinterland, it was always, to put it simply, a matter of do it, or die.
Most Singaporeans know this instinctively. But while the head might say this is so, the heart still needs to be won over.
Making the case for globalisation, at a time when it is under severe threat all round, is therefore critical to ensuring the system continues to work. As recent elections and events around the world have shown, political leaders - and societies - that failed to recognise this have paid a heavy price.
This was a point Prime Minister Lee Hsien Loong returned to in several discussions here in Davos, where business and government leaders are meeting at the annual World Economic Forum.
"We have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore, but benefit Singaporeans - across the board - so that they are able to take advantage of the jobs that we create, so that they are able to fend for themselves against global competition," he said.
"So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills, and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own, that the system is not on their side."
In his wrap-up interview with the Singapore media yesterday, Mr Lee went on to add that it was important that people not only understood this in the abstract, but also sensed the benefits of economic openness in their daily experience. They also needed to be confident that their leaders had their interests at heart, and would look out for them, at a time of major economic change and transition.
He cited the example of a young Chinese entrepreneur he had met in Davos who had set up his tech company in Shenzhen, with 60 per cent of his employees being Chinese and the rest from abroad. But he was seeking to raise the proportion of talent from overseas to 80 per cent, in order to have the diversity of talent needed for his company to scale up and compete globally.
If this was the case in China, with 1.4 billion people to draw on, what more in Singapore, said Mr Lee, adding that attracting such companies to Singapore created good jobs for Singaporeans, even if some of their colleagues or bosses were from abroad.
Some opposition parties were trying to seize on unease about immigration on the ground and exploit it for electoral gain, he said, pointing to the Singapore Democratic Party and the Workers' Party, both of which have taken up the issue in recent statements.
"They think they see a divide there, and they want to make it wider and exploit it. And it is our job to make sure that we don't allow such a divide. And even if it is a weak point, it doesn't get exploited.
"That is why I think it is important for us to explain to Singaporeans that we are doing this to make things work for Singaporeans. And this is the best strategy for Singapore to prosper."
A day earlier, speaking on a panel titled Leading A New Multilateralism, Mr Lee had cited globalisation as one of the key underpinnings of the Republic's success over the past 50 years, but also pointed to it as a risk to its future prospects should the system unravel in the face of populist pressures.
He said: "If 5½ million or six million people in Singapore have to grow our own food, and make our own computers, and make our own banking and living, I think we will starve, it is not possible.
"But to prosper in such a new globalised but troubled environment, we have to up our game, raise our capabilities, bring in new investments which will connect us to centres of vibrancy and prosperity all over the world."
Yet, making the political case for globalisation is as important as the rational economic arguments. Parties and political leaders everywhere have drawn the lessons from recent events, such as the British vote to leave the European Union, and the surprise election of United States President Donald Trump on a wave of support from disgruntled blue-collar workers.
Even last year's thumping victory by Britain's Conservative Party led by Prime Minister Boris Johnson has been attributed by some commentators to a sense among many working-and middle-class voters that he was more in sync with their concerns and aspirations than the Labour Party led by Mr Jeremy Corbyn.
Popular protests around the world, from France to Chile, have also broken out because workers there had begun to wonder if the global liberal economic order and their leadership elites who upheld it were acting in their interests when they pushed for free trade and open borders.
Taking up this point in a separate discussion later, Foreign Affairs magazine editor Gideon Rose noted that the critical factor that underpinned the globalised system was trust.
Voters needed to have trust in their leaders, and believe that they were defending their interests, for them to "buy into the project".
That project - the liberal global economic order - stemmed from a belief in the US after World War II that it was "part of an international team". It was in the US' own interest to shape the rules of the system such that all members of this team could rebuild and prosper together.
The America First approach now being pushed by Mr Trump has upended this, Mr Rose said, adding that it was critical to rebuild that trust, both within the US, and also among America's allies, so that they did not lose faith in the liberal economic order the US has fostered and which had brought so much prosperity to the world.
This polarising issue looks likely to be coming to a polling booth near you before long.
With a general election looming in Singapore - some think it could be held within months, even though it is not due till April next year - there are signs that this is shaping up to be a key point of political contestation.
So, as in several other recent elections, bread and butter issues such as jobs and the cost of living are likely to be on many voters' minds.
But much will also depend on how well political players on all sides are able to sway voters on the issue of whether the system of open borders and free trade that underpins globalisation really works for them.
For Singapore, which has just marked its bicentennial as a free trading post and thrived as a node for global trade over the decades, this is nothing less than an existential question.
Prime Minister Lee Hsien Loong's interview with Bloomberg Editor-In-Chief John Micklethwait
Singapore's economic rebound depends on global calm: PM Lee Hsien Loong
He says 2020 growth relies heavily on US; is relieved Singapore escaped recession in 2019
The Straits Times, 25 Jan 2020
DAVOS (Switzerland) • Prime Minister Lee Hsien Loong said Singapore's economy could improve this year only if any number of global risks do not materialise, particularly any emanating from the US.
Mr Lee said in an interview with Bloomberg's editor-in-chief John Micklethwait that he is "relieved" the Singapore economy escaped recession last year. The Government's growth forecast for this year - anywhere from 0.5 per cent to 2.5 per cent - indicates "we really don't know" how things will pan out, he said.
"That's the range of what our economy is capable of, but whether we realise that capability, that potential, depends on international conditions," Mr Lee said on the sidelines of the World Economic Forum's annual gathering in Davos, Switzerland.
"If there's a blowout between China and America, or if there's something happening in the Middle East, either with Iran or with Syria, then all bets are off."
Singapore is poised to rebound from last year, when a potent mix of trade war disruption and an electronics cycle slowdown pulled growth in the export-reliant economy to its weakest level in a decade.
There have been some recent signs of recovery: last month's purchasing managers' index signalled an expansion in factory output after seven straight months of contraction, while exports gained for the first time in 10 months.
"The electronics cycle seems to be turning, which is an important part of our manufacturing industry," Mr Lee said. "But it depends on the global economy, and particularly on the US."
Mr Lee said US growth has been better than many had expected, noting comments from US President Donald Trump in Davos earlier this week that the American economy is "marvellous".
Mr Lee warned, though, that it was not clear whether imbalances might build up, and that it is "not a negligible chance that you could have a change of direction within a year or two years".
Singapore's position among the world's most trade-reliant economies has left it vulnerable to each twist and turn of the trade war, but South-east Asia more broadly has seen some benefits as businesses shift their supply chains. Vietnam has been one of the region's biggest gainers.
Ultimately, businesses will probably opt for a "China-plus-one strategy", the Prime Minister said, maintaining a presence in China as well as other locations, for example in South-east Asia, India, Bangladesh or East Africa.
Singapore's gains from these supply-chain moves probably will not be significant, Mr Lee said, given the limited overlap with China on the kinds of industries that are shifting away from there. However, Singapore sees a unique role for itself as China's presence in the region continues to grow.
"It could be manufacturing presence, it could be infrastructure, it could be part of their Belt and Road projects," he said.
"We have a role in financing it, in hosting regional headquarters for it, in working with them, providing expertise, making sure that the projects go well."
BLOOMBERG
How Singapore can thrive in the new globalised environment: PM Lee
This is an edited transcript of Prime Minister Lee Hsien Loong's dialogue with World Economic Forum (WEF) president Borge Brende in Davos on 22 Jan 2020
The Straits Times, 24 Jan 2020
BRENDE: The story of your country is remarkable. Back in 1965, per capita in Singapore was US$500. Today, per capita is US$65,000 (S$88,000). That represents around 9 per cent annual growth. We know that there are a lot of things happening in the region but this is definitely Asia's century. For the first time, 50 per cent of the global GDP (gross domestic product) is coming from Asia, and Singapore's leadership is crucial. So I think all the people coming here are looking forward to hearing your views, Prime Minister, on the geopolitical outlook aspirations for Singapore.
PM LEE: Thank you, Brende. Thank you for your very generous remarks on Singapore. We have done reasonably well over the last half century. We worked hard for that but there were some external factors which are very important to us and I will just mention three of them - the United States, China, and globalisation.
The US was critical because it generated peace and stability and security throughout the Asia-Pacific over this last half century. The Vietnam War, notwithstanding, it has been a benign, constructive influence, generating an environment where countries like Singapore - small ones - can participate, prosper, compete and have our place in the sun.
At the same time, the US was also a major source of investments and a major market for us, because they kept their economy open, and they believe that by being open and by being welcoming of the growth and prosperity of others, the US gained.
China was also a major factor in our success because over the last 40 years as China reformed, opened up and grew steadily, even faster than Singapore, our engagement with them deepened. Trade volumes increased dramatically, investments in China grew hugely. Singapore, according to the Chinese statistics, is the biggest source of foreign investments in China - through Singapore. I think some of them must be other companies based in Singapore, but nevertheless, it shows the depth of the relationship.
Tourism numbers grew. The engagement generated confidence, lift and a certain vibrancy throughout the whole region, which Singapore benefited hugely from.
Thirdly, we benefited from globalisation because world trade was buoyant and because people did business with one another, became increasingly open. There were trade rounds, there was a Uruguay Round. The World Trade Organisation played a constructive role although not always effortlessly. But we plugged into the global economy and that enabled a small country to be productive, and so the policies we made could work.
TURNING POINT
Now, we are at a turning point, all three of these factors are changing. The US, in terms of security. The strategic balance in the region is shifting because China has become more influential and more substantial a participant, and other countries too - the North Koreans are a major preoccupation because they have nuclear capabilities.
America itself is asking the question whether they are carrying too much of a burden for this and wanting their allies to take on more of a responsibility, at least for financing the cost of this common security.
On economics too, the Americans have shifted their attitudes. I think that (they are now) much more concerned about the impact on American workers, much more concerned about other countries taking advantage of America, seeing this as a free-rider problem rather than one where America is holding the rein and being open, benefiting others but in the process benefiting itself. So that is a major change; we do not know that it is irreversible but it is certainly a very fundamental shift of stance.
The Chinese position has also shifted because as they have grown, they have become much more influential. Their role in the international economy has changed substantially. Their influence has grown, and their relations with other countries, in particular with the US, have become more difficult to manage. And therefore, whereas it was previously effortless to say, "I am friends with everybody"... now, we still want to be friends with everybody but you are pushed to be better friends with one side or the other. So that is a change in the world.
BRENDE: I think a lot of Europeans understand that.
PM LEE: The smaller you are, the better you understand it.
The third factor - globalisation - is also shifting. You discuss it all the time here because people worry about the impact on disadvantaged groups; people worry about the impact on the environment; people worry about the uncertainties which are generated because we are so interrelated; and people are anxious about the ups and downs, which we no longer have a buffer to protect ourselves against.
What do we do?
With America, we remain very good friends. They are a major security cooperation partner with us. I think we continue to believe that they have an important role in the region to foster stability and security - no longer alone, but still an indispensable role, because the Chinese cannot play the role the Americans do, the Japanese neither. And so we would like to continue to work with America, we would like to continue to work with China.
From time to time, you will find yourself being pressed to choose sides. When we do have to make a stand, I think it is very important that people understand that Singapore's choices are on its own behalf because we are making decisions for Singapore and not because we are a cat's paw for one side or the other.
That means you must have the courage to stand up and call things as they are, and from time to time, you will incur at least a raised eyebrow, and sometimes more than one raised eyebrow from one side or the other, and occasionally both.
But it is necessary to do that because once people no longer think that you are a serious interlocutor calculating on your own behalf, you are written off, you are finished.
With China, we also have a big account. In fact, China is our biggest trading partner as it is for everybody else in the region, including all of America's allies.
We hope that when we see that it is possible for China to adjust its position, taking into account its new very strong influence in the world, in order to integrate in a peaceful and constructive way into the global order, which it depends upon, whether it is through the Belt and Road Initiative, whether it is through the Asia Infrastructure Investment Bank or other diplomatic initiatives, I think China will have a major role to play, and Singapore hopes that we will be able to cooperate with them, participate and encourage them to engage in a way which leaves space for other countries to prosper, to set their own path, and in the long term to welcome a new major player and not feel that this is an elephant in the room, which may not notice who else is there and what may be underfoot.
On globalisation, I think, notwithstanding the pressures and the problems, we have no choice but to continue to bet on countries cooperating closely with one another. Because if 51/2 million or six million people in Singapore have to grow our own food and make our own computers and make our own banking and living, I think we will starve, it is not possible.
WHAT IT MEANS FOR SINGAPORE
But to prosper in such a new globalised but troubled environment, we have to up our game, raise our capabilities, bring in new investments which will connect us to centres of vibrancy and prosperity all over the world - Europe, America, Japan, China, Latin America and Africa - because there are many spots of vibrancy and future growth there, and link us in a way where we make a contribution because we can do things in Singapore, which is not so easy to be done, all together in one place, any other single place.
That means we have to upgrade our companies, upgrade our people, education, skills, and have the environment where we can welcome in very high-quality investments, operations, R&D centres, places where high-quality people want to live, want to work, and want to be.
It is not just costs, but it is also the whole environment - safety, security, confidence, opportunities, vibrancy. That is what Singapore needs to be. Amidst all of this, we have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore but benefit Singaporeans across the board. So that they are able to take advantage of the jobs we create, so that they are able to fend for themselves against global competition.
So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own and that the system is not on their side.
This system has to work for them because if it does not work for them, the system will fail. And in Singapore, it must not fail because we only have one chance to succeed.
BRENDE: Mr Prime Minister, do you feel that there are still challenges related to geopolitical confrontations and competition, or do you see that maybe, it has peaked with the signing of the first part of the trade agreement by US and China in (Washington) D.C. last week?
PM LEE: We are relentlessly optimistic but not that much so. I do not think it has peaked at all. It is a very serious issue. How does an incumbent hyperpower like the US accommodate a rising new power - China? How do both sides make the adjustments in order to accommodate each other, and head-off what Graham Allison calls the Thucydides' Trap? And it is not at all obvious that it is easy to do because both sides have domestic pressures, both sides are primarily calculating the next election, or the next domestic political succession. Already you have seen the consequences because the tariffs and counter-tariffs have reduced trade, reduced welfare and the uncertainty of the conflict has meant that investments have been affected... because you do not know and you cannot count on the future.
I was talking to one industrialist yesterday and he said, "Well, we may say, medical equipment - MRI machines; in an ideal world, you make it in one place and you supply the whole world. If we bifurcate, we can put one manufacturing centre for Asia and China, one manufacturing centre for America and it costs us and that we will not die."
I said that is fine if you are making the same MRI machine in both places. But if they need different chips and different software, and if the next time I find an MRI breakthrough, I am not going to share with you because that is a national security threat to me, then I think it will cost us. I think you are not there yet, but you are not heading away from that direction.
THE DECOUPLING THREAT
BRENDE: How worried are you about this decoupling because today, they have been competing but if you go for different systems and you do not follow a path where this is compatible, that can also have a quite significant negative impact on long-term growth and then countries will have to choose.
PM LEE: Today, I am here talking to you and we have two mics for backup and they are both the same system. One day, I may need to have one which is an American system and one which is not an American system. I do not think that is the better world to be in because it is not just that it is going to cost us more but the mutual suspicions and anxieties which are going to be created - did he design his own, did he borrow my design, did he reverse-engineer mine or did he entice my person over in order to carry the IP (intellectual property) along?
All these mutual suspicions and doubts are going to only create more frictions and problems. The optimists say you are going to be so integrated that pulling it apart is unthinkable but I do not take quite such an optimistic view. I think it makes it very hard but such things do happen before and if they do try to happen, the consequences are very bad.
In fact, before the First World War, the European countries were all very integrated together. The economies were integrated together, the colonies traded with one another, and people thought this was the future - globalisation. But that did not stop miscalculations and tensions from building up, and the First World War from breaking out disastrously, beginning with what should have been a minor incident. And so, we have had 50 years, generally of peace. Can you bet on another 50 years, generally of peace? I think that the odds are not negligible.
BRENDE: There is a lot at stake, so you are moving from like a prosper-thy-neighbour to a beggar-thy-neighbour approach.
PM LEE: Nobody says that. Everybody says that I want to prosper my neighbour, but I have to think about my people first.
BRENDE: Singapore already saw last year quite a significant slowdown in your growth. You are more optimistic about this year. Were you paying a price already for this trade war?
PM LEE: Some of it was from slower trade, export markets were less buoyant, some of it was because of electronics slowdown, which was global. There are some prospects that the electronic slowdown will turn around this year, the people in the industry are reasonably optimistic. What we are not sure this year is where the US economy is going - it does not look like it is going into a recession, but nobody has a very good record predicting when economies go into recession.
BRENDE: We do remember from the history books that in the 1930s, the global trade fell by 50 per cent and the global GDP... fell by 25 per cent and they got a real depression. There is a lot at stake.
PM LEE: Followed by a war. There is a lot at stake. I mean, I do not think we will repeat follies in the same way but it is quite possible for us to be inventive in making new mistakes.
SILVER LININGS?
BRENDE: Do you see any silver linings?
PM LEE: Well, if you look at the tech sector, there is tremendous vibrancy and optimism, and everybody believes they are going to change the world. They are not all right but some of them will not be wrong.
If you look at things like Google, Amazon or so many of the tech companies or Microsoft, which did not exist 30 years ago and which were not dominant 20 years ago. They are now major players in the world, so nobody knows what the major participants are going to be 20 years from now, and it is going to generate new opportunities but it is also going to generate new problems.
When social media came along, everybody said this is marvellous, this is a way to democratise debate, and everybody has a voice... basically nirvana will have arrived. Now we see what it is like. It does not look like it is nirvana.
BRENDE: Can democracy survive social media?
PM LEE: I do not know whether it is democracy surviving but how will human societies adapt to this?
Human societies... over many, many centuries have developed to have circuit breakers. A view, an idea develops, it catches fire, a few more people pick it up, it gets tested. Other people may or may not pick it up. Things take time. Gradually, evidence accumulates and then some fail, some succeed, and you move forward. Now, all that is short-circuited into one fraction of a second, that length of time it takes to press a button for either Facebook posts or Twitter tweets.
When you speed up the operating cycle like that by 100 or 1,000 or 10,000 times, the operating system will malfunction.
Human beings are not meant to work like that. Your brain does not speed up 10,000 times. You need time to hoist things in, to mull it over, to think it, discuss it, to test it and gradually to get some grey hair and then you have some better decisions about it. It will throw all that out of the window.
I think you need to be very confident that you know what you are doing, and I am not sure that we actually have an answer to that question.
BRENDE: Scale and size are everything when the winner takes it all in a platform economy. How do you think smaller countries and medium-sized economies will cope with this?
PM LEE: If we can participate in the global economy, then we are part of it. The major platform companies are all in Singapore - Google is there, Facebook is there, the data centres are there, engineers are there. If there are proper rules which protect participants, big and small, in this environment, then, I think we can make a living. If there are no rules, and all of a sudden you have a Twitter storm or something befalls you in the middle of the night, next morning you wake up and you find you have been devastated. It can happen.
This is an edited transcript of Prime Minister Lee Hsien Loong's dialogue with World Economic Forum (WEF) president Borge Brende in Davos on 22 Jan 2020
The Straits Times, 24 Jan 2020
BRENDE: The story of your country is remarkable. Back in 1965, per capita in Singapore was US$500. Today, per capita is US$65,000 (S$88,000). That represents around 9 per cent annual growth. We know that there are a lot of things happening in the region but this is definitely Asia's century. For the first time, 50 per cent of the global GDP (gross domestic product) is coming from Asia, and Singapore's leadership is crucial. So I think all the people coming here are looking forward to hearing your views, Prime Minister, on the geopolitical outlook aspirations for Singapore.
PM LEE: Thank you, Brende. Thank you for your very generous remarks on Singapore. We have done reasonably well over the last half century. We worked hard for that but there were some external factors which are very important to us and I will just mention three of them - the United States, China, and globalisation.
The US was critical because it generated peace and stability and security throughout the Asia-Pacific over this last half century. The Vietnam War, notwithstanding, it has been a benign, constructive influence, generating an environment where countries like Singapore - small ones - can participate, prosper, compete and have our place in the sun.
At the same time, the US was also a major source of investments and a major market for us, because they kept their economy open, and they believe that by being open and by being welcoming of the growth and prosperity of others, the US gained.
China was also a major factor in our success because over the last 40 years as China reformed, opened up and grew steadily, even faster than Singapore, our engagement with them deepened. Trade volumes increased dramatically, investments in China grew hugely. Singapore, according to the Chinese statistics, is the biggest source of foreign investments in China - through Singapore. I think some of them must be other companies based in Singapore, but nevertheless, it shows the depth of the relationship.
Tourism numbers grew. The engagement generated confidence, lift and a certain vibrancy throughout the whole region, which Singapore benefited hugely from.
Thirdly, we benefited from globalisation because world trade was buoyant and because people did business with one another, became increasingly open. There were trade rounds, there was a Uruguay Round. The World Trade Organisation played a constructive role although not always effortlessly. But we plugged into the global economy and that enabled a small country to be productive, and so the policies we made could work.
TURNING POINT
Now, we are at a turning point, all three of these factors are changing. The US, in terms of security. The strategic balance in the region is shifting because China has become more influential and more substantial a participant, and other countries too - the North Koreans are a major preoccupation because they have nuclear capabilities.
America itself is asking the question whether they are carrying too much of a burden for this and wanting their allies to take on more of a responsibility, at least for financing the cost of this common security.
On economics too, the Americans have shifted their attitudes. I think that (they are now) much more concerned about the impact on American workers, much more concerned about other countries taking advantage of America, seeing this as a free-rider problem rather than one where America is holding the rein and being open, benefiting others but in the process benefiting itself. So that is a major change; we do not know that it is irreversible but it is certainly a very fundamental shift of stance.
The Chinese position has also shifted because as they have grown, they have become much more influential. Their role in the international economy has changed substantially. Their influence has grown, and their relations with other countries, in particular with the US, have become more difficult to manage. And therefore, whereas it was previously effortless to say, "I am friends with everybody"... now, we still want to be friends with everybody but you are pushed to be better friends with one side or the other. So that is a change in the world.
BRENDE: I think a lot of Europeans understand that.
PM LEE: The smaller you are, the better you understand it.
The third factor - globalisation - is also shifting. You discuss it all the time here because people worry about the impact on disadvantaged groups; people worry about the impact on the environment; people worry about the uncertainties which are generated because we are so interrelated; and people are anxious about the ups and downs, which we no longer have a buffer to protect ourselves against.
What do we do?
With America, we remain very good friends. They are a major security cooperation partner with us. I think we continue to believe that they have an important role in the region to foster stability and security - no longer alone, but still an indispensable role, because the Chinese cannot play the role the Americans do, the Japanese neither. And so we would like to continue to work with America, we would like to continue to work with China.
From time to time, you will find yourself being pressed to choose sides. When we do have to make a stand, I think it is very important that people understand that Singapore's choices are on its own behalf because we are making decisions for Singapore and not because we are a cat's paw for one side or the other.
That means you must have the courage to stand up and call things as they are, and from time to time, you will incur at least a raised eyebrow, and sometimes more than one raised eyebrow from one side or the other, and occasionally both.
But it is necessary to do that because once people no longer think that you are a serious interlocutor calculating on your own behalf, you are written off, you are finished.
With China, we also have a big account. In fact, China is our biggest trading partner as it is for everybody else in the region, including all of America's allies.
We hope that when we see that it is possible for China to adjust its position, taking into account its new very strong influence in the world, in order to integrate in a peaceful and constructive way into the global order, which it depends upon, whether it is through the Belt and Road Initiative, whether it is through the Asia Infrastructure Investment Bank or other diplomatic initiatives, I think China will have a major role to play, and Singapore hopes that we will be able to cooperate with them, participate and encourage them to engage in a way which leaves space for other countries to prosper, to set their own path, and in the long term to welcome a new major player and not feel that this is an elephant in the room, which may not notice who else is there and what may be underfoot.
On globalisation, I think, notwithstanding the pressures and the problems, we have no choice but to continue to bet on countries cooperating closely with one another. Because if 51/2 million or six million people in Singapore have to grow our own food and make our own computers and make our own banking and living, I think we will starve, it is not possible.
WHAT IT MEANS FOR SINGAPORE
But to prosper in such a new globalised but troubled environment, we have to up our game, raise our capabilities, bring in new investments which will connect us to centres of vibrancy and prosperity all over the world - Europe, America, Japan, China, Latin America and Africa - because there are many spots of vibrancy and future growth there, and link us in a way where we make a contribution because we can do things in Singapore, which is not so easy to be done, all together in one place, any other single place.
That means we have to upgrade our companies, upgrade our people, education, skills, and have the environment where we can welcome in very high-quality investments, operations, R&D centres, places where high-quality people want to live, want to work, and want to be.
It is not just costs, but it is also the whole environment - safety, security, confidence, opportunities, vibrancy. That is what Singapore needs to be. Amidst all of this, we have to look after our own people, make sure that all these good things which happen in the world benefit not just Singapore but benefit Singaporeans across the board. So that they are able to take advantage of the jobs we create, so that they are able to fend for themselves against global competition.
So that if one industry is declining, which will happen from time to time, the people there are given the help, the support and the time to gain new skills and transfer their employment to another industry, another job and be able to make a living for themselves and not feel that they are fending for themselves on their own and that the system is not on their side.
This system has to work for them because if it does not work for them, the system will fail. And in Singapore, it must not fail because we only have one chance to succeed.
BRENDE: Mr Prime Minister, do you feel that there are still challenges related to geopolitical confrontations and competition, or do you see that maybe, it has peaked with the signing of the first part of the trade agreement by US and China in (Washington) D.C. last week?
PM LEE: We are relentlessly optimistic but not that much so. I do not think it has peaked at all. It is a very serious issue. How does an incumbent hyperpower like the US accommodate a rising new power - China? How do both sides make the adjustments in order to accommodate each other, and head-off what Graham Allison calls the Thucydides' Trap? And it is not at all obvious that it is easy to do because both sides have domestic pressures, both sides are primarily calculating the next election, or the next domestic political succession. Already you have seen the consequences because the tariffs and counter-tariffs have reduced trade, reduced welfare and the uncertainty of the conflict has meant that investments have been affected... because you do not know and you cannot count on the future.
I was talking to one industrialist yesterday and he said, "Well, we may say, medical equipment - MRI machines; in an ideal world, you make it in one place and you supply the whole world. If we bifurcate, we can put one manufacturing centre for Asia and China, one manufacturing centre for America and it costs us and that we will not die."
I said that is fine if you are making the same MRI machine in both places. But if they need different chips and different software, and if the next time I find an MRI breakthrough, I am not going to share with you because that is a national security threat to me, then I think it will cost us. I think you are not there yet, but you are not heading away from that direction.
THE DECOUPLING THREAT
BRENDE: How worried are you about this decoupling because today, they have been competing but if you go for different systems and you do not follow a path where this is compatible, that can also have a quite significant negative impact on long-term growth and then countries will have to choose.
PM LEE: Today, I am here talking to you and we have two mics for backup and they are both the same system. One day, I may need to have one which is an American system and one which is not an American system. I do not think that is the better world to be in because it is not just that it is going to cost us more but the mutual suspicions and anxieties which are going to be created - did he design his own, did he borrow my design, did he reverse-engineer mine or did he entice my person over in order to carry the IP (intellectual property) along?
All these mutual suspicions and doubts are going to only create more frictions and problems. The optimists say you are going to be so integrated that pulling it apart is unthinkable but I do not take quite such an optimistic view. I think it makes it very hard but such things do happen before and if they do try to happen, the consequences are very bad.
In fact, before the First World War, the European countries were all very integrated together. The economies were integrated together, the colonies traded with one another, and people thought this was the future - globalisation. But that did not stop miscalculations and tensions from building up, and the First World War from breaking out disastrously, beginning with what should have been a minor incident. And so, we have had 50 years, generally of peace. Can you bet on another 50 years, generally of peace? I think that the odds are not negligible.
BRENDE: There is a lot at stake, so you are moving from like a prosper-thy-neighbour to a beggar-thy-neighbour approach.
PM LEE: Nobody says that. Everybody says that I want to prosper my neighbour, but I have to think about my people first.
BRENDE: Singapore already saw last year quite a significant slowdown in your growth. You are more optimistic about this year. Were you paying a price already for this trade war?
PM LEE: Some of it was from slower trade, export markets were less buoyant, some of it was because of electronics slowdown, which was global. There are some prospects that the electronic slowdown will turn around this year, the people in the industry are reasonably optimistic. What we are not sure this year is where the US economy is going - it does not look like it is going into a recession, but nobody has a very good record predicting when economies go into recession.
BRENDE: We do remember from the history books that in the 1930s, the global trade fell by 50 per cent and the global GDP... fell by 25 per cent and they got a real depression. There is a lot at stake.
PM LEE: Followed by a war. There is a lot at stake. I mean, I do not think we will repeat follies in the same way but it is quite possible for us to be inventive in making new mistakes.
SILVER LININGS?
BRENDE: Do you see any silver linings?
PM LEE: Well, if you look at the tech sector, there is tremendous vibrancy and optimism, and everybody believes they are going to change the world. They are not all right but some of them will not be wrong.
If you look at things like Google, Amazon or so many of the tech companies or Microsoft, which did not exist 30 years ago and which were not dominant 20 years ago. They are now major players in the world, so nobody knows what the major participants are going to be 20 years from now, and it is going to generate new opportunities but it is also going to generate new problems.
When social media came along, everybody said this is marvellous, this is a way to democratise debate, and everybody has a voice... basically nirvana will have arrived. Now we see what it is like. It does not look like it is nirvana.
BRENDE: Can democracy survive social media?
PM LEE: I do not know whether it is democracy surviving but how will human societies adapt to this?
Human societies... over many, many centuries have developed to have circuit breakers. A view, an idea develops, it catches fire, a few more people pick it up, it gets tested. Other people may or may not pick it up. Things take time. Gradually, evidence accumulates and then some fail, some succeed, and you move forward. Now, all that is short-circuited into one fraction of a second, that length of time it takes to press a button for either Facebook posts or Twitter tweets.
When you speed up the operating cycle like that by 100 or 1,000 or 10,000 times, the operating system will malfunction.
Human beings are not meant to work like that. Your brain does not speed up 10,000 times. You need time to hoist things in, to mull it over, to think it, discuss it, to test it and gradually to get some grey hair and then you have some better decisions about it. It will throw all that out of the window.
I think you need to be very confident that you know what you are doing, and I am not sure that we actually have an answer to that question.
BRENDE: Scale and size are everything when the winner takes it all in a platform economy. How do you think smaller countries and medium-sized economies will cope with this?
PM LEE: If we can participate in the global economy, then we are part of it. The major platform companies are all in Singapore - Google is there, Facebook is there, the data centres are there, engineers are there. If there are proper rules which protect participants, big and small, in this environment, then, I think we can make a living. If there are no rules, and all of a sudden you have a Twitter storm or something befalls you in the middle of the night, next morning you wake up and you find you have been devastated. It can happen.
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