Introduction

1  Distinguished guests, ladies and gentlemen, a very warm greeting to you. Happy New Year!

2  Thank you for inviting me to this event. I recall that when I attended the Lunar New Year celebrations with you last year, the format was much different. But then again, while the format might be different this year, the meaning and significance of this event has not been diminished.

3 Every year, we gather together on the first day of Chinese New Year as a community, to reaffirm our determination to do better for ourselves, our businesses and most importantly, for our country.

Looking ahead

4 As we celebrate the start of the Year of the Ox, it is also important for us to look forward to the year ahead. In fact, as I will explain, we should look to the next few years ahead, because there will be great changes in the coming years.

5 We are starting 2021 with cautious optimism of our economic performance and prospects for the year. Since the onset of COVID-19, we have progressively reopened our economy in a safe, calibrated and sustainable manner.

6 If things go well, we are hopeful that we will see some global economic recovery in the second half of the year. Domestically, we are estimating that our country’s GDP will grow between four to six percent this year. But beyond the number, what is more important is to appreciate how our economy has transformed.

7 However, the global economic situation remains uncertain, given the recurring waves of COVID-19 infections in many countries, geopolitical tensions between major powers, and the continuing shift in global production and supply chains.

8 We do not expect these issues to be resolved quickly. Neither do we think that the ongoing vaccination programmes globally will be a silver bullet, given the uneven pace of rollout of the vaccination programme in different countries across the world. 

9 That is why Singapore has to act now to re-think our processes, our value proposition and how we can build a new economy by transforming ourselves, in order to seize the opportunities available amidst the crisis.

10 The faster we are able to do this collectively, the sooner and the better we will be able to seize the growth opportunities available and be ready for the recovery when it comes.

Ushering in a new economy

11 Prior to COVID-19, technological advances had already caused many companies to review their business models and strategies. Some re-examined the role of business hubs in the region. Others re-thought their business models and production processes. Yet others were re-thinking about their supply chains and global production footprint, to see how they can be either closer to their markets, or to research and development. COVID-19 caused a rapid acceleration of these developments. 

12 With the increased fragmentation and potential bifurcation of the global system, we are likely to see a further reorganisation of global production and supply chains. The changing nature of how companies lay out their operations and supply chains across the world will raise a fundamental question for Singapore: Is there still a role for hubs, for business hubs, like Singapore in the post-COVID world?

13 Our answer is yes, there will still be hubs. However, the nature of hubs will have to change.

14 In fact, with digital technologies and other advancements in technologies, operations can become much more decentralised. It would be fair to say that there will be many more business nodes. But there might be fewer true business hubs. And these few business hubs will be the few across the world that can truly mobilise capital because of their rule of law, that can truly aggregate talent because they provide a platform for talent to serve diverse markets in a fragmenting world. And true business hubs must be able to provide a predictable environment where people will put their ideas and intellectual property in.

15 Singapore must endeavour to be one of these key business hubs in the world, where we offer the services of being able to mobilise capital, aggregate talent, protect intellectual property, and provide a predictable environment for businesses to thrive, not just to serve any particular domestic market, but to serve international markets.

16 Going forward, Singapore must value-add to our own economy and value-add to the rest of the world. If we can do this well, we can transcend our geographical size and geographical location.

17 This is how our role as a business hub will be changed. We will no longer just be an intermediary matching supply and demand. We will go forth and value-add as a business hub to do what I have just described. This is especially important for Singapore, which has never had a hinterland that is big enough to access resources and markets.

18 This is a historical opportunity for us to truly transcend our size and geographical location, and leverage technology as well as the connectivity that we can establish for ourselves – both in the physical dimensions of air, land and sea connectivity, but also in the non-physical dimensions of our data flows, financial flows, talent flows and so forth.

19 To succeed in the next lap, we must continuously strengthen our position as a critical business hub and not be easily displaced.

20 We have our work cut out for us. Our role is not just to identify the growth sectors and the sunset sectors. I always like to refer to what Thomas Chua once said – there is no such thing as a sunset industry, it is more about our mindset. On top of that, it is about our ability to analyse and place ourselves in the critical niche areas along the various global value chains that will make us hard to be displaced.

21 In every industry, we must try to identify the critical nodes of capabilities that we must have that make us hard to be displaced by people who compete on the basis of price or the abundance of their resources. We must compete on the basis of the quality of our ideas, the speed of our execution, and the speed of evolution of our products and processes. So, there is no such thing as a sunset industry, but there is always such a thing as being a critical node in that global value chain that makes us much harder to be displaced even amidst natural crises and pandemics. 

22 Our strategy is to anchor both international and local companies in such critical nodes in the global value chains in order for us to drive the next level of growth. This will be applied to current conventional industries, as well as new and emerging industries including urban solutions, environmental sustainability, agri-tech, and clean energy, and so forth. 

23 Whether it is existing sectors or new sectors, we have a chance to identify those niche areas that we can compete in, in order to strengthen the economic resilience of our country.

24 There is no denying that COVID-19 has changed the world and will continue to change the world. But whenever there is a crisis, there is an opportunity.

25 This is why in today’s session, we started by talking about embracing new opportunities, especially in the digital sphere.

26 The digital world presents fresh opportunities that are up for grabs for those who are willing to try. Technology is neutral. Whoever who can master technology best will win. This applies to us and our businesses as well. So, it is not about technology per se. It is about how we position ourselves in this rapidly transforming world.

Government’s efforts to help businesses to go digital

27 In Singapore, we will adopt a four-pronged strategy to ensure that our companies, both at the individual and collective levels, can seize the opportunities presented.

28 First, at the macro-level, the economic agencies will continue to forge new trade rules in forward-looking areas such as data and finance through the Digital Economy Agreements (DEAs).

29 These new DEAs will allow us to work with likeminded partners, which includes both companies and countries, to strengthen digital connectivity, resist digital protectionism, and bridge digital and technological fragmentation across various jurisdictions. The more DEAs we have and the more comprehensive they are, the more it will allow businesses in Singapore to connect with the rest of the world, even in a fragmenting world.

30 This is how we have conventionally done so with free trade agreements, where more than 90 percent of our products and services have privileged access to the global markets. This makes us a very attractive place for others and our own companies to plant their investments in Singapore, and service the world from Singapore.

31 As digitalisation becomes more pervasive, we must make sure that governments and companies alike can work together to prevent digital fragmentation of the world.

32 Second, at the national level, we are pursuing an innovation-led and digital-forward economy that takes advantage of technological advancements to transform products and production lines.

33 In the digital world, the competitiveness of our businesses will hinge on whether they can push the frontiers of production to create new products, new services and new production models at speed.

34 To continue to be efficient is necessary, but it may not be sufficient. We must make sure that we can evolve products and processes at speed. Many of the R&D and commercial institutes like Siemens have made available opportunities for small and medium enterprises (SMEs) to leverage technologies to evolve business products and services at speed.

35 This is very useful to our own business ecosystem, because not every SME will have the ability to put in the necessary resources and extract the necessary talent to evolve their products and processes at speed. And that is why, increasingly, we need to share resources at the national level to allow businesses to do so.

36 This is why I’m so happy to see the initiative by SCCCI. The studio that we have seen is an example of the trade associations coming together to provide a platform as a service for our local enterprises to evolve their products and services, and to evolve their outreach to the international market.

37 If each and every one of our enterprise were to do this by themselves, it will be labourious, it will be difficult, it will be costly. But because of efforts like what SCCCI has done, they now have access to a platform as a service to reach the world and transcend our borders.

38 Third, at the company-level, we will have to double-down on our efforts to support our local enterprises in gaining e-commerce capabilities and maximising their growth opportunities in the digital world.

39 Just now, SCCCI President Mr. Roland Ng shared with me how the world has been transformed by e-commerce. Today, retail no longer respects boundaries. Today, retail is global and not just local. Of course, there are local elements that we need to be sensitive to, but the outreach is potentially global.

40 This is why we have launched the Grow Digital initiative to help SMEs which are willing and ready to seize opportunities in overseas markets via digital platforms.

41 Today’s effort by SCCCI is another part of this effort to help our companies go beyond Singapore. While SCCCI’s efforts are now focusing on China, what they have done for the Chinese market can, if successful, be replicated to markets even beyond China. And then we will no longer be limited by the market size of 5 million in Singapore. But that requires us to build up new capabilities and new capacities. And again, I’m very happy to see SCCCI, together with the other trade associations and chambers (TACs), doing this for their members, not just as a service, but also internally building up their capabilities and capacities to do this better.

42 The key to this goes beyond building the capabilities and capacities in SCCCI. The key to this for the next part of our work is to outreach to as many local enterprises as possible to come and join this effort, so that they can broaden their consumer and customer base.

43 I am happy to know that more than 1,800 enterprises are now transacting on e-commerce platforms supported under the Grow Digital initiative.

44 The fourth thing we will do at the national level is that we are strengthening our digital infrastructure. This includes investing in digital connectivity, data analytic and computing capabilities, payments systems and new business innovation.

45 A key initiative will be our 5G infrastructure, which will form the backbone of our digital infrastructure for the next lap of our economic growth. The greater speed and bandwidth of the 5G network will allow us to handle a larger volume of e-commerce orders from all around the world.

46 But handling the orders is one thing. Combining that capacity and the fulfilment capacity with our more integrated and superior logistic chain will be the other part of our work. Taken together, both the digital infrastructure and the physical infrastructure for logistic fulfilment will give Singapore an edge in a growing e-commerce space.

Call to Action

47 While the Government can do many things, we also need to work with TACs, which are critical in this effort. Not just to build up capabilities like what we have done today to allow our SMEs to access them, but also very importantly, to help the SMEs to be on board this initiative. TACs like SCCCI are critical in how our SMEs can be reached and how many of them can come on board.

48  This initiative to set up the Live-Streaming Studio as a shared resource for the business community in Singapore is a positive example, and I’m sure there will be many more examples.

49 I’m also very happy that many of the TACs are stepping up to their roles to help our businesses navigate the fast-evolving environment.

50 Just as I was entering the hall, Roland shared with me how the recent geopolitical developments in the region has impacted some of our businesses. Without the Government having to prime our TACs, you are already coming together to organise seminars and share knowledge on how to manage regional geopolitical developments. This is a positive sign and I applaud you for this effort as well.

51 It shows that our TACs are stepping up, that our TACs are capable of doing all these for our local enterprises. Beyond aggregating opinions and passing on messages and explaining policies, very importantly, the TACs are determined to build up substantial capabilities that can value-add to global enterprises, both in Singapore and beyond Singapore.

52 I have full confidence that our TACs are on the right track, and I would like to assure the TACs that the Government will continue to support you and work closely with you, as you build up these capabilities in service of the local business community in Singapore and beyond Singapore.

Conclusion

53 Finally, while this can be the crisis of our generation, this can also be the opportunity of a generation.

54 I often share with my staff that while the challenges posed by COVID-19 have been immense and the challenges posed by the technological challenges and geopolitical developments are not easy, it is also the chance for Singapore to distinguish ourselves for many years to come.

55 If, at this moment in history, we are able to act coherently and cohesively, we will be able to distinguish ourselves. Not many places in the world will be able to serve different markets in a fragmenting world. Not many places in the world will be able to convince people to put their capital in them, through them, because of their legal system. Not many places will be able to aggregate talent from east and west, north and south, in order to serve different markets in a fragmenting world. And definitely not many places will have the capacity to assure people of their business continuity, their policy coherence and their intellectual property protection regime that are so necessary for the generation of new business ideas.

56 Singapore has every chance to do this. If we do this well, we will attract the right businesses and entrench ourselves in the global value chain, and attract the right talent who will continuously generate new ideas for the next lap of economic growth. If we can do all these together as one community, we will be able to distinguish ourselves from the rest of the competition, not just this year, but for many more years to come.

57 Thank you very much, and I wish everyone all the very best in the Year of the Ox. We will continue to work closely together to make sure that our little red dot continues to shine.