Secretary-General of NTUC, Mr Ng Chee Meng,

 

Chairman of the Singapore Business Federation, SBF, Mr Lim Ming Yan,

 

Members of the Firefly family, Trade Associations and Chambers, brothers and sisters of NTUC, ladies and gentlemen,

 

1. A very good afternoon to all of you, and welcome to the Firefly Symposium 2022.

 

2. Let me thank the Singapore Tourism Board (STB) for that energising video to kick us off; I am sure many of us are looking forward to the vibrancy brought about by a rejuvenated tourism and lifestyle sector. I’m sure many of us are booking tickets to travel overseas as well.

 

Introduction

 

3. This Symposium is the first major event that MTI has organised since the start of the pandemic, and it brings me great pleasure to see and interact with members of our economic agencies, and some of our closest partners, in person under one roof.

 

a. We would not be here if not for the dedication, creativity and grit displayed by each and every Firefly officer. Even as they battled against the pandemic, our officers continued to hold fast to MTI’s mission – to better Singaporeans’ lives by growing our economy, creating good jobs, and helping our workers take on these jobs, thereby sustaining real wage growth. I thank you for your hard work and sacrifices, and I am very proud of what you have achieved as a team.

 

4. This year, we have invited our key partners to the Firefly Symposium, including our tripartite partners, the Trade Associations and Business Chambers, or TACs, our union brothers and sisters, and our think tanks. Thank you for joining us today, and for your steadfast partnership, especially through the pandemic.

 

5. We want to continue engaging our stakeholders through platforms such as this, as well as the Future Economy Council, and the Alliance for Action industry coalition groups. Constant global and regional developments require us to work closely with our stakeholders, so that we can adapt with greater agility and create the right environment for new ideas and partnerships to flourish.

 

Growing Headwinds in our External Environment

 

6. Last month, I spoke in Parliament about the emerging uncertainties in our global environment, and shared our Singapore Economy 2030 vision.

 

7. Since then, the war in Ukraine has sent shockwaves throughout the global economy, further straining and disrupting supply chains, and driving up prices of energy, food, and industrial goods and commodities.

 

8. Many of our businesses and households have been feeling the squeeze. The Monetary Authority of Singapore (MAS) further tightened our monetary policy earlier this month to address underlying inflationary pressures. This will help to slow the inflation momentum. The Government has also extended support to companies and households to help with business costs and cost of living. Earlier this month, the Minister for Finance announced that we will accelerate the implementation of support measures announced at Budget this year, to bring relief more quickly to those in need.

 

9. While we tackle the immediate challenges, we must not lose sight of the longer-term trends and strategy. Looking ahead, there are deep, structural shifts that are profoundly reshaping the global economic landscape.

 

10. First, the rules-based global order that has governed international economic relations for more than 70 years is now under serious threat. Depending on how events unfold, respect for international rules and norms may continue to recede, and trade may become increasingly less “free”. This is a major concern for a country like ours, which depends heavily on trade for growth and jobs.

 

a. The geostrategic competition between US and China has been further elevated by the Russia-Ukraine conflict. Both sides could be looking to reduce mutual dependencies to strengthen economic resilience, and preserve manoeuvring space, and their economic partners may come under increasing pressure to “choose a side”.

 

b. The rising food and energy prices will hit both enterprises and households, especially those with lower incomes. This threatens to widen inequality, and lead more to turn their backs on multilateralism and pursue protectionism instead.

 

c. COVID-19 has also highlighted the importance of supply chain resilience. As countries move to near-shore or onshore certain production capabilities, there may be a loss of efficiency in global supply chains, leading to an increase in overall costs.

 

11. Second, the low-interest rate, low-inflation environment that has supported economic growth in recent decades may be coming to an end. Going forward, Governments will likely need to manage starker trade-offs between growth and inflation. Many countries have also significantly ratcheted up their commitment towards climate action, and Singapore is similarly committed. But many low-carbon technological solutions are still some distance away from being commercially viable. The move towards decarbonisation is likely to increase costs in the near- to medium-term.

 

12. We must therefore be prepared for the impact of heightened inflation, constrained supply and volatile geopolitics.

 

Opportunities in the Global Environment

 

13. But against this backdrop of rising challenges, we continue to see many growth opportunities, and Singapore is well positioned to seize them.

 

14. First, the shift in global economic weight towards Asia, and in particular Southeast Asia, puts us in a position of strength.

 

a. Major economies around the world are sharpening their focus on our region, both politically as well as economically.

 

b. The US has been increasing its engagement with Asia Pacific, including through the Indo-Pacific Economic Framework. We are also strengthening US-Singapore bilateral collaborations in new and forward-looking areas, such as through the Partnership for Growth and Innovation (PGI).

 

c. Our partners in Asia are doing the same. Last year, China indicated that it hoped to upgrade its relationship with ASEAN to a Comprehensive Strategic Partnership, to further strengthen economic and non-economic cooperation. South Korea upgraded its engagement strategy with Southeast Asia in November 2020, titled the “New Southern Policy Plus”, and earlier this year, Japan announced the Asia-Japan Investing for the Future Initiative.

 

d. Singapore is stepping up our efforts to strengthen regional economic cooperation architecture, such as through the Regional Comprehensive Economic Partnership, or RCEP, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. We are also creating new “pathfinder” agreements for the digital and green economies, and our efforts have gained traction globally. For example, we have concluded digital economy agreements with Australia, New Zealand, Chile, the UK, and South Korea, and we have embarked on the first of our green economy agreements with Australia. Together, we can forge new economic partnerships and create new systems for trade. We will also help our companies and people benefit from such partnerships.

 

15. Second, we are investing heavily to capture value from the two secular trends that will fundamentally transform our economy – advancement in digital technology and sustainability. Our companies will need to be nimble in pivoting their processes, workers, and even their entire business models, to seize these opportunities.

 

16. The automotive industry is one example of an industry that has reinvented itself time and again, in response to disruptions from global trends and advancements in technology. The first car was invented in 1886 by Karl Benz, but the automotive industry only took off in 1913, when Ford created the moving assembly line that reduced production time from 12 hours to 1.5 hours. Companies that did not adopt the assembly line technology quickly went out of business.

 

17. In the 1950s and 60s, Toyota pioneered the “kanban”, a “just-in-time” production control system that improved productivity while reducing inventory costs. This process improvement made Toyota a new giant in the global automotive industry.

 

18. Today, the industry continues to undergo deep transformation in the areas of digitalisation and sustainability – or CASE as the industry calls it, which stands for connectivity, autonomous driving, sharing economy and electrification.

 

a. For one, the car has changed from a mostly mechanical machinery to an increasingly electronic one; one study showed that electronic components accounted for 35% of the total vehicle cost.[1]

 

b. As ride-hailing services increasingly replace private mobility, car makers will need to respond to slower growth in sales by creating new revenue streams, such as through digital services like in-car apps and software.

 

c. The pressure to reduce emissions has driven manufacturers to develop electric vehicles and hydrogen fuel-cell vehicles.

 

d. As the world increasingly moves from a “just-in-time” to “just-in-case” operating model following the COVID-19 pandemic, we can expect the automotive industry to respond accordingly.

 

e. All of these will have significant impact on the supply chains, technical capabilities, and workforce competencies of car makers.

 

19. Many other sectors are facing similar pressures to transform. This continuous process of investment, capability development, and painful adjustments to one’s business is inevitable, and keeps us growing and reaching for greater heights.

 

Realising Singapore Economy 2030 through Industry and Workforce Transformation

 

20. So amidst the near-term challenges that our economy is facing, I urge the business community to not lose sight of the future, and the significant growth opportunities that we can capture if we collectively put our mind to it.

 

21. We are organising our efforts around the Singapore Economy 2030 vision, which comprises four key pillars – Manufacturing, Services, Trade and Enterprises. This builds on the hard work and collective leadership of our stakeholders – industry leaders and TACs, the unions and workers, and the Government. In particular, the Industry Transformation Maps, or ITMs, spearheaded by the Future Economy Council, have laid a strong foundation for the near- to medium-term moves that we must make to remain competitive, and provide our people with meaningful career opportunities. We are in the process of refreshing all 23 ITMs, and they will bring us one step closer to realising the Singapore Economy 2030 vision.

 

22. Most importantly, we need to achieve deep industry and business transformation, and build a bench of successful Singapore enterprises that can sustain strong growth and create good careers for our people. We will also work with a select number of high potential companies, and accelerate their growth into “Singapore Global Enterprises”, or SGEs – large, successful companies that are based in Singapore, but spread their wings globally. We are driving these efforts through the Enterprise 2030 strategy.

 

23. Some businesses have asked – how can we think about transformation, when costs are escalating, and we cannot even find sufficient workers with the right skills to support the companies’ daily operations? Actually, the only sustainable way to address these challenges is to relentlessly push on innovation and transformation. Let me highlight three key areas.

 

24. First, companies need to press on with productivity improvement.

 

a. We hear the difficulties that businesses face given the tight domestic labour market, and we have moved quickly to reopen borders and restore the inflow of foreign workers as the pandemic situation improved. However, the reality is that there will be limits on how many workers we can accommodate on our island. As the global economy reopens, the labour market is likely to tighten further.

 

b. Businesses need to overcome the limit in labour supply by adopting innovative solutions and adapting their business model, to reduce their demand for labour. I encourage businesses to tap on the many Government schemes that provide targeted support for firms with varying needs. Schemes such as SMEs Go Digital and the Productivity Solutions Grant help level up SMEs through basic digital solutions, while firms with more specific needs can tap on the Enterprise Development Grant and CTO-as-a-Service.

 

25. Second, companies need to innovate, build deep capabilities and pivot their business models where needed, to respond to industry trends, open up new revenue streams, and leapfrog the competition.

 

a. By creating products and services that others cannot easily replicate, companies will be able to command a higher premium, and secure a larger and stickier customer base.

 

b. There is no shortcut, and companies must continue to invest in developing indigenous capabilities and technologies that can keep them ahead of their competition.

 

c. Sustainability is one such trend that companies need to embrace. Rather than look at it as a threat, I urge companies to see it as an opportunity for them to move ahead of the market, and develop new solutions to attract customers and investors who demand sustainable goods and services. At the Committee of Supply debate this year, I unveiled the Green Economy Strategy to guide our efforts to partner businesses on this journey.

 

26. Third, Singapore must remain open to top talent from around the world. This must be paired closely with workforce transformation, which will require not only commitment and investment from companies, but also the willingness of workers to learn new knowledge and skills, and take on new responsibilities.

 

a. The support from our tripartite partners have been instrumental in supporting employers and workers on workforce transformation, such as through the Jobs and Business Support Package, and the $100 million set aside for NTUC’s efforts to scale up our Company Training Committees (CTCs).

 

b. Our TACs are also actively working with NTUC. For example, SBF has commenced its Jobs Development Partner programme, which will provide advisory services to companies on business and job transformation.

 

c. I thank NTUC and the TACs for supporting our businesses and workers, and I look forward to our continued partnerships as we press on with workforce transformation.

 

Conclusion

 

27. Singapore Economy 2030 is a journey that none of us will walk alone. In fact, achieving our vision will require the close partnership of our tripartite stakeholders, industry, and workers. In particular, I would like to thank Ming Yan, Chairman of SBF, who will be sharing with us the business community’s perspectives, and SBF’s efforts to support our collective vision.

 

28. Thank you all for being here, and for being a part of our Singapore Economy 2030 journey. I wish you a fruitful event, and with the further relaxation of Safe Management Measures starting tomorrow, I look forward to physically meeting and connecting with you on a more regular basis.

 

29. Thank you.