Mr Danny Quah, Dean of Lee Kuan Yew School of Public Policy,

 

Mr Adam Posen, President of the Peterson Institute for International Economics,

 

Ladies and Gentlemen,

 

1.             Good evening. Thank you for inviting me to join you tonight. To those of you who have flown in from overseas, a very warm welcome to Singapore!

 

2.             The theme for this year’s conference is a timely one – reconstructing ties in a fragmenting world. This is also a very important and salient topic, and I am pleased to have this opportunity to share Singapore’s perspectives on the changing global environment and how we might respond to them.

 

Changing Operating Context

 

3.             The world we live in today is very different from the one which many of us grew up in. There are at least three key shifts that governments, businesses, and individuals have experienced and have to contend with. Let me just share with you some of these key shifts.

 

4.             The first, is the shift from rules to power. 

 

a.    Since the end of the second world war, the world has largely been operating in a rules-based international order, anchored on a set of common principles upheld through bilateral and multilateral institutions. This has brought about stability and prosperity for the world over many decades.

 

b.    However, in recent years, we have seen a shift towards power politics. The war in Ukraine, rising US-China tensions, and most recently, the conflict in the Middle East have created shock waves across the world and complicated the global operating environment.

 

c.     The war in Europe disrupted energy and food supplies and contributed to a rise in inflation around the world. The conflict in the Middle East is extremely volatile and has the potential to divide and fragment societies, even those thousands of miles away.

 

d.    China and US competition has also created uncertainties and affected business confidence.

 

e.    These geopolitical tensions and conflicts have significantly affected global trade.

 

5.             This brings me to the second big shift: the shift in the rules of trade.

 

a.    Over the last few decades, there was broad international consensus supporting globalisation. Countries were lowering tariff and non-tariff barriers, harmonising rules, seeking win-win economic cooperation. Even when countries clashed on political or national security issues, they still continued to find ways to trade with one another.

 

b.    However, things have changed in recent years. All over the world, countries are prioritising domestic and national security considerations and preferring “near-shoring” and “friend-shoring” of supply chains.

 

c.     Advanced economies are also rolling out massive incentives and subsidies to build up their own domestic production, especially in strategic industries like semi-conductors and clean energy. These in turn trigger a competitive response from the others.

 

6.             The third big shift is the shift to a zero-carbon world.

 

a.    Climate change is an existential issue, and much has been said about getting to net zero. But addressing the climate change challenge is a very complex problem.

 

b.    We will need more than just commitment. We will also need political will to make hard decisions and implement tough measures to achieve our collective climate goals.

 

c.     We will need governments to not only implement transition measures in their countries, but to also work together with one another so that we can help each other to progress along the journey and eventually arrive together.

 

7.             These three shifts are fast gaining momentum, and they will become increasingly challenging for us to navigate.

 

How can we respond?

 

8.             So, the question before all of us today is how should we respond to these trends? Tonight, I would like to share three key suggestions.  

 

9.             First, we need to stay the course in our pursuit of a multilateral and rules-based international order.

 

a.    A world order based on “might is right” is inimical to global peace and prosperity and would be detrimental especially to small countries like Singapore. That is why we have always maintained that the sovereignty, political independence, and territorial integrity of all countries, big and small, must be respected.

 

b.    Singapore’s survival also depends on our ability to do business and trade with the rest of the world. This is why we have consistently pursued bilateral and multi-lateral trading frameworks.

 

 i.      This has been Singapore’s experience with our multilateral trading networks, such as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP. Trade amongst CPTPP members has increased despite the global trend towards protectionism and has prompted keen interest from several aspirant economies, reflecting the value of such cooperative frameworks.

 

c.     But given the shifts in trading rules, we will also have to identify and develop new trade architectures and modalities, and facilitate innovative trade cooperation models across new geographies.

 

  i.      One recent example is the Indo-Pacific Economic Framework (IPEF), which seeks to advance resilience, sustainability, and inclusiveness, amongst the parties. In contrast to traditional trade agreements, the IPEF adopts a collaborative and modular approach to give participating countries greater flexibility so that they can take into account their unique circumstances.  

 

10.          Second, we will need to seek out new areas of possible cooperation, to deepen regional and international integration and collaboration.

 

a.    Climate change is a global problem that requires a global solution. It is one area where there is strong cooperative potential because of the sheer complexity of the problem that no one country has all the answers.

 

b.    Countries will need to collaborate on technology development to reduce carbon emissions, on infrastructure, such as for cross-border electricity trading, and on markets, such as for carbon trading.

 

c.     These present opportunities for governments to come together, set common frameworks for cooperation, facilitate capacity building, and share best practices.

 

 i.      Singapore’s Green Economy Agreement with Australia is a good example of this. We hope it can serve as a pathfinder to explore a way forward for cooperation on sustainability-related areas.

 

 ii.      Singapore is also working closely with our regional neighbors to develop an ASEAN Power Grid, which will facilitate cross-border trading of electricity, accelerate the development of renewable energy in the region and support the region’s decarbonisation efforts.

 

d.    Digitalisation and artificial intelligence are also areas where there is potential for like-minded partners to come together and collaborate. We can share best practices and co-develop rules on ethical development of AI capabilities and applications.

 

e.    These new areas of cooperation will help to reinforce the existing rules-based multilateral trading framework and create new economic opportunities and value.

 

11.          The third, and perhaps most important element is trust.

 

a.    In an environment where protectionism and power politics is the default mode of engagement, governments will, more than ever, need to build trust and demonstrate that they can be reliable partners. This is the foundation for many collaborative partnerships.

 

b.    Singapore has always strived to be a trusted and responsible partner on the global stage. We uphold our commitments; act responsibly based on strong and consistent principles and deliver on our promises.

 

i.      For example, we have upheld our commitment to free and open trade and refrained from imposing any export restrictions, even in the depths of the COVID-19 crisis when critical supplies were short.

 

ii.      We have always sought to fulfil our obligations and responsibilities as a key partner in the global supply chain. In fact, when global shipping routes were disrupted during the SUEZ canal blockage in 2021, Asia-bound maritime cargo were able to do catch-up through Singapore’s ports. 

 

c.     Governments will also need to build trust with their domestic constituents by delivering economic benefits to them, as domestic stability is a precondition for economic development and international cooperation. To do this, we must also continue to invest in our people, equip them with skills that are needed to allow them to seize the new opportunities when they emerge.

 

d.    We must also build trust within the communities, so that we can build a resilient society that can withstand external shocks.

 

Conclusion  

 

12.          Ladies and gentlemen, we are now facing an increasingly troubled and fragmented world. But I am confident that fragmentation need not be the inevitable outcome. There remain opportunities for the global community to rebuild ties, deepen trust, expand collaboration, and develop open, inclusive and global architectures.

 

13.          Thank you all very much and I look forward to hearing your views and comments.