Thank you Sato-san for your kind introduction.

 

Excellencies,

 

Distinguished Guests, Ladies and Gentlemen,

 

1. Good morning to all of you. First, let me thank you for inviting me to speak at the 29^th Nikkei Forum on “Asian Leadership in an Uncertain World”. 

 

Asia’s Growth

 

2. Over the past few decades, Asia has seen spectacular growth. Its share of global GDP has more than doubled from around 20% in the 1980s to 45% today¹.

 

a. Japan emerged as an industrial powerhouse.

 

i. Japanese companies such as Toyota and Sony became well-known household brands globally.

 

b. The Four Asian Tigers of Singapore, Hong Kong, Korea and Taiwan grew rapidly and modernised, benefiting from the relative peace and security in the region.

 

c. Today, ASEAN is leading the next chapter of Asia’s growth, while India’s economy is also gaining momentum.

 

i. By 2030, India and ASEAN are expected to be the 3^rd and 4^th largest economy in the world respectively.

 

d. China has been a big part of Asia’s growth story.

 

  i. China’s per capita GDP has grown from US$600 in 1995 to around US$13,000 last year, more than 20 times.

 

  ii. This has created new opportunities for billions of people in the region and around the world, even as the world has had to adjust to China’s rise.

 

3. Asia’s rapid economic growth was possible because we had the right conditions.

 

a. An unprecedented period of sustained peace and stability in the Asia-Pacific region.

 

b. Global support for open and free trade.

 

c. This was what the late Mr Lee Kuan Yew had predicted when he spoke at the first Nikkei Forum in 1995 – that Asia will gain tremendously if we pursued market deregulation and liberalisation.

 

4. But we also had to navigate periods of volatility such as the 1997 Asian Financial Crisis and 2008 Global Financial Crisis. And of course, SARS and, more recently, COVID-19 pandemics too. Each time, we were able to overcome the crisis, learn and adapt, and continue our growth journey.

 

An Uncertain World

 

5. Today, we are meeting at a time of great volatility and uncertainty for the world yet again. Let me highlight three points.

 

6. First, intensifying geopolitical contestation, especially between US and China, pose great uncertainties about the future of the global order.

 

a. The US-China relationship is the most consequential in the world but is unfortunately marked by deep suspicion and distrust.

 

b. When each side views the other as an adversary, the risk of accidents and miscalculations increases.

 

c. The key question, therefore, is whether the two super-powers can compete, co-exist, and cooperate, while managing their differences.

 

i. Taiwan is one of the most sensitive issues in US-China relations, and it is now one of the most dangerous flashpoints in the region.

 

ii. Any clash in the Taiwan Strait will have dire consequences not just for the parties involved, but for the entire world.

 

iii. On Singapore’s part, we have a clear and consistent “One China” policy.

 

iv. We are longstanding friends with both sides of the Strait, and hope that both US and China can find a way to engage in dialogue, build trust, and pursue cooperation. Not just on Taiwan, but on other issues too. This will be beneficial to both sides as well as the wider region.

 

d. Regional countries and China must also devise their own ways of cooperating and co-existing.

 

i. With China’s growing heft, it is only natural for China to desire a more prominent role on the regional and global stage.

 

ii. However, as the second-largest economy and the country with the second-largest military budget in the world, China’s actions and words are often seen and interpreted differently.

 

iii. Frictions will arise between China and other countries from time to time, over territorial disputes, or China’s economic policies. How China wields its clout in response, will greatly influence the reactions of countries in the region.

 

e. Fundamentally, all of us want to have a good working relationship with China.

 

i. China is a geostrategic reality. It is the largest trading partner for most Asian countries.

 

ii. China’s involvement is also necessary if we are to have any hope of dealing effectively with global challenges such as climate change.

 

iii. Therefore, it is in our interest to ensure that China is an active part of the regional and global architecture. An isolated or excluded China is not good for anyone.

 

f. While the US-China relationship is currently the central axis of tension, we also cannot ignore the other conflicts happening around the world.

 

i. The war in Ukraine is into its third year with no clear end in sight.

 

ii. The Israel-Hamas conflict has resulted in a dire humanitarian tragedy.

 

1. Terrorist attacks by Hamas on the 7^th of October last year resulted in the brutal killings of around 1,200 Israelis and other nationalities. More than 200 hostages were taken, many of whom remain in captivity.

 

2. On the other hand, there have been over 35,000 Palestinian fatalities and 80,000 injured.

 

iii. In the Red Sea, which is a major Sea Line of Communication, ongoing attacks by the Houthis have disrupted supply chains and threatened the safety and freedom of navigation through the area.

 

iv. In Northeast Asia, tensions have also risen as DPRK stepped up its provocations with numerous ballistic missile launches in recent years.

 

g. These regional conflicts could escalate into global conflicts.

 

7. Second, the global economy is restructuring at a scale and pace never seen before.

 

a. International consensus supporting globalisation is now in reverse.

 

i. Countries are pursuing de-risking strategies, such as “near-shoring” or “friend-shoring” their supply chains.

 

ii. Measures such as sanctions, export and import controls, and investment restrictions have become more common.

 

iii. Hence cracks in the global economy have started to emerge.

 

b. Technological developments such as Artificial Intelligence, especially Generative AI, will fundamentally reshape our economies.

 

i. They have the potential to improve our way of life.

 

ii. But they will also have an enormous impact on jobs, and have the potential to divide us.

 

c. How we respond as a global community to these developments will determine whether these cracks will worsen and lead to further decoupling, or if we can heal the cracks and collectively grow the economic pie.

 

8. Third, climate change is a global existential crisis.

 

a. Humankind’s transition to net zero will be the most difficult transformation for the world, with far-reaching consequences.

 

b. Governments will need to invest trillions in mitigation and adaptation efforts.

 

c. Traditional carbon-based economies will need to be transitioned into low or zero-carbon ones. Workers will also have to adapt, or risk being marginalised.

 

9. These uncertainties will compound one another and add to the unpredictability as to where we will end up.

 

10. Yet I remain hopeful amidst these challenges. I believe that Asia can play a leadership role in this uncertain and volatile world.

 

a. Asia’s economic fundamentals remain strong.

 

b. Asia also has every interest to lead the way in this uncertain world.

 

i. We have benefited much from globalisation and the rules-based trading order. Developing economies in Asia were able to trade with developed ones on a level playing field, leading to rapid growth in the region.

 

ii. Likewise, Asia’s continued progress and prosperity depends on having a free and rules-based trading  order.

 

iii. If we continue our current growth trajectory, by 2030, four of the five largest economies in the world will be in Asia.

 

iv. Hence, Asia has a lot to lose if globalisation fails.

 

11. But we have to accept that the traditional model of globalisation may no longer be workable given the current realities. We will need to tweak and find a new way forward. I believe Asia can take the lead in three ways:

 

a. Form agile partnerships;

 

b. Pursue dynamic growth; and

 

c. Ensure inclusive development.

 

How Can Asia Lead?

 

Agile Partnerships

 

12. The bedrock of the rules-based multilateral trading order is the WTO.

 

  a. It has enabled many countries to grow and contributed to global peace and stability.

 

b. But we know that the system is not perfect.

 

i. For example, the current practice of consensus-based decision-making works well when there is strong collective commitment to protecting the global commons.

 

ii. This commitment requires political will from all Member States, which has become increasingly difficult to achieve.

 

13. This is why it is important for us to reform the way the WTO operates.

 

a. We must find a way for the Appellate Body of the WTO to function properly, so that it can enforce trade rules and deal effectively with issues like tariffs, protectionist industrial policies, intellectual property rights, and dispute settlement.

 

14. At the same time, we must also embark on agile partnerships that allow like-minded Members to move ahead on important issues, while leaving the door open for others to join when they are ready.

 

a. One good example is the WTO Joint Statement Initiative on E-commerce.

 

i. The JSI aims to establish the first set of global baseline rules on digital trade.

 

ii. It currently has 90 members and is open to other WTO members to join in future.

 

iii. Singapore is proud to be a co-convenor with Japan on this agile partnership.

 

15. There are other novel economic partnerships that are different from the traditional FTA, but facilitate broader economic cooperation, such as the Indo-Pacific Economic Framework (IPEF).

 

a. Many Asian economies, including Japan and Singapore are members of IPEF and have played a key role shaping its agenda.

 

b. Singapore will be hosting the inaugural IPEF Clean Economy Investor Forum and Ministerial Meeting next month which will bring together governments, investors, and businesses to catalyse projects that will contribute towards our shared climate objective.

 

16. Agile partnerships like the JSI and IPEF complement existing networks of cooperation and interdependence such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP), which have contributed significantly to reducing trade barriers and strengthening economic integration.

 

17. We hope that these overlapping and mutually reinforcing economic partnerships will help to strengthen multilateralism and the rules-based trading order.

 

Dynamic Growth

 

18. Beyond agile partnerships, we must also ensure that our agenda for cooperation is relevant and future oriented. This is why we must pursue growth dynamically.

 

19. The digital and green economies are two emerging areas where there are enormous opportunities for growth, especially in Asia.

 

a. This region is home to many of the fastest growing digital economies in the world.

 

b. For the digital economy to flourish, there must be mutual trust and confidence in the exchange and use of data.

 

c. This requires like-minded countries to come together to establish a common set of rules to underpin the flow and use of data.

 

d. Likewise in the green economy, the scale of investments that is needed to address climate change and unlock the revenue potential is huge.

 

i. We are not talking about billions, but trillions of dollars that need to be invested every year, over the next 30 years.

 

ii. Many of these investments also tend to have a much longer payback period given the nature of such projects.

 

iii. Individual countries will not be able to afford these efforts on their own.

 

20. Asian countries are well-placed to play a leadership role given our strengths in these sectors.

 

a. Japan launched the Hiroshima AI Process[1] at G7 last year to promote safe, secure, and trustworthy AI. Singapore is happy to be a part of the Friends Group to support this effort.

 

b. In the digital economy, Singapore has initiated bilateral Digital Economy Agreements, and plurilateral Digital Economy Partnership Agreements, to enhance interoperability between governance frameworks.

 

i. Together, these networks of digital trade agreements allow companies to enjoy seamless cross-border data flow and facilitate digital trade.

 

c. In the green economy, initiatives such as Green Economy Agreements and the ASEAN Taxonomy for Sustainable Finance will contribute to capability development and help to catalyse new green growth opportunities.

 

Inclusive Development

 

21. Ultimately, the fruits of these efforts must be enjoyed by our businesses and our people. Only then can we ensure broad-based support for the policies necessary to make this happen.

 

22. That is why we must pursue a model of development that is inclusive. This means:

 

a. Generating opportunities for our people;

 

b. While ensuring that development does not cause new problems and dislocations.

 

23. Investing in education is key to inclusive development.

 

  a. Increasingly, it is no longer sufficient to just have good access to basic formal schooling.

 

b. Because of the fast pace of technological evolution and business transformation, governments must invest in life-long continuous education to help the workforce adapt to the changing demands of the global marketplace.

 

i. Singapore has introduced what we call the SkillsFuture scheme, to encourage Singaporeans to attend upskilling and reskilling programmes partially subsidised by the Government.

 

ii. And we have recently increased the level of Government support for this scheme to signal our commitment to support our workers to remain competitive.

 

24. Different Governments will adopt different approaches to inclusive development. Regardless of the approach, Governments have the responsibility to ensure that the benefits of globalisation and economic growth are ultimately enjoyed by our people.

 

JAPAN’S ROLE

 

25. Japan can play a greater leadership role in the region within this broader context of agile partnerships, dynamic growth, and inclusive development. I am glad that Japan is keen to play a more active role in this region under PM Kishida Fumio’s new “Free and Open Indo-Pacific” (FOIP) Plan.

 

26. Japan has been a long-standing partner to Southeast Asia’s development.

 

a. Japan is ASEAN’s top development partner and has contributed an estimated US$140 billion in development and economic assistance.

 

b. Japanese companies were early investors in many, if not all, the economies in Asia.

 

c. Japan has also contributed towards regional peace and security through its participation at regional platforms such as the ASEAN Regional Forum (ARF), and the ASEAN Defence Ministers’ Meeting Plus (ADMM-Plus).

 

d. As mentioned by PM Kishida last night, a recent survey by the ISEAS-Yusof Ishak Institute indicated that Japan continues to be the most trusted power in Southeast Asia.

 

27. Japan is therefore well positioned to do even more moving forward.

 

a. For example, Japan can play a leadership role to facilitate the region’s decarbonisation efforts, through its Asia Zero Emissions Community (AZEC) initiative.

 

b. The newly established Japan-ASEAN Comprehensive Connectivity Initiative will also strengthen regional integration across areas such as digitalisation, supply chain resilience, and electricity connectivity.

 

c. In the area of security cooperation, Japan will be co-chairing an ASEAN Working Group on maritime security this year and we look forward to Japan’s leadership and contribution in this domain.

 

i. Singapore is happy to support Japan’s efforts to promote peace and security in this region, and we welcome Japan Self-Defence Forces (JSDF) aircraft and vessels to stopover and make port calls in Singapore.

 

28. From July this year, Singapore will assume the role of country coordinator for ASEAN-Japan relations. We are committed to partnering Japan to further engagement of the region.

 

a. For example, we could strengthen the ASEAN-Japan Comprehensive Economic Partnership (AJCEP).

 

b. We can also expand collaboration in cyberspace, to address common threats such as digitally enabled scams and ransomware.

 

c. We should enhance connectivity between ASEAN and Japan, including through the conclusion of the ASEAN-Japan Air Services Agreement. This would facilitate trade and investments, as well as strengthen people-to-people links.

 

d. We should also cooperate closely to implement the ASEAN Outlook on the Indo-Pacific (AOIP), which would contribute to an open and inclusive regional architecture.

 

29. Bilaterally, we should actively explore opportunities to enhance cooperation between our two countries.

 

a. The Japan-Singapore Economic Partnership Agreement (JSEPA) is the corner stone of our economic relations and has created many opportunities for our businesses since it came into force in November 2002.

 

i. We could review the JSEPA and ensure that it continues to remain relevant and effective.

 

b. We should also deepen existing partnerships in traditional industries such as hospitality and logistics, and explore collaborations in the emerging areas of digitalisation, innovation, and the green economy.

 

i. Initiatives such as the Memorandum of Cooperation to establish the first Singapore-Japan Green and Digital Shipping Corridor, and the Japan-Singapore Co-Creation Platform which brings together start-ups, universities and research institutions are examples of how we can partner each other to navigate this fast-changing world.

 

CONCLUSION

 

30. Ladies and Gentlemen, we are now living in a more uncertain and complex world. How well we navigate these choppy waters and these uncertainties will determine how the future will look like for our children and our grandchildren. There are no easy solutions, but what is clear is that there is scope for Asia to play a leadership role. I am hopeful that Asia’s dynamism, coupled with our commitment to agile partnerships, dynamic growth and inclusive development will stand us in good stead to ride through these uncertain times, turn challenges into opportunities, thereby firmly establish Asia’s leadership and emerge stronger and more prosperous.

 

31. Thank you very much.