Distinguished Guests
Ladies and Gentlemen
1. Thank you for inviting me to speak at this year’s Lee Kuan Yew School of Public Policy – Peterson Institute for International Economics Next STEP Global Conference. It is both an honour and a privilege to be here with all of you today, discussing some of the most critical issues that will shape the global landscape in the coming years.
2. We are at a unique intersection in time. The world is undergoing profound shifts.These shifts are not merely transient. They represent a new global reality that will define the next decade and beyond. The decisions and actions we make today will determine our future paths.
Global Challenges amid a New Global Trade Order
3. One new reality is the New Global Trade Order that is taking shape. Let me highlight three key trends underpinning this fundamental reconfiguration of the global economic system.
4. One, intensifying geopolitical tensions, especially between US and China, pose great uncertainties about the future of the global order.
a. The US-China relationship is arguably the most pivotal in the world today, yet it is characterised by fundamental differences and increasing suspicion. When both sides perceive each other as adversaries, the potential for misunderstandings and unintended escalations rises, making the global landscape increasingly unstable.
b. The war between Russia and Ukraine, and conflicts in the Middle East have added significant upside risks on inflation and global trade flows, beyond the devastating human casualties.
5. Two, the open and rules-based global economic order is being challenged. This results in greater friction to trade and rising uncertainty for businesses globally.
a. International organisations established to promote global economic cooperation and foster growth and peace since the second world war have come under unprecedented pressure in recent decades as countries disagree on what constitute “fair competition and fair trade” and increasingly resort to unilateral actions to level the playing field.
6. Three, countries are also increasingly compelled to look inwards and adopt protectionist measures to shield domestic industries from external competition.
a. According to the World Bank, the number of trade restricting policies have surged from slightly more than 500 in 2015 to almost 3,000 in 2023. We should expect such a trend to continue in the coming years.
b. Policies, such as the imposition of tariffs, tend to trigger retaliatory moves which would in turn contribute to increased business costs and disruption to supply chains across all economies involved.
7. At the same time, we are confronted with global challenges of unprecedented scale that cannot be solved by any one country or region alone.
8. One of them is climate change – one of the most pressing global challenges of our time.
a. Rising sea levels, increasingly severe weather events, and shifting weather patterns are just a few of the immediate impacts that we are seeing across the globe.
b. Global temperatures are already 1.1 degrees Celsius higher than pre-industrial levels and are continuing to rise. While 2023 was the hottest year on record, reports have shown that we are “virtually certain” that 2024 will be even hotter.
c. As an issue that transcends borders, cross-border collaborations are crucial to unlocking decarbonisation potential across national boundaries more quickly and effectively for all parties.
9. Another major global challenge is the emergence of disruptive technologies, in particular, AI.
a. AI is revolutionising industries, economies, and the nature of work itself – from improving productivity and healthcare outcomes to revolutionising smart cities and financial services.
b. For economies like Singapore which do not have the benefit of demographic advantage, AI offers the potential to overcome both labour and productivity constraints. However, it also poses significant risks, especially in terms of job displacement and the future of work.
c. The rise of AI also brings with it the challenge of ensuring ethical standards in AI development, protecting data privacy, and managing the risks associated with algorithmic biases.
d. While we continue to allow innovation to take place, there is a need for global cooperation to establish clear standards for AI governance and regulation to ensure that the associated risks are managed.
10. Against the new global trade order and challenges, Singapore must and willremain agile and responsive. Our survival has always been secured by our ability to anticipate change, adapt quickly, and seize new opportunities while keeping an eye on future trends. Let me touch on three areas Singapore will push ahead on.
Championing Multilateralism
11. First, Singapore continues to champion multilateralism and an open trade policy. We call on others to join us in this important endeavour. Against the growing tide of protectionism, Singapore remains a steadfast supporter of a rules-based multilateral trading system. We continue to engage with global partners, including businesses and institutions demonstrating policy thought leadership, like PIIE and LKYSPP, to ensure that the discourse on trade remains relevant and inclusive to all.
a. The expansion of major plurilateral agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)and Regional Comprehensive Economic Partnership (RCEP) is a concrete example of countries still believing in open trade and its importance in economic development.
b. Today, we have an extensive network of 27 Free Trade Agreements (FTAs), which gives companies here in Singapore access to a wide range of markets, amounting to more than 85% of global GDP.
c. Our commitment to novel trade agreements like Digital Economy Agreement and Green Economy Agreements positions us to shape the future of global trade and tap on emerging opportunities in new areas like the digital economy and green technologies.
d. We must also reinvigorate the WTO, through negotiating novel rules in emerging areas of relevance to the evolving global trade landscape. We had incorporated new rules simplifying domestic regulations for the services industry at the WTO earlier this year, and we hope to do the same for e-commerce and investment facilitation.
Investing in Growth
12. Second, Singapore invests in new growth areas that will redefine the future of our economy.
a. One such area is in AI.
i. Earlier this year, ASEAN leaders endorsed the ASEAN Guide on AI Governance and Ethics, which seeks to establish common principles for trustworthy AI and suggests best practices for how to implement trustworthy AI in ASEAN.
ii. Singapore has also updated our National AI Strategy last year, so that we can address risks and concerns from the potential disruptions, abuse and mismanagement of AI, while seizing the potential of AI to unlock the next frontier of economic growth.
iii. We hope that this will also strengthen our value proposition as an active, constructive and reliable contributor to global AI developments, and position Singapore at the forefront of AI.
b. On our pursuit of a low-carbon economy, the Singapore Green Plan 2030 outlines our ambitious goals of making our power grid cleaner, increasing energy efficiency, and scaling up renewable energy sources such as solar power. Through public-private partnerships, we are investing in green technologies and creating the infrastructure to support a low-carbon future.
i. We are capturing green growth opportunities such as in the carbon market and services sector, leveraging Singapore’s strengths as an international financial, business and trading hub.
1. Today, we are home to over 120 carbon services and trading firms. Our economic agencies, EDB and Enterprise Singapore, are supporting the development of training programmes in carbon management, services and trading, in our universities. Both the National University of Singapore and the Nanyang Technological University have recently announced the setting up of sustainability academies, offering a wide range of programmes in carbon services.
ii. Singapore is also innovating new solutions with the global community.
1. Regionally, we are working with our neighbours to realise an ASEAN grid, a critical enabler of our region's energy transition.
2. Globally, we are supporting the development of a high-quality carbon market through our cooperation with partner countries on carbon credits projects, to promote sustainable development, crowd in financing and support a just transition.
3. COP29 that was recently concluded in Baku, Azerbaijan reached a decision to fully operationalise Article 6 of the Paris Agreement. This will provide the necessary guidance to the carbon markets and facilitate the trading of high-quality carbon credits. Singapore has co-facilitated the Article 6 negotiations with New Zealand.
Building Inclusive Futures
13. Third, Singapore will ensure that we remain inclusive, and that every Singaporean is supported amidst these global shifts.
14. We see in many societies, where segments of society feel neglected or are not benefiting from economic progress, division and polarisation occur, which in turn leads to the rise in nationalistic sentiments against trade, immigration and globalisation.
15. Many of the effects of the global shifts that I have spoken today have tangible impact on people, especially for a small and open economy like Singapore.
16. That is why we launched the Forward Singapore Exercise in 2022 to review and refresh our social compact and chart a roadmap for the next decade and beyond.
a. The Forward Singapore exercise brought together over 200,000 Singaporeans, through 275 partnership and engagement sessions, surveys, roadshows and digital platforms.
17. In the face of global uncertainty, it is essential that nations build a strong social compact — In the case of Singapore, one where Singaporeans feel that they have a stake in the future of our country and global wellbeing. Whether it’s through ensuring job security, investing in lifelong learning, or improving access to healthcare, we must ensure that no one is left behind as we navigate this new era.
18. In the Forward Singapore exercise, we lay out a few key uncertainties and challenges that Singapore faces. First, geopolitical tension. Second, technology in productivity and automation that has an impact on the nature of work, and the type of jobs we have to offer. It is also about how we can continue to train our people so that they remain relevant in the face of such technology. Third, the demography of Singapore is ageing quickly. How do we continue to sustain and support such a society into the future? How much of our social spending should be spent on the older generation, and how much should be left for the younger generation? How do we ensure that income inequality continues to be arrested, given that those younger and more educated are able to tap on jobs that require new technology that maybe the older generation may not get access to? Fourth, the proliferation of information. Social media has fractured some societies, and multiplied the channels that we receive information. How do we build consensus, when we are fed information based on what we normally read and consume? These are some of the challenges that we see will have an impact on Singapore and it is important for us, through the Forward Singapore exercise, to get Singaporeans to come together, to think about some of these challenges, to plot a road ahead that has consensus and, in that process, build convergence.
Conclusion
19. Let me conclude. As we face an era of increasingly complex challenges, it is more important than ever for the international community to remain united in addressing these issues. Singapore remains committed to openness and stands ready to work with global partners to create a better future for all. At the same time, we will ensure that no Singaporean is left behind, as we journey through the turbulent waters ahead.
20. Thank you.