Members of the American Chamber of Commerce,
Ladies and gentlemen
A very good afternoon to all of you, and thank you for inviting me to the American Chamber of Commerce’s Balestier Speaker Series. I think it is significant that Joseph Balestier was the first American consul to Singapore in 1837, which was about 180 years ago. And I think the significance of that is the fact that Singapore was then a British colony, and America, in 1837, was reaching out and establishing international and economic relations, and had appointed someone to take charge of it. And today, you have in the American Chamber of Commerce actively contributing to the continuation of that tradition. And importantly, strengthening our bilateral ties and commercial relations.
2. This work takes on a particular significance in today’s environment. So what I hope to do is to sketch a few broad thoughts, and then we can pick up specific themes or ideas that you are interested in during the Q&A. The reason why I say the work of building bilateral and diplomatic ties take on added significance in today’s environment is simply because we are now in a world where the economic environment is complex. And it is being challenged, not only by trade tensions between the two largest economies, but also by populist sentiments and rhetoric against globalisation and a rules-based multilateral trading system.
3. And yet, these very things - globalisation and a rules-based multilateral trading system - are the foundations upon which we have built global prosperity over the last several decades. And indeed, it is also what has enabled us to lift hundreds of millions of people out of poverty, creating new opportunities for them. So, if you think in terms of what it has enabled, it is the free flow of goods, the free flow of services, the capital of talent and factors of production. And this has allowed countries to leverage their comparative advantages in order to create opportunities for their businesses and benefits for their people. But this rich cross-pollination, combined with technological advancements and innovation, has also posed challenges in the form of compressed product cycles, disruptions to industries and business models, and changes to the fundamental nature of jobs and work as we know it. And because of that, what is apparent is that the strongest pushback against globalisation, a multilateral trading system and greater economic integration is coming from precisely those areas where businesses or individuals have not been able to adapt to the changes that are brought by globalisation and free trade. This is significant, because what it means is that unless we make an effort to address these adjustment challenges, in tandem with our efforts to create a bigger pie, we will face significant obstacles.
4. But history shows us that we do have the ability, capacity and leadership to deal with such global challenges, if nations of the world are prepared to come together, with the will to cooperate, negotiate and overcome problems. If you think about it, in the post-World War II era, America was a key architect of the Bretton Woods Institutions, and then the World Bank, the International Monetary Fund, the General Agreement on Tariffs and Trade (GATT), and the World Trade Organisation (WTO). In fact, the Kennedy Round of negotiations at the GATT was named after John F Kennedy because the negotiations were made possible by the “exceptional” powers obtained by President Kennedy in the Trade Expansion Act of 1962.
5. China too, the second largest economy, has demonstrated its willingness to engage the global economy through trade organisations and agreements, for example by becoming a member of the WTO in 2001, by driving the establishment of the Asian Infrastructure Investment Bank (AIIB), and also by participating in the Regional Comprehensive Economic Partnership (RCEP). And I can cite examples of many other countries that have played a crucial role in the evolution of our global economy.
6. The point is, we do have the capacity, leadership and the ability to forge new pathways and overcome challenges as they emerge. But the question is, there must be the political will and the commitment to resolve these issues. But what it also says is that we need to have negotiations and build trust, mutual respect, and the commitment to a negotiated resolution of outcomes. And once we do that, we set the tone for the way we engage with each other, and especially for small countries - but I think it is also true for all countries - we do need to find a way to deal with these issues in this systematic way. In the context of US and Singapore, we have long-standing, strong bilateral ties and economic, commercial and business engagements; we have got strong people to people ties; we have got students who go to America in large numbers to study; and we also have many Americans come to Singapore. We also have strong ties at the political leadership level and at the level of institutions. So I think it is a broad-based engagement that we have. And the question is, what can we do to strengthen the way we work together, and build on this notion of a foundation or a lattice structure upon which we can strengthen the global economic system and make positive contributions. I thought I would cite three areas, which we can pick up for discussion.
a. I think the opportunities in Southeast Asia present one significant opportunity for us to work together.
b. The second is to see how we can work together on new ideas and partnerships.
c. The third is how we can contribute towards building trust in a global system.
Let me elaborate.
7. The first is on Southeast Asia. I think you all know the key metrics of the region – its population of over 600 million, its economic size of about US$2.5 trillion dollars, middle class is rising and disposable incomes growing with them, and the overall GDP growth at about 5 to 5.5 percent. And just based on these current projections, ASEAN would probably be among the top four aggregate economies in the world by 2030.
8. We have this burgeoning region, which has got very important needs, and that these are needs that can be met by capabilities that American businesses have to offer; creating a very opportune moment for us to collaborate and see how we can work together, and with Singapore serving as a gateway to the region – something that many of you are familiar with - but also looking at deeper partnerships.
9. And if I can give you an example of what I mean by deeper partnerships - we need to work together to develop a more nuanced understanding of these markets. It is not just about ASEAN, it is not even just about 10 countries, but it is actually about perhaps 30 cities, or a few regions, and each with its own variations, characteristics, growth possibilities and opportunities. So depending on the size and nature of the business, I think we do need to find ways to deepen our understanding of these markets. In Singapore, that is something that we are doing, not just for ASEAN, but are also looking at how we can deepen our understanding of China, India and many other regions in the world.
10. The second point, beyond the obvious regional market growth opportunities, are new areas that we can work together on. In particular, the obvious thing that comes to mind is the digital economy and its opportunities. Because there is a relatively young population in ASEAN, the rate at which technology is being adopted is quite breath-taking. And we are already seeing the emergence of unicorns and decacorns born in this region. And this is just the beginning. We are seeing this excitement. And what makes the digital economy even more compelling for many of the developing markets of ASEAN, in my opinion, is the fact that it now enables you to unlock potential that previously remained untapped.
11. So if I am a small SME in one of the more distant provinces of Indonesia, by plugging into a digital economic framework, I am now able to access new and distant markets, I am able to partner companies with complementary strengths from around the world, and I am able to also source from around the world. But you need a digital platform to enable that potential to be unleashed. The digital economy offers a very promising way forward in terms of how the US and Singapore can collaborate, not just bilaterally but in the region. And I think there are elements in this, for example like what do we do with data and the flow of data, what do we do in terms of digital identity so that we can transact securely over the Internet, and cross-border payment solutions etc. There is a whole range of these things that need to be addressed.
12. ASEAN is working on this – we have several work groups and initiatives for this. Meanwhile, in Singapore, we have also initiated what we call digital economy agreements with countries which are like-minded. For example, we have a digital economy agreement discussion taking place with New Zealand and Chile. And it may seem like a rather unlikely combination of countries. But yet I have pointed out time and again – these are three small countries, but the Trans-Pacific Partnership, which morphed into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), actually was a collaboration of four small countries – Chile, New Zealand, Brunei and Singapore. So I think it is a good way to start, because if you are like-minded and prepared to move with flexibility, then you can set the pace and establish some ideas, which can be pathfinders for larger countries.
13. We are also working on a similar idea with the Australians, and we are looking at more possibilities in that regard. And the possibility of having such a collaboration, for example with the US, is something we would be keen to explore - because we already have a strong presence of American businesses in this digital space in Singapore. And the question is how we can work together bilaterally, but also into the region.
14. And that leads me to my final point about where we can work together. This is about not just US and Singapore, but also the business community and our government here. If we are going to work on a digital economy, these are all frontier efforts. We are all navigating this as we experience it and we evolve with it.
15. In that regard, it is important that we have a sense of where regulations are needed, but also where perhaps we should be a little bit more flexible, to allow the industry to develop and explore new possibilities. In Singapore, we have tried a sandbox approach, where you create a small model where you can try and experiment before we allow it to become a system. This gives regulators a lot more comfort, and the willingness to experiment, because they know that the risks are contained. Meanwhile, for the businesses, this is an opportunity to test out their ideas and see what kind of impact they have potentially.
16. We are now in an era where it is not just about the government regulating and the industry being regulated. You need a closer collaboration, because the sheer dynamism of the technology and the way things are changing, requires that the public and private sector work closely together. So that what is necessary is regulated, and where it is not essential, we allow the market to develop. And this requires a constructive dialogue between the private sector and the government.
17. But we also need partnerships across countries, between major partners, but also within the region, in order to establish platforms – the basic conditions around which we will transact, for example, so in Singapore, we initiated together with Japan and Australia, the joint initiative on e-commerce in the WTO. And the idea was that the WTO needs to develop norms that help guide and govern e-commerce and the way it is conducted across markets. It is quite remarkable because it is 2019, and we are now talking about e-commerce in the WTO. So it tells you how hard it is sometimes to put these things on the agenda. But that is also why you need some of these bilateral initiatives, so we can move faster.
18. But there are other areas. I have talked about data but there is also the emerging field of artificial intelligence. What needs to be covered? What are the concerns? But you also do not want to over-regulate and stifle the potential of technology. And how do we find that balance? So I think these are areas where governments can work together, whether on international platforms, or bilateral and regional platforms in order to create a conducive enabling environment, and all of it premised on trust.
19. And on the point of trust, the final point I would make is, as we expand our digital economic footprint, the issue of cyber security becomes ever more apparent. You cannot talk about engaging more deeply in the digital economy, transacting and capturing data, without addressing the issue of cyber security. And this is not just about what you do domestically with your individuals, companies and infrastructure. It is also about the evolution of international norms. So we are active participants in, for example, a couple of initiatives in the United Nations (UN). One is the United Nations Groups of Governmental Experts (UNGGE), which is a group of 25 countries, and Singapore is a member of that. And then there is the UN Open Working Group. Both are working on how we can develop norms to guide behaviour and the way we conduct ourselves inside the space.
20. These are some examples of where we can work together at the Government-to-Government level, or the Government-to-Business level, in order to strengthen the regulatory environment. So if I can pull the points back together, my sense is that notwithstanding the environment that we are in - in terms of some of the challenges I have described - the scope is significant for us. And I mean by us, in particular to this context, the US and Singapore. We are championing for our agencies to collaborate. And this scope is defined by firstly, what we are seeing in ASEAN. Secondly, by the new opportunities that are emerging in the digital sphere. And thirdly, in helping to define the way we can have rules or guidance on how these sorts of transactions could play out in the digital economy. Thank you very much.