SINGAPORE: The Government is working on a Budget for next year which will be strong and suitable to what the Singapore economy needs, given the state of the world, Prime Minister Lee Hsien Loong said on Tuesday (Nov 26).
He was speaking to Singapore media in Busan at the end of the Association of Southeast Asian Nations (ASEAN)-Republic of Korea (ROK) Commemorative Summit, and bilateral visit of South Korea.
Outlining the state of the world economy, he noted the uncertainties surrounding Brexit, and pointed to the US-China trade spat as well as that between Japan and South Korea.
Singapore is preparing for these uncertainties, he said.
“Finance Minister Heng Swee Keat and all the other agencies are working towards preparing a Budget which will be strong, and suitable to the state of the world, and what the Singapore economy needs,” he said.
It is not surprising that Singapore’s economy has slowed down, given the slowdown in the world economy, he said.
HEADED FOR RECESSION?
“Whether we tip into a recession or not, that depends a lot on external factors. We don't know whether the American economy will tip into a recession, it may. The risks seem to have gone up. But right now, the indicators are mixed,” he said.
While their unemployment is still low and employment is still “quite good” and still growing, there are risk factors for a recession such as increasing leverage and corporate borrowing, he said. What happens depends on what external shocks may happen, he said.
“For example, if you have a problem worsen between America and China, or you don't have a solution and the current uncertainties continue, they could go into a recession within the next 12, 18 months. And then, if that happens, we are in a greater risk, So we are watching this,” he said.
The solution is to take advantage of the slowness of the economy to “redouble our efforts at upgrading at training at productivity at improvements so that we make the most of what we’re able to do”, he said.
“Given this environment, the markets may not be there yet because when you have a big cloud hanging over you nobody wants to make commitments,” he said.
He said they would want to see what will happen on Brexit, between US and China, between Japan and South Korea, and monitor uncertainties.
“We have to understand that those clouds also affect our weather and our climate. And we're preparing for that,” he said.
SOUTH KOREA LOOKING TO DIVERSIFY PARTNERSHIP
South Korean President Moon Jae-in is looking beyond focusing on North Korea and China which has been also their biggest trading partner, to look at Southeast Asia, Mr Lee said, referring to the country’s New Southern Policy. The policy aims to cultivate relations with ASEAN and India as trading partners, which is good for the regional bloc, he added.
“Some of the summit is commemorative, is ceremonial, but we hope that as a result of the New Southern policy, we'll be able to get more substantive ideas going,” he said.
On the home front, the expanded Air Services Agreement that will allow Singaporean and South Korean carriers to operate any number of passenger and cargo flights and anywhere between the two countries is a “very significant step forward”, he said.
READ: Singapore, South Korea formalise expanded air services agreement, more flights expected between the 2 countries
“We've been encouraging the Koreans for a long time to do this. And now they have finally done it and I think it's a good step for both countries,” he said.
Given the troubled world economy, countries have to try and do their best to keep on making progress on things which are within your own control.
“One of the things which is within your own control is to work on economic cooperation and deepen and reduce the barriers and promote the interdependence and trade as well as investments. And this is something which we work on progressively,” he said.
BEING UNITED IS KEY IN CURRENT CLIMATE
Beyond the economy, when asked how the Singapore Government, including 4G leaders can deal with changing geopolitical alliances, and the possibility of smaller countries being forced to take sides, Mr Lee said there is no magical answer.
“The key thing is, you must be united domestically. You must speak up for Singapore, you must represent Singapore's interest, everybody must know that you are expressing Singapore's position and not speaking on behalf of anybody else,” he said.
At the same time, Singapore tries its best to be on good terms with everybody, which is “not so easy” because each side will push to support their point of view a bit more, he said.
What Singapore has to do is stand on principle and have good reasons that it can articulate and defend, he said.
“It won't always be sweetness and light, but at least we respect each other, even when we have to agree to disagree,” adding that, countries like Mexico and South Korea, while not as small as Singapore, are also neighbours with bigger countries.
“We have bigger neighbours in our region, we have even bigger neighbours in Asia Pacific. We have to get along with them and they have to find us useful to them and so far we are not doing badly,” he said.