DAVOS: Finance Minister Heng Swee Keat on Wednesday (Jan 23) has urged countries to work together to ensure shared prosperity moving forward.
Speaking at a panel session on the global geopolitical outlook held as part of the World Economic Forum (WEF), Mr Heng said multilateralism and free trade are key for global economic growth, adding that a common understanding among countries will lead to prosperity for all.
“We should all work together to help one another prosper, to raise economic growth so we can raise the standards of living of our people, so that we can tackle the issue of jobs and harness technology far more effectively and a very key part of that prosperity is global free trade.
"I think a multilateral rules-based free trade system has brought prosperity to the whole world in the 20th century and particularly in the last 50 years.”
Mr Heng said he hopes that both US and China can reach an agreement, because the negative implications the trade conflict has on trade flows and supply chains can already be felt.
But there have been some positive effects on supply chains in Asia. For example, US companies that find it too expensive to source their goods from China are turning to cheaper alternatives in Asian economies like Vietnam, Thailand and Indonesia.
“We are already beginning to see a shift in the supply chain, and in the short run, some neighbouring countries are benefitting, so we are beginning to see, for example, partly as a result of rising wages in China and the trade tensions, there was already a movement of the supply chain into Vietnam and Cambodia and so on, all the countries if we move south.
"I think there will be a reconfiguration of the global supply chain in some ways but I hope that we can do this in a steady way.” he said.
Mr Heng, however, mentioned during another panel discussion on China’s Belt and Road Initiative on Tuesday that not everyone would come out as winners as a result of free trade.
While free trade has been an enabler of growth, it has its winners and losers, and those who feel they have been left behind oppose it, he said.
He reiterated his thoughts yet again on Wednesday as to how economies need to restructure to feel the full benefits of free trade.
"Opening up was a way to inject external pressure to stimulate reform domestically and the more you open up, the more we have to reform.” he said.
All in, Mr Heng also called for the global community to come together on issues such as climate change, and addressing extremism in various forms for the good of everyone.