SINGAPORE: In face of globalisation and technological challenges, Singapore can maintain its relevance and competitiveness by improving the capabilities of its population, and this can only be done through collaboration between the state and other parts of society.
That was Deputy Prime Minister Tharman Shanmugaratnam’s response to a question from American political scientist Ian Bremmer on Wednesday (Nov 7) during the Bloomberg New Economy Forum.
Mr Bremmer had asked how Singapore, a small and open economy that has long thrived on being connected to the world, can respond to external developments. He cited the possibility of US-China trade tensions evolving into an “economic iron curtain” – a risk sounded by former US treasury secretary Henry Paulson earlier during the forum – as well as disruptions from technological advancements.
To that, Mr Tharman replied: “You’ll respond to that by focusing on what it is that you can add to the world, what it is that your whole population has and how they can improve capabilities that add something to the world.”
“It’s a small country way of thinking,” he added. “You can’t change the world but you got to find a way of being relevant.”
The country’s education system, from “pre-school to tertiary education to lifelong learning”, will have to gear up for that, elaborated Mr Tharman, who is also the coordinating minister for economic and social policies.
For that, it is “necessary” that the state collaborates with the likes of technology entrepreneurs and academics, he added.
“It’s not old-style industrial policy … but you can’t just leave it to the markets because the markets leave too many places dislocated and too many people lose hope over time,” said Mr Tharman, while adding that other open economies including Sweden and Denmark have adopted similar approaches.
That drew a response from fellow panellist, International Monetary Fund’s managing director Christine Lagarde, who said: “From my experience of dealing with international players, we will always need Singaporeans.”
“I’m not here to sing the praise of Singapore but if you need educated, smart, inventive people prepared to innovate and to take risks, use Singaporeans,” she added. This drew applause from the crowd and Mr Tharman quipped: “Well, we listen to others.”
TRADE WAR TOP WORRY FOR 2019
Mr Tharman and Ms Lagarde, alongside American tycoon Michael Bloomberg, were speaking before a packed hall of business and political leaders at the closing session of the global forum held in Singapore. Over the past two days, discussions were held across a wide variety of topics, though global trade tensions dominated the agenda.
A poll at the start of the closing session showed nearly 70 per cent of attendees voting trade war as the biggest story of 2019.
Describing himself as a “cynic” who thinks that "all is done for show", Mr Bloomberg said: "In the end, China and America will get back to some normal kind of trade but with a little bit of acrimony at the beginning."
"Then, we’ll go on to the next subject,” added the former New York City mayor who re-registered as a Democrat last month.
“When you get all your news in 140 characters, you can’t focus on any one thing for any length of time,” said Mr Bloomberg in a veiled critique of US President Donald Trump and his Twitter habit.
Agreeing that trade tensions will likely continue in the near term, Mr Tharman said the “biggest problem” is the “difficulties that are underpinning the trade war”. Ms Lagarde reckoned that the dispute “might get worse before it gets better”, and is worried about the consequences on other countries.
When asked if the trend of globalisation is in reverse given the rising tide of protectionism, Ms Lagarde said the way in which people consume products and services today shows that the world has become “more than ever before global".
Echoing that, Mr Tharman brought up a point made by Ms Lagarde in an earlier session about Africa's population boom, which he described as the “biggest challenge and opportunity in the world” that can be met by globalisation.
Stressing that globalisation “is not a bad word”, he added: “There’s a large (group) of young people with aspirations and if they are not met, the world has something coming. It can be met and it requires what we call globalisation … It’s about supply chains, markets (and) foreign direct investments.”
TECH DISRUPTIONS ON JOBS, CLIMATE CHANGE
Other topics that emerged during the final panel included the disruption that technological advancements may have on jobs.
Striking an optimistic view, Ms Lagarde said that even with 40 million people joining the labour market every year over the coming decade, she does not believe that automation and the expansion of artificial intelligence will result in a net loss of jobs.
Nevertheless, there will be a “transition period during which people will be affected” and the “right thing” to do is to invest in education now.
“If we don’t do that now, that transition period will be far too long to cope from a political and sociological point of view,” said the IMF chief.
“But at the end of the day, it will probably be a net positive if we do the right thing.”
Making a similar point, Mr Tharman said efforts will have to be made not just to prepare the young for a different future, but also to help the middle-aged or “mid-career” worker update their skills.
“If we re-orient our whole system to that task, there’s a better chance that you’ll end up with a net positive with technology. But if you keep looking into the crystal ball and wonder what’s going to happen, it’s going to be a net negative.”
The other “looming challenge” is the issue of pensions and healthcare financing – one which Mr Tharman described as a “grave threat to a whole range of advanced economies” after being neglected by politicians.
In Germany, for instance, every working person may have to contribute almost half of his or her monthly salary to the pension scheme in less than 20 years’ time. “They don’t know it yet but the arithmetic is very clear,” said the Singapore deputy prime minister.
Stressing on the importance of long-term solutions over short-term fixes, he added: “If we don’t focus democratic politics on the issues of the future, the future is going to undermine democratic politics.”
Climate change was voted third in the top issues for 2019, behind trade war and fears of a global economic slowdown.
On that, Ms Lagarde said her concern is that some countries have “chosen the good choice in the easy times”.
“Many countries have agreed to remove subsides for fossil fuels (or) set a price on carbon tax. But the moment the price of oil goes back up (and) it becomes hard again, (there will be the) huge temptation … to reinstate the subsidies.”
When asked who will be best positioned to advocate change, Mr Bloomberg said that in the case of the United States, it would be individuals and companies.
Mr Tharman, on the other hand, said civil society can play a “very useful role”, and that governments should leverage them.