Singapore economy faces challenges, but significant opportunities also present: Chan Chun Sing
SINGAPORE: Even as Singapore faces challenges that are both external and internal, Trade and Industry Minister Chan Chun Sing said there are also significant opportunities and strategies that have been mapped out to ensure the country’s future success.
Mr Chan was speaking at the annual Singapore Economic Policy Forum organised by the Economic Society of Singapore and Nanyang Technological University on Thursday (Oct 25).
In his keynote speech, he started out by outlining five challenges that Singapore has to deal with “squarely”.
These include simmering nativist politics and protectionist economics that are threatening to fragment the global trading system.
Citing the tit-for-tat tariffs between the United States and China, Mr Chan said trade disruptions between the world’s two biggest economies will likely impact Singapore given how US-China bilateral trade contributes indirectly to 1.1 per cent of the country’s gross domestic product (GDP).
Singapore’s open economy could be further affected if an escalation in the trade conflict triggers a sharp and sustained plunge in business and consumer confidence.
Shifts in global production and value chains, as well as the rise of the new digital economy, also count as the external challenges that Singapore faces, according to Mr Chan.
The latter, which bolstered the rise of sharing economy and catapulted the likes of Uber to key players in their respective industries, will mean that new rules will be needed to keep up with the pace of change, while also ensuring growth support for the sectors and consumer protection.
On the domestic front, the economy continues to contend with differing growth trajectories across sectors, as well as constraints in labour and land.
For the limitations in labour and land, Mr Chan said there is a need for these “factors of production to be recycled more efficiently”.
These will involve ensuring that labour is channelled to more productive activities by being equipped with the right skills. Similarly, Singapore needs to be more innovative in its usage of land – a finite and scarce resource – by going high-rise, underground or having shared facilities.
But even as challenges abound, Mr Chan said there remain five significant opportunities for Singapore.
They are the potential of a rising Asia amid increasing urbanisation and fast growth, as well as the emergence of new technologies, such as robotics and artificial intelligence, which means that geography and size are becoming less important in determining Singapore’s economic potential.
On top of existing physical connectivity through airport and port infrastructure, the country also needs to continue investing in its connectivity to the world, particularly in non-physical domains including finance and data, he added.
Singapore’s “hard-earned” competitive advantages in trust and standards on goods and service quality, as well as having a stable and pro-business economic environment will also stand Singapore in good stead.
CRITICAL STRATEGIES FOR SUCCESS
To that end, Mr Chan said there are eight strategies underway to ensure Singapore’s future success.
They include the building of physical and relational connectivity with the world; supporting international trade rules; embracing Industry 4.0 solutions to transform manufacturing; growing a global talent network; fostering innovation by investing in research and development (R&D); capability building in both big and small local enterprises; having agile regulations and lastly, helping the local workforce to learn continuously.
On connectivity, Mr Chan cited British technology company Dyson’s decision to build its electric cars here as a reflection of Singapore’s strength in this area.
“Dyson will require a global supply chain. While our land and labour costs may not be the cheapest, our superior connectivity will allow them opportunities to create a new industry in Singapore.”
When it comes to innovation, there are plans to connect research institutes, companies and Government agencies to develop plans that address sector-level needs and opportunities, said Mr Chan.
To do so, he revealed that he has challenged the Agency for Science, Technology and Research (A*Star) to find 10 progressive trade association and chambers that want to have an R&D plan for their sector, 10 large enterprises that can translate outcomes from science and technology into commercial products, as well as 10 Government agencies.
“This is something that we need to do much better,” said the minister, who stressed that the translation of R&D into commercial products “cannot be left to chance”.
“It is a concerted effort to have regular dialogues between the commercial arm of economy and the research arm of our society. When we connect these two, we will build a powerful ecosystem whereby our people will compete based on our capabilities rather than price or size.”
Meanwhile, Mr Chan said Singapore, together with like-minded partners, is helping to update World Trade Organisation’s (WTO) rules to keep up with the new economy – echoing a point made by Prime Minister Lee Hsien Loong in a speech last week during the Asia-Europe Meeting Summit in Brussels.
The country also continues to pursue regional and bilateral free trade agreements, he added. The newly signed trade pact between Singapore and European Union, for one, will help local companies to access European markets more easily.
The minister said Singapore’s economy has done reasonably well thus far despite the challenges, given how GDP growth expanded by 3.8 per cent year-on-year in the first three quarters of the year.
Official forecast is for full-year growth to fall within the range of 2.5 to 3.5 per cent.
“This is not easy because we are facing quite many challenges on the horizon and there are downside risks in the global economy due to ongoing trade conflicts and the slowing pace of expansion of regional economies, such as China,” he said.
“We need to understand the challenges, the opportunities and go forward together.”