DAVOS: Singapore needs to support an open, rules-based multilateral trading system, even as it is faces forces such as populism and protectionism, said Prime Minister Lee Hsien Loong.
Speaking on a panel discussion on multilateralism at the World Economic Forum in Davos, Switzerland, Mr Lee said that Singapore’s population needs to understand the need for an open policy, noting that such a system provides “great help to a small country like Singapore”.
“Without that, if I am arm wrestling one on one, Singapore versus whoever the other side is, chances are the other party is bigger than us,” he said.
He pointed to Singapore's support of the World Trade Organization as well as the country’s participation in groupings such as the Association of Southeast Asian Nations (ASEAN) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Singapore is protecting itself on two fronts, said Mr Lee.
First, the country is establishing itself in growing sectors such as tech, he said.
He cited how FAANG companies - a term referring to tech giants Facebook, Amazon, Apple, Netflix and Google - had set up engineering teams and data centres in Singapore.
“In an uncertain world, if you have a capability, despite the uncertainties, people will find that they want to do business with you and put their business in Singapore,” he said.
Second, Mr Lee also pointed out how the Government is working to protect businesses and workers affected by changes in the global economy.
He cited efforts such as SkillsFuture, which is aimed at helping people upgrade themselves, enhance their employability and transition to new jobs if necessary.
The Leading a New Multilateralism panel was moderated by Financial Times editor Roula Khalaf. The other speakers on the panel were South Africa’s Minister of International Relations and Cooperation Naledi Pandor, Western Union CEO Hikmet Ersek and Bharti Enterprises founder Sunil Mittal.
On the topic of the trade war between the United States and China, Mr Lee said that the friction between the two countries has had an impact on Singapore.
“Our exports are down, confidence in the region is down,” he said, noting the country’s growth last year stood at less than 1 per cent.
There is still a lot of uncertainty and doubt surrounding the direction of the world economy, he said.
“I think that is holding back business confidence and investments, it’s bound to. If I was a businessman, I would be very watchful too.”
A member of the audience asked if it might be possible that the world be led by a country other than the US.
Mr Lee replied that such leadership would require the consensus of major players such as the US, the European Union and China as well other countries such as South Africa and Brazil, which he said were not yet major participants in the multilateral system.
“It is very hard to do, every one of these countries has their own domestic political concerns,” he said.
“If you think that the US is not doing the right thing because the US administration has the wrong policy ... it may be the next government may be elected with similar values and reflecting similar pressures.”
The difficulties in the multinational system have been there for “some time”, he said.
Although new participants now make up a bigger part of the global economy, they do not yet have a “commensurate influence” because they are largely focused on safeguarding their own interests, said Mr Lee.
The right mechanism has not yet been worked out to reflect the new balance in the world economy, he noted.
Other panellists meanwhile expressed their own concerns with the state of the global economy.
Mr Mittal said that India, despite giving “significant concessions” in opening its markets, was finding a lot of doors shut on it by countries such as the US.
He pointed to the US withdrawing India from the Generalised System of Preferences, a trade concession programme that allows duty-free entry for up to US$5.6 billion worth of annual exports to the US.
Though India had withdrawn from the Regional Comprehensive Economic Partnership (RCEP), it had signed other treaties, said Mr Mittal, noting that the door to RCEP was not yet closed.
Pointing to the Africa Continental Free Trade Area introduced last year, Ms Pandor meanwhile said that there needs to be more trade within the African continent.
“We have to do much more to place the continent in a far improved trade space,” she said.
On the topic of climate change, Mr Lee said the concept has to be explained to people in terms they understand so that they can make the necessary changes to stave off a potential “disaster”.
“In Singapore, what we have tried to do, is to bring it down to what is most immediate to us, which is that we are a small island, low-lying,” he said, adding that any rise in sea levels would impact the country.
To protect the island would require significant sums over a long period of time, he noted.
In his National Day Rally message last year, Mr Lee said that more than S$100 billion may need to be set aside over the next century to protect Singapore from rising sea levels, through engineering solutions such as the building of polders.
Ms Pandor said there needs to be more cooperation on the issue, adding that rich nations can do more to support poorer countries in tackling climate change through funding and the transfer of technology.