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“We don’t choose our neighbours,” but Singapore has to deal with Malaysia and Indonesia constructively and respectfully: PM Lee

While Singapore’s relationship with Malaysia and Indonesia might not always be smooth-sailing, Prime Minister Lee Hsien Loong believes that any issues with the two neighbouring nations ought to and can be dealt with in a “constructive” way that “respects the core interests of both countries."

Speaking at a 45-minute dinner dialogue moderated by Bloomberg Editor-in-Chief John Micklethwait at the Bloomberg New Economy Forum on Tuesday (6 Nov), Mr Lee said that "Neighbours are never without complexities," said PM Lee, adding that even the US and Canada have "interesting conversations,” to which the audience laughed.

In response to Mr Micklethwait’s question regarding Singapore’s relationship with its closest neighbours, Mr Lee added: "This is what God gave us… We don't choose our neighbours and we are blessed with two bigger than us, and we get on well with them.

“There will always be issues which come up and we will have to deal with them in a way which is constructive, win-win and respects the core interests of both countries.”

Mr Lee’s answers were couched within the context of a discussion on trade wars between world superpowers United States and China, which Mr Lee suggested should not permeate other aspects of their bilateral relationship, as unresolved global trade conflicts will potentially result in more severe, catastrophic ones.

"The trade issues are genuine ones,” he said.

"Both sides must want to reach a deal and then it can be worked out,” he said, stressing that the US and China had almost come to an agreement regarding certain matters, only to have failed to secure the deals at the "top level."

An example of such failure is US President Donald Trump’s decision to impose tariffs on US$250 billion (S$343.5 billion) of Chinese goods, which resulted in retaliation from Beijing and created a whole new set of conflicts, from those regarding human rights to US military support for the autonomous island of Taiwan.

While Mr Trump has indicated a willingness to strike a deal with China’s President Xi Jinping in the very near future, the two leaders have yet to agree in terms of economic policies and views, particularly regarding market freedom and state subsidies for government-run enterprises.

When asked a member of the audience as to what he would advise Mr Xi and Mr Trump to do on the trade war if he was at the same table as them, Mr Lee replied: "I would be very hesitant to be at such a table," he said, drawing laughter from the audience.

He then elaborated: "The leaders of the two countries have to decide what they want to do, and if it cannot be worked out, then I think you really want to keep it from boiling over, respond in a restrained way and try to keep things going and prevent this from poisoning the overall relationship …

"Even between America and China, there are so many things where you have to work together, otherwise you are not going to get anywhere, starting with North Korea."

Mr Lee added: "The trade deficit is on Mr Trump’s mind but the economists will tell you that trade deficit is a manifestation of macroeconomic problems and not a matter of trade restraints or lack of trade openness," Mr Lee said.

"That has to be dealt with separately."

In recent months, Mr Trump's approach towards trade relations with other nations has been haphazard and volatile, such as deciding to impose levies against European car-makers and declaring that the United States will exit the World Trade Organization due to alleged unfairness.