At the World Economic Forum (WEF) in Davos, Switzerland, the Prime Minister advocated for Singapore to support a rules-based, open multilateral trading system in this era of rising protectionism and populism.
In the panel discussion on multilateralism, the country should realise the importance of having an open policy with a system that provides “great help to a small country like Singapore,” the Prime Minister urged.
“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 stressed.
The country has always been a part of international agreements such as the Association of Southeast Asian Nations (ASEAN) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as well as supporting the World Trade Organization’s initiatives.
According to the Prime Minister, the country is defensive from two aspects. The first is developing its tech sector. Tech giants like, Facebook, Amazon, Apple, Netflix and Google (FAANG) have established data centres and engineering teams in the country: “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 remarked.
Secondly, the next priority is the protection of workers and businesses by the government against the vagaries in the global economy, the Prime Minister said. For example, initiative such as Skillsfuture is designed to reskill workers, facilitate job transition and improve their employability.
The panel titled The Leading a New Multilateralism had important figures such as Bharti Enterprises founder Sunil Mittal, South Africa’s Minister of International Relations and Cooperation Naledi Pandor and Western Union CEO Hikmet Ersek. The moderator was Roula Khalaf, who is the editor for Financial Times.
Discussing about US-China trade tensions, the Prime Minister remarked that Singapore has been impacted by the tension.
He mentioned that “exports are down, confidence in the region is down” and this was also reflected by the country’s less than one per cent growth in 2019. The world economy is also laden with doubt and uncertainty in recent times: “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.”
To the query from the audience if it is probable that another economic power will supplant the US to lead the global economy, the Prime Minister answered that such an entity leading will require approval from major economies like the US, China and the European Union alongside rapidly industrializing economies like Brazil and South Africa, although these two are still lacking in their participation in multilateral systems.
“It is very hard to do, every one of these countries has their own domestic political concerns…[and] 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,” He further added that multinational systems have been fraught with difficulties for “some time”.
Although new economies are now more integrated into the world economy, these countries are lacking in “commensurate influence” as their focus is primarily to safeguard their own interests, he remarked.
The new balance in the global economic landscape is yet to be found through the right mechanism.
Other panellists also voiced their concerns over the state of the world economy.
Mr Mittal highlighted that for the case of India, who opened its borders thereby “giving concessions”, saw that other countries shutting their doors to India, such as the US.
The US removed India from the a trade concession programme which allows duty-free entry for up to US$5.6 billion worth of annual exports to the US, dubbed the Generalised System of Preferences. Also, India has also pulled back from the Regional Comprehensive Economic Partnership (RCEP), but it has inked other treaties as well, Mr Mittal remarked. Nonetheless, door to RCEP is yet open.
Referring to the Africa Continental Free Trade Area inked last year, Ms Pandor opined that“we have to do much more to place the continent in a far improved trade space,” and more trade should occur within the African continent.
With regards to climate change, the concept of it should be made understood to the people in such a way that they can make the necessary changes to combat it, the Prime Minister said: “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.” Any rise in sea levels could have impact to the country and a lot of financial resources may be required in the long-run to protect the island.
The Prime Minister said at the National Day Rally last year that at least S$100 billion may be required over the next century for engineering solutions to safeguard the country from rising sea levels.
Rich nations can assist poor countries through technological transfer and funding, in the quest to combat climate change, Ms Pandor remarked.