Speech by Mr Chan Chun Sing, Minister for Education at the 9th Singapore Economic Review Conference

Global Transitions – Local Responses

Prof. Euston Quah

Ladies and gentlemen

1. A very good morning to all of you.

2. Thank you for the invitation to the 9th Singapore Economic Review Conference.

1. Thank you also to NTU, as well as the other universities, for organising this event.
2. I am very happy to be back here to join you this morning because I know that this conference has been very well–received internationally since its inception in 2005.
3. The SER journal is now a leading economics journal in Asia. I hope the journal will continue to enjoy the support of both local and global researchers.

3. Through your research, I hope you will continually help Singapore to scan the horizon for the forces shaping our future.

1. And help us chart directions to survive and thrive amidst the challenges.

4. As Singapore celebrates our 57th National Day next week, it is thus timely to reflect on the question – "Where will Singapore be in the next 50 years?"

1. Will we survive?
2. Will we thrive?
3. If so, how?

5. Let me share my thoughts this morning on six key global transitions, which will serve as the economic backdrop in the next 50 years.

1. Usually, I don't make more than three points in a speech.
2. But for such an esteemed audience, I shall attempt six, and I hope you will indulge me.

Global Transitions

6. First, the world faces a significant geopolitical transition.

1. We should not assume that the next 50 years will be underpinned by the rule of law in a stable international security order.
2. Neither should we assume that any single global power will be overwhelmingly dominant; willing or able to underwrite the load and responsibilities of maintaining such a global security order.
3. In addition, we should also not assume that there will be a global trade and economic order founded on:
   1. clear rules,
   2. predictable system of dispute settlement mechanism, or
   3. decisions largely premised on economic logic.
4. We must instead expect a more fluid geopolitical environment.
   1. Where stability is a bonus and not to be taken for granted.
   2. Where geopolitical considerations colour economic decisions much more, and in more unpredictable ways.
   3. Where middle powers jostle and add to the complexities, especially as the major powers contest amongst themselves or are distracted by their domestic pre–occupations.

7. The second significant transition in the next 50 years will be geo–economic.

1. In one dimension, we must expect the relative economic heft of the major economic powers to be reordered.
   1. Notwithstanding the point that we know very well,that linear projections of economic growth are seldom useful or precise.
   2. We can still be quite certain that the relative economic weights of the US, China and EU will change.
      1. In 2022, China has already overtaken the EU.
      2. By 2030, China may overtake the US. Of course, depending on your measures as economists, some would already say that China is already on par with the US.
   3. The trade linkages and networks across countries will also see significant shifts.
      1. In 2021, China already exported more to the world than the US.
      2. China is already the largest trading partner with almost all East Asian economies.
   4. The relative economic weight of the medium powers will also shift.
      1. By 2050, PricewaterhouseCoopers (PwC) projects Indonesia to become the fourth largest economy in the world. Behind only China, India and the US.
      2. With projected long–term growth of 4% to 5% per annum, the Philippines and Vietnam are expected to overtake Thailand and Malaysia to become the second and third largest economies in ASEAN, respectively.
2. Now in the other geo–economic dimension, the pattern of production, supply chains, and economic value chains will also readjust and reconfigure.
   1. And this is due to various reasons:
      1. Geopolitical considerations,
      2. Resilience
      3. Emerging models of production
      4. New business models
      5. And of course, new technologies.
   2. Countries and companies are now more conscious of the need for resilience beyond efficiency.
      1. The reliability of the supply chains, especially in crises, has become more salient than ever before.
      2. New production methods, including 3D printing, can shorten and reconfigure the global production layout of the MNCs.
      3. New business models, driven by data, can allow mass customisation for entirely new market segments.

8. That brings me to the third transition – carbon.

1. The carbon transition will see significant global changes in
   1. Energy supply flows.
   2. Food production flows.
   3. And the manufacturing map.
2. On the energy front, we can expect to see new winners and losers as the world transits towards a fossil–lite, low carbon energy scenario.
   1. Countries with abundance of renewables will become the new "Gulf States".
   2. Countries that can produce the minerals, materials and technologies for renewables will be the new winners.
   3. We are also likely to see more regional power grids that move electrons rather than molecules.
3. On the food production map, rising temperatures can shift the pattern of production away from current agricultural land to new areas that are currently deemed non-arable.
   1. This will again shift the pattern of production and flows.
   2. However, this transition must be considered together with another transition, which I will talk about later, which is the demographic transition.
   3. The locations of the new supply and the new demand will determine the new patterns of flow.
4. For the manufacturing map, the energy intensive industries – petrochemicals, bioreactors, data centres, semiconductors – all these will become highly sensitive to energy and carbon prices.
5. However, while the direction is clear and undisputed, it remains uncertain – how fast and how far will the carbon transition go?
   1. Global coordination is required for an orderly decarbonisation transition.
   2. But the pace and extent of collective action depends on how well countries address different constraints in their options towards a low–carbon future.
   3. And of course, much also depends on whether the world stays the course necessary for this long–term transition.
   4. The tyranny of the urgent, including wars and pandemics, will always threaten to throw any plan off–course, as we have seen in the last two years
6. This transition presents both challenges and opportunities for Singapore.
   1. We are an "Alternative Energy Disadvantaged" country.
   2. Much of what we produce is sold to the world, but the carbon footprint is accrued to us, in our already constrained carbon budget.
   3. Our challenge and opportunity are to evolve the new carbon–lite and energy efficient production processes to redefine our competitiveness.
   4. We turned water from constraint to opportunity in the last 50 years Now, we must do the same for energy in the next 50 years.

9. I had earlier talked about the three major transitions of geopolitics, geo–economic and carbon. Let me now move on the fourth transition. From physical to intangible assets.

1. This transition is not new, it has been ongoing for some time.
2. However, it is just going to intensify, especially with data, computing power and artificial intelligence algorithms.
3. Countries and companies that can muster the data and master the analytics to create new value propositions will win.
4. Access to information will be commoditised.
5. Value add will come from collaboration, connectivity, and creativity.
6. Businesses that can best deploy their intangible assets to complement their physical assets will more effectively deliver disproportionate returns.
   1. In particular, hybrid activities have the potential to unlock the next wave of productivity gains.
7. Given Singapore's physical limitations, the shift to intangibles can be a game changer for us. It can be good news if we can master it.
   1. Over the past decade, the share of intangible assets in the Singapore economy has risen.
   2. The capital deepening in intangible assets has been a key contributor to Singapore's labour productivity growth.
   3. Our economic growth in the next 50 years will be determined by
8. how we leverage on both our physical and intangible assets,
9. how we combine our physical and virtual connectivity with the world.
10. How we build physical and virtual talent networks
11. To create new exciting value propositions for the world.

10. This brings us to the fifth transition – the demographic transition.

1. Globally, the West and China are ageing, whilst the global South still remains relatively youthful.
   1. Europe and Northern America are the two regions with the oldest populations worldwide, with median ages of 43 and 39 years old respectively. In contrast, the median age in Africa in 20, and in South Asia – 28.
   2. By 2050, for the first time in history, globally there will be more people over the age of 65 than those under the age of 15.
   3. Along with this, the epicentre of population growth is expected to shift to Africa in the coming decades, as its population is expected to nearly double between 2022 and 2050.
   4. In this region, India will overtake China in population size this year or next year.
   5. As countries age and birth rates decline, we must find new growth opportunities to support their ageing needs.
   6. Many of these countries have begun introducing measures to attract younger talents internationally to meet their demand for human resources.
2. In Singapore, the growth in our resident workforce is going through a phase-shift.
   1. Today, already 1 in 4 of our resident workers is aged 55 and above, and this proportion is projected to grow.
   2. We face the same challenges as other ageing societies: the need to maintain economic vibrancy, provide sufficient opportunities to meet the aspirations of our people and to sustain social mobility.
3. Beyond the overall stock numbers, we talked about for the demographic transition, we must also be aware of the potential flows and unpredictability of this transition.
   1. Climate change will move populations from less inhabitable areas to newer ones. The World Bank estimates that over 200 million people may need to move within their own countries by 2050, due to the effects of climate change. Now this is just within the country, surely we can expect some to move between countries, beyond their own borders.
   2. Job opportunities, or the lack thereof, will also be a cause of migration and social tensions, if there are insufficient jobs in developing countries to meet the aspirations of the young and mobile.

11. The sixth but not last transition that I will talk about today is the transition in the nature of work.

1. Digital connectivity and computing power were already reshaping the nature of work prior to Covid–19.
2. COVID–19 has accelerated the adoption of remote work. As part of the new normal, the balance between virtual and physical working arrangements is being redefined.
3. Virtual connectivity allows for even more flexible talent networks, going beyond one's national borders.
4. This could be a challenge for Singapore if companies here consider outsourcing work to international talent based overseas. This has already happened. The trend will only grow.
5. On the upside, this also mean greater access for our companies and workers to build talent networks to support our economic development, without being constrained by our size, geography or population.
6. There is also a shift in the aspirations of younger workers to have a greater sense of purpose, impact on society, flexibility and autonomy, and work–life balance. This is especially so in Europe, Asia and North America.

Readying Local Responses

12. To address the challenges and tap on the opportunities brought on by these six global transitions, there are six key moves which I think we need to consider, and they are captured through six "P"s.

13. First, Singapore must remain principled amidst the shifting geopolitical tides.

1. Singapore's relevance comes from being a trusted partner.
   1. We do not take sides.
   2. We take positions – based on our national interests and principles that best support our long–term survival and success.
2. This requires a deep understanding, appreciation, and connection with the wider world.
   1. Not just with the major powers like the US and China.
   2. But also with other middle powers and our international partners.
3. Only with a deep understanding of the world and our partners' interests, will we be able to value–add to the relationships by coming up with relevant and timely propositions.
   1. How we played a part in major global initiatives and agreements, from UNCLOS, CPTPP and RCEP
   2. How we partner China in the various G–to–G and provincial projects;
   3. How we pioneer FTAs with the US, and how we initiated digital partnership agreements with Chile and New Zealand;
   4. All these illustrate the potential for us to value–add if we have a deep appreciation of the world and our partners' needs.

14. Second, Singapore must pioneer new forms of connectivity and reinforce existing ones to overcome our lack of hinterland, for markets, and talent networks.

1. For conventional connectivity in air, land and sea, we need to strengthen their resilience amidst pandemics, geopolitics and technological changes.
   1. We will continue to grow our hub port status and global logistics network.
   2. We will resume our plans for the future of Changi Airport.
   3. We will continue to diversify our connections with the world for resources and markets to minimise disruption risks caused by pandemic, politics and technology.
2. However, we need to seize the opportunities that come from the connectivity of data, finance, talent, technology, and regulations.
   1. Data and finance are already the new enablers of economic growth.
   2. Both are much less constrained by geographic size and population.
   3. And I will touch on the talent networks in a while.
   4. Connectivity of technology standards and regulations to promote interoperability, in a fragmenting world, will be another source of man–made competitive advantage for Singapore.
3. We must entrench ourselves in the global value chains such that we cannot be easily displaced.
   1. This goes beyond the issue of just earning a living.
   2. It means having the capabilities and capacities to produce things that the world needs in crises, for us to exchange and secure what we need. This lesson was most recently brought home to us during the COVID–19 pandemic.
4. Going forward, the ability of Singapore to continually attract frontier companies – from vaccines development to precision engineering – will be critical for us to entrench ourselves in the global supply chains and make us that much harder to be displaced.

15. Third, Singapore must remain a preferred platform for collaboration in a fragmenting and uncertain world.

1. Singapore has built up a strong brand as an open and trusted platform. This is where East and West, North and South, can connect and collaborate in a trusted, rules–based environment. And by the way, SERC is one such platform for us to strengthen our value proposition, for conversations, dialogues, discussions, and in–depth research to be done with different parties from across the world.
2. To sustain the value of this brand, we must continue to
   1. Uphold the rule of law in both domestic and international affairs
   2. Strive for a stable political environment
   3. And distinguish ourselves as a pioneering and predictable business environment, and I wish to stress this. Predictability has distinguished Singapore all this while, but we must also be a pioneering business environment because with new business models and new technology, the existing rules will be necessary but inadequate.
3. The competition is tough and dynamic.
   1. As technology and business modes evolve, our laws and regulations must continue to pioneer new approaches and update existing ones.
   2. This is especially so in the fields of intellectual property, data management, biomedical sciences and financial services.
   3. So we need to continuously pioneer new regulations to make ourselves an attractive proposition for the world to use Singapore as a platform for them to mobilise capital, aggregate talent and perfect their intellectual property.

16. Remaining principled, pioneering new forms of connectivity, and being a preferred platform for global connectivity are just three moves for us in this uncertain world. And now for my fourth point, which is that at the same time, Singapore must preserve our optionality in the carbon transition.

1. We need to take a pragmatic approach in pacing our transition towards a low–carbon, net–zero future.
   1. So that we can balance the considerations for economic growth with stewardship of the environment.
2. Beyond looking for new "green industries", we need to "green all industries" to the extent possible.
   1. Reducing the energy consumption and carbon footprint will become increasingly urgent and it will become a new competitive advantage, if we achieve it before the rest.
   2. We need to turn this challenge into an opportunity just as what I have said about how we turned water from constraint into opportunity in the last 50 years.
3. Developing alternative carbon–lite energy sources will be a key priority for our energy mix.
   1. Working with regional partners for a cleaner and more resilient energy network will be another critical piece.
   2. Carbon credits accounting, verification and trading will also present new opportunities, leveraging our brand of trust.

17. Fifth, Singapore must be a pathfinder in building new talent networks.

1. We need to break the artificial talent divide between locals and foreigners.
2. The question going forward is not how many locals and foreigners we have in Singapore.
3. The question is how many people – both local and foreign – we can have in the Singapore global talent network.
   1. How do we find the best complements of both local and foreign manpower to compete as one Team Singapore?
4. We must organise ourselves differently for the next lap of global production and competition.
   1. Our yardstick of success is not how many jobs we create in Singapore for Singaporeans.
   2. Our yardstick of success is how many global companies we create. How much global talent we can have access to.
   3. So that we can create the best opportunities for Singaporeans in Singapore and beyond.
   4. We must reimagine Team Singapore to include Singaporean and global talent beyond our geographical location, whilst remaining anchored in Singapore.
   5. This is not an entirely new concept. This is not unlike how Port Singapore Authority (PSA) compete as a global logistics network, rather than as one port, even if it is a global hub port, in Singapore alone. PSA has never competed on the basis of it just being the best port in this region, it has competed on the basis of a global network of ports since the 1980s, drawing talent and opportunities from across the world, creating opportunities for Singaporeans in Singapore and beyond. Which is why today Singaporeans can work in the PSA network not just in Singapore, but in different parts of the world, as part of the global logistic networks that PSA is known for.

18. Finally, we must protect and refresh our social compact as we navigate these global transitions.

1. These global transitions bring tremendous opportunities, and yet have the potential to widen divides in Singapore society:
   1. The differences in opportunities.
   2. The diversity of contesting and conflicting ideas
   3. The disparity in outcomes
   4. The inter–generational allocations
2. The need to progress together and uphold our ethos of Singapore being a land of opportunities, regardless of one's starting position in life, will become more urgent than ever.
   1. We are all familiar with the saying that if one wants to go fast, go alone.
   2. If one wants to go far, go together.
   3. But what if we must go fast and go far?
   4. Then, the only way is with a united and cohesive Singapore that moves as one.
3. We need a fresh social compact.
   1. One that reaffirms what has brought us here so far –
      1. meritocracy,
      2. multi–racialism,
      3. incorruptibility,
      4. prudence for this generation,
      5. stewardship for future generations
      6. these are things that have stood the test of time and will continue as the ethos of Singapore.
   2. However, we also need a fresh compact that refreshes
      1. What it means to be successful in Singapore
         • Not just individually but collectively
         • Not just in one or few dimensions, but many more
         • Not just in one exam but across life
         • So that we have continuous meritocracy
      2. What it means to take care of this generation and next, in terms of:
         • How much we consume and how much we leave behind.
         • From financial to environmental resources.
      3. How much we are prepared to contribute to the common pot for the greater good in a world of greater disparities in opportunities and outcomes.
         • How much we are committed to do for one another as a community, beyond contributing to taxes and complying with government policies.
   3. For example, to provide more opportunities for the less is not just about paying taxes.
      1. Will every medium and larger enterprise make it a point to employ someone from a disadvantaged background and commit to mentoring him / her?
      2. Imagine if every large enterprise commits to employing a person from a disadvantaged background for every 500 employees that they have?
      3. If we are able to achieve this, then we will not have to worry about finding meaningful opportunities for the little, the lame, the lost and those with the least…
4. This is part of our Forward Singapore exercise.
   1. It is not just a compact between Government and our people.
   2. It is much more.
   3. It is a compact amongst Government, Community, Corporates and Citizens.
   4. When we say we want to achieve something, all of us chip in.
      1. Those with more, do more.
      2. Even those with less, can do something.
      3. Each giving his or her best
      4. To enable everyone to achieve their best

Conclusion

19. Ladies and gentlemen, at the start of my remarks, I asked "Where will Singapore be in the next 50 years?".

1. This is a question that occupies me, always.
2. And I hope this is a question that you can help answer too.
3. Our efforts to chart a better future for Singapore never cease.
4. I hope you all will join us in this quest for a better Singapore – may you be family, friend or fan of Singapore.

20. I wish you the very best, and a successful Conference in the days ahead.

1. May you continue to grow from strength to strength
2. Allowing Singapore and Singaporeans to benefit from your insights, capabilities and wisdom.

21. Thank you very much.