Mr Desmond Choo: To ask the Minister for Trade and Industry (a) whether the Ministry expects a greater regionalisation of supply chains; (b) what is the expected near and longer term impact on Singapore's trade and logistics sector; and (c) how will the Ministry prepare companies and workers for this challenge.
Oral Answer (to be attributed to Minister for Trade and Industry Mr Chan Chun Sing)
1. The COVID-19 pandemic will accelerate the shifts in global supply chains that were already underway before the pandemic struck, arising from global trade tensions, the need for resilience and the impact of technological change.
2. There is no telling how supply chains will eventually be reconfigured, but it is likely that supply chains will be relocated nearer to final demand markets, so as to strengthen resilience against future supply disruptions.
3. In the near-term, there will be a severe impact on the global economy and Singapore. Earlier today, MTI announced a downgrade to Singapore’s GDP growth forecast for this year from “-4% to -1%” to the new range of “-7% to -4%”. The outlook for outward-oriented sectors, such as manufacturing and those related to trade and logistics, remain weak, adversely affected by the sharp slowdown in many of Singapore’s key markets.
4. However, as we adjust to the new environment, there will be opportunities to fill new and unmet demand and to participate in new supply chains that are formed. As companies consider shifting production lines to the region, Singapore and Southeast Asian countries can facilitate these new investments by matching overseas interest to suppliers and global distributors. Our posture therefore must be to foster greater regional integration and global interdependence rather than to try and maximise domestic production which may not be the most efficient nor sustainable.
5. We are helping our companies and workers to take advantage of these shifts.
6. First, we will continue to boost our connectivity to the region, and uphold our status as a financial and logistics hub. The network of Digital Economy Agreements we have started to build with partners such as Australia, New Zealand and Chile will augment our extensive network of Free Trade Agreements, to ensure that our companies have access to opportunities in the digital economy.
7. Amidst the pandemic, Singapore has been working closely with other like-minded countries on various initiatives to ensure supply chain connectivity. We issued a Joint Ministerial Statement with 10 other countries to affirm our commitment to ensure supply chain connectivity and to refrain from imposing export restrictions on essential goods. As a concrete follow-up to this initiative, we have signed a declaration with New Zealand to eliminate customs duties, not restrict exports of essential medical products, as well as expedite clearances of these goods through sea and air ports.
8. We are similarly working with our fellow ASEAN countries to ensure the continued supply of essential goods, and remain fully committed to signing the Regional Comprehensive Economic Partnership (RCEP) this year. Doing so amidst the pandemic would also send a strong signal of our continued commitment to free and open trade, as well as unlock further economic opportunities.
9. Second, we are helping our companies take advantage of these shifts. For example, under the Research, Innovation and Enterprise plan, we are deepening our companies’ R&D capabilities in Industry 4.0 supply chains to address industries’ needs in optimising and ensuring supply chain resilience. We are helping businesses leverage digital platforms to grow their international reach. Earlier this year, we introduced Grow Digital under the SMEs Go Digital Programme, to help SMEs seize business opportunities in overseas markets through e-commerce platforms, without having a physical presence overseas.
10. Third, we have also introduced enhanced training and re-skilling programmes, to prepare our workers and companies such that they can capitalise on the upswing when the economy recovers. In March 2020, Workforce Singapore (WSG) launched a new Redeployment Programme for Supply Chain and Logistics Coordinators, to help firms reskill and redeploy existing rank-and-file workers to take on new or redesigned job roles as companies digitise or transform their business processes.
11. Mr Speaker, Sir, we will continue to do our utmost to help companies and workers adjust to these changing supply chains. While some concern amidst this flux is understandable, we should not despair. Such shifts are not a zero-sum game. Even as countries like the US and Japan diversify their production from China, so too are Chinese companies going international and moving more production to Southeast Asia. This will present new opportunities for regional economies like ours, which will in turn deepen the economic links between Southeast Asia and these countries.
12. To harness these opportunities, we will work with companies and workers to invest in building new capabilities, and as one Singapore, emerge stronger from these challenging times.