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Transcript of the Dialogue with Minister Chan Chun Sing at the US-ASEAN Business Council Luncheon

Transcript of the Dialogue with Minister Chan Chun Sing at the US-ASEAN Business Council Luncheon

Background 

Minister for Trade and Industry Chan Chun Sing spoke at a lunch dialogue organised by the United States-ASEAN Business Council luncheon (USABC) on 20 March 2019. The dialogue was moderated by Ms Wendy Cutler, former Assistant U.S. Trade Representative and Vice President and Managing Director of Asia Society Policy Institute. About 100 US business leaders and representatives attended the session.  

The USABC is an advocacy organisation for U.S. businesses in ASEAN. Members include the largest U.S. companies conducting business in ASEAN, and range from newcomers to the region to companies that have been working in Southeast Asia for over 100 years.

Transcript

Wendy: Welcome to Washington DC, Minister Chan Chun Sing. I understand it is your first trip here since assuming this position as the Trade and Industry Minister. Could you share with us what your objectives for this trip are, what messages you would like to convey to this audience, and what messages you are going to be conveying to Washington during your visit?  

Minister: Thank you Wendy. A very good afternoon to all of you. Secretary of Transportation Elaine Chao, Under Secretary of Commerce for International Trade, Gilbert Kaplan, and thank you USABC President Alex Feldman and distinguished guests. 

As Wendy said, this is my first trip here to the US in my current appointment and I have a few simple objectives. First, it is a good opportunity to catch up with friends from the US, exchange views on the global economy and discuss the US’ leadership role in the world. Second, to discuss the US’ strategic interest in Southeast Asia and last but not least, to discuss the US business leadership in the context of the larger US leadership role in the world and your interest in Southeast Asia. 

Wendy: I understand that you assumed this position in May of last year. It was a very busy year, 2018, and the year that Singapore was chairing ASEAN. You assumed this position and right away you had a lot on your plate. And you are a very active Minister on the ASEAN front. From your view, what were the big accomplishments of ASEAN last year?

Minister: ASEAN is always a work in progress. It is a work in progress because we need to build up the institutions in ASEAN, we need to better integrate the 10 different economies when promoting the ASEAN market. ASEAN has many opportunities such as a young population, a young market which will allow businesses around the world to come and do business in Singapore and ASEAN. There are also challenges in ASEAN which include the need to move faster in the way we integrate our economies, especially in the realm of e-commerce and data sharing. Nevertheless, there are opportunities, in the area of smart cities or what we call urban solutions, that offer tremendous business opportunities for many of the businesses here to work in ASEAN. 

Wendy: Let me pick up on that – the e-Commerce work that you do. I know that there is a lot of interest in this room about the ASEAN agreement on e-commerce and also some concerns that maybe there will be uneven implementation of the commitment the ASEAN member states gain in that agreement. How do you think implementation will go and how can capacity be built with those ASEAN members that maybe are lagging a bit behind here?

Minister: The kind of challenges that we see in ASEAN is a microcosm of the kind of challenges we see on the global trade front. Different countries at different stages of development will have different aspirations on the standards that they would like to see in a trade agreement. And there will also be differences in their ability to enforce and execute any agreement. So you are right. What is important is for us to get everyone to sing from the same song sheet, to have the same framework, to discuss the rules and the execution. That requires a bit of give and take. Be it the TPP, the CPTPP, the RCEP, we have to be careful not to let the perfect be the enemy of the good. Very often, in many of these global trade agreements, we may not be able to achieve all that we set out to do in one fell swoop. But that doesn’t mean that having a slightly imperfect system is bad. It just means that we have to establish a system and use that as a platform to grow the capabilities of the various countries, to do more and do better in time to come. That is how we approach any trade agreement within ASEAN and beyond ASEAN. 

Wendy: Actually that’s a good segue to the RCEP negotiations – the Regional Comprehensive Economic Partnership negotiations. I know last year as the ASEAN Chair, Singapore made a big push to conclude those talks. I heard they just held their 26th round. As a former trade negotiator, I think that any negotiation that has 26 rounds, it is really tough to find a way to conclude. But you were not able to take it to the finish line although major progress was made. What prevented it from its conclusion and you think it can really come to a successful conclusion this year? 

Minister: As with any trade deal, whether we can come to any conclusion will depend on the objective factors and it will also depend on the political will of all the countries involved. Whether we can get RCEP past the finishing line this year will depend on a few factors. First, on the outcome of a few regional elections which include India, Indonesia, Thailand and Australia. These elections will be done by May and then we will have a clearer sight of the political will by the new or existing governments to complete the task ahead. I think the gaps are narrowing and I think we have a fair chance to get it done by this year. Like with any international agreement, getting to the starting line and crossing the finishing line is but a part of it. It must be seen as part of an ongoing process to continuously refresh the rules, upgrade the rules, enforce the rules and get everybody to play their part. So that is ongoing work. But we always encourage all the countries involved, and I think all the countries involved understand this – that there is an urgency for the countries to come together, not just to form this architecture called the RCEP for the economic benefits, but there is also a geostrategic set of benefits. To stand forward together as 16 countries, to say that we all continue to believe in the multilateral system, we all continue to believe in a rules-based, open trading system. I think that statement of intent is very strong to the world and to the global trading community. So it is not just the economic benefits, it is also the geostrategic benefits that we have to consider as well. I think all the 16 countries, understand this. Having said that, just like any free trade agreement, any form of globalisation, it will require political will and resources for every country to help its domestic constituents make the necessary and consequential adjustments. 

It is a very simple hypothesis – globalisation comes with it many benefits, but globalisation requires every country to make consequential adjustments to their domestic economies. If the broad middle in the respective countries are unable to benefit absolutely or relatively, then they will not support globalisation or more free trade agreements. So it requires every government to muster its political will and resources to help those who have fallen behind, to make those adjustments. It means having to equip the workers with the skillsets necessary to compete in tomorrow’s industries. It means helping businesses to make the adjustments to compete in tomorrow’s economies. Until and unless we can do that, the local pushback will have global consequences. We see this in Asia, we see this in the US, we see this in Europe. It’s the same everywhere. And there is a deeper challenge that we have to confront. In any country, if the political centre fractures, it will be very difficult for any political system to come together, elect good, solid leaders who are prepared to take bold and decisive actions for the long term good of the country. And if we get that part of the economics and politics wrong, we can be in for a downward spiral quite quickly. But on the other hand, if we have leaders who can put the issues squarely to the people, make long term decisions, not find the easy way out, spend the resources to upgrade its workforce and help its industries transform, then I think we will preserve the political centre and that can lead us on a positive trajectory to support free trade and globalisation. Otherwise, every country risks fracturing its political centre and having its political system spin out of control. So that is really the challenge, be it globalisation, CPTPP, RCEP or any other free trade agreement that we are talking about. If political leaders are unable to capture the political centre, then it will not surprise us that there will be many calls to shut the gates, keep out the barbarians and think that we will live happily ever after. And that has already happened, in many parts of the world. And that is the common danger that we all confront today. We all know the benefits of free trade, but it is the net positive benefits that we need to stretch across the entire nation. And I’m not talking about just re-distribution to solve a temporal inequality problem. That part is difficult to solve and manage, but the bigger challenge is to make sure that we solve the social mobility problem. That the people who have fallen behind from globalisation have the chance to catch up. If people are poor, that is one thing. But if people are poor and there is no chance to catch up, it is another thing. And that is perhaps the source of discontent for many countries. 

Wendy: In that regard, when you think about the importance of adjustments, Singapore is doing some very interesting things on this front. Maybe you can share, some of things you’re doing, for example in workforce development, because that does seem to be a priority for your government going forward?

Minister: The challenges that I sketched out just now applies equally to Singapore. The people, the workers who are most vulnerable are paradoxically not the lowest income blue collar workers. They have geographical insulation. Paradoxically, the group of workers under the greatest strain in today’s globalised economy are the middle income, because their services will compete on a level playing field on the cyber front. There is no geographical insulation whatsoever for the middle class professionals. They face the greatest strain. We have the same challenge and we need to spend tremendous effort to upgrade our training and education system. In the past, many countries and most countries would have focused a lot of their effort on basic education, the 15 years of compulsory education. Going forward, our belief is that we need to complement compulsory education with continuing education for our workers and it is not about going back to school every 5 or 10 years to learn something. It is a process of changing our training and education system whereby workers, even as they are working, are able to get just-in-time, stackable modules, to help them continuously keep pace with the challenges of the economy. That is why Singapore has started the SkillsFuture programme where we put money into the individual accounts for each and every worker to take charge of their own training, over and above the training that is done at the national level, over and above the training that is done by the respective companies. 

On the other hand, we need to make sure the industries in Singapore continue to keep pace with the challenges of the new economy. I used to be the labour movement chief, or the union chief. I know the word ‘union’ in the US has different connotations and you cannot understand why the union chief has become the Minister for Trade and Industry. In Singapore, we call that tripartism. We learnt this from the Scandinavian countries and the northern Europeans and that’s because we know that economic transformation is not easy. It requires a lot of hard work to help industries and companies restructure their operations, re-think their business models, and re-design their processes in order for them to keep pace. But that is hard work. It requires us in the economic agencies to work with the unions, to go company by company to help them restructure. There is no shortcut. But if we do it well, we will continuously create the jobs of the future. 

When I was the trade union chief, we had a mantra. We say that most countries are trying to put today’s unemployed into today’s jobs. Some countries are trying to put today’s unemployed into tomorrow’s jobs. In Singapore, we aspire to put tomorrow’s unemployed into tomorrow’s jobs ahead of time. Now that is tough work. You have to convince your population that they need to change ahead of time. It is not easy to convince someone who has a job, that his or her job is being threatened by technology and globalisation, and at the same time, to convince him or her to undertake new training, in order to prepare himself or herself for the jobs of the future. On the other hand, it is similarly difficult for us to tell a company that your current business model may be obsolete quite soon and that you need to change ahead of time. But if you are prepared to do so, the government will partner you. 

We are a small country. The budget of my ministry is about S$4 plus billion which is about US$3 plus billion, but that is to make sure that the 180,000 enterprises in Singapore continuously upgrade their capabilities in order to meet the needs of the future and plug into the global supply chain. These are some of the initiatives that we do, but I don’t think this is very different from what the US and the European countries have to do as well. 

I just had a discussion with Gil Kaplan, my good friend. These are common challenges and I can understand the current preoccupations of the US administration with the trade numbers. But I deeply urge all of us in this room to think beyond the trade numbers because what makes America great is not just a set of trade numbers. 

What makes America great is the innovation that is present in this economy, fuelled by the free flow of talent and ideas, fuelled by the energy, the spirit of the American enterprise. And the American leadership in the world is determined by the role they play in the international institutions, to create the rules for the international community to have a predictable, lawful environment to do business. These are the things that really define how great America will be. And if America, just like other countries, is to compete in the next lap of economic development, then whether is it Singapore or America, we all have to get some things right. The fundamentals of making sure that our education system is right, the fundamentals of making sure that our continuing education and training for adult workers is done right, our R&D, the protection of our IP is done right, the support for an open, rules-based trading system is done right. These are the things that will really determine how far each and every one of our respective countries will go in the overall contest of nations. These are some of the things that I think are often missed out in our focus on the here and now, and that is something that I think we should never ever forget in that contest of nations. It is beyond any single set of numbers, it is a multi-pronged strategy to get our people and businesses ready for tomorrow and that is the greatest strength that America’s leadership can provide for the world. 

Wendy: Well, that’s a great message for us here and I think a great way to open up the floor for a few questions before we need to wrap up the programme.

Audience: I have two questions and you answered them already. They all have to do with what Singapore is doing as a leader in some of these trade negotiations, for example, the ASEAN single window, WTO discussions and of course as you’ve already mentioned, the ASEAN e-commerce. Many of the companies here have their headquarters in Singapore. How is Singapore embracing technologies such as artificial intelligence, block chain in your work?

Minister: If I may be brief, it boils down to one word – connectivity. And let me explain. Many of you are familiar with Singapore, you know we are a little island not much bigger than Washington D.C. To survive and keep alive a population of five million without natural resources requires tremendous effort. We import everything that we need – almost everything. So since 1965, the question for Singapore is, how do we survive? How do we not be circumscribed by our geography or our size, or our location? And the way we survive and thrive is by this word - connectivity. We see the world as our hinterland and we want to make sure that the Singapore economy is closely intertwined with that of the world. So that we are never held ransom by geography or size. 

If we can connect to the rest of the world and see the world as our hinterland, we transcend our geography and size. In the past, for us to survive and do well, we make sure we connect to the world in three physical dimensions – the air, land and sea connectivity and we have done reasonably well, with us becoming a hub port in that part of the world, for us to have a good airport and airline which are both essential to our very survival. 

Trade is three times the GDP of Singapore so the port and our airport are our lifelines. But to your question, in the next lap of our economy, having done well in the three dimensions of connectivity is necessary but insufficient. Going forward, we have every wish to enhance our connectivity with the rest of the world on five other non-physical dimensions. And those are the points that I will come to - regulatory, financial, data, talent and technology connectivity. Data and finance are not constrained by geographical size. For us to enhance our linkages across the data and financial domains allows Singapore to transcend our geography and size. And we will step up our efforts to make sure we strengthen these two dimensions of connectivity that will reinforce the three physical dimensions of connectivity. When it comes to new technologies like AI and FinTech, or even for that matter food security, regulatory connectivity is important. How do we harmonise the rules for products and services, the digital economy, for conventional trade flows so that we have fair and predictable rules? These are all important things for us to fuel the growth of Singapore into the next level. Likewise, in talent and technology. 

The US is a great country today not just because of the vitality of its domestic population. The US has always been a migrant society drawing talent and energy from across the world. The very fact that you can have a president called President Barack Obama, you have Secretary Elaine, they all hail from different shores and that’s what makes the US great and that’s what we also think can make Singapore great – that free flow of talent and technology. So for Singapore, our survival and success will depend on us being more plugged in to the rest of the world as our hinterland. We will make sure that all the three physical and five non-physical dimensions of connectivity will continuously be enhanced, so that we provide a good business proposition for people to want to do business in Singapore. 

Most of you would have invested in Singapore not because you think that the five million market in Singapore is the be all and end all. Most of you, if not all of you, have operations in Singapore because Singapore is a platform for you to reach out to the region and beyond. It is also not because you are looking at just the Singapore or even just the ASEAN market. Our ability to connect with the rest of the world is so critical to your success and our survival. 

Recently Dyson, a UK company, relocated to Singapore. They are going to invest more than a billion US dollars in a facility in Singapore to produce a new generation of electric vehicles. Singapore doesn’t even produce tyres. Why are they in Singapore? They told us they are there not because we can give them superior tax benefits or anything of that sort. They are in Singapore because of our superior connectivity – data connectivity, regulatory connectivity in terms of IP protection, superior logistics supply chains, easier access to other markets. Those are the reasons why Dyson moved to Singapore and set up operations there and I think these are also the reasons why many of you are in Singapore. Our economic strategy is quite different from the rest of the neighbouring countries who depend much more on their natural resources for their competitive advantage. We need to create the competitive advantage for us to survive and thrive, and that all goes back to that one word – connectivity, with the world as our hinterland and market. 
Audience: First I would like to commend the Singapore government for its leadership role in Geneva for pushing for e-commerce change. I would like to ask for you to comment on how do you expect it to play out and also your advice for companies in this room on whether you see an ambitious outcome, similar to what you achieved in the CPTPP and the e-commerce chapter. 

Minister: We see tremendous opportunities on this new frontier, or what you call the data and digital enabled economy. Having said that, there are new challenges. We need new rules on the global trading system. And we need new mind-sets to look at how we can collectively seize opportunities in this new domain. Let me give you an example. 

Many people say that data is the new oil. I can understand that if you mean data as a new oil, as a lubricant, to enable many other parts of the new economy to grow and thrive. However, I am always cautious to use the word to equate data with oil, as in oil as a consumable. Because many people unfortunately are using this concept, which means that if it is a consumable, your very consumption deprives me of it. Which means that consumption of data is subtractive. That is actually the wrong concept that we apply to data. Data consumption is not subtractive. It can be additive. The more we share data, the more we allow the free flow of data, the greater our opportunity to create new products and services to serve the world economy. Therein lies our challenge. Will we, going forward, see a world that is more integrated through data or will we see a balkanisation of the digital space because of concepts like data localisation. We have great debates now on the international front even on who should expropriate the gains from data. Some countries believe that the gains should be accrued to those who produce the data. Others believe that the gains should also be accrued to those who process, analyse the data and produce new products and services. 

So all in, we need new rules for the digital economy and this is where Singapore, together with Australia and Japan, like-minded countries, are trying to find a way forward, a sort of pathfinder agreement with like-minded countries that share the same objectives of keeping this new frontier open and connected. But I must be frank that it is not easy. There are many countries that think of data and the digital economy quite differently from Singapore, Japan and Australia. And to this end, we will be quite happy to work with like-minded countries like the US to make sure that this new frontier, is a frontier that helps unite economies, integrate economies across a level-playing field. Because I don’t think we will all be better off with the balkanization of the digital space. Many of the greatest products and services depend on the free flow of data across all geographical boundaries and there are tremendous opportunities there for us to seize, but we will all have to work together. 

On this note, I would like to make a pitch to all the global US multinationals. The thought leadership required for us to integrate the global economy, especially on the data side is not the sole purview of just the political leadership, be it in Washington or other capitals. All global multinationals like yourselves have a leadership role to play in helping governments to think through how best we can leverage the potential of the digital economy for the good of all of us. And many of the companies present in this room will also have vested interest to make sure that the digital frontier is an open, inclusive and integrated one. We would like to work with companies like yourselves to push this agenda forward because I think it is in our common interest and benefit to work on this together. If we end up in the other extreme where everybody goes for data localisation, where the digital space is fragmented, then I think we will have a very different outcome for the next lap of the global economy. 

So we will work with like-minded partners. We may not be able to get all the WTO partners on the same page in one go, but we believe that if we have enough like-minded partners, with a pathfinder, a framework agreement, we can build momentum. And this partnership will need to be supported, not just by sovereign jurisdictions, it will also have to be supported by global multinational companies like many of you and we hope to work with you closely on this. 

Wendy: So I just have one final question and this is a question I posed to a number of Trade Ministers that I’ve worked for through the years, I worked for nine USTRs, and the question is, what has surprised you the most about being trade minister? Either good or bad, or something totally unexpected. And if you don’t answer that question – is this job easier or harder than being the trade union chief? 

Minister: I grew up in the Military – there is a saying among the US Navy SEALs that I learnt – the only easy day is yesterday. 

No job is easy, every job comes with its own challenges and every job has its share of fun. You may find this surprising, from a US perspective. I was in the military for 23 years, then I served in the Ministry of Social and Family Development, I went to the trade unions and now I’m in the Ministry of Trade and Industry. I think many would find this journey of mine rather perplexing. But there is a commonality in all of this – there is a common thread, regardless of where I am serving. And that is, we are here to make sure that Singaporeans have the chance to continue to live the dream to be Singapore. It’s never been easy for us – for those of you who know our history, we have only been independent for the last 53 years. But if you go back into history, for the last 700 years, that little island that you are familiar with called Singapore, has never been independent, nor has it ever been allowed to be independent. And we didn’t become independent because we wanted to – we are uniquely Singapore because we got kicked out. We had independence thrusted upon us. Now to keep this country going is not easy, to say the least. Many of you may remember our founding Prime Minister Lee Kuan Yew, many of you might even have seen the video montage of him tearing on the 9th of August 1965 when we became independent. That wasn’t the moment that I remember the most. That wasn’t the most poignant moment for me. I grew up remembering one particularly sentence he said during that video montage, and that was, “henceforth, from today, the lives of 2.5 million Singaporeans are in our hands.” Today, it is not 2.5 million Singaporeans, it is 3.5 million Singaporeans. But that has not changed. Henceforth today, the lives of 3.5 million Singaporeans are in our own hands. Which means that we have not only to chart a course for ourselves, we have to make sure that we survive and we thrive. So that is the commonality across the four jobs - to keep the Singapore story going. 

I learnt to make sure that we take care of our defence and security, so that we can live in peace - I spent the greater part of my life doing that. My first time to the US was to a place called Fort Benning, Georgia, which many of you may not have been to. My second time to the US was to a place called Fort Leavenworth, Kansas, which many of you may also not have had the privilege to have been to. The third time I was here I was in a more civil place called Boston, MIT, which most of you have been to. 

From the military, to helping the weakest and most vulnerable in our society, to taking care of the workers, the broad middle class, the blue collars, the white collars – all the workers, to my current job portfolio which is to make sure that we create jobs for our people – they are all connected. I used to say that after the military, I learnt to take care of the most vulnerable. But I told myself that my mark of success in the Ministry of Social and Family Development was not how many people I helped. The mark of success for a social ministry is how many people I do not need to help. So I went on to the union, to make sure that if the unions are successful, if the workers are successful, the broad middle of Singapore are successful, I have less and less work for my colleagues in the Ministry of Social and Family Development. And when I was with the union, I did not just want to put today’s unemployed into today’s jobs, neither was I looking to put today’s unemployed into tomorrow’s jobs, I wanted to make sure that we can create tomorrow’s jobs for tomorrow’s employed, ahead of time. Now you see the continuum of jobs that I have done, but they all come to the same thing, which is, we are very determined to keep Singapore a bright shining star in a sea of chaos, in a sea of uncertainty. 

We would like to pride ourselves that no matter what uncertainties there are in the world, we can distinguish ourselves by thinking far, by thinking long term and giving businesses like you the predictable environment for you to succeed. It is not easy. It is easy to say, as a mantra, that we like governments to think long term. We all like to have predictable policies. But it is actually not that easy. Governments can only think long-term if the government has the broad support of its people and the broad middle. And the broad middle will only support a good government to think long term if they can continuously see their lives improving. And they can only do that if we make the political determination, master the resources, to always keep the broad middle growing and thriving. And only then can we focus the resources from the very rich to help the very poor in any society. In Singapore, we are determined to do that. And we hope that with your friendship, with your support, that we will continue to distinguish ourselves as a place that is stable, business friendly, progressive, for you to try new ideas, create new products and services to serve the world. And all we ask for is that in your success, you help us take care of fellow Singaporeans as well so that the success of the businesses and the success of the workers are two sides of the same coin. This is why there is no irony in Singapore between being a labour chief on one day and being the Minister for Trade and Industry on another day. In fact, I spent three weeks of my life being both at the same time. That is the fastest way that we can reconcile any differences between labour and business – they are all in one. 

I would also like to thank you for your support all these years. We would like to be partners with you for as long as we can. We would like to value add to your business and your growth and development. We hope that you will always have a little place for Singapore in your hearts and we wish the US every success in your onward journey. There are many challenges that the US is confronting at this point in time. But as a friend to the US, I hope that the US will never ever lose its leadership position because it forgets the bigger things that make the US great today. And these bigger things are what many other countries will find hard to replicate – the value system that you have, the ethos that you have, the creativity, innovation and enterprise that you have – all these are what makes the US such a great country and such a great partner for us. 

We also hope that you will always have Southeast Asia somewhere in your hearts, because Southeast Asia is literally the lynchpin that connects the dots between your interest in Northeast Asia and Southwest Asia. Singapore will play our part, to partner the US to strengthen your presence in Southeast Asia, in your onward journey. Last but not least, all of you are leaders in your own right, you are the business leaders, you are part of the US leadership system – your perspective on the world, your connection with the rest of the world is part of the US’ outreach to the world as well. So you have every right, every responsibility, to make sure that the US’ leadership in the world continues to shine and keep the flag flying high. If there is any way that Singapore can be a partner in this journey of yours, we will be most happy to join hands with you. 

Thank you very much. 
 

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