Mr Teo Siong Seng, Chairman, Singapore Business Federation,
Mr Wee Ee Cheong, Deputy Chairman and CEO, United Overseas Bank,
Distinguished panellists and guests,
Ladies and gentlemen,
1. Thank you for inviting me to this year’s ASEAN Conference 2019. This event is very timely. It brings together business leaders in Singapore and the region to discuss insights and challenges in how we continue to build a more competitive and prosperous ASEAN amidst the current global challenges.
Cohesion Key to ASEAN’s Success
2. ASEAN has made tremendous progress over the last five decades, but it was born out of difficult circumstances. Our immediate neighbourhood had just emerged from Konfrontasi in the 1960s. But we were in a fight with the Communists. Several countries, including Singapore, believed that it was better to band together to promote regional peace and stability. Thus ASEAN was formed. First with Singapore, Malaysia, Indonesia, Thailand, and the Philippines, and later with the remaining five Member States.
3. Over time we prevailed, integrated our economies and prospered together. Today, ASEAN is one of the most successful regional groupings in the world. Growth in recent years has exceeded the global average, and will continue to do so barring significant external shocks. And by some estimates, the ASEAN economic bloc will be the fourth largest economic bloc by 2030.
4. We also have many mutually reinforcing frameworks to realise an economic community, including the ASEAN Single Window and the Agreements on E-Commerce and Trade in Services concluded during Singapore’s ASEAN chairmanship last year.
5. These have all prospered many businesses, which are expanding in the region, including Singapore companies such as Banyan Tree Holdings, Select Group, Breadtalk, YCH Group, UOB, Ninja Van and many more. Companies from our ASEAN neighbours such as Thailand’s CP Group, Malaysia’s CIMB, Indonesia’s Go-Jek, to name a few, similarly recognise the value of ASEAN’s potential for their respective businesses.
6. Most importantly, because we have an interest in one another’s prosperity, we have averted conflict and strengthened regional stability. This has not been easy. This has not always been the norm for this region.
7. We hope this continues, but the world is at a crossroads.
a. International geopolitical and economic environment is now under strain, due to a backlash against globalisation, the politics of inequality, and the disruption of technology.
b. Evident in rising economic nationalism, growing trade protectionism, and more intense security and technological competition.
c. US and China relations are but one example.
d. But so too is Brexit. The recent European parliamentary election, and the rise of the far Right in democracies worldwide.
e. Furthermore, the rules-based multilateral trading system that has underpinned ASEAN’s growth and prosperity for over half a century is also now under stress.
f. All of these developments risk the balkanisation of economic blocs and the technology space. The formation of multiple blocs globally will be detrimental for both governments and businesses alike. In the last 50 years, integration has allowed all countries to leverage their respective strengths to promote growth and prosperity for their economy. The question is, in the next 50 years, will we continue the path of integration or will the world risk further fragmentation.
g. Almost exactly 100 years ago, in the 1920s, the world faced the same question. The debate was whether we would further integrate our economy or would respective countries adopt isolationist and protectionist policies. In fact, 100 years ago, the world made the wrong choice. We ended up with the Great Depression in the 1930s and subsequently World War Two.
h. Fortunately for ASEAN today, we are not in conflict, nor are we in the circumstances that triggered ASEAN’s establishment in 1967.
i. But having said that, all parties must work hard to prevent the situation from deteriorating further for all, including businesses, so that we can continue to bring economies together despite the challenges around us.
Role of Business
8. So what can ASEAN businesses do in the current global context? I offer three suggestions today for your consideration.
9. First, ASEAN businesses can come together to make the case for keeping our markets open and integrated. And businesses have a significant role in this. The respective businesses in their respective countries will need to encourage and work with the respective governments to promote an open, rules-based, inclusive, integrated trading environment.
10. ASEAN is committed to concluding the RCEP or Regional Comprehensive Economic Partnership this year. RCEP’s conclusion will be a powerful signal of this region’s commitment in keeping markets open and integrated. The value of RCEP is more than economics. It is also a geostrategic signal to the rest of the world of what ASEAN and the RCEP countries believe in collectively.
11. Businesses stand to benefit from the new opportunities and preferential access through such agreements. Your support and strong call upon each of your governments on RCEP’s early conclusion of negotiations will be invaluable.
12. But this is not just about lowering tariff barriers through trade and integration of supply chains. This includes addressing the non-tariff barriers (NTBs) as well. With the ASEAN region being almost tariff-free, NTBs are now the key impediments to further integration. Protectionism has sparked the rise of NTBs, even in the ASEAN region. Businesses can play a stronger advocacy role in nudging your host governments to streamline and eventually eliminate NTBs. There is also greater value across the ASEAN countries to work together to mutually recognise each other’s quality standards, rules and regulations.
13. Businesses strive in an environment whereby rules are harmonised for businesses to easily cooperate across jurisdictions. If ASEAN can come together to further harmonise our rules, our regulations, our intellectual property protection, there will be much more scope for businesses to truly enjoy the integrated market of 600 million. So there is much work for us to do together.
14. Second, businesses can provide fresh ideas and work together on emerging issues such as digital integration. Beyond conventional trade, the digital space and the digital economy will be the next blue ocean for ASEAN and businesses. ASEAN businesses should not be separated by distances but be connected and united in platforms, data and financial standards. In today’s world, the non-tangible aspects of connectivity will be as important, if not even more important, than the physical aspects of connectivity and this must include the connectivity dimensions of data, finance, technology, talent and regulations.
15. This ensures that we are always prepared for the future, and not merely focused on the current or the past.
a. Digitalisation is a good example. It is affecting all businesses and societies.
b. If we harness it well, we can seize opportunities for our companies and our peoples.
c. That is why ASEAN signed an Agreement on E-Commerce, and developed the Digital Integration Framework (DIF) in Singapore last year. We are now working closely with Thailand, as ASEAN Chair this year, to develop an ASEAN Action Plan to operationalise this. This Action Plan aims to be the blueprint for digital integration in this region.
d. Businesses should come together and drive specific components of this Action Plan with governments. One area could be the development of digital-related skills to level up digital talent in the ASEAN region. Another area could be the harmonisation of digital standards so that data can flow seamlessly across borders for us to create new products and services. All these will collectively enable ASEAN to compete with the rest of the world, and secure our economic prosperity for many more years to come. To reiterate, the competition is not within ASEAN. The competition is how ASEAN can compete as an entity with the rest of the world.
e. The digital field is such an important one which is why Singapore has started talks on the Digital Economy Partnership Agreement (DEPA) with Chile and New Zealand. It is also the same reason Singapore is partnering Japan and Australia on the Joint Statement of e-Commerce for the WTO initiative between 77 countries. The digital frontier is the new frontier for all of us to conquer and overcome together. But at the same time there are forces around the world that threatens the further integration of the digital space. There is a real risk that if we don’t get it right, the digital space will be balkanised and people will adopt the wrong concept towards the digital economy.
f. When it comes to the digital space and data, usage and consumption is additive and not subtractive. It is unlike conventional material goods. The more we are able to integrate, the more we are able to share data, the more we are able to analyse them and create new products and services. This is a great opportunity but also a great challenge.
16. Third, all ASEAN businesses can do your part to help overcome the disruption brought about by technology and globalisation and the impact they have on businesses and workers. Many workers are unable to keep pace with the technological disruptions and globalisation because they lack the skills necessary for tomorrow’s economy. Many businesses are also hard pressed to make the adjustments when markets are open and more integrated. The correct approach to this, in our view, is to make sure we protect the workers and not the jobs. The jobs will change and evolve but it is the skills of the workers that will make them relevant in the new economy. Every country in partnership with its businesses must muster the resources to help our workers acquire the new skills to be relevant for tomorrow. If workers are left behind, if the salaries and wages of our workers are not progressing but regressing, then we can all expect a local backlash against trade, localisation and technology with negative global consequences.
17. Similarly for businesses. If they are unable to make those adjustments to keep pace with the competition, then there is every tendency that businesses may instead lobby for more protectionist measures to avert the changes that are so needed today. And this is the reason why the government, the businesses and the labour movement must work closely together to help businesses and workers adapt and adjust. Without this, we all risk the rise of populist politicians who will come forth with promises of the easy way out. But this is actually setting back the necessary adjustments in our respective economies.
18. The lack of reforms in many economies, especially in skills development and economic transformation will exacerbate this. Businesses can work closely together with the government to prepare our people and businesses for the future. Business chambers like yourselves have a leadership role, in increasing awareness that businesses need to transform and our workers need to upskill and upgrade. Businesses should also share the fruits of success with your workers by partnering local governments to upgrade the skills of their workers and support the communities, especially the underprivileged. All these socially responsible measures will go a long way in maintaining the public support for a more globalised and integrated world that is constantly buffeted by technological changes.
19. Technology is not the end. Technology is neutral. Whoever can master it wins. And it is the responsibility of governments and businesses to work closely together to help businesses and our workers to master those technologies so that we can all win together. If we can navigate and weather the uncertainties posed by the global economic environment and harness the global opportunities together, we have our work cut out for us together.
20. So let us take some time to consider these three aspects of how we can strengthen our operations and bring forth a stronger economy, a stronger society for all of us.
21. I look forward to joining you in the discussion. Thank you very much.