Speech by SMS Chee Hong Tat at the STEP Youth Regional Affairs Dialogue

Speech by SMS Chee Hong Tat at the STEP Youth Regional Affairs Dialogue

Professor Kam Chan Hin, Deputy Provost (Education), NTU Singapore,

Professor Joseph Liow, Dean, College of Humanities, Arts & Social Sciences, NTU Singapore,

Professor Simon Redfern, Dean, College of Science, NTU Singapore,

Professor May Oo Lwin, Director, NTU-University Scholars Programme,

Distinguished Guests,

Ladies and Gentlemen,

1   Good morning. I am happy to be here today, addressing all of you. Let me start by echoing what Professor Liow said about one of the key things of this week’s event for all of you this programme is for all of you to interact with each other and form relationships that in time to come, will be very important for us to build a stronger community in this part of this world. It starts from all of us as individuals, and the linkages and the bonds we form with other within the region. These are testing times for the global economy, and the world at large. Yesterday, the first thing I saw on my newsfeed after waking up was an announcement by US President Donald Trump saying that he is going to impose an additional 10% tariffs on China. And today I saw the Chinese response, which was if you do it we will respond and we will also retaliate. So I think this is going to be a difficult period for all of us. Some of us are more affected than others. Singapore for example because we are a small, open economy. Trade is more than 3 times our GDP. So you can imagine global trade is affected, Singapore will be badly hit. Larger economies, because of the larger domestic economies, they have a bit of buffer but even then you will also be hit. It is just a matter of to what degree. So this benefits no one, when we have a global trade war. And we start to have barriers being erected, walls being built, making it more difficult for people to exchange ideas, making it more difficult for companies to invest, making it more difficult for trade to flow. After decades of reaching out to one another, we are seeing a tendency among some of the world’s key powers to look inward. Let’s be clear, President Donald Trump is not the only world leader advocating such an approach currently. You see this happening in different countries in different parts of the world in fact, one could argue that the way the Americans are behaving is not because of Trump, the way Trump is behaving is because America has become like that. He has quite a bit of support back home, in fact when he put some of these barriers, his popularity did not go down. When he attacked the four congresswomen, saying ‘go back’, actually 3 of them are born in the US, his popularity was not hit. What does this show? This shows that what he said and what he’s doing actually resonated with some segments of the American population. You see this happening in the UK too with Brexit. Brexit is a response to globalisation, it is a response to external completion, people feel threatened ad they think that by building walls we can block out all this. At a time when complex economic issues are increasingly becoming trans-national we think that there is even greater need to build connections. Even greater need for those of us who live in this open, rules-based multilateral system to step forward and be willing to defend this system.

2   So given this global context, it is fitting that this dialogue brings you, our young people from various countries in Asia, together to encourage discussion, deliberation and more importantly, to build friendships.

 3   Today, Asia is the nerve centre of global economic activity, and in many ways, it also stands as a testimony to the value of an open, rules-based multilateral trading system. Asia has seen a remarkable drop in poverty, a significant increase in incomes and broadly speaking, a move towards greater prosperity. We see an uplifting of many people in Asia, from those who stay in the urban areas and even those who stay in the rural areas. Incomes have increased, standards of living have improved, life expectancy has gone up, infant mortality rates have gone down. I think this is a remarkable achievement in human history. Many countries within Asia still believe that it is in our best interests to maintain and deepen relationships with one another. Because we have seen how this helped to enlarge the pie for all of us.

4   What does this mean for all of you seated in this room today? I hope you will, over the course of the next week, be able to appreciate the value of collaboration and partnership, and the importance of forging deeper connections, deeper and genuine understanding. This will help you develop a better understanding of global affairs and the role our region can play in shaping them.

5   Regional efforts are going to be crucial in driving economic development and providing continued opportunities for our businesses and people. In doing so, building connections will be key – whether in the form of deepening trade relations, strengthening both physical and digital trade and also improving upon and working through global and regional infrastructures such as the World Trade Organisation (WTO) and ASEAN to maintain geopolitical and economic stability.

Global and Regional Challenges We Face

6   Let’s start with some of the challenges our region faces in sustaining economic development today. There was an interesting chart someone showed me some time last year, when I was looking at this issue of a rise in political populism in some societies. This chart looks like an elephant. It goes like that and on the horizontal axis, the world population was split by income. So we see at one end, the people in the poorest societies and on the other extreme, people who were the wealthiest. On the vertical axis you see the percentage change of real income over the past say 20-25 years. So the elephant shape shows two peaks – one somewhere in the middle, and one where the wealthy segments are. The one in the middle represents actually the uplifting of many societies in Asia and the developing world – China, India, ASEAN. Many of us have seen how economic growth and prosperity has benefited many segments of our society and this is where the middle peak is. On the other end you have the wealthy societies and these are the people who are elites among the wealthy society. These are the very, very rich and they have actually gotten even richer in the past 20 years. So what about the valley in between the two peaks? Those are basically the people in the wealthy societies who may fall in the middle or bottom segments of wealthy societies. So in the US, the UK, many of the developed societies, these may be the people who have lost their jobs when the companies move out, these are the people in the Midwest, who are complaining about competition from imports from China. And that’s why when President Trump speaks to them and says that I will build walls, I will build barriers, it resonated with them. It is because they have seen, in real terms how their incomes have not grown. It has become stagnant, maybe even negative for some of them. Lost their jobs, lost their homes, they do not see a future for themselves, they do not see how they can get out of their current situation so anything that can change the situation, even if it is based on some not very logical arguments, it is okay I will give it a shot. Drain the swamp. Punish all those elites in New York, Washington and California who have grown rich at your expense. Retaliate against the Chinse who are stealing our ideas. Unfair competition. I raise this because we have to understand that it’s not just an economic issue, it’s not just a trade issue. But the core is actually socio-political.

7   So that’s why I think that even if trade discussions between the US and China progress in time to come, I do not think we will fundamentally solve the mistrust, the sentiments that are so pervasive in these different societies. The presence of protectionist sentiments around the world has created greater uncertainty in the global economy, and I think that the effects of these trade tensions, we will see them spread over different domains and different sectors. Different aspects of our lives. Already you have read reports of how the US started discouraging, or sending signals to scientists and researchers of ethnic Chinese origin. Some of them may have been born in the US, or grown up there. They may be just as American as their colleagues but because they are ethically Chinese, they are viewed with suspicion. They are not allowed to participate in the more sensitive research, doubts are cast on their loyalty. So I think this is going to spread. You are going to see this mistrust affecting more aspects of our lies, possibly even making the world bifurcate. So in other words, it’s a bit like the Cold War where you have on one hand the US and the Western allies, and on the other the former Soviet Union and those who are behind the Iron Curtain. I do not know if this will happen, I hope not, but you already see this trend happening. Trade is one domain, technology is another. Ban Huawei, but then they realise that there are so many parts of value chain that are also linked – their own companies are being from Chinese companies. So how? So they suddenly say time out, allow them to buy first then we decide later. It was a knee-jerk reaction, basically a political move. There is no economic logic to this. Yes, all of us know we need to have safeguards against cyber espionage, cybersecurity, these are real issues. And it is true that in some areas the Chinese have done a good job in improving their technologies in Artificial Intelligence, in drones. But you see, it is about how we want to compete. For example, imagine two people are in a race. One is slightly ahead, the other is trying to catch up. And you see this person ahead looking back, seeing the other person running getting closer and closer. There are two ways you can react. The first way is I run faster. The second way is I see my opponent catching up, I trip him. I put barriers in his way. I leave you to decide which way the current situation is like. How we resolve this, I think that is a big problem.

8   Secondly, we are seeing structural changes to the global economic order. What were the first few things President Trump did when he took office? First, he pulled out of the Trans-Pacific Partnership, which they had already agreed to. Climate change, they also pulled out of the Paris Agreement, which they had also agreed to and signed. So this breakdown in the global system is not sending positive signals because what it shows is that in this world, as long as I am a big country, might is right. I will do whatever I want, I do not care about what I will lose. That is what it means. And it’s actually very bad for smaller countries. Why do you think Singapore always speaks up at ASEAN or other forums like the UN about the need for international law? About the need to respect contracts? About the need for a rules based approach? It is not because we are very legalistic or rigid. It is because we think that in this world, if we do not have rules, people do not respect international law and it is basically free depending on who has the louder voice or bigger stake, it will be a less safe world for all of us. Because you may be a big country in ASEAN, but in Asia you are not big, in the world you are not big. There is always a bigger animal that will come and eat you up if we allow the law of the jungle to prevail. On the other hand, if you have a world where people respect international laws, is rules-based, I think it gives stability and progression to all of us. If there are conflicts, there are proper ways of solving it, it gives greater certainty and assurance. Rather than what we had in the past where it did not matter whether you were right or wrong, my army is stronger than yours, I will just march in. We do not want to go back to that kind of world.

9   Singapore and indeed the region has benefitted immensely from economic integration and free trade underpinned by a system of rules anchored by the World Trade Organisation (WTO). I think we have to be honest and say that the WTO rules need to be updated and are not perfect. There are areas for improvement. So on the complaints about the global trading system, I do not think we have to be too defensive, we should be willing to update. But that does not mean you throw the baby out with the bathwater. It does not mean that the better solution than what we have now is to erect barriers like tariffs and to close our borders. How is that a better system? Is that solution worse than the original problem?

10   A third issue we must deal with is the impact of technological change on the economy, on our lives.

11   Technology is rapidly changing the foundations of our economies, and also what it means to all of us as individuals - workers and citizens. While on the one hand, these technologies allow us to be more manpower efficient and overcome labour constraints brought on by an ageing workforce and allow our older workers who want to continue working to do so, they could also replace jobs and put people out of work. Also, when it comes to issues like ethics. How do we use data? These are more complex than just a technological issue or an economic issue, it actually goes down to your values, what you want as a society as a whole. Take something as common as facial recognition now for example.In Western societies I think they will not accept what is being done in some Asian countries. In China for example, you go to a train station and there are cameras everywhere. You go to a concert, there are cameras everywhere. And you can be arrested if your name appears in the database because of a crime you committed say 10 years ago. The system is so good that it will assign a percentage to your face and match it against the database. I saw it when I went to China and they asked me if I want to do it in Singapore. I said yes, the technology is very good but whether we do it in Singapore is not a technology issue but in the end, it is about whether our people are willing to accept it. It calls into question all sorts of other issues like personal privacy. So I asked my Chinese counterparts if they were concerned about privacy, they said do not worry, all the data is kept by the police.

12   I am not saying that is right or wrong, because in their society their people are okay with it. They accept it because they see it as enhancing public safety. They may complain now that it is very easy to get a parking fine as they can be issues a parking summon by the time they hit the next traffic light. It is a different situation compared to many other societies. In Europe for example, I think people would not allow this because they see it is a violation of their personal privacy. There is no right or wrong, it is a matter of where you draw the line and what your societal norms are. I raise this because this is something we will see something happen more and more. The constraint will no longer be technology. In fact, I think the technology will move quite far ahead. It is the adoption, and the extent to which we are able to apply some of these technologies will depend on us, our societal values, what we consider as right or wrong, acceptable or not acceptable that will be the bigger issue. The technology will continue to develop and I think we will continue to see scarier, or fascinating depending on how you want to look at it, technology developments. And the pace will not be like the past since technology usually develops exponentially. So now, some people predict that we will soon see an exponential growth in terms of new technologies, new inventions and new applications.

13   So what can we do? We see that globalisation impacts businesses, societies and individuals differently – some may benefit while some may gain less or even lose out. I mentioned earlier in my remarks that a lot of this goes down to not economic or technology, but socio-political factors. Ensuring continued development in an open economy therefore requires us to have the right social and political system where there needs to be some redistribution of the gains across society. Ultimately, this is still one society, one people. You cannot leave one segment of the population far behind while other charge ahead. It is not going to work. Discontent that will be coming up will in time affect growth and prosperity and pull back progress. So a better approach is to not allow that gap to get too wide, and to find the balance between getting support for economic growth and progress and on the other hand reallocating some of the gains from this progress to helping who have fallen behind.

14   Where to strike this balance, how much to reallocate, that again is going to be for each society to decide. If you’re in Scandinavia, your view of this may be very different than if you’re in another part of the world. In Scandinavia for example you are prepared to say “I pay very high taxes; 70% of my income goes to the government as taxes. The government will then redistribute and give to others. Welfare, free education, free healthcare.” It is not that it is wrong, but the people must accept it. You must be willing to say, “I’m a high income earner, 70% or even more of my income goes to the government, not to me.” But in some societies people say “no, I don’t think that’s acceptable it’s too much. Maybe a lower percentage. You know, 40, 50”. There is no magic number there is no right or wrong, but this is something that each society has to decide. But you cannot go zero. Because if it is zero - and I do not think any society does zero –you are going to leave certain segments of the society behind and it is going to be unsustainable.

15   So one of the things that I think is useful for us, when we have a regional forum like this, is for us to be able to learn more from our friends from the other societies, the other countries. To get a better understand of the trade-offs the pros and cons. There is no system that I think is perfect. Because depending on how you draw the lines, depending on how you tweak the balance, there will be some gains and there will be some losses. There will be some winners and there will be some losers. So where you want to draw the line – in future; I’m speaking to a lot of young people here. In time to come you will be in key positions in the government, in companies, private sector. You will be people who will influence what is going to happen in your respective countries and societies. So where are you going to set these lines? How are you going to set your policy? What underlying philosophy will you adopt? But I think if we work together and we better understand what other societies have gone through, it can give us good ideas. It can also help us to avoid some of the painful lessons that others have gone through. And I think it is important for all of us, whether you are in the private sector or in the government, to convince society to be able to accept some of these key driving forces and the adjustments that have to be made. That is the difficult part. Making people understand, first, what are these driving forces, and then second what can we do to adjust. Because the last thing you want is to have a reaction like what we see in some parts of the US, where the solution becomes build walls and barriers and pretend that all these things don’t happen. It is not going to work. Especially in a small open economy like Singapore, it is going to backfire. And I would argue this is true for many of the Asian societies too. Because you may be a larger economy than Singapore, but in the overall scheme of things, on the global stage, we are actually still considered small individually. But collectively, that’s where I think we have greater strength. So I will touch on this a little bit later towards the end.

16   Earlier I talked about building connections. And whether we like it or not the world is becoming more interconnected. Globalisation, technology, ease of travel, ease of interaction and communication. So the challenges that I mentioned earlier about trade tensions, rising nationalism, technological disruption, are actually transnational issues. And It will require the collective will and commitment of all countries to resolve.

17   Climate change is another good example. There is no point if one country tries to keep carbon down, but other countries just continue burning. Sea levels will still rise. and when sea levels rise I don’t think it matters whether you are a big country or a small country, you will all face the same climate change problems. So it is a global challenge. It requires a collective global response. But this is where it gets complicated.

18   So the way forward, I think, is to build deeper connections globally and regionally. Because we believe that challenges cannot be overcome. Growth cannot be attained. It is better for us to look at opportunities for growth and development as something which I think can enlarge the pie for the whole region. So there is more to go around. And yes, I think we have to accept that whenever you do something on the regional scale, there will be people who will gain more, there will be people who will gain less. But what is more important is there is something that can benefit all the different societies. That is what we should work towards. It is an abundance mind-set rather than a zero-sum game, because if all you think about is a zero-sum game, you win means I lose. Using the race analogy that I was using earlier, then the only way for me to win is to make you fall down right? But if I think that my job is not to make you fall down, but my job is to help you to also run faster so that I also run faster, we all can benefit. I think that abundance mind-set, enlarging the pie, ultimately will benefit the whole region.

19   So in this region, Singapore is committed to enhancing ASEAN integration. ASEAN has become one of the world’s leading economic blocs with a GDP of almost $US 3 billion, and there is still room for further growth. So the past few years Southeast Asia has become an important driver of global economic growth and we think, together with a growing population, a youthful population, a growing middle class, this trend will continue. ASEAN is also one of the strongest proponents of free trade. ASEAN member states realise that deeper economic integration and connectivity will help secure the region’s economic future, as such we must continue to push ahead in the next phase of integration: the ASEAN Economic Community Blueprint 2025. The goal for ASEAN is to maximise trade and investment flows which will benefit our businesses and lives. And to achieve all this, we will also need to enhance connectivity in both physical and nonphysical realms. And at a time when countries are building walls, Singapore and the countries in this region should build bridges and forge stronger connections to realise common regional bonds, create opportunities for growth, and enable our people to lead better lives.

 20   Another way that we can do this is to forge deeper connections through strengthening trade relations and supporting a rule-based order. A conducive global and regional business environment with like-minded countries – and we do this through our extensive network of free trade agreements – is going to be integral for people and businesses to grow and develop. We are committed to this, we have signed many FTAs and we are in the process of discussing a few more. Some are more challenging than others, but we will press on, because we believe that trade is one way to bring the region closer. Trade is one way to achieve what I mentioned earlier about growing the pie.

21   And to realise the full potential that digitalisation can bring, we will also have to work with other countries to develop international regulations and frameworks for this segment of the economy, including what I mentioned earlier about ethics privacy rules, how data is being used and so on and so forth. It will be good for us to have some common understanding – I dare not say consensus because I think there will always be a need for different countries to have their own customisations – but at least some basic ground rules that everybody can agree with. And that will facilitate the flow of data, that will facilitate investments, that will facilitate trade. So we do this through the joint statement initiative on e-commerce at the WTO, which has 78 participating countries. And we hope that this will be able to move towards trade related aspects of e-commerce so that member countries can enjoy better outcomes. And in Asia in particular, I think ecommerce is still at the early stage, but has shown a lot of promise. In many of the emerging societies that we see in this region, that is one way to actually leap frog some of the constraints of infrastructure and market access. And we have seen how unicorns have emerged in Asia, relying on ecommerce as one of the key drivers.

22   So it is our strong belief that when we do some of these – we build bridges, we strengthen collaboration – that the region’s economic future will be brighter. And we will continue to support efforts on this front.

23 Now let me end my speech with one other important area that I think we have to talk about. And this is about people. I spoke about systems, I spoke about rules, I spoke about data, technology. But ultimately it boils down to people. In an interconnected world that is grappling with transnational issues, business and people must develop cross cultural skills and networks that are needed to work well with international partners to create and seize growth opportunities. It is heartening to see students from so many different parts of Asia today. I am encouraged by that and I think it is something we should keep up.

24   Now in Singapore we are also grooming our own students to be Asia ready by creating opportunities for them in ASEAN and Asia. Our global ready talent program aims to create a pipeline of global ready talent for Singapore enterprises through exposing more Singaporeans to internships and overseas work opportunities. and we will focus on Southeast Asia, we will focus on China and India. Not because the other economies are not important but because I think these are the countries these are the economies where majority of our companies will be operating.

25   Another example is the Global Innovation Alliance. The objective of the GIA is to establish networks to create more opportunities for Singaporean students, entrepreneurs and businesses to gain overseas experience, connect and collaborate with their overseas counterparts. We recently started one in Ho Chi Minh city. We have ne in Bangkok, Jakarta, different parts of China. I think this is something that will allow us to tap on the growth in the region, tap on the growth in the region and also to allow our students to have a node through which they can interact with businesses and entrepreneurs from these emerging cities. In other words, we are trying to build a network.

26   We also have efforts specific to ASEAN. The ASEAN Leadership Programme is meant to equip our business leaders with regional specific skills. For example, how to navigate key Southeast Asian markets and develop leadership skills necessary to steer organisations that span several markets within a Southeast Asian context. We also encourage our students to see Southeast Asia as place where they can do internships, exchange programmes, study visits. Something we also want to play a role in and see how Singapore can connect countries outside of Southeast Asia with countries within Southeast Asia using Singapore as a regional hub and city.


27   I have shared on the significant challenges facing our region and the need for regional and global partners to build bridges, not walls, for continued economic growth and better lives for our people.

28   Let me end by asking our participants here a few questions — what is it that we want to do going forward? First I think it is useful to discuss in the week or so going forward, why is it that after decades of openness and free trade, countries are beginning to look inward? What is causing this? And what can we do to reverse this or at least prevent it from becoming worse especially in our own countries and societies. How can we make sure that we stay open and connected to the world, rather than building walls? How do we do that? As I said, it is not a simple issue. It is not one which you can solve by technology alone. It is something that require a multifaceted approach, including socio-political ones.Second, what can we do to strengthen the unity, cohesion and deepen the understanding of Southeast Asia?

29   I think many Singaporeans have more opportunities to travel to the developed economies than Southeast Asia, something that we recognise is a gap. Some of my residents tell me that when they travel to Southeast Asia, it is not considered a holiday to them, it is just a short break. Holiday to them means that they have to go somewhere very far away, minimum to China or Japan or Australia. But jokes aside, what is more important is for us to realise that we are a part of Southeast Asia. Therefore, our understanding of this region is something of value that we can bring to partners outside of the region.And also to work with our friends and fellow ASEAN member countries to strengthen the intra-regional bonds. So I hope that this dialogue will plant the seeds of connectivity and collaboration among all of you. We must remember that our futures are interdependent, and we must all work together to ensure that our communities and future generations continue to have opportunities to grow and lead better lives.

30   If I may end with three ‘U’s. I know we are not there yet but I want to paint a vision of what we can achieve in time to come. The first ‘U’ is Asia United. I say this because I think we need unity, cohesion if we want to have collaboration and trust and partnership. So the first U is ‘Asia United’.

31   The second ‘U’ is Asia Unlocked. By unlocked what I mean is that barriers should come down, linkages should be formed so that we can unlock the potential of our people and our markets. We can unlock the rich and diverse culture and heritage that we have to offer to the rest of the world. We are not doing a good enough job today of promoting what we have, to celebrate what we have. A lot of it is below the radar. People in the region may enjoy it but definitely I think a lot of people may not be aware. Tourism is an example of an area where we can find opportunities to benefit businesses and our local communities by bringing out the best of our local heritage and culture.

32   The third ‘U’ is Asia Unlimited. I think this is important because for a long time we had this wrong perception that the West is better and hat developments and technologies all originate from the West and what we do is to learn from them. Yes, we should still learn from the West because they have good things to learn from but we should also have some self-confidence, that we also have things to offer to the rest of the world, in terms of technology, culture and also how we run our societies, the values we have in our societies. I will just give you one example.

33   In many Asian societies, this concept of this generation we sacrifice so that I give my children and grandchildren, our future generation, a better life. Something which I think is very easy to explain, it resonates in many Asian countries because it is in-built into our culture and our DNA. How many stories have you heard in your respective societies where your parents will sacrifice and work hard to make sure that their children will have a better education and lad better lives? Something which is very ingrained in our DNA translates into how a lot of our policies, and I speak from Singapore’s perspective, are designed not just for our current generation but also to impact our future generation, even those who are not yet born. Today they have no say, they have no vote, some of them are not even born. But what we do today has an impact on them, just like how our forefathers did 54 years ago did when Singapore first became independent had a tremendous impact on us today. If in those days they had only thought about what would happen in the next 5 years, I do not think that many of the decisions would have had a major impact on us today. We benefitted a lot from their forward thinking. In the same way, if we want to give our future generations a better future, a better life than what we inherited from our forefathers, we have to think long-term, we have to take into account not just what is going to happen here and now, but what is going to happen in the future.

 34   And I think this is something that is not difficult to convince people in Asia. It is already very much in our DNA. We do not want a situation which we see in some Western societies today where they lobby their Governments to spend money now, incur debts now because I want it now. Who will pay for the debts? Future generations who do not have a vote now. So that what populism is about – give me here and now. Who cares about what is going to happen in the future? And the politicians respond in that way too because why should they respond to someone who does not have a vote now if all they care about is winning the next election. So that is why populism is so dangerous, because you focus everybody’s minds onto the here and now and doing what is populist but may not actually be good for society and definitely not good for future generations. And next time, it will be a different group who regrets, who will say, why were my ancestors like that? Why are our forefathers like that? Making such irresponsible decisions that leave us in this bad situation. Whereas today if you talk to a lot of Singaporeans, we will say thank goodness our forefathers made those right decisions. They saved up, they invested in education, in infrastructure, in our reserves, and that is why today we are what we are.

35   So I think this DNA is something I hope can continue to guide our growth and development in Asia. So the three ‘U’s – Asia United, Asia Unlocked and Asia Unlimited. Have confidence in ourselves, we can do it. We have already proven that there are many things that have come out of this part of the world. This place is a place I am confident will drive the world’s economic prosperity and progress for the next few decades but we will need to get it right and we need to work together.

36   That is why, ultimately I think that there is one more ‘U’, and that is all of you. That is what is critical – our young people. If our young people do not share these ideals, values, desire to work together to improve the whole region, if we all become inward-looking and build walls. The future is going to be determined by all of you. What I spoke about - Asia United, Asia Unlocked and Asia Unlimited – I do not think we can achieve it in our lifetimes, I hope it is something you can achieve in your lifetime. So with that, I wish all of a fruitful week ahead. Thank you very much.

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