1. In 2020, the Economic Development Board secured S$17.2 billion in Fixed Asset Investments (FAI) and S$6.8 billion in Total Business Expenditure per annum.
a. The FAI secured in 2020 significantly exceeded the medium to long-term investment commitment goals of S$8 billion to S$10 billion that EDB has set for itself.
b. This is a strong performance from the EDB team in an exceptionally challenging year. I would like to commend them for their perseverance and resilience.
2. The investments committed in 2020 are expected to create more than 19,000 jobs over the next five years with a projected contribution of S$31.2 billion in Value-Added (VA) per annum
a. Our focus will continue to be on placing our workers in jobs that are created.
b. The companies remain committed to working closely with us to prepare the local workforce for the available positions.
3. Despite the uncertainties brought about by the pandemic last year, Singapore has remained an attractive investment destination for many global companies in a diverse range of sectors.
a. Our efforts to keep our borders open, maintain external connectivity and ensure business continuity have given global companies the confidence to continue to site their projects in Singapore.
b. Our regulatory system and intellectual property (IP) regime undergird our “trust premium” that is highly valued by global companies; allowing us to attract key investment projects, especially those dealing with high-value and knowledge-intensive products.
c. Our skilled local workforce and the ability to aggregate global talent here allows companies based in Singapore to access the manpower they require to help them grow
d. EDB’s achievements are also testament to the premium that global companies place on competent and trusted governance. This is something which we must strive to maintain in the years to come as the world becomes more tumultuous.
4. While EDB has done well in the past year, the road ahead will be challenging. The global situation continues to be plagued by uncertainties.
a. Recurrent waves of infection are happening across many countries around the world.
b. The roll out of vaccination programmes in most countries has been slow and uneven.
c. Geopolitical tensions abound.
d. There is thus still uncertainty around the pace of global economic recovery.
5. We also see the impact of various pre-Covid factors that will affect the level of investments into Singapore in the future.
a. That is also the reason why I supported EDB’s decision last year to move to a longer-term approach towards investment commitment goals instead of fixating on the year to year numbers which will increasingly see greater volatility.
b. Such an approach allows us to take a broader view and position ourselves for the long road ahead and determine which investments are able to best entrench Singapore in the global value chain.
c. Let me elaborate on some of the challenges we see and our key economic strategies for the year ahead.
6. The impact of COVID on the global economy has resulted in growing income disparity among countries. Governments all around the world are facing significant domestic pressure to secure investments that will create new jobs and opportunities for their people.
a. Many countries, including developed ones, are using political reasons to aggressively pressurise companies to re-shore while simultaneously boosting domestic production capabilities.
b. Within sectors such as manufacturing, there has been an increased premium on resilience as companies re-examine their production and supply chains. This has resulted in greater reshoring, regionalisation and diversification of supply chains.
c. The competition for fiscal revenue has also intensified. For example, OECD’s FHTP and international tax policy developments such as Base Erosion & Profit Shifting (BEPS) 2.0 will certainly impact the way countries compete, where investments go and affect how corporate profits are allocated and taxed.
d. As digitalisation becomes increasingly pervasive and profitable, we have likewise seen the emergence of digital trade barriers such as data localisation and filtering measures.
7. Tensions between the two largest economies in the world – US and China – are likely to persist. This could result in them having limited bandwidth to shoulder greater international responsibilities which could further stress the international rules-based trading system which many, including Singapore, have benefited greatly from over the years.
a. The issues that the US and China face are beyond personalities and we should not expect a quick resolution to the tensions. However, both countries also share many of the same challenges and overlapping interests. It is our hope that the incoming US Administration will turn the page on the past four years and both countries will continue to build strategic trust with one another while staying connected to the world.
8. Closer to home, we have seen heightened sensitivity regarding the balance between locals and foreigners in the job market. This is understandable given the economic uncertainty caused by the pandemic. However, if we do not manage this carefully, our hard fought and hard-won reputation as an open and connected country will be lost and the consequences could be dire.
a. We must remember our competitiveness come from our ability to aggregate talent from across the world to complement ours.
b. The real competition is never within Singapore but beyond Singapore with the rest of the world.
9. Although remote working has grown as a direct result of the pandemic, we have not seen the full impact of what remote working could mean for workers all around the world. The nature of competition for jobs will certainly change.
a. Over the last year, I have spoken to many companies. While many were at first at a loss as to what to do following the closure of borders and the loss of foreign manpower, they quickly found ways to adapt. Some manufacturing plants in Singapore now have processes operated by workers via tablets remotely from home, and some outside of Singapore.
b. Others can compete away our jobs without being in Singapore. We can also compete with others without being overseas, if we are skilled and have the networks.
10. Remote working and hyper-competition across the internet platform will fundamentally change the nature of job competition. Together with the search for supply chain resilience and business continuity amidst natural and technological disruptions, where companies position their investments, production and supply chains will also change.
a. However, there are opportunities for us as not all competition is focused on cost minimization alone.
b. The increased premium placed on business continuity, supply chain resilience, diversification, long term policy consistency will continue to play to our advantage.
Economic Strategies for 2021
11. To drive economic recovery and position ourselves strongly for continued growth, we will focus on four key strategies in 2021:
a. Strengthen our position as a critical node in the global value chain
b. Forge new trade rules in forward looking areas
c. Pursue an innovation-led and sustainable economy
d. Double down on transformation efforts to help our companies and workers stay resilient and competitive in a Covid and post Covid-world.
12. First, on strengthening our position as a critical node in the global value chain. As a small city-state with no hinterland, we have always known that we will not have all the skills and capabilities required for all parts of the global value chains. That is why a key strategy has been to identify the best global and local companies in niche areas that we want to anchor in Singapore and build a strong ecosystem to support them so that we cannot be easily bypassed.
a. This strategy has been successful. It has uplifted many SMEs in our economy by giving them valuable exposure and experience and helped develop highly skilled and globally valued generations of workers.
b. We will continue to pursue this strategy, particularly in new areas of growth such as agritech, biomedical sciences electronics, and infocomm and media, and in the process, place greater emphasis on investments that allow us to entrench ourselves in the global value chain.
13. Such an approach will also provide greater resilience to our economy and give us an edge in times of need.
a. Covid-19 has taught us an important lesson – that money alone is not sufficient in a global pandemic. Early in the year, when countries around the world were trying to snap up essential supplies, many found that having cash was useful but not enough.
b. Many times, it became a barter trade. Companies and countries took a cold, hard look at what each country had to offer before deciding whether to sell their item to the country.
c. This is the reality we face and an important lesson we must remember.
14. Second, we will forge new trade rules in forward looking areas such as data, finance and technology.
a. Last year, we concluded digital economy agreements with Australia and separately with Chile and New Zealand. We have also launched negotiations with Korea and will launch negotiations with the UK soon.
b. These DEAs will allow us to accelerate efforts to develop our digital economy and set high standards in digital trade rules globally. We hope that more countries will join us in this journey and build more bridges instead of putting up walls in the digital space.
15. Third, we will pursue an innovation-led and sustainable economy. Ultimately, the greatest value for any economy is never just in manufacturing a product or providing a service. It is also how fast we improve our product and services, our production process in the race with the rest of the world.
a. Conventional arbitrage and lowering costs of production are no longer sufficient.
b. We must continue to strengthen our R&D efforts to support the creation of new products and services and have these efforts translate into tangible commercial outcomes. Last year, amidst the economic challenges caused by the pandemic, we announced that we would sustain our RIE investments over the next five years at about S$25 billion. This is no mean feat and a signal of our determination to invest for the future.
c. We will strengthen our research networks with companies at the cutting-edge of new technologies and developments while supporting our smaller companies to close the innovation and enterprise loop.
d. We will also encourage companies to undertake innovation and develop new products and solutions to serve the wider regional and global markets.
16. Sustainability has grown to become an increasingly important component of companies’ strategies as they factor Environmental, Social and Governance (ESG) considerations into their investment and business decisions.
a. Our track record in this area, coupled with our commitment to be stewards of our finite environmental resources will underpin our potential to be a hub for sustainability, developing ESG-related solutions and services to not only meet our own commitments but also global demand.
17. Our fourth strategy is to ensure that we continue to support our companies and workers to pivot and remain competitive and resilient in a Covid-world.
a. Over the last six months, I have been focused on sending out one clear message to our businesses and workers – we are not returning to a pre-Covid world and the earlier we make the necessary adjustments, the faster and stronger we will emerge.
b. For businesses, regardless whether they are doing well or not doing so well amidst the pandemic, they must accept that things have changed. The business models that have worked well for them in the past will increasingly become less relevant. They will also have to further diversify their sources of labour and look into more productive solutions as cheap and plentiful low-wage workers becomes increasingly scarce.
c. These are realities that will not go away even when the pandemic has passed. The sooner our businesses can transform, the more ready they will be to catch the wave of recovery.
18. For companies, our support will progressively move from stabilisation to helping them pivot to new areas of opportunities.
a. Our targeted help will focus on building up corporate capabilities and helping our companies to access additional platforms to innovate and new markets beyond Singapore.
19. For our workers, we will make sure we continue to invest in the new skills they need to stay competitive and relevant – from the mainstream school system to lifelong learning programmes. We will give our people the exposure and the experience they need to compete in a globalised economy so that we increase their chances of success.
a. I also want to strongly urge our workers to keep an open mind to the new possibilities that are emerging. While we understand that change can be difficult and even scary, it is inevitable in the new economy. Globally, the average lifespan of a major company has gone from 61 years to less than 18 years today. McKinsey’s research predicts that in 2027, only six years from now, 75% of the world’s top 500 companies will cease to exist.
20. What this means is that while there will still be job opportunities available, the jobs will change significantly and our workers’ skillsets will need to be constantly upgraded. This is a global phenomenon that no country will be exempted from. As a small and open economy, Singapore will feel these pressures earlier, and more than any other country. However, our commitment to our workers is that we will never leave anyone behind.
a. We will redouble our efforts to help Singaporeans stay competitive and relevant and continue to find resources to invest in them.
b. We will also ensure a fair playing field and continue to work with the companies in Singapore to invest in local talent development and provide good jobs for our people.
21. We head into 2021 with cautious optimism of our economic prospects for the rest of the year. EDB’s figures today are promising and encouraging, and if things go well, we can expect to see some recovery in the global economy in the second half of this year. However, we should not think that the road ahead will be a walk in the park because we have managed to do well even up till now.
22. Many uncertainties lie before us, including how the Covid situation will continue to pan out. Companies will take a much longer time to decide upon their investments over the next one to two years because of the uncertainties at the local and global levels. Countries will compete even harder for their investment dollars and jobs. While Singapore continues to be an attractive investment destination, we also need to be mindful that things can change very quickly. In order to stay resilient, we must continue to be flexible and adaptable – government, companies and workers included.
23. Thank you.