Speech by Minister Gan Kim Yong at MTI Economic Dialogue 2022

Professor Lily Kong, President, SMU

Distinguished guests,

Ladies and gentlemen,

1. Good morning.

2. It is my pleasure to join you today for the 14th annual MTI Economic Dialogue. The last two editions of the dialogue were held virtually due to the COVID-19 pandemic. I am very happy that today’s dialogue is taking place in-person at SMU, our co-host for the dialogue this year. The annual MTI Economic Dialogue serves as an important platform to discuss key economic issues facing Singapore with students in the local universities.

3. The theme for this year’s dialogue is “Strengthening Resilience Amidst Economic Headwinds”. As the global economy recovers from the impact of the COVID-19 pandemic, several economic forces have emerged, creating both challenges and opportunities for the Singapore economy.

4. Let me first sketch out what these economic forces are, then I will discuss what we are doing to transform our economy to strengthen our resilience and capture opportunities in the face of these changing forces.

Economic Headwinds in Today’s World

5. The global economy is currently facing a surge in inflation. This has occurred as the economic recovery from the pandemic since 2021 has fuelled an increase in global demand, including for energy and commodities, even as the global supply of these products remains constricted due to ongoing disruptions stemming from the Russia-Ukraine conflict and supply chain constraints. Strong inflationary pressures have in turn led to elevated costs for businesses and consumers around the world.

6. At the same time, as inflation goes up, the global economy is slowing. Advanced economies are tightening monetary policy aggressively in response to sharp inflationary pressures and this is expected to weigh on consumption and investment demand, leading to economic slowdown. In the longer term, as economies transition to a low carbon future, they will need to introduce policies and measures to abate carbon emissions. This will shrink their policy space and force them to find innovative and sustainable ways to grow.

7. Finally, even as global trade is under pressure from slower economic growth, it is also being threatened and challenged by anti-globalisation sentiments and geopolitical tensions. For example, the COVID-19 pandemic exposed vulnerabilities in the global trading system as countries imposed export limits and bans on critical supplies to meet their domestic demand. This in turn prompted a shift towards self-sufficiency and resilience in many economies, from “Just in time” to “Just in case”, thereby further disrupting the international flow of goods and services. Firms are also increasingly looking to onshore their supply chains to reduce supply chain disruption risks.

8. As a small and open economy, Singapore depends heavily on trade and external markets, and we are vulnerable to these global developments and headwinds.

Policies and Transformation Efforts to Strengthen Resilience

9. To strengthen our economic resilience and remain competitive in the face of these economic forces and challenges, we need to identify new opportunities and build new engines of growth. Let me now share our strategies, which are outlined in our Singapore Economy 2030 vision.

10. The first pillar of our Singapore Economy 2030 vision is Manufacturing 2030. Under Manufacturing 2030, we will position Singapore as a global business, innovation and talent hub for advanced manufacturing. We aim to grow the value-add of the manufacturing sector by 50% between 2020 and 2030.

11. To do so, we will attract frontier investments and strengthen our overall ecosystem We have a conducive business environment, extensive connectivity and excellent infrastructure. Singapore will continue to be an attractive destination for quality investments. But we must also double down on our efforts to groom promising local enterprises. We are rolling out tailored schemes to encourage them to adopt Industry 4.0, pursue internationalisation and embrace innovation. An example is Oatside, Singapore’s first homegrown oat milk brand whose internationalisation efforts were supported by EnterpriseSG. We are also embarking on efforts to strengthen Singaporeans’ interest in a career in manufacturing and develop a pipeline of skilled local talent. I hope many of you here will join the manufacturing sector and be part of this exciting journey.

12. The second pillar is the Trade 2030 vision, where we aim to increase our trading volumes and widen Singapore’s trading activities and markets. From 2020 to 2030, our ambition is to grow our export from about S$800 billion to at least S$1 trillion, and double our offshore trade from US$1 trillion to US$2 trillion.

13. To achieve this, we are proactively strengthening regional economic integration through ASEAN and regional Free Trade Agreements (FTAs), as well as pioneering new agreements in emerging areas, such as the digital economy and green economy. At the same time, we will accelerate efforts to build a strong ecosystem of trading companies and activities. One example of a potential Singapore Global Trader is Mlion (pronounced “Mer-lion”) Corporation Pte Ltd, one of Southeast Asia’s largest steel suppliers, which I visited last month. Mlion grew its core business revenue by almost 60% in 2021 in the midst of the COVID-19 pandemic. It has worked with EnterpriseSG’s Scale-Up SG programme and will be launching two new products[1] later this year that will redefine the preowned steel industry and sharpen its own competitive edge. We will also nurture a skilled workforce through upgrading initiatives, and develop talent who have the necessary trading skills, including among students like yourselves. Finally, we want to capture more re-exports and transshipment flows, so as to embed Singapore more deeply into global supply chains and strengthen our enterprises’ regional distribution capabilities and competitiveness.

14. The third pillar is Enterprise 2030. Our aim is to evolve a vibrant ecosystem of Singapore enterprises that are innovative, globally competitive and future ready. These enterprises will, in turn, create good jobs and meaningful careers for Singaporeans.

15. We have announced the Singapore Global Enterprises initiative to scale up our efforts to identify promising local businesses and support their growth into global champions. We will support our Singapore Global Enterprises in areas such as (a) developing global-ready talent, through schemes such as the Singapore Global Executive Programme, (b) creating new corporate ventures, (c) facilitating mergers and acquisitions, and (d) enhancing access to financing. Enterprise 2030 aims to strengthen the capabilities of our SMEs, in areas such as (a) capability development, (b) internationalisation, (c) digitalisation, and (d) innovation.

16. The fourth pillar pertains to our large and diversified Services sector, which constitutes more than 70% of our economy. There will be two major waves of opportunities to grow and strengthen our Services sector – sustainability and digitalisation.

a. On sustainability, the Government has formulated the Green Economy Strategy to support businesses and workers to green our industry, tap on green growth opportunities, and prepare for the green economy. An example of Government’s efforts is the Enterprise Sustainability Programme (ESP) which was launched last year to enable local enterprises to uplift their capabilities and capture opportunities in sustainability. Even though there may be trade-offs as more sustainable options could cost more, there are many new and exciting economic opportunities, in areas such as green financing, carbon credit trading and services, as well as sustainable tourism. We must remain focused on moving towards a low-carbon future, and pace our transition to give our enterprises and workers time to adapt while remaining competitive globally.

b. As for digitalisation, it is a global trend that will fundamentally change the way we live, work and play. Many of you have grown up in a digital age. There is immense growth potential, especially for SMEs, as digitalisation will enable them to expand beyond the limitations of their physical size. It also serves as a powerful transformation tool for businesses to improve their productivity and fundamentally change their business models.

17. Finally, to ensure that our workforce remains relevant and competitive amidst rapid technological changes and disruptions, the Government will continue to invest in the training and upgrading of our people. As businesses innovate, restructure and renew their business models, Singaporeans must also play our part. We must continue to deepen our skills and widen our skillsets, remain nimble, and stand ready to seize the opportunities that are being created.

MTI Economist Service Scholarship and Academic Awards

18. The road ahead will be challenging but also exciting for Singapore businesses and Singaporeans. To support Singapore’s continued economic progress and development in the years ahead, it is imperative for us to have capable economists in the public sector who can provide high-quality economic analysis to inform the formulation of our public policies. The Economist Service has played this vital role since its establishment in 2001, with nearly 100 economists currently deployed across the public sector.

19. They have contributed to a wide range of policies, from economic to social, security and infrastructure policies. For example, at the height of the COVID-19 pandemic, the macroeconomic analysis conducted by our economists was critical in helping policymakers to scope and size the support package provided to businesses and workers. The economists also contributed to the evaluation of these support measures subsequently, and distilled key learning points to inform policies going forward.

20. As we strive towards the Singapore Economy 2030 vision that I have just described, the role of economists will become even more important.

21. At today’s dialogue, I am pleased to be presenting the Economist Service scholarship and academic awards to the economists of the future. My heartiest congratulations to all the award recipients. I am confident that you will continue to do well and contribute meaningfully to Singapore in the years ahead.

22. Thank you.

[1] GoListID (pronounced "Go-list-it”) is a first-of-its kind B2B marketplace for pre-owned steel, which will encourage pre-owned steel to be traded instead of being used for scraps.

GoTagID (pronounced “Go-tag-it”) is a RFID-based solution which traces and tracks steel materials. GoTagID also aims to provide standardised and authenticated information on preused steel, in contrast to the current market approach where pre-owned steel has to be appraised by professionals, a talent that is in short supply.