Transcript of Minister for Trade and Industry Gan Kim Yong's Interview with Bloomberg TV for "Bloomberg Markets Asia"

Hazlinda Amin: We know that the US is pressurising its allies to clamp down on China to block its access to chips; the Netherlands for instance, is the latest one to come on board. Just wondering, how is Singapore positioning itself as US-China tensions rise?

Minister Gan: Well, the US-China relationship is one of the most consequential bilateral relationships that has serious consequences for the rest of the world. Singapore, as you know, has always wanted to do business with both China and US. So, it is in our interest to ensure that we continue to uphold this multilateral open rules-based trading system that has benefited all of us for many decades. And it will continue to benefit us if we are able to maintain a collaborative, stable and secure environment for businesses to seize opportunities and continue to grow. Therefore, it is in Singapore's interest – and in the interest of the rest of the world – to ensure that US and China have a stable and secure relationship as well as a constructive one.

Hazlinda Amin: But Minister, how are you positioning? Are you having to tweak, pivot your economic strategy?

Minister Gan: We will need to continue to adjust our economic approach to encourage companies, to make sure that they understand the concerns and interests of both US and China so that they are able to position themselves to seize opportunities and adjust to the needs, interests and concerns of both countries. We will also do our best to facilitate dialogue and engagement between US and China through our businesses, through our officials so that we can foster a collaborative relationship. And indeed, there are many areas that I think will require cooperation globally, such as climate change. I think all of us have to do our part and find ways to work together, so that we can all achieve our climate change goals.

Hazlinda Amin: We know that the US is imposing export controls. How worried is Singapore about it? I'm just wondering if there could be a trickledown effect, given that the country is exposed to all the various countries; it is an open economy.

Minister Gan: Yes, indeed. I think all of us are concerned and watching this development very closely. I think although the export controls are not targeted at Singapore, our companies are concerned, given that they do have the products and services that may depend on US technology. And they are watching this very closely. We have been working with our companies here, assuring them that we will work with them and find solutions to address challenges that come along. And it is going to probably expand beyond just chips, because they are also looking at biotechnology, as well as other technology that may be of implication.

Hazlinda Amin: The other big concern for the world is the Fed and the tightening it is embarking on. Some are saying that terminal rate could get to 6%, which is a game changer. In your view, how is that shaping your assessment of whether we could see a soft or a hard landing? Where is the US economy headed?

Minister Gan: I think the jury is still out. We will have to watch the development. Countries around the world are working very hard to ensure that they can manage inflation and the need to continue supporting the economy as they emerge from COVID-19. Singapore is no exception; we are also working very hard with our companies. One key message that we are sharing with our enterprises here, is that they need to continue their transformation journey – they need to move from lower productivity activities to higher productivity, higher value-add activities. They will then be able to manage cost increases, and at the same time continue to grow their businesses.

Hazlinda Amin: What new risks do you see emerging from the Fed being so aggressive? Might you have to rethink perhaps even your GDP targets?

Minister Gan: We are watching this very carefully, and we continue to adjust our GDP projection. We need to take into account not just Singapore environment, but the global environment, because Singapore is a business hub – we depend on the growth of the world to fuel Singapore's economic growth. So, we are watching the development very closely. We have also been rolling out initiatives and measures to support and help our businesses cope with challenges of a higher interest rate as well as higher operating costs. I think these are issues that we will continue to work with our enterprises on.

The way we handled the COVID-19 pandemic over the last three years has also illustrated how the Government is working with businesses to cope with the various challenges, including supply chain constraints imposed by COVID-19. Therefore, I think our businesses are quite confident that they will be able to work with the Government in tackling emerging challenges.

Hazlinda Amin: We talk about how the macro environment is challenging. It’s also challenging for the domestic environment and against that backdrop, we're seeing soaring, housing prices and rents have doubled in some cases. And that begs the question, will that impact the level of investments that come into the country? Might that impact the decisions made by companies whether or not to put the resources in Singapore?

Minister Gan: That's a very important question. In fact, the Government has been monitoring the property market very closely, particularly the housing market. The reason for the rise in rental is mainly because of housing projects being delayed by COVID-19 over the last three years, but we are catching up with our building program. In fact, this year alone, we are going to have 40,000 units completed. This is a significant number – it is the highest probably in history, and between 2023 and 2025, we are expected to complete about 100,000 units between the public sector and the private sector.

This will help to ease off the rental market somewhat, but having said that, I must also stress that investors and professionals – when they make decisions on their location – will take into account not just rentals, but also things like efficiency of the government, infrastructure, and connectivity. The way we managed the COVID-19 pandemic in last three years has also given investors and professionals the assurance that we are with them. We are together as a reliable partner, and we will continue to support them as they endeavour to grow their business here.

Hazlinda Amin: Give us a sense of the indication so far in terms of the level of investments that can be expected in Singapore this year.

Minister Gan: Well, last year we brought in $22 billion of investments; it was one of the record years of investments. This goes to show that investors will continue to have confidence in Singapore's environment, and we have been working very hard with our economic agencies to reach out to investors around the world to encourage them to look at Singapore.

Our business hub status will give us additional advantage, enjoying a very high connectivity with the region as well as around the world. Even in the depth of the pandemic, we continued to keep our airlines flying, our ports operating and kept cargo being delivered. I think these are important signals that Singapore is a reliable, credible partner even in crisis.

Hazlinda Amin: China’s reopening is consequential for Singapore – it is one of the biggest trading partners, if not the biggest. How are you assessing China's reopening and its recovery story? How strong is it from your perspective?

Minister Gan: The higher PMI data that has been released recently reflects a very positive outlook. I think that China’s opening will definitely give a new momentum to economic recovery and growth. Singapore is also expected to benefit from this reopening. As I mentioned earlier, Singapore is a business hub. We depend on China, the region, and the global economy to do well for us to do well. And we look forward to continue benefiting from China's reopening. As an example, the border reopening has encouraged air travel to return and this has significantly benefited our aviation and tourist related industries like hotels, restaurants, as well as retail.

Hazlinda Amin: How about terms of the boost to trade? What are you anticipating between Singapore and China?

Minister Gan: China has always been Singapore's important trading partner. And we do expect trade with China to continue to recover. Even during the pandemic, our trade continued to grow strongly. So, I think there will be a lot of opportunities for us to look at how we can continue to be a partner to China as well.

Hazlinda Amin: Minister just one more question before we let you go. With China's reopening, have we seen the end of supply chain disruptions? No more log jams at points for instance?

Minister Gan: I think one thing one lesson that we learned from COVID-19 is that it's not going to be the only crisis, and it will not be the end of crises that we are going to face. Therefore, although we have adjusted to COVID-19 in terms of supply chain resilience, we cannot be complacent; we cannot take it for granted. We need to continue to invest in strengthening our supply chain resilience and we are working with our businesses, to encourage them to ensure business continuity, to continue to invest in diversifying the sources of supplies and supply chain avenues. I think Singapore being a business hub, that is very important for us – to continue to invest in connectivity and supply chain resilience.