Ladies and Gentlemen, members of the Young Sikh Association, and I see that it is a multi-racial group here so I’m glad. That reminds us that we are in Singapore.
First, let me say that I am very happy to be back. I didn’t realise in 2004 I had a lot less grey hair. Time has flown but it’s a pleasure, a privilege for me to be back. I have also quickly scanned through the scenario planning exercise which you have done, and I must say for all the groups who have been involved, quite frankly, you are all spot-on. What I am going to do here is to quickly run through some of the issues, give you my unadulterated views, and then hopefully we will have a robust question and answer session.
The one word which I think can summarise all that I am going to discuss, as well as the discussions you have already had, is the word “uncertainty”. If you ask yourself, if you just rewind time to one or two years ago, and you ask yourself, how many of you predicted that Britain would vote to leave the EU? I didn’t expect it. How many of you predicted that Donald Trump would be President Donald Trump? Some would. I’m not asking whether you support but whether you predicted and whether you anticipated or expected that. If you look at the rise of both terrorism and extremism on one hand, and the rise of right-wing fundamentalism, anti-immigration, xenophobia, and racism on the other hand, the discourse all over the world has become more coarse and thinking has become more shallow. This was not what people were thinking of if you go back to 2004, with the Internet and one happy global village, and we are all connected as easy as email, WhatsApp and SMS. The world is not unfolding according to a script which people had hoped for or anticipated. That’s why I am coming back to the word “uncertainty”.
Even if you come closer to home, right now, if you look at the situation in the Korean Peninsula. You could say, “well maybe with the recent election of President Moon in South Korea, at least he said he would try his best to diffuse tensions”. But the situation is tense. War is unlikely but no one can tell you that it is zero probability. If I asked you a year ago would you expect VX poisoning to occur in the airport in KL, would you have anticipated it? I don’t think any of us would have anticipated it.
You mentioned China and South China Sea. I’m glad that this year things are calmer, but you all should know that when you have territorial disputes, when it is an issue of sovereignty, these are not things which will disappear just with smart formulation of words. It takes decades, and sometimes it will never completely be resolved. The accumulation of unresolved issues is also occurring at a time of great change. So, uncertainty fuelled by great change. If you listen to the discourse in political economy side of the house, people are railing against free trade, against globalisation. In fact, people are blaming free trade, open markets, capitalism, open borders, as the cause for the loss of jobs, stagnation of the middle-class, and so on. These debates are raging on, not just in university seminars such as this, but out in the streets as well.
My point here, and it is a sub-point that I want to leave with you, is that blaming free trade is barking up the wrong tree. It is a red herring. The point is that, yes, the world is changing, but to me one key point is that technology has changed. Here again, although by inclination, I lean towards the “geek” side of the house, I think it is also very important for us not to get too carried away. Yes, technology is one key driver of change, but you cannot look at technology in isolation without considering human needs – the human need for identity, for values, for religion, for community, for a sense of meaning in life. Because, even if you subscribe fully to evolution and ongoing evolution, human evolution cannot evolve faster than technological evolution. This tension between technological revolution and slower pace of human evolution is in fact one key theme that is driving a lot of the anxiety and angst in our society. At the economic level, even in Singapore, we are facing twin shortages. On one hand, many white-collar, in the past, middle-class secure jobs, are disappearing, not because of free trade and globalisation, but because they are becoming obsolete. Whether you are a lawyer, doctor, accountant, or whatever white-collar job, technology is changing the demands of the job. So there is a shortage of job creation in what were previously safe, good jobs the university graduates could go for. So that’s one shortage. But yet, if you talk to the employers, they will also tell you, even in Singapore today, there is an acute shortage of skilled people with the relevant technical and literary and cultural and artistic skills to fulfil the needs of a modern economy.
So we are facing twin shortages – an erosion of jobs, and yet, a shortage of skills. A lot of the angst about degrees and paper qualifications is completely missing this point because we are trapped in the old thinking. In the old days, only one percent of the population had degrees. When I went to university, only five percent of us went to university. Today in Singapore, even if you just count the autonomous universities, it’s 35 percent, and you know it is going to go to 40 percent. If you include everyone else who goes overseas or goes to a private university, that number is more than 50 percent. But again we are chasing the wrong issue, because the real issue is where are the new jobs, what are the new skills, and are our young people prepared for it.
And the other point is that in the past you had the Agricultural Revolution, you had the Industrial Revolution. In the Agricultural Revolution, human beings first started cultivating and planting rice 8,000 years ago. The Industrial Revolution and the advent of the steam engine was about 250 years ago. When jobs disappeared, when there was creative destruction, it occurred over millennia or over centuries. If you suspected that your job was going to become obsolete, never mind, just hold on till you retire. Today, you don’t have the luxury of millennia or centuries. You are talking about decades. For most of us that means two or three jobs, or careers, in one lifetime. So this is the source of a lot of middle-class angst. Whether you are a politician or a political scientist, you know that ultimately decisions, elections, are decided in the middle-class, the fiftieth percentile, the median. What do people in the middle-class want more than anything else? We want good jobs because jobs are important not just for income, but we also derive a sense of worth, a sense of meaning, a sense of significance, a sense of contribution from jobs. So this age of uncertainty fuelled by accelerating change, primarily from technology, at its intersection with human and community is the source of a lot of tension, angst and aggravation. Now all this by definition has a profound impact on a small city-state like ours, which has to be open by definition. Even if we manage things completely perfectly within Singapore, because we are small and open, the region affects us as well.
I hope I haven’t made of all you too pessimistic with this litany of challenges confronting us in an existential way. But I want to change gear a little bit and give you some reasons for optimism. I will analyse it in a regional and international flavour first, and then come back to Singapore and explain why I think we’re still in this game. Let’s look at it regionally first, and I am glad that at least two groups talked about ASEAN.
Southeast Asia is still a bright spot in the world. Let me give you some figures. I just came back from Washington and when Vice President Mike Pence went to Jakarta, he said the United States exports every year more than US$100 billion worth of goods and services to Southeast Asia. The Vice President said about more than half a million American jobs depend on what they export to us. Then he said, if you do an inventory, a stock of American investments in Southeast Asia, I think he said it was about US$274 billion. Now here is where the shocker is. The amount the United States has invested in Southeast Asia is more than the combined amount that the United States has invested in India, China and Japan. I didn’t believe it. I got my staff to double check and triple check the figures. We have always treated ourselves sometimes unfairly and think the world is about America and China, maybe India and then Europe which is in decline. We forget that actually even in American eyes, we play an important part. Now that’s not the end of it because we have 628 million people in Southeast Asia, and maybe you might argue that too many of us here have white hair, but in Southeast Asia, it is still one of the youngest regions in the world. Except for Singapore, most people are still having babies and I think something like 60 percent of people in Southeast Asia are below 35. So the point is that the demographic dividend has yet to be harvested. This is quite different from the situation in Northeast Asia, that means Japan, Korea and China, which you know are going to undergo rapid ageing in the next two decades. In fact Japan is already aged. In Japan, the bubble burst in 1991. 1991 was in fact the same year that their labour force peaked. Since then, it has been in decline. But if you add 25 years after that, now in Japan the death rate exceeds the birth rate and the population is shrinking. Even in China, the workforce has already peaked. That’s why those of you who own factories and do business in China know that the cost of labour has gone up. So the point is that life isn’t a series of straight-line trajectories, and if you look at the demographics of Northeast Asia, it looks quite different from the demographics of Southeast Asia.
Now the other point is that in Southeast Asia, our combined GDP now is only about US$ 2.5 trillion. The fact is that we can still absorb a lot of investments, including infrastructure. That’s why even the One Belt One Road is relevant to us. We have a young population. Actually the median per capita GDP in Southeast Asia is still very low and there is quite a lot of upside, as long as we don’t have war, we don’t have tension and break up, we continue to attract investments and we continue to educate our people. The trajectory for Southeast Asia for at least the next two to three decades is in fact relatively positive compared to many other parts of the world.
That’s why ASEAN is important. There was a presentation there that talked about Singapore being a superpower or dominant power. I would say forget about all those words. We will never be a superpower. But we can be a focal point. We can be a city, a Manhattan, in the heart of Southeast Asia. Remember that because we are so small, we don’t need to be too greedy. You just need to be useful, fulfil certain niche roles where we have a competitive advantage, like trust, reliability, mathematics, accounting, science, law. Provide those services to Southeast Asia and also to China, India, Australia and New Zealand. That’s more than enough if we can do it right. I want to emphasise that ASEAN is important for us. It is important to many parts of the world including China.
Even if you talk about China, I was always very surprised at least for the last three or four years. Do you know who the largest foreign investor in China is? It’s little Singapore. Who is the largest foreign investor in Indonesia? It’s Singapore. So whilst we must have a realistic sense of our place in the world, we mustn’t oversell or undersell ourselves. There are many strategic opportunities for us in this part of the world.
Two weeks ago I spent over 30 hours trying to get to Buenos Aires, Argentina. There is a whole lot of things happening on the other side of the globe in Latin America, South America. You’ve got groupings like MERCOSUR and the Pacific Alliance, which most of you probably don’t know of. In the past, they would never bother with us, and we also. 30 hours was too long to fly. But because this is an uncertain world, and because suddenly they realise with their markets in North America and NAFTA at risk, even they suddenly put up their hand and say “we would like to do trade deals with ASEAN and in fact, maybe you know ASEAN would be difficult to do with all 10, so maybe we start with Singapore first”. Again, there are opportunities. That’s why I do about 36 trips a year because we are searching to build bridges rather than walls. Again, the key point here is that there are opportunities if you are willing to look beyond our boundaries.
Now enough about travelling. In Singapore itself, some things have not changed. We continue to be a little red dot. Short of land, zero-resources and our survival still depends on a few fundamentals. We must always remember that everything we eat, drink, wear, and use is imported. Therefore, in order to afford the essentials of life, we have to have a surplus. You have to have profits. You have to be able to sell to other people the sweat and ingenuity of our minds because otherwise we just don’t have the money to buy the essentials of life. There is a lot of angst about inequality – Thomas Picketty and why the return on labour is falling versus the returns on capital. But if you actually stopped to think a little deeper into that phenomena, if you assume that is true, do you understand why we have to be obsessed, from a government budget point of view, with generating surpluses year after year and building up reserves year after year? If you believe that the return of assets at least in the foreseeable future is perhaps even more than the returns on labour; a country, a nation state with a triple A rating, with significant assets and a portfolio invested across the world, hopefully in a diversified portfolio. I say hopefully because I am not going to reveal to you our investment pattern. This again makes us one of the few governments in this unique position to be able to enjoy the return on assets. So, when someone comes up to you and says “why are you all so obsessed with money, why do you keep generating surpluses, why do you keep building national reserves?” Just remind them that in fact, in the current state of the world, to be a net creditor, to have assets, and to be able to generate returns from assets is a unique and a competitive advantage for us. That is another unique point.
In 2004, we were wondering whether we should start an integrated resort. We were trying to decide, even if we did have one, where should we do it. I remember taking a boat. We left Clifford pier with Mr Lee Kuan Yew and Mr Lim Kim San. So we went out and went to the southern islands and Sentosa. In 2004, Marina Barrage was not yet built, so from Clifford pier you could still go out to the sea. After all that, we were coming back in, sailed through where the Marina Barrage is today, and we were at the top deck of the boat. When you come in, you see the Singapore skyline. So I turned around to Mr Lee and said, “Mr Lee, you know after all this time (this was about 40 years), now we are sailing in, it’s the sunset, and you see this beautiful city, how do you feel?” I thought he was going to give me something very profound. He looked at me, stared at me in his usual way, and all he said was, “a hard-working and disciplined people built all this.” Hard-working and disciplined people. I thought he was going to tell me about exercise of imagination, vision, fantastic planning, foresight. All that’s true, but he didn’t. Hard-working and disciplined people. That again has been another key competitive advantage that we have had, that we are an immigrant society. For most immigrant societies at least in the early phases, because you’ve either lost everything back home or you’ve got nothing back in the motherland, you come here and you work very hard. Most first generation immigrants can’t spend on themselves. They work very hard for the sake of their children and families. So that forward orientation, that willingness to invest in the future, what I am saying is that it’s the work ethic. The question is if we retain that, we will have a big head start.
Another reason for optimism is our education system, and now DPM Tharman, Ong Ye Kung, Lim Swee Say, keep telling you about SkillsFuture, adapt and grow. Minister Heng Swee Keat talks about the future economy, and now he’s chairing the Future Economy Council. Actually, you see, what we are trying to solve – remember I told you about the twin shortages of jobs and skills – if we can get it right, and give our people the relevant skills to get, to meet the demands of the new jobs in the midst of a region with growth potential, then many things become available to us and our people. But it cannot be and will not be the same old stuff. It cannot be business as usual. So that’s why there is a frenetic sense of urgency for us to transform our economy and society.
But even as we do all this, there’s also a need for us to remember who we are. And here, this is the Young Sikh Association. According to my staff, and I’ve tried to do a bit of research, the big migration of Sikhs to Singapore, I think, goes back to 1881 or thereabouts, when a group of Sikhs moved to Singapore from the Punjab. Of course, for some historical reasons, a disproportionate number of them were in the police force and all these security-related jobs. But since then, since 1881, the Sikh community has been an integral part, not just of Singapore, but also contributed to defining our identity, our cosmopolitanism, our approach to diversity, our equality.
I’m going to end here, and this is reflecting from a foreign policy point of view. Whether I go to India or I go to China, or you go to England, it’s something necessary for us, even to our own neighbours Malaysia and Indonesia, sometimes necessary for me, to remind everyone that we are not little China, we are not little India, we are Singapore. The key fact about Singapore is we didn’t fight for independence, but we were kicked out and forced to be independent because of a belief in an ideal, that Malays, Chinese, Indians, Sikhs, Eurasians could live in peace. We could treat each other fairly and equally, we could maintain cohesion amidst great diversity, despite the fact that at the point of our formation in 1965, all the forces, if you were doing a scenario planning back in 1965, were against this formula. If you think about the countries that gained independence between 1945 and 1965, which includes India, China, lots of Africa, this is perhaps the only unique country where the majority race actually actively accommodated the minorities. Soon after independence, some Chinese businessmen went to Mr Lee Kuan Yew and said, “now that we are free, this is time now Chinese should be the dominant language, the first language.” And Mr Lee in his usual way turned around and said, “we were part of Malaysia, we knew what it was like to be a minority and to be squatted on. The worst thing you can do is to now squat on our minorities.” That fateful act of leadership and the agreement by the majority to actively make space and accommodate the minorities, accompanied also by the minority communities – Malays, Indians, the Sikhs, everyone else – also knowing that this requires give and take on all parts. In fact, if everyone just dug in and demanded their rights, asserted their rights, the formula wouldn’t work.
So the point is, even in this very uncertain world, accelerating change, technological development, and this whole challenge of the human need for identity, belonging, allegiance, we have actually been an exception. That exceptionalism has given us enormous opportunities in the last fifty years. If we can remember to remain exceptional, not to settle for being average, not to settle for conventional wisdom and simply copy others, then we can remain a shining red dot, a united red dot, a unique, relevant, useful, reliable, trustworthy partner to many other countries. Whether the challenges are climate change, or robotics, or genetics, it almost doesn't matter. Each of these things become opportunities. So that, in a nutshell, is why I feel optimistic about our future despite uncertainty and accelerating change. So thank you all very much for your attention.
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