Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan's keynote address at the Commemoration of the 25th Anniversary of the Asia-Europe Foundation, 15 March 2023

 

 

1 It is an honour to be here to commemorate the 25^th anniversary of the Asia-Europe Foundation (ASEF). On behalf of the Singapore Government, let me extend my warmest congratulations to ASEF on its Silver Jubilee in 2022, and on the occasion of the Asia-Europe Meeting (ASEM) Day just two weeks ago on the first of March.

 

2 To fully appreciate where we are in time and space today, we need to take a few steps backwards and examine how we got here. Let me start by making three observations. First, immediately following the end of World War Two was a period which was marked by the Cold War. There was a series of proxy and regional wars. Despite, or perhaps because of the threat of mutually assured destruction from nuclear annihilation, thankfully the world did not slip into another World War, although if you read the declassified records, you know that there were several close shaves.

 

3 Second observation. If you measure the share of global GDP that was allocated to defence expenditure, this fell from 6.34% in 1960 to 2.24% in 2021.[1] This is worth repeating – the share of global GDP allocated to defence expenditure fell from 6.34% in 1960 to 2.24% in 2021. Some people have called this a ‘peace dividend’ – the notion that a decrease in defence spending makes available public funds for non-defence budgetary expenditures. This decrease in defence spending has been most pronounced – and prolonged – in Western Europe, especially after the Cold War, basically the period when ASEF was formed, until a rude awakening, a punctuation mark, when Russia launched this unjustified and illegal invasion of Ukraine a year ago.

 

4 Third observation. The process of globalisation was based on the entire world sharing in fact a single set of technologies. Working together, innovating, making new products and services, exporting and importing, and creating a virtuous cycle of progress and development has been a key feature of much of the peace and prosperity that we have witnessed certainly in the last 25 years. In Asia, the first to take off was Japan. Then people talked about the “Asian Tigers” – Hong Kong, Singapore, South Korea and Taiwan. In all these places, we witnessed impressive growth spurts which took full advantage of this global shift towards economic liberalisation, economic integration and free trade. This was fuelled by the adoption of export-oriented policies, investments in education, investments in infrastructure, as well as a strong focus on innovation, technology, and entrepreneurship.

 

5 Globally, we witnessed a reduction of trade barriers. We witnessed the establishment and spread of global multinational corporations, and the globalisation of supply chains based on the principle of optimising efficiency. Non-communist Southeast Asia first embarked on this journey in the 1960s, when Singapore gained our independence in 1965. Later, Mr Deng Xiaoping ushered in a period of reform and opening up in China. This started in 1978. China has been the biggest beneficiary of this period of relative peace, growth, and stability. Of course, full credit should go to the Chinese people for the incredible growth, their capacity to engage in hard work, savings, investments, and being competitive. By the late 1980s and early 1990s, and especially with the end of the proxy wars in Indochina and with the expansion of ASEAN that was only possible with the end of the Cold War, we saw our Indo-Chinese partners also take off. India also witnessed a period of economic liberalisation and rapid growth, spurred in part by the reforms under Prime Minister Narasimha Rao in 1991.

 

6 So, you see, in a sense, when ASEF was formed, the formula for globalisation and economic integration was optimised, democratised, and disseminated worldwide. This model had proved immensely successful in generating growth and lifting hundreds of millions of people out of poverty over the past six decades. The question now, which we confront at the 25^th anniversary of ASEF, is whether this is, to quote Chancellor Olaf Scholz, a ‘Zeitenwende’, turning point. The pillars which have undergirded our progress in the last 20 years especially, are suddenly eroding. Why is this so? Well, the first risk – bifurcation. The bifurcation in the global economic commons, the bifurcation in the common technology stack which has underpinned a period of growth and innovation. The conditions that we all benefited from over the last century – this common, open and evolving stack of scientific discoveries, based on a shared platform of research, development, methods, applications and technologies – these pillars are all at risk of severe erosion.

 

7 To be more specific, nowhere is the risk of bifurcation more evident than in semiconductors. In the early 1960s, when the semiconductor industry was in its infancy, each transistor cost about US$2. Each transistor. Fast forward to today, and I think every one of you carries a smart phone. In that smart phone in your pocket, are billions – not millions, billions – of transistors. If we still had to pay US$2 for each transistor, that smartphone in your pocket would cost many billions of dollars. The price of chips has gone from US$2 per transistor to less than US$50 for several billion transistors. This is why TSMC Founder Mr Morris Chang has called semiconductors the most deflationary product mankind has ever invented. Think about that – the most deflationary product mankind has ever invented. I think he is right. But more significantly, this cost reduction has been due to progressive improvements in manufacturing and supply chain innovation and efficiency – gains which are at risk if we are to have a hard and deep bifurcation. This will have an immediate impact on higher inflation, a slower rate of progress, and it will also cause a more disruptive, volatile world. Because that sense of interdependence, that we are all in this together, will also be lost. That is why we are in truly unprecedented and dangerous waters.

 

8 If you ask people all over the world, if you ask them what is important, they would say number one, good jobs. The second, they will say good education, especially for the children, so that the children can get even better jobs. The third, they would say ‘I want peace’ – peace so that I can get on with my life. Peace so that the children will have a better life, and they can focus on feeding people and meeting their needs. My belief is that if we are to meet the demands of our citizens all over the world, we actually do need a rules-based world order and we need greater – not less – economic integration. No one, in Asia or in Europe, wants to see an arms race or an all-out technological war which subtracts from our ability to invest in infrastructure, connectivity, productive capacity, healthcare, education and training. These are the priorities that would benefit and have a tangible impact on people’s lives and livelihoods.

 

9 Excellencies, we are faced with this very fraught geopolitical backdrop. It is vital therefore for Europe and Asia to take a moment to ponder what has changed, what is at risk and what are the possibilities for the next 25 years. I would suggest that, at a moment like this, Europe and Asia make quite natural partners. Because I think we are all instinctive multilateralists. We all believe that we do need to double down and intensify our engagement. We do need to continue to build global supply chains. COVID-19 has reminded us that supply chains and inventory are not just a matter of “just in time”, but “just in case”. Which means resilience matters. Which means all of us will also have to be prepared to pay the required insurance premiums. But this does not mean autarky or bifurcation or zero-sum games. It means building on existing pathfinder agreements. One very good example is the EU-Singapore Free Trade Agreement (EUSFTA) and the ASEAN-EU Comprehensive Air Transport Agreement (CATA) –noteworthy that we were able to negotiate, agree, sign, ratify these agreements, even at a time when globalisation was under pressure and (with) the rise of political activism against globalisation. Nevertheless, Asia and Europe have been able to get these agreements past the finish line. What we are trying to work towards now, is the expeditious conclusion of the ASEAN-EU Free Trade Agreement. We must also take full advantage of the digital revolution. We need to intensify our efforts to deal with climate change, a clear and present threat, one whose effects could be amplified significantly over the next two decades. My point is that by working together, Asia and Europe are uniquely positioned to harness opportunities in emerging areas of mutual interest, and especially the digital and green arena.

 

10 I want to acknowledge that it is not a given that all countries will happily come together and work alongside each other. These things do not happen spontaneously. It requires effort, it requires commitment, it requires communication. Most of all, it requires the building of mutual trust and understanding. And therefore my point is that platforms like ASEM serve an invaluable role. This is why the work of ASEF, which complements the ASEM process and translates its agenda into something tangible, is not just important but in fact indispensable.

 

11 So here, I would like to commend ASEF’s good work over the past 25 years, in promoting mutual understanding between Asia and Europe through intellectual, cultural and people-to-people exchanges. It is heartening that ASEF has brought together over 40,000 people from Asia and Europe since its inception 25 years ago – forging friendships, exchanging ideas, and strengthening bonds between our two regions. Even as our global order comes under growing stress, with the erosion of globalisation, political pushback against economic integration, and a hot war in Europe right now, it is a reminder that both Europe and Asia can and must double down and play a constructive role in supporting multilateralism, and making common cause for mutual benefit.

 

12 To conclude, the engagement between Asia and Europe has become even more essential than before, amidst this increasingly turbulent and uncertain geopolitical and economic landscape. This is the only way we can secure peace and achieve prosperity in our respective parts of the world. Singapore looks forward and will continue to support ASEF. We look forward to another 25 years of good and essential work by our partners and colleagues. I am confident that with the support of Members and the Board of Governors, ASEF will continue to complement the ASEM process, flourish and scale even greater heights. This is not an option – this is essential work.

 

13 So, thank you, and congratulations.

 

 

 

 

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Photo credit: Ministry of Foreign Affairs Singapore