DPM Heng Swee Keat at the Forbes Global CEO Conference 2023

Moderator: DPM Heng, thank you so much for joining us here today. This is our 21st Forbes Global CEO Conference, and as you can see, we have a very distinguished group of business leaders, tycoons, and entrepreneurs from around the region, and around the world. And I am sure they are waiting to hear your views and many things. Now you have had a very illustrious career. You first started as a police officer, many decades ago.

DPM Heng Swee Keat: I was a police officer for 15 years.

Moderator: And then, of course you rose through various levels and ranks and became the Managing Director of the Monetary Authority of Singapore in 2005, where you oversaw Singapore and helped it through the global financial crisis. Then a decade later you were appointed as the Minister of Finance, where you oversaw 10 national budgets, including some very critical budgets that helped Singapore to get through the pandemic. So, now, you and I, we probably met maybe 25 years ago in New York, and so it is great to see you here again and meet you here in Singapore.

DPM Heng: Shall I share the story about how we met?

Moderator: Yes, please.

DPM Heng: We met 25 years ago because Justin was an excellent writer. I was working for Mr Lee Kuan Yew and Mr Lee read several of his articles and said, ‘This guy has substance, and I would like to see him’. So that was how we ended up meeting.

Moderator: That is right, you were the Principal Private Secretary to the late Lee Kuan Yew and in fact, this month Singapore is celebrating his 100th birthday. So, I would like to start there with our questions. What do you think will be his sort of lasting legacy? How will people remember Lee Kuan Yew?

DPM Heng: I think Mr Lee's lasting legacy is really Singapore.  You recall that we were a British colony, and he fought for Singapore's independence. During that time, there were also many leaders who fought for independence from colonial powers, but what distinguished Mr Lee was that he went on to build a nation out of migrants. A multiracial, multireligious group of people brought together by the sense of a shared future, a Singaporean identity, and a belief that regardless of race, language or religion, this is a country for all people who are committed to building a better life together. And that has been a guiding principle for Singapore's governance all these years. One of his most famous quote is, “I will turn these mudflats into a metropolis”. Indeed, over that period of time, we have transformed from mudflats into a metropolis. So it is a remarkable achievement for any leader, but especially so for a leader of a country that has zero natural resources.

Moderator: Very true. And, of course, Forbes’ relationship with the late Lee Kuan Yew was that he was a columnist for the magazine as well, so we both have had the experience with him, but you have had a great chance to get to know him very well. He was one of the great political leaders of our time. What are some of the leadership lessons that you have been able to take away and that would help this current, next generation as it rises up and soon assume leadership of Singapore?

DPM Heng: I think it starts with Mr Lee having a very clear vision of where he wanted to lead Singapore. If you read his memoirs, he was most distressed that he had to sing four different national anthems before Singapore became independent. He went through the Japanese Occupation and the Second World War; he went through a period where he studied in the UK and did extremely well, and he saw life in the UK at that time. So, it had been a remarkable transformation for him. And he started with a very clear view that we should build a multiracial, multireligious, multicultural society – that was a very clear guiding principle. Despite the ups and downs, he always stuck to that conviction. I will say that is the first point.

Second, this sense of purpose allowed him to bring like-minded people with that sense of mission and purpose, to come together to govern Singapore. Dr Goh Keng Swee as his Deputy Prime Minister was a very critical figure, particularly in our economic development and our monetary policies, setting up of the GIC, and in the industrialisation of Singapore. Mr Rajaratnam was our Foreign Minister, and an outstanding one. So, Singapore’s voice on the world’s stage grew because we had remarkable leaders who worked cohesively as a team, and that allowed them to galvanise action. They had a very clear goal that they wanted to uplift the lives of everyone in Singapore, not just those who were rich.

For instance, in order to defend Singapore, we needed national service. If I were an 18-year-old boy, why would I sacrifice my life to do national service to defend the country if there is no stake for me at all? And so, home ownership was not only a housing solution to solve the problem of slums and squatters,  but a way of giving Singaporeans a stake in a country's progress.

Today, a flat that someone who has bought 40, 50 years ago, is worth several hundred thousand dollars. I have residents who come to me and say, “I am so glad that I have this property. I did not have to rent all my life, and now that I am growing older, I can monetise this flat because it is only my husband and I. We can live in a two-room flexi unit, and have a nice retirement nest egg”. So that, together with the CPF policy of compulsory savings, has allowed Singapore to grow and prosper, and allow for the benefits of that growth to be shared all across our entire citizenry.

Moderator: Perhaps for my next question, if we could turn a little bit wider to Asia, Lee Kuan Yew was a very keen observer of China. And right now, one of the great key sea changes of our days, is the growing tension between the US and China. How do you think he would take a look at this situation and how we should deal with it?

DPM Heng: Justin, you asked me a really tough question. I am not Mr Lee Kuan Yew. I do not have his amazing intellect. I can only share perhaps, years back in 1999, some of you will recall that an American plane dropped a bomb in Belgrade, and it hit the Chinese Embassy. It was a huge issue. It was also a time when China was negotiating to enter the WTO. There was a regional meeting in Singapore, both Secretary of State Madeleine Albright and the Chinese Foreign Minister Tang Jiaxuan, were in Singapore, and they both had asked to see him. Everybody was nervous, “My goodness, what will Mr Lee say to them?”, whether it will create more fireworks and so on.

I was present in both meetings, and I can say that, if the Chinese and Americans had exchanged notes about what Mr Lee had said to each of them, they will realise that Mr Lee said exactly the same thing to both of them, but with a different frame – of what the long-term strategic interests of the US were, and what the long-term strategic interests of China were. For the Chinese, to accept and take the Americans’ words that the bombing was an accident, so as to focus on what China needed to do for the next 20, 30, 40, 50 years, which was to enter the WTO, open up your economy, carry on with reforms, so that you can be a major part of the global community. And for the Americans, a similar message, that if you had committed a mistake you have to apologise and make compensation. But focus on the big picture of bringing China into the global economy, and into a working partnership with the Americans. 

The fact is that Mr Lee was never purely idealistic. He was very clear that countries will compete. But even as you compete, what are the areas that you can cooperate? What are your fundamental long-term interests? Not over one or two election cycles, not over one or two incidents, but take a long view of what needs to be done for both of you to achieve your long-term strategic interests.

Moderator: Yeah, that sounds like very good advice.

DPM Heng: So, in that regard, I wish that both China and US will play a stronger leadership role in the world, because the world is facing a large number of challenges which with good leadership, we can deal with. The pandemic is a very major lesson. A phrase that was commonly raised during the pandemic was, “nobody is safe until everyone is safe”. The fact that a tiny, microscopic virus can wreak such havoc on the world is a lesson for all of us to be humble about this. To focus our efforts on how we can advance our R&D work to confront this better, how we can understand external threats better, and how we can come together to build better safeguards for the world. 

Climate change is another major issue which affects the whole world, and particularly for small island states like Singapore. I do hope, given that both countries have major investments in R&D, that this R&D work can be harnessed to find solutions to bring people from around the world together, to try and find the next breakthrough. If we can find a way to achieve this energy transition from fossil fuels to renewables on a much larger scale, then I think we have hope for humanity. 

I do hope that the rest of us who are small players – Singapore is a very active member in the Forum of Small States which gives small states a voice – can bring everyone together and say, “Come on, guys. Let us work together to deal with these major issues which affect you and me, regardless of whether you are a little island or a big continent”. 

Moderator: Now perhaps could we go back to Singapore. Recently we just saw the Presidential Election, where the former Senior Minister Tharman won a landslide victory – 70% of the vote. The question is, there is a lot of discussion about what that means. Do you see this as a mandate for the PAP or is this something more specific to Tharman himself or, you know, I'm sure people would love to hear what your views are on what this means. And particularly also looking forward, what that that might mean for potential elections to be held before November 2025?

DPM Heng: First, I am very glad that Tharman has been elected with such an overwhelming majority. To me, it shows the growing understanding of our citizens on the role of the President, and the importance of having a second key in our governance system, to safeguard key appointments, to safeguard our reserves, to play that very important role of keeping Singapore corruption-free. Those are very important aspects, and I am very glad that in this Presidential Election, while there were some aspiring candidates who did not quite understand the role of the President, the media, the public, and those who understood, played a useful role to help explain what exactly the role of an Elected President is. In fact, it is quite amusing to see how the media in many other countries thought that the President of Singapore is like the President of America. The President of Singapore has custodial powers, but not executive powers. But Singaporeans, I believe, by and large understood it very well. 

You asked whether is it an endorsement of the PAP, or is it something else? I would not say that. I will say that there is probably a whole range of reasons. The citizens I have spoken to, I think one major part of it is that we have emerged from the pandemic reasonably well. That was one of the most major tests of the leadership of all countries around the world. It is an enormous stress test, but I think we have been able to get out of it with pretty low fatalities, and managed to get the economy back on track. 

In fact, when I was Finance Minister, as you said, I did five Budgets in one year. Our normal year's Budget is $100 billion. The five Budgets added together was $200 billion. So, within one year, I had to allocate a $200 billion Budget, and during the process, I had to see the Elected President before every Budget. Normally, in my earlier years when I presented my Budget, all I needed was a note from the President to say that she had seen it and I had briefed her on the Budget, and the Budget will not draw on past reserves. It is our rule. 

In this particular instance, the President had to issue a statement to say that this Budget drew on the past reserves, and she had authorised the use of the past reserves. In the end, we spent slightly over $40 billion of the past reserves to protect lives and livelihoods in Singapore. And I think many of you who have companies here would know that we had a very strong job support scheme. The job support scheme allowed companies to preserve their capabilities, so when the situation allowed us to reopen the economy, many businesses bounced back very quickly. I think this is a very important part of our long-term competitiveness, that even in a crisis, that we have the means to bounce back. 

Now, Tharman, of course, was a very key member of the cabinet and we had many discussions. I think if the citizens were very unhappy with the government and say, “the situation was so mismanaged”, I think Mr Tharman who is a member of the Cabinet would also have had to take some responsibility for that. So, I think there was some of that, but I will say a lot of it has got to do with his personal popularity. 

He has been in politics for over 20 years, he has run his constituency really well. In the various postings that he has had, he had done an excellent job. So, I think the public regard for him is very high. For him to get over 70 percent of the votes, it cannot be only one part of Singapore, it is throughout Singapore. I think it is a great sign that our electorate is discriminating, they look for political figures who are sincere about serving the people, sincere about bringing about a better life for everyone, and who have the competence, knowledge and integrity to do that.

Moderator: And Singapore has always prided itself on building a multiracial, multicultural society. So, could we be perhaps see this Presidential Election as saying that Singapore is now ready, perhaps with the appropriate candidate, that there might be a Prime Minister who is a non-Chinese?

DPM Heng: I will say that there is a difference in the role of the Elected President and the Prime Minister because as I said, one is custodial, and one is executive. I will see it as a very positive sign, that the fact that he is an Indian did not stop people from electing the best person. 

As to whether you can draw a conclusion about what happens in the general election, what happens more broadly, I will say that it is too early, but it is certainly a very, very positive sign. Will we ever have a non-Chinese as a Prime Minister? I will say it will come one day, because Singapore society is growing, maturing and it will come one day. As to when that day will be, I cannot tell; none of us can predict the future. But I see that as a very positive sign. 

I see that as a very important aspect, by the way, of Mr Lee Kuan Yew’s legacy to build a multiracial, multireligious, multicultural society. If you look at what is happening around the world today, it is not something that we should ever take for granted. We must continue to work hard to promote understanding across people, regardless of race, language or religion. 

And in the same way, I will say across the world, Singapore is a very major business hub, and we have people from all over the world coming to Singapore. I have always argued that a child growing up in Singapore is in a very good position to develop their cultural literacy, to develop their understanding of other people, so that we can play a role in this world, in a world that is more contested. 

My favourite analogy of what that person is – all of us travel around the world, and every country that you go to, the power points are different. Some are three pins, some are two pins, some are round pins, some are square pins, some are slanted pins. We need to carry the adapter whenever we travel. My hope is that a child growing up in Singapore can be that adapter, that wherever you go, you can plug in and draw energy from whatever grid there is, and be a connector, a bridge builder across the world. 

Certainly Mr Tharman’s election is a very strong endorsement of that change that is happening in Singapore.

Moderator: Speaking of “Sea Change”, perhaps you could give us some insights into how the next generation is preparing for the General Election we hope to see before 2025?

DPM Heng: First, DPM Lawrence Wong, together with his team, has done an excellent job in managing the COVID; he was one of the co-chairs of the COVID task force, and I think he has done really well. He is now the Finance Minister.  The team has gone through a very severe stress test too, and I think they have come out of it well. 

The key really is how do we help Singaporeans to adjust to this – the theme of your conference, “Sea Change”.  There are huge changes that are going on around the world and also huge opportunities.  

If you look at huge challenges, we are facing this huge challenge of the advances of science, technology, and innovation. The old business models will no longer be viable unless we take active effort to transform. But at the same time, these technological advances are also providing useful potential solutions to problems that the whole world faces. Climate change is one, pandemic is another. If you look at the way in which the vaccines were developed so quickly, within a short period of time, it has been a remarkable change. 

I think the advances in all these will be a major part of the work. The other is, of course, everyone in the world and every Singaporean will face major changes to their jobs and businesses. Because with globalisation, technological advances,  and the rate at which innovation is happening, the businesses are finding it more and more challenging to be able to adapt, transform, and change.

Similarly, I think we need to pay a lot of attention to our workers, especially the older workers. Many of my classmates did not quite finish school. Because in those days, Singapore was poor, education was not so good, many of my classmates failed and they ended up in fairly manual jobs. But today, with advancing medical care, our lifespan has gone up so much. So how do you deal with these massive disruptions in your jobs and at the same time, to have enough savings to deal with rising medical costs and so on?

We will need to think hard about the kind of policies that need to be put in place, to build that social compact, to build that solidarity. DPM Lawrence Wong is working very closely with the public on this through the Forward Singapore exercise, to define the sort of issues that Singapore must deal with, for which we can crowdsource solutions, for which we must have a better understanding of our citizens’ concerns, and then at the same time, work together with the private sector to find ways forward.

One of the things which I convened when I was Finance Minister during COVID was the Emerging Stronger Task Force. I got Minister Desmond Lee and Mr Tan Chong Meng, the CEO of PSA, to come together to co-chair a group of CEOs and Ministers, to answer one simple question: how can Singapore emerge stronger from this pandemic? It is a very comprehensive report, and one of the very useful recommendations is that we should start Alliances for Action, or AFA. In the Alliance for Action, rather than government agencies, at a very junior level, and officers in the company at a very junior level, argue over what can or cannot be done, we think that government should be a facilitator of change. And the question then is, how do we bring the most senior people to come together and say, as the government, I have an important duty to protect the public, build trust, build confidence in Singapore, and particularly for areas like finance, drugs, food. 

I think building that level of trust is important so that our agencies understand how you need to regulate and to do it smartly, but at the same time, being open to hearing from the private sector – what is it that you are trying to do, how are you trying to innovate and how do we go forward? So I think that will be our important way forward in building this stronger partnership within our society.

Moderator: One of the issues when you mentioned trust, and one of the issues that has recently come up – there has been this money laundering case. And of course, Singapore prides itself on being a hub for financial services. What are some of the takeaways and what are some of the lessons that have been learned, based on your great experience in the financial services industry? How we can deal with this issue?

DPM Heng: As you said, I had gone through the Asian Financial Crisis; I was working with Mr Lee Kuan Yew during that time when we met.  I had gone through the Global Financial Crisis when I was running our central bank. I had gone through the COVID crisis when I was Finance Minister.

Now, I think our ability to channel finances into productive uses to support the real economy to create a better lives for people is critically important. Finance is a very critical means to enable us to do all the good things that we want to do. But how we channel finance into productive purposes is critical. One lesson that we learned from Asian Financial Crisis and the Global Financial Crisis is that if finance has gone into unproductive areas, where there are severe mispricing, or worse still, through clever financial engineering. you manufacture synthetic products that are not of any value, the system will sooner or later collapse. So I think it is important for us to keep the integrity in finance, and keep its ability to function effectively.

So money laundering, counterterrorism financing, are areas which we are very vigilant about, from very early on. We want Singapore to be a financial sector that people can trust, that it is a centre for channelling capital to productive uses if you are in the private enterprises. I have also been very cheered that so many philanthropists are now using Singapore as a base to do their philanthropy work, that they want a contribute to more inclusive development.

And in the same way, it is very important for our commissioner of charities, for our agencies that regulate these activities, to have a very high standard of supervision, to bring in the right people, so that the money is used as it is stated, to do  good and not for some kind of whitewashing and greenwashing.  I think one of the greatest things that Mr Lee emphasised is integrity. That whatever we do, if I do not mean it, I will not say it. But if I say it, I mean it, and we want to get it done.

I see that as a plus for our system that we are able to do that. Financial centres all over the world will face this challenge, because so much money is moving around. In fact, if at all, it is a call for all of us to be very vigilant because every transaction will have a financial element, and the fact that we are vigilant is a plus and we have every intention to keep it that way.

Moderator: You are now the Chairman of the National Research Foundation. This is a position where you can sort of look ahead and make sure that Singapore stays at the forefront of cutting-edge technologies. So how do you want to reinvent Singapore so that it stays at that cutting edge?

DPM Heng: That is a very important question. About seven years back, when I was about to be appointed Finance Minister, I spoke to my Prime Minister and said, “Prime Minister, I think the global economy is changing even faster, and we do need to do something about our economy.”, and PM in his great wisdom said, “Well, since you believe in it, why don't you do something about it?”.

So I landed the job of chairing the Committee on the Future Economy, and that was where we did a lot of work thinking about how to transform the Singapore economy. We started looking at the Singapore economy – we have 23 sectors，and 23 sectors accounted for about 85, close to 90% of our GDP. So in every of those sectors, we got the agencies, the private sector and the public sector to come together and said, what is it that we need to do for this sector to stay competitive? The government is not in the business of picking winners, but the government is in the business of supporting change.

And what are the changes that are needed? First, we worked with companies, to look at how companies need to change and transform, how they need to re-strategise. Two, how do we reskill our workers. Once the company changes its strategy, it needs to re-design jobs, and therefore we need to reskill our workers. Workers must not be left behind. So as part of that reskilling exercise, we worked with the SkillsFuture Singapore to look at the whole set of training programmes that are needed.  Third, how do we make better use of science, technology and innovation to raise productivity? Whether you are a big company that is willing to set up a corporate laboratory with the university to do more cutting-edge research, or you are a small company that looks at how you can adopt technology, how we can create technology platforms for the smaller companies to harness this. And fourth, given that Singapore's market is a small market, how do you use Singapore as a base to get out of Singapore to serve the region? 

I think that industry transformation maps in the first five years from when we did it, has achieved very good results. In fact, an evaluation report would be coming up. We have now launched the second phase, the ITM 2025, looking at the next phase of transformation. We are now preparing for the next bound, to identify which are the key areas. We spend a lot of money on R&D, S$25 billion over five years. For those of you in the science and tech space, I will make a pitch that there are four areas which we think will be critical. 

One is human health and human potential. How do we keep our people healthy? How do we help to develop people to the best of their abilities? The pandemic has taught us the importance of understanding basic sciences like genetics. We have now a very excellent team working on mRNA technologies and so on. So that is one big area. 

The second big area: Singapore is a tiny island, we only have this 700 odd square kilometres of land, we also need to watch our carbon footprint. So how do we keep this land highly productive, yet manage to meet our Paris Agreement? Urban solutions and sustainability will be valuable work. If we can make it work in Singapore, I think you can scale the solution to hundreds and thousands of cities around the world.

Third, how do we deal with advanced manufacturing, trade and connectivity, so the Singapore remains an important advanced manufacturing hub that taps on the best of robotics, digital twins; with our air and seaports allowing us to connect to all parts of the world. And finally, smart nation and digital solutions, because digitalisation, AI, digital technology, Fintech are going to reshape the global economy significantly. If we can ride on these waves, bring the best people from around the world to be part of our efforts, train and educate our people to the best of our ability so that they can play a role in this increasingly bifurcated and fragmented world, then I think Singapore will have a future. And all of you are welcome to work together with us in this.

Moderator: Terrific, I think that is a great place to end our fireside chat. Thank you.

DPM Heng: Thank you very much.