DPM Heng Swee Keat at the Future Economy Conference and Company of Good Conference 2024

Mr Lim Ming Yan, Chairman, Singapore Business Federation,
Excellencies,
Ladies and gentlemen,

I am delighted to join you at this second edition of the Singapore Apex Business Summit organised by the Singapore Business Federation. As Singapore’s apex business chamber, it is fitting that SBF is convening an Apex Business Summit. I am also happy that we are launching the “Transforming the Singapore Economy” report at today’s Future Economy Conference, held in conjunction with the Company of Good Conference.

In 2020, the COVID-19 virus plunged the world into one of the worst health and economic crises in history. Many companies went bankrupt, and many people lost their jobs. The impact of COVID-19, together with the US-China trade and technology war has changed globalisation in significant ways. Globalisation is under stress, because while it brings the benefits of a wider range of products and cheaper goods to many consumers, it also sharpens competition in certain economic sectors. This can cause stress for people who are adversely affected. The benefits of globalisation are spread widely but the pain can be concentrated strongly in certain sectors. This can have an impact on broader support for globalisation.

At the same time, advances in technology, and the innovative use of new technologies, are bringing huge benefits as well as new stresses. During COVID-19, remote meetings and working from home became the norm. But in many cases, if you can work from home, you can work from anywhere in the world. For these jobs, a geographical market no longer makes sense. From the point of view of a business, if I can employ the best talent from around the world using remote means, why do I need to set up in one particular location? And why do I need to even think about recruiting talent and labour from only one source? I can tap on the best talent around the world. So in many ways, technology is also changing globalisation significantly.

In fact, recent advances in artificial intelligence and automation have given rise to much anxiety. People are asking, “What is the future of jobs? What is the future of skills? What is the future of education?” These changes are not only occuring, but taking place at an accelerated pace.

So the overall theme of this year’s Singapore Apex Business Summit, the “End of Business as Usual: Shaping the Future of Business,” is one that I agree with fully. The key question for us – governments, businesses, and societies – is how we manage change. How do we ride the waves of change and not be swept under by them?

Let me share three lessons that we have learned over the past eight years of industry transformation here in Singapore. The first lesson is to be prepared for the future, and be prepared to change. Second, to bring our resources and expertise together and adopt holistic and integrated solutions for the benefit of all. And third, to expand our partnerships across the region and across the world. Let me expand on these.

First, to be prepared for the future. None of us can predict the future. At the same time, none of us can accept business as usual. So how can we be ready for change, and ready to change?

Some 8 years ago, seeing the acceleration of global economic trends, we convened the Committee on the Future Economy. Government, businesses and the Labour Movement came together to formulate what we now call Industry Transformation Maps (ITMs), covering 23 sectors of the economy accounting for around 80% of our GDP.

In every ITM, we tried to bring four pillars of work together. First, productivity. What are the strategies to support companies to move to higher value-added activities and raise operational efficiency? Second, technology and innovation. How can we make better use of technology and innovation to be ready for change? Third, how do we redesign jobs and reskill workers? And fourth, given the small size of the Singapore market, how can our companies internationalise? Multinational companies in Singapore use us as a base to sell to the wider region. Similarly, our companies, even our small and medium enterprises, have to start to think regional, and even global, from day one.

After completing ITM1.0 between 2016 and 2020, we embarked on the second phase, ITM 2.0, from 2021 to 2025. Learning from our experiences dealing with COVID-19, we added two pillars in addition to the four I just mentioned. First, resilience, to help our companies transform, adapt and perform even in the midst of disruptions – whether a pandemic, or trade or supply chain disruptions. Second, sustainability. As a low-lying island, climate change is an existential threat for Singapore that we take very seriously. And far greater attention will be paid to sustainability in the years ahead. So all businesses must embrace the sustainability agenda early.

Now let me say a few words about the report that we are launching this morning, entitled “Transforming the Singapore Economy”. It chronicles the journey of our economic transformation over the past 8 years. While growth across sectors varied due to the intensity of competition, as well as exogenous and cyclical factors, our efforts in transformation have grown the overall economic pie for Singaporeans even in the face of the pandemic shock.

Between 2016 and 2023, our economy achieved real value added growth of 2.8% per annum. Over the same period, our labor productivity, measured in terms of real value added per hour worked, also grew by 2.1% annually. For an economy at our stage of development, appropriate comparisons would be with what the IMF and World Bank define as advanced economies. And on both value added growth and labor productivity, Singapore performed better in the past 7 years than many such economies with comparable population sizes. So indeed, despite structural global headwinds and structural shifts, this latest chapter in our transformation has helped Singapore maintain our position among the world's most competitive economies. Just last month, the International Institute for Management Development or IMD, ranked us as the most competitive economy in the world.

More importantly, we are not just chasing after rankings or numbers. These figures have a tangible impact on our people's lives and livelihoods. As our economy and productivity grew, incomes also rose in tandem. Between 2016 and 2023, the median income of full time Singapore residents registered a growth of 1.5% per annum. And this is just the median for the entire economy — there are some sectors which have grown even better!

Now bringing about this fruitful transformation has taken many stakeholders working together, and with common cause, to drive change and co-creation. These include businesses like yourselves, academia, our Labour Movement, trade associations and chambers. So let me express our deep appreciation to members of the Committee on the Future Economy and the Future Economy Council, as well as the various work groups and officials, for your dedication and hard work over the years. Let me also recognise SBF’s contributions as the apex business chamber in Singapore for leading transformation efforts. We saw all the effort that SBF has invested in the video screened earlier.

Most of all, let me thank all businesses and workers for changing the way you work. Because unless each and every one of you changes the way you work, transformation will not succeed. So let us always remember that our first lesson is that everyone must be prepared for change.

The second lesson is that change can be impactful if we bring the resources and expertise of all stakeholders together and adopt a holistic, integrated approach. No one has a monopoly on good ideas, so we must work together to craft the best solutions and execute them well.

Doing this also engenders a stronger sense of ownership which is necessary for any change movement. And our industry transformation efforts are essentially a change movement. In Singapore, we are very fortunate to build upon the foundation of tripartism where businesses, unions and workers work closely together. I'm very glad that our unions have set up Company Training Committees and played a proactive role in working with business leaders to effect change. This collaboration is important and further strengthens our tripartism.

We also stepped up industry transformation with the Jobs Transformation Map and the Career Conversion Programme. We heard from some of the beneficiaries of these programmes in the video earlier. The main point is that no one should be left behind. In fact, during COVID-19, one of the major programmes that we ran was the Job Support Scheme. Through that, the Government subsidised companies to keep their workers even though their jobs roles were affected by the pandemic. I'm grateful that we had the resources to support our companies, and that our companies made good use of these resources to keep their workers. And in fact, many companies took the opportunity of COVID-19 to think hard about how they could transform – for example, by using robotics and automation to raise productivity in places like hotels and hospitals.

Another successful example of tripartism, during COVID-19, was the Emerging Stronger Taskforce that I set up. One of the key recommendations of the Taskforce was to establish Alliances for Action – to bring together business leaders, government leaders and union leaders and ask “What is the change that we need to make?”. And the Alliances for Action are now a key part of the way the Government engages with businesses.

I am glad that the awareness of change has grown in the last few years. Today, we are holding the Company of Good Conference. Companies can generate a lot of what economists call negative externalities – for example by polluting the environment, having unfair recruitment practices, or neglecting workforce development. At the same time, companies that are effective in attracting capital and talent would have built up great capabilities, and these capabilities can be used to serve society. And I think that a great deal of good can be done by tapping on this agglomeration of resources and talent for the world. So the second lesson that I would like to draw from our experience over the last few years is to bring all our different stakeholders in Singapore together so that we can adopt holistic, integrated solutions.

The third lesson is to expand on partnerships in Singapore, in the region, and around the world. One of the key challenges going forward is sustainable development, and one of the big changes in the last few years is the increased attention paid to sustainability. It is very important for us to take this seriously because climate change, as I said earlier, is an existential threat for Singapore as well as many other island states. Climate change is changing the global ecosystem. So if we want to use our global resources well, we have to use it optimally.

Singapore’s experience over the last 50 years has shown us that we must always stay open and connected to all parts of the world. More than 20 years ago, we started negotiating Free Trade Agreements, both bilateral and regional agreements, that generated momentum for globalisation and certainly benefited Singapore and our partner economies. So we have negotiated 27 Free Trade Agreements, some of which I personally negotiated such as that with India. During my time in the Ministry of Trade and Industry, we also worked on agreements with the US, Japan, China, the EU, and between ASEAN and many of our partners. I'm glad that Singapore has stayed open. In fact, our latest agreements are with the Pacific Alliance and MERCOSUR, both sub-groupings in Latin America.

In a global economy that’s driven by technology, particularly digitalisation, we must also find new ways of building linkages and working together. Besides traditional FTAs, we now have Digital Economy Agreements, or DEAs, with Australia, UK, and Korea. We also have a Digital Economy Partnership Agreement with Chile and New Zealand. I hope that we engage more partners soon. Additionally, we also have a Green Economy Agreement with Australia. We must continue to partner like-minded countries to catalyse change, using such agreements as pathfinders.

Let me conclude. We started with Industry Transformation 1.0. We then moved onto Industry Transformation 2.0 with added focus on sustainability and resilience. In the report we are launching today, we end off by asking “What next?”. When we think of the next stage of transformation - Industry Transformation 3.0 - we must consider a few things. First, we must continue to build on our tripartite framework of trust in Singapore among labour, businesses and the Government. For any change movement to succeed, trust is most critical. A big part of ensuring that we maintain this trust is that everyone must feel that by working together, they have benefited. It is important that there is an alignment of our interests, so that every one of us can achieve our mission better.

Second, the future economy will depend heavily on leveraging science, technology and innovation. The Government has allocated S$28 billion for research and development between 2021 to 2025, focusing on a number of areas, including urban solutions and sustainability, health and human potential, advanced manufacturing, digitalisation, and biotech. We are also in the midst of reviewing our R&D plans up to 2030. But it's not just what we do in universities and research institutes; it is also what businesses can do with science and technology. So I hope that all of you here embrace technology and innovation in a far bigger way. And because issues like pandemics and climate change can only be tackled if countries around the world work together, we also aim to build our R&D collaborations with like-minded partners from around the world.

On that note, I hope that this excellent company that you are in today, and over the next 3 days, will allow you to make excellent conversations, to learn from one another, and to find opportunities for all of us to enhance this partnership within Singapore, and between Singapore and the rest of the world. Thank you very much.