DPM Heng Swee Keat at the Swiss Chamber of Commerce Gala Dinner

Mr. Georg von Wattenwyl, 
Chairman, SwissCham Singapore 

Ambassador Frank Grütter, 

Ladies and gentlemen, 

Good evening. I am glad that we can gather in person for tonight’s Gala dinner, now that we are learning to live with COVID-19. I had planned to make a working trip to Switzerland in June, but came down with COVID-19 in Berlin before the Swiss leg of my trip. So, when former Swiss Ambassador Fabrice invited me to this event, I gladly accepted. Although I did not manage to go to Switzerland this year, I am glad to meet the Swiss community here in Singapore. It is a sign of our close ties.

The theme for tonight’s dinner is “Innovation”. Thomas Edison once said, “There’s a way to do it better – find it”. In a nutshell, this is what innovation is about. Through innovation, we can reshape the world into a better place, and provide solutions to our many challenges. But innovation can also be constrained by global events. The basis of vibrant innovation includes the free flow of talent, ideas, and capital. These fundamentals are being challenged by an increasingly more complex and uncertain global context.

Headwinds, Whirlwinds, and Crosswinds 

As we are learning to live with COVID-19, the global economy is facing renewed bouts of turbulence. 

First, global headwinds from high inflation. Global inflation has accelerated in recent months, reaching its strongest pace since the mid-1990s. Consumer sentiment has deteriorated, slowing down parts of the global economy. This is most pronounced in the US and Eurozone, where central banks are hiking interest rates to tackle inflation. Even then, inflation remains elevated, with most analysts expecting further hikes to come. 

Central bank actions have led to a sharp increase in mortgage and other interest rates in many parts of the world. We therefore need to remain alert to stresses in various financial markets and the housing sector, as they adjust to higher interest rates. The ultra-low interest rates since the Global Financial Crisis had facilitated firms and start-ups to access capital for innovation.  But these headwinds arising from inflation have made fundraising more difficult. Valuations have taken a significant hit, and investors are also demanding a clearer and faster path to profitability.  

Another contributor to the global uncertainty is the situation in Europe, which brings me to my next point on the growing whirlwind from the war in Ukraine. The immediate ramification is a surge in prices, especially gas prices, contributing to inflationary pressures. The uncertainty about future energy supply from Russia leaves most of Europe on the cusp of a severe downturn. 

But the geopolitical consequences are much more profound. The Russian invasion has shattered decades of peace in Europe. The world’s response to the unfolding situation will continue to test multilateralism and the international rule of law. The threat of nuclear escalation, while remote, has become real for the first time since the end of the Cold War. 

The Ukraine war is a whirlwind that is creating much more uncertainty. Elevated uncertainty is bad for innovation. The innovation journey is already hard enough in the best of times. The uncertainties make an already arduous journey even more difficult. 

This brings me to the third wind – the crosswinds from US-China strategic competition. The consensus in the US on their policy in the Asia-Pacific has allowed a more predictable relationship in recent years, but tensions have increased, partly because of the lack of trust between the US and China. Competition is not a bad thing. In fact, competition spurs innovation. But unhealthy competition leads to crosswinds. US and China strategic competition is now the greatest risk to the peace and prosperity of the world. The verdict is still out on whether the US and China can beat the Thucydides Trap. Both sides have said that they do not want to go to war. But accidents or miscalculations may escalate quickly. 

Even if tensions do not boil over, they do have a destabilising effect on innovation and the global economy. We have already seen some trade decoupling between the US and China since tariffs were first raised on Chinese imports in 2018. Further decoupling could lead to major shifts in trade patterns – resulting in lower trade, investments, and other economic interactions. This is most profound for the tech sector, which thrives on openness and scale. A bifurcation of the tech space will make it much more difficult to innovate, collaborate, and make progress. All these will hold back the progress of humanity and our efforts to tackle common challenges like climate change.  

Global Innovation: More focused, more collaborative

Headwinds, whirlwind, crosswinds. Some fear these could curtail the global innovation movement. But that need not be the case. The potential and promise of innovation have not changed. There is still much more we can extract from developing tech waves, such as AI, IoT, automation, advanced materials, and robotics. New waves of emerging technologies promising new breakthroughs, including Web3, 6G and GreenTech. The potential for innovation remains unbounded, although the operating environment has become more constrained. In the next bound, we need a global innovation movement that is more focused and more collaborative. 

More Focused 

First, more focused. The end of easy capital does not mean that investments have dried up. Funds for innovation continue to be available, but they are more discerning at a time when there are more opportunities to pursue.  

We need greater focus in where we apply innovation. We must channel our energies towards solving common challenges, and there are many. The climate crisis is now especially urgent. Even among major powers, there is room for cooperation in areas such as pandemic preparedness and sustainability. The world is currently not on track to meet the UN Sustainability Development Goals by 2030. The COVID-19 pandemic and the ongoing turbulence have dented progress in many areas – from food and nutrition, to the environment. So, we must focus on applying innovation in these critical areas to catch up on progress. 

Not only do we have to stay focused on our most important challenges, we also have to sustain this focus over time. A feast and famine approach is unhealthy for innovation, adding more volatility to an innovation eco-system that is inherently uncertain. In Singapore, we are committed to creating a conducive environment for innovation, rain or shine. We have invested steadily in research, innovation, and enterprise for decades, with government putting in around 1% of GDP annually. We also provide a stable operating environment with strong IP protection, which are important enablers for innovation. These factors draw innovators and companies, including Swiss ones, and crowds in a comprehensive network of venture capitalists and investors. 

A more focused innovation movement will enable us to make the greatest impact in a more turbulent global economy.  

More collaborative

Next, let me speak on a more collaborative innovation environment. How we build on each other’s expertise allows us to advance innovation. In turn, collaboration also acts to strengthen interlinkages and common interests in times of greater crosswinds.  

Like-minded countries must make a more deliberate collective effort to strengthen our linkages. We have strong free trade agreements in place today. In the next bound of collaboration, we can make a more deliberate effort to bring our strong trade connectivity into the digital realm. For example, Singapore and the European Free Trade Association are working towards commencing negotiations on a Digital Economy Agreement. As small innovative advanced economies, Switzerland and Singapore can do more to strengthen interlinkages, including in innovation. 

In Singapore, through CREATE, we have partnerships with many innovative institutions around the world. We partnered ETH Zurich to set up the Singapore ETH Centre more than a decade ago. I visited the Centre several months ago, and was impressed by their good work to develop practical solutions for future cities and a more resilient future healthcare system. We have or had partnerships with other institutions including CNRS from France, MIT from the US, TUM from Germany, and Shanghai JiaoTong from China. 

There are also many other forms of cross-border collaborations taking place in Singapore, including with Swiss companies. One example is the partnership with Nestle to kickstart the Circular Materials Lab. We hope that the Lab will not only connect companies to researchers, but also bring exciting green innovation to market. 

Switzerland has also placed a similar emphasis on global partnerships. I understand that 20% of all federal resources for the promotion of education, research and innovation go to international cooperation activities. Switzerland also actively takes part in global innovation meets. In fact, I look forward to meeting Federal Counsellor Ueli Maurer when he is here for the Singapore Fintech Festival next week. 

Working together, Switzerland and Singapore co-organised the inaugural Point Zero Forum in Zurich this June. Point Zero Forum was started to strengthen the circulation of innovation, broaden opportunities between Europe and Asia, and advance a new wave of emerging tech for good. The inaugural edition drew more than 1,000 senior-level participants, not just from Europe and Asia, but around the world. Switzerland and Singapore will once again collaborate to organise the 2023 edition of Point Zero Forum, and I’m pleased to say that this will be held from 26 to 28 June in Zurich next year. I will be making a visit to Switzerland to co-launch the Forum. The next edition will bring global leaders from across the world to further push the boundaries of Web3 and green finance.On Web3, one area that the Forum will focus on is how we can raise confidence in the adoption of digital assets with the right safeguards, regulations, and new technologies. In the area of green finance, one emphasis is on developing enabling technologies for companies to track their ESG commitments and to combat greenwashing. I look forward to meeting some of you in Zurich at the Forum. 

Conclusion 

In conclusion, the world is facing greater turbulence – with headwinds due to inflation, the whirlwind in Europe, and crosswinds from strategic competition. Although the operating environment has become more constrained, the potential for innovation remains unbounded. People’s attraction and excitement to new ideas and frontiers are not diminished. In the next chapter, we need to tap on the global innovation movement in a more focused and collaborative way. As small, innovative, and advanced economies, Switzerland and Singapore can be pathfinders in bringing together like-minded partners, through Point Zero Forum and other means. 

The Swiss Chamber of Commerce here can play a significant role towards the partnership and friendship between our two countries. The first Swiss traders came to Singapore in the late 1830s, and the Swiss Chambers was set up more than 150 years ago. Today there are 400 Swiss companies in Singapore in many diverse areas. I have met several of you, and look forward to meeting even more of you tonight. I hope tonight’s dinner can also inspire new streams of innovation, and spur greater collaboration between our two countries and the world. Have a wonderful evening.