Closing Address by PM Lee Hsien Loong at the World Economic Forum Davos Agenda Week

Introduction

I am very honoured to speak at the Closing Address and I would like to congratulate Professor Klaus Schwab and the WEF team on putting together a successful programme.

It has been one year since we were all physically gathered in Davos for the 50th Annual Meeting of the WEF. At the time, we were just starting to hear about this new virus and trying to understand what was happening. None of us anticipated how quickly a full-scale pandemic would blow up, and dramatically change our world.

The disruption to lives and livelihoods has been massive and unprecedented. The virus is still raging in many countries, in the developed world, in the US and Europe, and also the developing world in Africa, South America, and South Asia. Thankfully, with vaccines are becoming available, there is some light at the end of the tunnel. It is now critical that vaccines are rolled out quickly across the world but even with vaccines, the pandemic is far from being quelled. The new variants discovered in the UK, South Africa and Brazil are worrying, and further mutations will surely emerge. Until a large part of the world’s population is vaccinated, we still need strong public health measures everywhere to suppress the spread of the virus and keep populations safe.

Global Cooperation Remains Critical

What will the post-COVID-19 world look like? Will countries emerge more resolved to build a more resilient, but still globalised, world? Or are we headed towards a less integrated global economy, and a less stable international order? The answer depends on the decisions that countries take now.

Even before COVID-19, globalisation was already under pressure. Confidence in multilateral institutions, rules, and norms was eroding. Populist politics, nativism, nationalism and protectionism were on the rise.

Countries’ initial reactions to the pandemic seemed to herald globalisation’s demise. Borders were closed. Supply chains were badly disrupted. Each country scrambled to secure its own supplies of essential goods, especially medicines, facemasks and ventilators. It was each man for himself.

But as the situation unfolded, we were forcefully reminded that our fates were intertwined, and we had to work together and so we did in many areas. We restored supply chains, we repatriated each other’s citizens stuck overseas, we shared tests and medical supplies and we supported vaccine multilateralism initiatives like the COVAX, so that all countries, especially the least developed ones, would have access to vaccines. As we gradually rebuilt confidence in one another, we opened up controlled corridors for travel and trade between countries. Crucially, international scientific cooperation in the fight against COVID-19 continued. Doctors and scientists shared information about the disease and the virus, studying them, developing treatments and testing vaccines. This enabled us to improve patient care, and to produce effective vaccines in record time, some using new technologies. Such international cooperation and multilateral efforts remain essential, to tackle the global pandemic coherently.

With border closures and lockdowns, economies have all taken a deep plunge. The livelihoods of millions came under enormous stress. Only unprecedented levels of emergency spending and budgetary stimulus have kept us afloat, providing a lifeline to companies, workers and families. Central banks have played their part to prevent financial systems and global capital markets from seizing up, unlike in previous crises. These extraordinary measures cannot be sustained indefinitely. In fact, spending packages are already tapering off. But hopefully as vaccination becomes more widespread and we make headway suppressing the virus, COVID-19 restrictions can be progressively eased, and economies will rebound. The World Bank and IMF forecast global growth to recover this year. It will not restore output to pre-COVID-19 levels, but is still something still to be thankful for.

Now we are entering a new phase. The pandemic has exposed businesses and jobs which are not going to remain viable. They have to be let go, to allow new growth and better jobs to be created in their place. Hard decisions have to be made and this will exacerbate existing stresses. Governments will come under more pressure to adopt protectionist and nativist positions.

To resume growth, we must look beyond returning to status quo ante. We must look ahead. Within countries, governments and businesses must collaborate to tap new markets and develop novel technologies. Externally, countries need to strengthen the framework for international cooperation. As an immediate task, countries should collaborate to develop a standardised, robust system to verify the authenticity of tests and vaccinations. This is essential to re-open borders and resume international travel. In the longer term, countries should work together to update and strengthen. international institutions like the WTO, and create new rules to govern and foster novel forms of economic activity.

For example, to sustain the growth of the digital economy, and facilitate safe, secure and efficient cross border e-payments and data flows, we have to develop new e-trade regulations. Singapore has concluded Digital Economy Agreements with like-minded countries like Australia, Chile, and New Zealand. We hope that this is only the beginning. We encourage all countries to come together to shape and grow the digital economy globally.

The signing of the Regional Comprehensive Economic Partnership or the RCEP, last year by 15 countries was also a major collective commitment to trade and economic integration, amidst the pandemic. The RCEP will broaden trade, open up markets in East and Southeast Asia and Australasia, and hopefully prevent the push for resilience and self-reliance from going too far.

While dealing with the aftermath of COVID-19, we must not lose sight of other long term challenges that affect all of us. One major problem is climate change. 2020 was the world’s hottest year on record. Extreme weather events have become much more frequent. Last year, carbon emissions went down, but only because of COVID-19; otherwise the trend has been climbing inexorably upwards. Climate change is clearly accelerating dangerously, and it is late in the day. But if countries act now and in concert, humankind can still hope to avert a catastrophe.

We all know what we need to do. Within individual countries, to muster support for policies and measures that will slow the changes, and limit global warming. Collectively, to set higher common standards, and hold one another to our mutual commitments. Whether it is tightening emissions rules, phasing out fossil fuel subsidies or promoting renewable energy.

We can take some comfort that countries are now taking climate change more seriously. The US has re-joined the Paris Agreement. China has announced a zero emissions target by 2060. But much more still needs to be done, going beyond our Paris commitments. Otherwise we risk grave consequences in the not too distant future, even within our own lifetimes.

To tackle these challenges – COVID-19, economic recovery, and climate change, global cooperation is essential. But getting countries to work together is not simply a matter of nurturing and showing goodwill. The international order must be underpinned by stable great power relations.

Big countries naturally jostle and compete with one another for influence and power. But they also need to work with one another, through established and accepted rules and norms, on issues which affect us all, be it pandemics, economic cooperation, or climate change. Recent years have witnessed growing friction and distrust, rather than cooperation and confidence building, among major powers.

The most worrying trend is in US-China relations. This remains the most important bilateral relationship for the world in the years ahead. Over the last four years, tensions between the US and China have intensified sharply. Both powers have adopted more assertive and uncompromising postures. The US now sees China as a strategic rival and challenger to its preeminent position and China is vigorously asserting what it considers its rightful place in the world. On both sides, domestic pressures to harden their external positions are considerable, and moderate voices have been marginalised.

Given the enormous stakes, difficult as it will be, it cannot possibly be too late for the US and China to reset the tone of their interactions, and avert a clash between them, which will become a generational twilight struggle. The new US Administration is an opportunity to steer the relationship towards safer waters. Amidst President Biden’s many urgent preoccupations, the US-China relationship should become a key strategic priority.

Conclusion

To build a stable international order, regular constructive dialogue is critical. Thus, I am happy to see many distinguished participants taking part in the Davos Agenda Week. The World Economic Forum plays an important role in promoting dialogue, bringing together leaders in government, industry, and civil society. It is a forum where leaders from countries large and small alike can speak and be heard.

This is why when Professor Schwab asked me whether Singapore would host a Special Annual Meeting of the WEF, I agreed. Not a decision lightly taken, but we are happy to make a modest contribution to the global discussion. As the host country, we will work with the WEF to ensure the health and safety of all. I welcome all of you to Singapore in May, so that we can take these discussions forward, and forge a new path forward together.

Thank you.