SM Lee Hsien Loong at the Singapore Business Federation Appreciation Event

Deputy Prime Minister and Minister for Trade and Industry, Mr Gan Kim Yong;
Chairman, Singapore Business Federation, Mr Lim Ming Yan;
Distinguished guests, ladies and gentlemen;

A very good evening to everybody.

Introduction

I thank the SBF for organising this appreciation event, and for the wonderful video montage you have put together. I would also like to thank Ming Yan for his warm and gracious words, and all of you for helping to make possible the donations to the community groups — $500,000 to the five groups this evening — as a meaningful and worthwhile gesture, and I am grateful you are doing it in my honour. Thank you very much.

This gathering brings back warm memories of my many engagements with the business community over the years. I am grateful for your steadfast support and partnership, and would like to thank you again.

Tonight is not the occasion for a long speech, but I would like to share a few thoughts on the importance of the business community to Singapore.

Thriving amidst a changing world

Since our founding years, a vibrant business sector has been vital to Singapore’s economic development and success. Because while the government sets the strategic direction for the country, and must create the preconditions for economic growth, ultimately, it is businesses that actually create wealth and generate prosperity for Singapore. And this depends on individual businesses being productive, competitive, and profitable. Only then can they create good jobs, pay good wages, and in so doing, improve the lives of our people. Over the decades, our companies have done well, and so our economy has grown, and Singapore has prospered.

But the international environment is changing, and businesses will have to adapt, together with Singapore. 20 years ago, when I became Prime Minister, the dominant paradigm was fostering multilateralism and encouraging interdependence. Countries talked about prospering together through freer and more open trade. Not that there were no protectionist pressures or national rivalries then – there certainly were but the conflicts were not as sharp as now, and even when countries could not see eye-to-eye on specific issues, they still continued to do business with one another, and where possible, try to work towards win-win solutions. As a small country heavily reliant on international trade, Singapore thrived in this environment. Today, it is a much more challenging world. Technology is advancing faster than ever, nations are competing to secure an edge in emerging areas like biotechnology and AI. And there is intense geopolitical contestation, especially between the US and China; and between the US and Russia, there is outright hostility. Other conflicts and tensions around the world add to the turbulence and uncertainty. So the dominant paradigm has changed. National security and resilience are taking centre stage, trumping economic efficiency or mutual prosperity. Terms like friend-shoring and near-shoring, de-risking and deglobalisation have entered our vocabulary. Major powers are determined to do all they can to stay ahead of their rivals, or get ahead of their rivals, even if this will make them worse off in real terms. State intervention and protectionism is much more prevalent and overt. Countries accuse one another of implementing industrial policies and multifarious subsidies that distort the market and unfairly benefit their own companies, while all sides do the same themselves. All the pots and kettles are about the same colour. There is no longer deference to multilateral rules or institutions like the WTO, not even lip service. Because instead of that, countries claim the absolute right to take whatever measures they deem necessary, in the name of their national security and resilience.

Such an approach may possibly help some individual countries to feel more secure, but it will certainly make the whole world collectively less prosperous and also less safe. As a small country, Singapore has to accept this prevailing ethos as a fact of life. We will just have to make our living in a more adverse global operating environment.

But I am quietly confident that we will overcome these difficulties, just as we have done many times before. Singapore will continue to pursue trade and investment liberalisation wherever possible. We have an extensive network of trade agreements that gives our businesses good access to markets overseas, even in this environment. We continue to stand out as a regional hub and global node, and should make the most of our international reputation as a trustworthy and reliable partner. We offer ease of doing business, incorrupt and efficient government, and a strong rule of law. And therefore we can promote international economic cooperation with regional countries. We are deepening ties both within ASEAN and with ASEAN’s partners. We are also exploiting newer and wider arrangements, like the RCEP – the Regional Comprehensive Economic Partnership – or the IPEF – the Indo-Pacific Economic Framework.

At the same time, we must seize new opportunities as they come along. In the digital economy, we are well-placed to take advantage of advances in IT and AI. Asia is home to some of the fastest-growing digital economies in the world. And we have already concluded the Digital Economy Partnership Agreement (DEPA) with Chile and New Zealand — three countries in one agreement — more countries are applying to join and in the process of joining; and we have similar bilateral agreements with the UK, Australia, and South Korea. In the green economy, tackling climate change and decarbonising our economy will create new industries and opportunities, for example in green finance and carbon trading, even though our transition will not come cheap. Initiatives like the Singapore-Australia Green Economy Agreement and the IPEF Clean Economy Agreement will support our transition, while promoting economic growth and job creation. And hence despite the headwinds, I am confident Singapore will find a way forward, and we will take care of ourselves.

Role of business community / trade associations and chambers

Looking ahead, economic growth and transformation remain essential to improving Singaporeans’ lives but our economy is now in a more mature phase. We will be doing quite well, if we can sustain growth at around 2%-3% annually. And this growth can come from just two sources: workforce growth and productivity growth. The size of our workforce depends heavily on our demographics. We are doing our best to nudge Singaporeans to have more babies but we are not likely to reach replacement level, much less net indigenous population growth. So, we will continue to bring in a controlled flow of immigration, as well as work pass holders, to supplement and complement our local workforce but there are limits to this too. We have a few other levers – e.g. increasing female labour force participation rate further, and enabling old folks to stay healthy and active longer. But on the whole, while we can maintain a stable, and even slowly growing labour force, it will be very difficult for us to expand the labour force significantly. Therefore, productivity gains are a main source of economic growth – must be. And this is also crucial because ultimately, we want not just a bigger GDP, but also higher per capita incomes and thus better standards of living, and this can only be sustained through higher productivity. And this is where businesses will need to do your part, for when individual companies do better, so does our entire economy. Raising productivity depends not just on broader factors like efficient infrastructure, a conducive business environment, or technological breakthroughs. Individual companies must transform themselves – by upgrading your workforce, creating new opportunities, applying those breakthroughs to your business, and developing new markets, and earning more money. We need a competitive corporate sector with companies that are doing well growing from strength to strength, and companies that are doing less well pivoting to more productive sectors, or possibly exiting the business altogether. This is how free markets generate growth, and this is how our economy has to work.

In Singapore, as companies transform yourselves, you can depend not only on a pro-enterprise government, but also a supportive Labour Movement. MTI has worked with businesses on the Industry Transformation Maps – the ITMs, as we call it. Many of you have contributed to this effort, to chart the way forward for key industries, and help firms in the same industry innovate and raise productivity, solve common problems, to continue to thrive in the future economy.

Trade associations and chambers (TACs) are important players in this industry transformation. Because as your chairman told you, you are aggregators and multipliers in our business ecosystem, bringing companies together, pooling resources and raising standards. TACs have partnered the Government to set up an island-wide network of SME Centres, to offer business advisory services, capability-building workshops, and a range of facilitation services. And in the past year, more than 25,000 SMEs have benefited from these services. TACs also participate in an Alliance for Action on Business Competitiveness, co-chaired by MTI and the SBF. This Alliance for Action will find ways to help businesses remain competitive, including by managing business costs, unlocking resource potential, and streamlining regulatory processes.

For its part, the NTUC launched Company Training Committees (CTCs), with government support, to translate the ITMs into training programmes tailored to the needs of individual companies. Many companies have set up Company Training Committees, utilised CTC grants to digitalise and streamline your workflows, and upskilled your workers with the help of NTUC’s LearningHub. In these ways, companies can improve their productivity, while their workers can benefit from transformation and technical progress.

Our Tripartite Partnership has served us well for half a century, and continues to give Singapore an enduring competitive advantage. I greatly appreciate employers’ commitment to tripartism, and its contributions to tripartite forums such as the NWC. And I am confident that you will do your part to strengthen and renew this partnership, to keep it strong into the next generation.

Conclusion

Ladies and gentlemen, once again, I thank the SBF for organising tonight’s event, and the business community for all your good wishes, and also all your good work. I am deeply humbled and grateful for your trust, confidence and support, especially when I was PM. I ask that you extend your support to Prime Minister Lawrence Wong and his team too. And with your support, I am confident that Singapore can continue to grow and prosper, and everyone can enjoy the fruits of our nation’s success. Thank you very much.