Adversity into Opportunity: Staying Ahead in a Troubled World

Mr Murali Pillai, Minister of State, Ministry of Law and Ministry of Transport
Excellencies
Distinguished Guests
Ladies and Gentlemen

A very good morning to everybody

I am delighted to join you for this year’s Singapore Maritime Week 2025. This year, the Maritime Week takes place amidst an increasingly turbulent environment. The global industry, and Singapore’s own maritime sector, will need to actively prepare for what lies ahead.

Trade as a driver of growth

As the world globalised over the last six decades, Singapore’s small, open economy flourished. We lived in a generally peaceful and stable world. The global order was underwritten by the United States, supported by its allies in Europe and Asia. Multilateral institutions were established — the United Nations, International Monetary Fund, the World Bank, and the World Trade Organization (WTO). International laws and treaties were negotiated and adopted, including the United Nations Convention on the Law of the Sea (UNCLOS). Countries big and small generally acknowledged these international rules and norms. They understood that economic liberalisation and freer trade would benefit everyone. Many countries acted on this understanding and reaped the benefits, including small economies like Singapore and huge ones like the United States and China. Investments by MNCs in developing countries opened up export markets, and fostered economic growth. International trade boomed, and the global maritime industry grew with it. Collectively the world economy benefited too, as freer trade promoted finer global division of labour, more integrated supply chains, and greater efficiencies all-round.

Singapore rode these waves, and made the most of them. We made investments and implemented policies to build an open, reliable, and trusted trade and maritime hub. We became a key link in global supply chains, a gateway between East and West

Choppy waters ahead

But it is a different world today. Attitudes towards trade have changed. Patterns of trade flows are shifting too.

First, geopolitical developments are severely straining the global trade system.

Over the past decade plus, tensions between the major powers have intensified. Countries have become increasingly anxious to stay ahead of one another. They are prioritising security, resilience and self-reliance, over interdependence and co-operation. Supply chains — once optimised for economic efficiency — are being reconfigured through friend-shoring, near-shoring, and re-shoring. Restrictions have been imposed – on investments, semiconductors, critical minerals, data – to preserve leads over competitors, or to deny rivals dual-use products and technology. Some big powers are adopting a more transactional, sometimes coercive, approach to achieve immediate objectives; and giving less weight to more indirect and longer-term benefits.

These structural shifts have accelerated in recent months. A new administration in the US believes that under the previous system, "the US has been treated unfairly by its trading partners, both friend and foe", to quote their words — far from the erstwhile win-win view of international trade, investments, or multilateral agreements. It treats tariffs not only as a preferred economic instrument, but also as bargaining leverage in non-economic domains, to protect its overall national interests. Other countries have responded in kind.

These strategic policy shifts are re-shaping the landscape of world trade. Protectionism and economic bifurcation are rising. The maritime industry is itself directly affected, with countries acting to reduce reliance on competitors for freight shipping and ship-building, or to displace rivals controlling strategically located ports.

Meanwhile, a second powerful force is quietly impacting global trade patterns, and that is climate change. Climate change and extreme weather events are already affecting established trade routes. Droughts have lowered water levels in the reservoirs supplying the Panama Canal, raising costs and creating uncertainty for vessels seeking passage. New routes — such as the Northeast Passage — are opening up due to the melting Arctic ice. As a significant emitter, the maritime industry is under pressure to reduce carbon emissions. International shipping accounts for about 3% of all greenhouse gas emissions — roughly as much as global aviation. The industry is therefore actively seeking ways to decarbonise — by using greener fuels, and developing more efficient ships. Beyond green technologies, patterns of trade are likely to shift, to account for the environmental impact of carbon emissions from shipping. Whether this happens through carbon taxes on fuel or carbon border adjustment taxes, the result will be to reorient existing supply chains and trade routes.

What these mean for Singapore

These global shifts will have a major impact on Singapore. Because to us, trade is existential, and the maritime industry is a major contributor to our economy. But while trade faces significant headwinds, globalisation is unlikely to completely reverse itself.

Despite all the current challenges, the world still needs to trade, and countries still need to do business with one another, as we were reminded during Covid-19. For some, this is a matter of survival. About a quarter of global food production is traded internationally. More than 80% of the world’s population live in countries that are net importers of food, including Singapore. Without trade, these countries would simply starve. For many others, trade remains a crucial driver of prosperity. Trade enables the international division of labour and creates efficiencies and economies of scale. No country can produce on its own; a modern car, aeroplane, or handphone, without relying on materials and components from abroad, usually from many countries.

For decades until the Global Financial Crisis (GFC) in 2008, international trade grew faster than world GDP. In the 1950s, international trade was around 15% of world GDP. By the time of the Global Financial Crisis, this had more than tripled — to 55%. This was how countries around the world sustained economic growth and productivity gains, and steadily improved their peoples’ lives.

The GFC was a turning point. After the GFC, globalisation slowed. World trade stopped growing faster than world GDP. But despite the headwinds, international trade still generally kept pace, staying at 55% of world GDP. And thus in the decade and a half since the GFC, world trade continued to rise, reaching a record US$33 trillion last year.

But this present moment could prove to be another turning point. Given the heightened strategic tensions and policy uncertainty, we cannot assume that global trade will continue to keep pace with GDP. If the trade-to-GDP ratio starts to fall, there will be serious economic and strategic implications. At the least, it will dampen economic growth in many countries. Which will cause further social and political problems, both domestically and internationally. In that event, the world would truly enter a new epoch, which it has not seen since the Second World War. Naturally, our hope is that whatever the uncertainties and turbulence ahead, world trade will continue to grow. Not just to sustain the maritime industry, but to enable more productive and prosperous lives for the peoples of the world

And thus Singapore’s task is to: i) do our part to enable and foster the growth of international trade; ii) to make our economy, and our maritime industry, more efficient, more competitive, more trusted. So that whatever the state of the world, others will still want to trade here; to do business here. And we can continue to make a living for ourselves.

How?

Securing our maritime industry’s future

Maintaining an open economy; strengthening trade linkages

First, we are committed to staying open. Being so small, we have no choice. But we are not alone. Even with globalisation in retreat, many countries still believe that trade can be a win-win proposition, and still want to preserve as much of the benefits of the multilateral trade as possible. Certainly, this is the view of European Union members and the UK. In our region, Australia, South Korea, Japan, China, India and the ASEAN group, among others, all want this too. And many African and Latin American countries benefit from and support the good work of the World Trade Organization. Therefore, like-minded partners can definitely work together, to preserve oases of stability amid a world of chaos.

Singapore will continue to support a multilateral rules-based order, international co-operation and interdependence. We joined the International Maritime Organization (IMO) almost as soon as we became independent. First as a member state, and then since 1993 as a council member. In the 70s and 80s, we were active in the negotiations that resulted in the UN Convention on the Law of the Sea. Ambassador Tommy Koh served as President of the Third UN Conference on the Law of the Sea from 1981 until its successful conclusion. Recently, we hosted the inaugural General Assembly of the International Organization for Marine Aids to Navigation, or IALA, which adopted the "Singapore Declaration" to advance global maritime navigational safety.

Beyond multilateral frameworks, we pursue many regional and bilateral trade partnerships and arrangements. We have built an extensive network of 27 Free Trade Agreements (FTAs), which collectively cover 90% of our trade. These have strengthened our trading hub, and contributed to our economic growth. We continue to expand this network. In recent years we joined the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Indo-Pacific Economic Framework for Prosperity (IPEF). The RCEP is mainly on the west of the Pacific, including China, Japan, South Korea, the ASEAN countries. The CPTPP spans the Eastern Pacific — the Americans decided not to participate but Canada, Mexico, Chile, Peru are there. The IPEF, Indo-Pacific Economic Framework for Prosperity, was launched by the Biden administration in the US, and we hope that in some way, it will continue to exist. Most recently, we signed FTAs with the Pacific Alliance (2022), and MERCOSUR (2023)¹ in the last few years. In the fields of sustainability and technology, we are negotiating Green Economy Agreements and Digital Economy Agreements with key partners. We are also working on Green and Digital Shipping Corridors with many countries and ports. We have six of these agreements - to expedite port clearances, promote the supply and deployment of new fuels, and define common standards.  

Singaporean companies too, are working across borders to strengthen trade and supply chain linkages. For example, PSA International operates a network of ports around the world. It is innovating its services, to enable cargo to flow seamlessly across these multiple PSA ports, and to add more value to the supply chain.

This is how, instead of turning away from trade and partnerships, Singapore is doubling down on staying open.

Securing our status as a regional hub and global node

Secondly, we will continue to strengthen ourselves as a regional hub and global node. Modern Singapore had grown and prospered by being an entrepot, an emporium of the orient. By the 1960s, this regional trade was in decline. Singapore embarked on an industrialisation drive to replace those jobs and grow our economy. But even then, we continued to see potential in the maritime industry. An efficient, modern port would help our growing exports reach world markets. And we could also become a transshipment port not just for our immediate neighbours in Southeast Asia, but for a much wider Asia Pacific region, even extending to South Asia. Therefore, we built up a whole ecosystem to support the maritime industry — the port, the shipping lines, the shipyards, the bunkering services, the legal services.

We steadily invested in port infrastructure. In 1969, in the very early days of containerisation, we decided to build a container terminal at Tanjong Pagar — Southeast Asia’s first. As the Asia Pacific prospered, and trade volumes grew, we made major investments ahead of time in new port terminals. And today, Singapore is one of the busiest ports in the world, with more than 1,000 vessels in port at any one time. The maritime sector contributes to over 6% of our GDP and about 140,000 jobs.

Looking ahead, we will continue to build up the maritime industry, and to invest in capabilities and infrastructure. We are now building Tuas Port — an ambitious, multi-decade project that will consolidate all our container terminals into a single location. When completed in the 2040s, Tuas Port will have a handling capacity of 65 million TEUs annually. We are investing in technology and innovation. We are developing an AI-enabled Next Generation Vessel Traffic Management System, to improve the safety and efficiency of port operations. And as you heard from MOS Pillai, we are launching the Digital Twin for the Singapore port and maritime ecosystem. And as MOS Pillai has explained, it will help us further improve port operations and services.

We are doing all this through a strong tripartite partnership between the Government, industry, and unions. And we are determined that our workers will benefit from the new technology and investments. And indeed, our Port Workers’ Union, Port Officers’ Union and Maritime Officers’ Union are represented and attending this conference, participating in the deliberations. Our workers must be prepared to take on new and more productive roles, and not be sidelined or displaced by technology or AI. Therefore, we are also investing heavily in our people. We are upskilling them to operate new AI and digital systems, and advanced technologies such as remote quay cranes, drones, underwater robots. At the upper echelons, we continue to develop maritime professionals through leadership programmes. With this support, our people will embrace and make full use of technology, instead of resisting it and jeopardising both Singapore’s competitiveness and their own livelihoods.

Contributing to the fight against climate change, and adapting to it

Thirdly, Singapore will play our part in mitigating climate change, even as we adapt to its impact upon us. Since 2013, we have been an observer state in the Arctic Council. We support the Council’s work on scientific research, on sustainable development, and green shipping. Singapore has committed to peaking emissions before 2030, and to achieving net zero emissions by 2050. This is an extremely difficult task, for an island nation with hardly any energy sources of our own — whether renewable or fossil. But we will do our share as a responsible member of the international community.

And in the maritime industry, we are investing in green technologies, to play a role in the industry’s decarbonisation transition. Today we are a centre for bunkering and petroleum refining. In future, as alternative fuels are developed and come into use, our sea lines and infrastructure will most probably become key conduits for their transportation and distribution. As MOS Pillai explained, we are conducting trials on the bunkering of alternative fuels, which will support the setting of national and international standards. We are also progressively training our workers to handle alternative fuels, to prepare for their widespread adoption.

This is how we are responding to climate change, while preparing for the inevitable long-term trends that are in store for the global maritime trade.

Conclusion

The world cannot escape the turbulent times ahead. But the future for the maritime industry is still bright. If we plan ahead and take the right steps now, we have every chance of continuing to thrive. As Mr Lee Kuan Yew said at the Singapore Harbour Board in 1963, more than 60 years ago, "The good things in life do not fall down from the skies. They can only come by hard work over a long time". Collectively, we can turn adversity into opportunity.

And I welcome all of you here to work with us to seize these opportunities, as we invest for a better, brighter maritime future.

Thank you very much.

[1] Singapore signed the Pacific Alliance-Singapore FTA (PASFTA) with Chile, Colombia, Mexico, and Peru in Jan 22, our first FTA with a Maritime Chapter. Singapore signed the Mercosur-Singapore FTA (MCSFTA) on 8 Dec 23, our first FTA with MERCOSUR member states (Argentina, Brazil, Paraguay, Uruguay).