Excerpts of Dialogue with PM Lee Hsien Loong at the EDB Society's Pioneering the Future Series Forum

Mr Han Fook Kwang (Moderator): Let’s move on to the other topic which is on international relations and issues. Before I move to the specific questions, PM if you could help set up the stage for us. It is a very changed global landscape after Brexit, after the election of Donald Trump, China’s growing power and influence in the region. From your perspective PM, what are the most important changes that have happened from last year and what are the changes that affect and will affect Singapore us the most?

PM Lee Hsien Loong: Well, the changes are not just from last year, but the tipping over like the Brexit and the election of President-elect Trump happened last year, the changes have been underway for some time. Globalisation has been progressing, the stresses have been building up, people have been anxious about immigration, anxious about job insecurity, anxious about inequality, anxious about ethnic trends in their society and it’s developed in many Western countries into a nativist, unilateralist and anti-elite, inward looking and fractious mood. And now, it has erupted in terms of political consequences - the decision for Britain to leave the EU, in America the election of President Donald Trump who reflected and articulated the frustrations felt by this segment of the American population. It means a very different world environment because for the last few decades, whatever the tensions, there have been conflicts, there have been all sorts of very difficult problems, but the dominant narrative or the dominant politically correct line is that we are working together, that trade is good, it has to be fair but trade is good, it is win-win, let us cooperate, there is a global environment, there are international rules, and we all fit within those rules. Everybody cheats a little bit. Everybody says I am a free–trader and then will do something which is not quite inconsonance with that but anyway they say the right thing. That is important because that sets a certain norm and the basis on which countries can work together. Now, if you stop even saying this, and the mood within the countries is “let’s go it alone unilaterally and I would try deal with the other fellow, and I will be stronger than him and I am looking after myself first”, and all countries take that, I think that overall is a lose-lose, and for small countries like Singapore that is a difficult environment in which to operate. It has not happened just last year, it is a trend which has been developing but it has now been crystallised and it may go further and we have to know that we are operating in this more difficult environment. Of course superimpose on that, the Chinese economy has been growing and increasing its weight in the world, its China’s influence in the world, and that has made for changing strategic environment. It is quite something to have the Chinese President go to Davos and make an eloquent speech on globalization, free trade, and competition the way he did. It could have been made by any Western leader or the Managing Director of the International Monetary Fund with credit.

Mr Han: Yes, in fact it is an amazing turnaround isn’t it PM. Asian countries look like they are more pro-globalisation and free trade than Western countries.

PM Lee: There are stresses in Asian countries too. China has its own internal stresses. It articulates this ideal but it knows it is some distance from this ideal. I suppose the reason is that because in the Western countries, the economies they are at a developed level, the economics have been stagnating and the pressures have been building up and showing up in the body politic. In America in the rust belt, in Europe, in all the countries receiving refugees, experiencing just immigration within the EU, Polish plumbers in England, one million Poles in England become a potent political symbol.

Mr Han: I have one question on our relations with China, PM. It is by John Chen. Let me read your question. I think it reflects the sentiment of quite a few Singaporeans. “Many Singaporeans and businessmen are concerned about our current relationship with China. But China is obviously flexing its muscle in geopolitics as it grows stronger economically and militarily. What lessons have we learnt from the hiccup and how can we be more skilful in balancing our foreign relations with China, the US and Japan in the future?”

PM Lee: We had an answer in the last Parliamentary session and both Ng Eng Hen speaking for the Ministry of Defence and Vivian Balakrishnan, speaking for the Ministry of Foreign Affairs, gave answers. If you look up the Hansard or go onto CNA, you will see what they said. Let me paraphrase what they said. We have a very broad and substantial relationship with China. Private sector business, people sector as well as between the governments and it continues. There is the Joint Committee for Bilateral Cooperation (JCBC) which is meeting at the end of next month. Teo Chee Hean is going up to Beijing. We have the Government to Government projects, the one in Chongqing which we are just embarking on, and also Tianjin and Suzhou and we have all kinds of business projects call over China. It is a broad relationship. On foreign policy issues, we welcome China’s engagement in the region, we welcome its growing influence in the region, there are areas where there are ticklish issues to manage like South China Sea which Singapore is chairing the ASEAN-China engagement and we are working towards a Code of Conduct on the South China Sea where we don’t see completely eye to eye but neither are we opposed to each other so these are things which we have to deal with from time to time, and which we have to take in our stride. The cooperation is win-win, if it happens it is good for both sides, if it doesn’t happen, well that’s a pity but in relations between countries, you must always expect from time to time, differences of views otherwise it would be unnatural and we must be able to manage them without affecting the overall relationship. Business people often are concerned because they have their own project and they get feedback from their partners and their counterparts, and they send their feedback along to us, we know what they say, and we can understand the point of view, but the business perspective is different from the government’s perspective. The government’s concern is to maintain a relationship which is positive, sustainable and protects our national interests over the long term and that is what we do with China and what we do with other countries too.

Mr Han: In fact there is another perspective and I should have read this person’s comment with John’s question. It is a reader from the Straits Times, it is a related question. Francis Tay, this is his comment, “I am very proud that my Prime Minister is able to stand up to China and other countries much larger than ours and remind them about the rule of law. How should Singapore approach its relationship with China from now on?”

PM Lee: On a win-win basis, we work together. If you read what Xi Jinping say in Davos, he said countries big or small, we work equally, mutual benefit, 平等互惠互利, is the Chinese phrase and that is a good basis especially for small countries.

Mr Han: There is a question from Tony Siddique. In this context, I suppose this context means our complicated relationship with US and China, “do we still pursue with vigour the One Belt One Road Concept?”

PM Lee: We have always pursued enthusiastically One Belt One Road, and also enthusiastically relations with America, the Trans-Pacific Partnership for example and we will continue to do that. We think it is a plus for the region, there are opportunities for Singapore, and it is a good way for China to engage the world. It is a natural way for a country with growing economy and influence to cooperate with its neighbours and partners.

Mr Han: Thank you. There is question from the other room related to China’s growing economic power. Perhaps we should take this question now. Mr Kalidas, retired police officer, his question is, “how is government preparing to face competition from Malaysia where China is investing in infrastructure like rail and ports?’

PM Lee: I don’t know the details of the Chinese investments in Malaysia. If you read the newspapers, they look on a large scale. In general it is a plus for us, for our neighbours to thrive. When people invest in Singapore, we don’t see this as a being a threat to our neighbours, we tell them it is good for them Singapore prospers and we can serve you better, and if Malaysia prospers, we can do more business with them. In some areas there will be competition, the port for example, depends on what they are building in the port but we are already competing with Malaysia in terms of port, and really it finally boils down to who can run the port better and more efficiently, and if there are more than one, how we can work together and cooperate because the volume of business is large, there is opportunity not just to compete but to cooperate with each other, even between Singapore with PTP and Port Klang, it is not an entirely win-lose relationship because the business is within the region, and because the business comes into the region, there is opportunity for Singapore too.

Mr Han: In fact the competition is not from Malaysia too. I don’t know if you read the Straits Times report yesterday, the first container…

PM Lee: Yes, the first train. I think that it is important symbolically but one train can carries far fewer containers than one ship, and they are planning one train per week, so for the time being it is ok.

Mr Han: There are a few questions about the US, Singapore-US and US role in the world, especially Donald Trump is going to be inaugurated in a few hours’ time. So let me go through some of the questions related to that. John Lee from EDB Society, “In a few hours’ time Mr Trump will be inaugurated as the 45th President of the United States. What do you predict will be his relationship with President Putin and President Xi, and how will this affect Singapore?” If I may add to this question, the balance of power between US and China is shifting as China’s influence and power grows, and both in this part of the world, especially, will feel the full weight of the shift because of our proximity to China. How a small country like Singapore navigate the more does complicated and difficult waters, as the balance of power shifts?

PM Lee: First of all, I hope that President-elect Trump will be able to establish constructive relationships with Mr Putin and Mr Xi, both of them. He fully expresses confidence that he will work with Mr Putin well, with China he has said some things the issues which China presents to the US, which he will have to deal with now as President. But from our point of view, if he can establish good relations with his counterparts, that is helpful towards establishing constructive relationships between America and China, and America and Russia, that is better for the world and better for Singapore. It is not easy to do because with Russia for example, every previous President has tried to establish a good relationship, either you call it a reset, I can do business with him, some formulation that shows good intent in the beginning, but the interests of the countries are not completely aligned whatever the good intentions are not easy to produce a win-win outcome. I hope Mr Trump would be able to do better but it is not a simple matter. With China it is even less a simple matter, but with China, in fact the win-win opportunities are greater than with Russia because the trade is enormous. China has invested in America, and Americans have invested in China, and you have to work together on climate change, on counter-terrorism, on North Korea, and so many other issues. So there are win-win aspects as well as competitive win-lose aspects and that is a relationship which is one of the most important in the world. If they can get it good or stable, it is easier for Singapore to be friends with both. If it becomes tense, then our space is narrowed, if we are forced to choose, that is a very difficult choice which we will have to make. We have been friends with both, and we want to be friends with both. For a small country, that is the best you can do and the way to be friends is not just to have personal bonhomie, although personal rapport helps, but to be relevant and to be able to make a contribution economically, politically, in foreign policy, in security so that you are working on things which are mutually beneficial, and that is the basis of the relationship, it can be cooperation in trade, in counter-terrorism, it can be security cooperation, but you are talking about some area where we both walk together and we both derive something from them.

Mr Han: Are you concerned about America’s commitment in this part of the world

PM Lee: We will have to see how the new administration settles down. We know who the key officers are. They have been appointed, these are serious people, and they are not unfamiliar with the region. Rex Tillerson for example, who is the candidate for the Secretary for State, he was ExxonMobil and ExxonMobil has billions worth of investments here on Jurong Island, we know him and we have met him many times. We know some of the other individuals too. We have to see what their priorities are and how they express their policies but in terms of stakes, the stakes are here as Kirk Wager, the previous American Ambassador said, we have so many investments here, we have so many projects here, in fact I would say you have so many friends and interests here, that is something any American administration would have to pay attention to in Asia.

Mr Peter Lim: There is a lot of talk, not only in coffee shops, nowadays is cafes and things, one problem in our relationship with China, is we are too friendly with America and the Chinese don’t like that. Is there something we can deal with? Is there any validity in that statement?

PM Lee: We are friendly with both China and America. We have more security cooperation with America than with China, and there are good reasons for that, we have explained this to the Chinese too and they understand that. We have worked with America for a long time, they supply a lot of the equipment for the Singapore Armed Forces, they are important to the security of Southeast Asia, therefore we have to maintain that, but that doesn’t mean we are against China. Xi Jinping said last year that they hope that the countries in the region will belong to the shared overlapping circles of friends of China, and of America, and we hope we count as belonging to this overlap in the Venn diagram, in the two circles.

Q: The 19th Century is the European century, 20th is the American and 21st is Asia. I don’t think we have to worry too much. In fact they have to come to us, all the engines of growth are all in Asia, the manufacturing are all in Asia, the resources are all in Asia, so in my opinion, we in Singapore and in Asia, under ASEAN can work great. Will that be the similar view taken by all?

PM Lee: Asia will be part of the 21st century, I am not sure Asia owns the 21st century. Asia has been doing well. India has potential, its population is young, China has shown dramatic growth and its population is not so young, and their working age population has peaked and is shrinking so it is not so simple to say 21st century is the Asian century. We will be there, but America will still be there, Europe would still be there, I would not say that they are out of the picture. It is wrong to think that America is in decline. It’s got challenges, it has got a lot of angst in the society now, but it has a lot of vitality in the society in the technology, in the soft power in its attractiveness of the culture and the system to the rest of the world, in its ability to bring in talent from worldwide and to do astounding things in America. If you look at Silicon Valley, their people come from all over the world, China, India, Eastern Europe, the Middle East, Israel, Southeast Asia, even a few Singaporeans and they have developed this remarkable centre in which everybody wants to emulate but very few have been able to equal. I cannot imagine that they are going to disappear or in the next 50 years they would not come up with new dramatic life-changing inventions and innovations, whether in healthcare, whether in IT, whether in space technology. If there is no war, if peace holds and we continue to do business with one another through all the countries, then I think America will be a big part of this, Australia, New Zealand will be part of this. Southeast Asia will be part of this as well. If you have to choose which part of the world to be in, I am happy that Singapore is located here in Southeast Asia. It is an exciting place. You must keep your wits about you. You don’t know what can happen tomorrow but it is a happening place and we can make things happen.

Mr Piyush Gupta: Just to segue into, we have not talked about two large countries which could be of some importance to use Indonesia and India. They are both opportunities but they are both complicated. In Indonesia, an increasing sense of nationalism, getting more difficult to navigate, India always messy, we still have not been able to get our CECA review after five years because of the issues there. Is there a way for us to rethink how we can get significant momentum in these countries not incremental but game-changing?

PM Lee: We work incrementally and patiently. In India that is a great virtue. In Indonesia, it is a necessary technique, and it works. I know that you have issues wearing your usual hat in both places but overall we have good relations with them and we are making progress. I was in Semarang last year for our retreat with President Jokowi and there is an industrial park there which is opened by Sembcorp. It is the signal of the kind of thing which you can do which can make a difference to the country, we cannot transform the whole of Indonesia but we set up a project, other companies come in invest, we create jobs, create prosperity and generate some goodwill. It doesn’t mean that there are not tensions, issues and pressures, and there always be the sense that we are a small country and they are a big country and why there is a comparison like that. I think we have to accept that. Once I was asked by some Indonesian journalists whom we have invited over to try and warm the friendship, and we do this regularly and they ask me, “Do you feel disappointed that despite all this effort you still get this kind of press in Indonesia sometimes and this reaction in Indonesia?” So I said no I have become quite used to it, it is like that, it is in the nature of the relationship, we can work together despite that and we can make some difference and we have to do that. With India, there is less of this psychological element, they do not see us in any way comparable. There is goodwill towards us and name recognition. I went to Udaipur in Rajastan recently. They gave me a very warm welcome, my posters are all over the streets as if I was standing for election over there but it shows goodwill and we have projects there. We are doing a project with them, training them for hotel staff, hospitality and technical skills. The goodwill translates into projects, investments, into cooperation and our people are all over India doing quite well and we continue to pursue the matter of the CECA and I hope one day we will able one day to get a review completed. But in these things we have to do it in a way which understands how the Indian system works and I have to work with that system, I cannot change the system. Mr Modi may be able to, he is trying hard.