Speeches

The Honorable Jay Weatherill, Premier of South Australia,

His Excellency Philip Green, Australian High Commissioner to Singapore,

Professor Warren Bebbington, Vice-Chancellor of the University of Adelaide,

Distinguished Guests, Ladies and Gentlemen,

I am delighted to be here today at the Official Launch of the Asia Growth Research Centre, a joint venture between the Ngee Ann Kong Si and the University of Adelaide, my alma mater. The opening of the Asia Growth Research Centre today is well-timed, as it is also the 50^th anniversary of the establishment of diplomatic relations between Australia and Singapore.

2. The Research Centre aims to “provide thought leadership on the new sources of growth for Singapore, in particular in innovation and productivity growth” In doing so, it will “inform the policy and business responses required for economic sustainability”. In essence, the question it has set out to answer is “what will drive growth in Asia and in Singapore?”

3. This is an ambitious objective, which I am glad to see is supported by an equally ambitious research agenda, which is well summed up in the conference theme – “Services, Skills, and Connectivity”. Deeper research into these future drivers of growth will help us answer the challenge of maintaining our competitiveness, and will shape our fortunes and survival for the next fifty years.

Where we stand today

4. As we launch this new centre to help understand the future drivers of growth for Asia and Singapore, it is instructive to look at where we stand, and what has driven growth over the last fifty years.

• Last year, our economy totalled US$308 billion, with almost equal contributions from the manufacturing, wholesale and retail trade, and business services sectors.


• This capped off an average annual GDP growth of 6% in the past 10 years – our real GDP per capita grew from S$53,000 in 2004 to S$71,000 in 2014.


• The unemployment rate of our citizens declined from 4.9% in June 2004 to 2.9% this year.


• Real average household income per capita rose by nearly 40% from around S$2,500 in 2004 to S$3,400 today.

5. But we would do well to remember that our growth today reflects our response to harsh realities we faced as a young nation in the 1960s – no common market with Malaysia, a sharp decline in trade with our neighbours, and a double-digit unemployment rate. We had to look beyond our immediate region, attract multinational companies from the developed world, and produce for the global market. Our success was built on the backs of hardworking Singaporeans, over decades of perseverance, and in the face of difficult economic challenges.

6. The challenges that lie ahead of us will however be starkly different from those we overcame in the past.

International challenges

• First, the external environment that we face is now highly complex.
  
  
  • Today, we continue to face the legacies of the Global Financial Crisis. Advanced economies are grappling with uneven economic recovery. High debt levels continue to weigh on their growth prospects, and ability to spend and invest.
  
  
  • There continues to be much volatility and uncertainty in global markets, for example over oil prices and over the last few weeks, exchange rates, or with the structural changes in major transitioning economies like China.
  
  
  • We have to monitor these developments carefully because globalisation has been weaving deeper interconnections between economies and across regions, often acting in unpredictable ways when crises result. It will be impossible to insulate Singapore – whose combined trade is now three to four times its GDP – from the vagaries of such global economic movements.


• Second, we have to ensure that we continue to find our niche in a more competitive economic environment. Many countries are catching up and starting to compete intensely in the global marketplace, putting pressure on how we can keep creating good jobs for Singaporeans. This is especially challenging in the context of a rapidly changing structure of the global economy, particularly in the areas of services.
  
  
  • For example, new technologies have started to have a significant bearing on the nature of work. Routine jobs are being easily digitised or automated, and then globalised. This momentum is extending to more complex jobs even in the service sectors such as in medicine, law, and accountancy.
  
  
  • This has brought about changes in the labour market, and the rise of new industries that require newer skills from before. Part of this means disruption for mature economies, destruction of jobs, and redundancy of existing skills.


• And third, as a country within a city, Singapore also faces the unique challenge of maintaining our national unity and identity as Singaporeans – even as we integrate and open our doors to the global economy; even as Singaporeans travel and work abroad; and even as foreign talents settle and assimilate here.

Domestic challenges

7. As our economy faces rising external challenges, we also have to grapple with domestic challenges that could stymie our progress if we do not evolve.

• One big challenge is the progress in productivity growth over the past decade, particularly in our domestic-oriented sectors, which have lagged behind our export-oriented sectors.
  
  
  • The productivity gaps between these sectors will complicate our objective of inclusive growth.
  
  
  • In response, we will have to keep our services sector competitive, both by encouraging greater use of technology, and strengthening the value chains between the services sector and the other parts of our economy.


• A second challenge arises from increasingly acute demographic pressures in Singapore, and a tighter domestic labour market.
  
  
  • Local employment growth is expected to drop to around 20,000 per year by the end of the decade. This will be a dramatic slowdown from the local growth we have seen over the last few years.
  
  
  • Our baby-boomers are gradually exiting the workforce, and the younger cohorts entering the workforce are smaller in size, due to lower birth rates.
  
  
  • We thus have to pay close attention to developing our human capital, and build flexibility as well as resilience not just for our unemployed, but equally for our employed.

8. While these domestic challenges are common to mature economies around the world, workable solutions have been few and far between. And so we will have to answer these questions without any ready model that we can learn and adapt from, like we did before.

9. That is why I welcome the Asia Growth Research Centre’s deeper studies on connectivity, skills, and innovation. Their work will inform our efforts to reposition our economy.

Our emphasis on Skills

10.One part of our response thus far has been to raise the skills and capabilities of our workforce in every vocation. We will continuously explore ways to better develop our human capital.

• In recent years, the Singapore Government has implemented a range of measures to raise the quality of our workforce, and support the restructuring of our economy towards productivity-driven growth.
  
  
  • This includes policies such as incentivising training and R&D efforts, as well as the tightening of the foreign labour force.


• In this year’s Budget, we introduced the SkillsFuture movement to develop an integrated system of education, training, and career progression for all Singaporeans.
  
  
  • SkillsFuture is positioned to be a national movement, fundamentally to help Singaporeans become resilient and adaptable.
  
  
  • While we are proud of our achievements in education and training, learning has to be a life-long pursuit.
  
  
  • We are thus building on a strong foundation of education to guide Singaporeans towards developing skills that are both deep, and relevant to evolving industry and economic needs.

Regional Opportunities

11. The other part of our response is to improve our connectivity, i.e. to position ourselves to take advantage of the growth and many changes happening across Asia.

• As a small country without natural resources, we naturally have to look beyond our shores, in order to help drive growth.


• And it is an approach that makes greater sense than before, not just because of the growing prosperity of our regional partners, but also given how Asia is becoming more deeply embedded within global value chains.


• Singapore can play an important role in the region’s development because of how we fit in the global value chain.
  
  
  • We cannot compete on cost alone, but in the value that we can create.

12. For Singapore, the opportunities in the region are clear.

• Despite global economic uncertainty, emerging market growth in Asia, including ASEAN, has remained strong. While there will be starts and stops, China is still expected to post a real GDP growth of around 7% this year, together with other Asian countries like India at 6.6%, the Philippines at 6.4%, and Vietnam at 6%.


• ASEAN in particular has come a long way since the 1997 Asian Financial Crisis. It has sustained positive economic performance over a period of two decades, and has immense growth potential as another rising region for business and investment.
  
  
  • ASEAN could become the fourth largest single market in the world by 2030, after the US, China, and EU.

13. More importantly, we expect ASEAN to overtake economies such as the EU to become Singapore’s largest final demand market, particularly for services exports.

• We see tremendous opportunities in the future, including:
  
  
  • In the growing demand for world-class expertise and services in areas such as engineering, urban design, financial and legal services, and telecommunications, which Singapore can provide to the region; and
  
  
  • In investing in and helping to support regional manufacturing companies further, as they scale the value chain and exploit higher value business activities.


• While Singapore’s dual identity as a country and a city brings challenges as I mentioned earlier, it also offers us advantages in becoming a regional hub for services.
  
  
  • For example, Singapore has become a prime location for major logistics firms, with 20 of the top 25 global logistics players conducting operations here.
  
  
  • This is because we are able to establish a network of leading global players, supply chain talent, consultancies and world-class infrastructure at close proximity.

Singapore and Australia’s role in this region

14. All that I have outlined present promising opportunities that we need not explore alone. In fact Singapore, together with our regional partners has played an active part in the development of the region, and we are committed to continuing this partnership.

• Our relationship with Australia deserves special mention. We have strong and well-established defence, trade, and people-to-people ties.


• In June this year, our Prime Ministers signed a Comprehensive Strategic Partnership aimed at enhancing our levels of integration, with deeper cooperation across the board. As High Commissioner Green mentioned, we have moved from close friends to family.


• This is a right move for our approach to the region.
  
  
  • Underlying this Comprehensive Strategic Partnership are not just values of mutual trust and respect, but common interests.
  
  
  • Both our countries share a vital interest in uninterrupted economic growth and development in the region.
  
  
  • Over the past decade, the total value of trade in goods between emerging Asia with both our countries has more than tripled.
  
  
  • And we have complementary economies that play to each other’s strengths, given Singapore’s strengths in logistics and supply chain networks, Australia’s exports of natural resources, and both our countries’ advantages in financial services and education.

15. More opportunities abound for both our countries.

• Urbanisation alone presents numerous opportunities for our companies to share their expertise in renewable energy, and solutions in urbanisation and city transportation.


• There will be similar opportunities for us to partner and develop human capital and physical infrastructure in countries across the region.


• Our economic engagement can be a platform from which we can work to grow regional services trade, bring out better opportunities for investment, for our SMEs, and bring about richer global and regional integration.

Conclusion

16. In summary, we live in times that will call for much change and evolution. We will have to shape developments in our economies in response to our economic challenges; respond to the evolving context in our region; and steer evolving relationships between partners working for shared interests and a shared future.

• Institutions such as the Ngee Ann-Adelaide Education Centre, and the Asia Growth Research Centre, can play vital roles in how the Singapore-Australia relationship will continue to evolve.


• They contribute to growing people-to-people ties, greater mutual understanding and strengthened bonds between our countries, and our people.

17. We all face many pressing questions going forward and do not always have all the answers. More informed research can illuminate pathways; on how we can better grasp the opportunities that are there for us take.

18. I am therefore excited about the perspectives that the Asia Growth Research Centre will bring to the table, and wish the Centre every success in its endeavours.

19. Thank you.