Edited Remarks by Deputy Prime Minister and Minister for Finance Lawrence Wong at Kent Ridge Ministerial Forum 2022 on 26 August 202226 Aug 2022
Faculty and staff, alumni and students, good evening. It is very good to be here to join you for this Kent Ridge Ministerial Forum. I think all of us know that we are in many ways at a turning point in the world. When you look around and read media reports of what is happening, you get a sense that there are major shifts taking place around us. These turning points do not happen all the time.
One major turning point that happened when I was around your age was this event in 1989. It is the fall of the Berlin Wall and that eventually started the end of the Cold War. This was in 1989, I was in JC going to university, about the age many of you are now. I suppose when it happened back thenin, we did not quite know the consequences. We just knew it was something significant. But it did have enormous consequences for the world. It brought about peace, stability, globalisation. For 30 years, it benefited countries everywhere. Hundreds of millions of people were lifted out of poverty. The world benefited, and Singapore benefited, due to globalisation and the growth of interdependent trade and investments.
Now we are seeing another major turning point in the world. The events that have happened in the last few years are the catalysts for these changes. First event is what we have been through these past two years and what we are still going through now -- COVID-19, which brought the world to a standstill. [Image of empty city streets in the US and China.] You would never have thought this would have happened in cities in China, in New York. This happened in 2020, but it has continued in several countries around the world. It is not just about the restrictions alone. Think about the damage and the toll that COVID-19 has had on countries everywhere. It is considerable. It is significant.
You may not feel it so much in Singapore. Certainly, things are much better now than they were before. But if you look at, for example, at the number of people who have died from COVID-19, it is about 6.5 million people globally. That is a huge number. Take America alone – more people in the US have died from COVID-19 than the number of people in the US who have died from fighting both World Wars. The toll that COVID-19 had on countries has been enormous. Where hospitals systems get overwhelmed, fatalities go up immediately.
Covid-19 is not even over yet. We hope it is over, or we hope at least the worst of COVID-19 is behind us, but we cannot assume that this is so because the virus continues to mutate. We do not know what the next variant will be like. While we hope it is milder than what we have experienced so far, it may well turn out to be more aggressive and more dangerous. Who knows what will happen in the coming months? We just have to continue to remain vigilant and stay on guard and, if need be, take the necessary precautions.
Whatever happens in the coming months, we must be prepared that our lives will change permanently. Because, even after the pandemic is over, I am sure that the new ways of living and working we have gotten used to will remain. For example, new hygiene standards, new standards for buildings for air circulation, new habits for work and, for that matter, more flexible work arrangements so that we can all be more resilient in preparing for future pandemics. Clearly, COVID-19 is a major turning point that will bring about a new normal in a post-COVID-19 world.
This is one major turning point but you have another big turning point recently this year as well and that is the invasion of Ukraine. It is not just a war that is happening in a faraway land, but a significant event that will lead to a major change in the global order in several ways. One, the Russian invasion of Ukraine is already impacting energy and food supplies everywhere around the world. For energy, this is because Russia is such a major exporter of oil and gas, and when the supplies of oil and gas are affected, everyone feels the impact. That is why oil prices are where they are today. There may well be more difficult times ahead, especially if you think about the winter months coming up very soon. If Europe is not able to have access to Russian gas for example, if that gas supply continues to be throttled down or even held back, then Europe will face a major energy crisis in the coming months. If Europe faces that, the rest of the world will be impacted. Again, this may seem like it is far away, and after seven months of war we may think that we felt the worst of it. But the truth is that you never know. Things can get worse, and we have to be mentally prepared that there will be more difficult times ahead. That is on the energy side.
There is also impact on food. Why food? Because Russia and Ukraine are also major exporters of wheat, fertiliser and various food exports. All of that have been curtailed as well. And it has downstream impact on so many other things. That is why even our neighbours banned the export of chicken. You may ask what does chicken in Malaysia have to do with Russia and Ukraine? There was a chicken feed shortage in Malaysia because of the war. Chicken feed shortage meant not enough chicken supplies; it meant they wanted to keep the supply for their own people. Therefore, they banned the export of fresh chicken to Singapore. There are some of the cascading impacts of the Ukraine War. You could easily imagine more to come.
One of them that has already happened is a fertiliser shortage, and that fertiliser shortage has meant that next year’s harvest will be impacted. This means there will be food shortages coming up. Different countries may react to this differently, but we must be prepared that some may impose restrictions similar to Malaysia’s chicken export ban. So, on the food side, we must mentally be prepared that there will be more difficult times ahead as well.
That is not the end of it. We have got an energy impact, a food impact, but an even bigger impact is the geopolitical impact. What has happened in Ukraine is fundamentally changing the global order. US-China relationships, in particular, will be impacted. That relationship was already strained before the invasion and has become more strained after the invasion. There is now deep distrust between the two superpowers. And there are potential flashpoints like Taiwan, which can cause the relationship to escalate very quickly. What happened in Europe may seem far away, but this is not just a European matter. Ultimately, this is a contest between two major superpowers, America and China, and we should not assume that Asia is insulated somehow from geopolitical tensions arising from events in Europe.
For 50 years now, since the end of the Vietnam War, Asia has seen relative peace and stability. But no one can tell whether the next 50 years will be like the past 50 years. You could easily see a very different geopolitical order, with rising tensions occurring not because the major superpowers intentionally want to have war, but because of accidents, miscalculations, such as something happening in the South China Sea or the Taiwan Strait. Before you know it, that accident leads to an escalation and things get worse and spiral downwards. If you look at history, that is how wars start. People do not intentionally go into war, they sleepwalk into war. The risks are there and therefore again, we have to be mentally prepared that there may be changes in the external environment.
All of these changes that I just described sound very daunting, but at the same time we should not be overwhelmed, intimidated or daunted by the fact that these things are happening. Instead, we should recognise that this is, in many ways, something that Singapore has been going through for 57 years already. We have always been a little red dot. We have always had to live with many external challenges. We have always had to recognise that, as a small little island with no natural resources of our own, we can only count on ourselves, our wits, our ingenuity, and our own people to survive and to make a good living.
That is our fundamental mindset. And that is how Singapore has come far these 57 years. We should therefore draw confidence and strength from the journey that we have been through together these past 57 years, to look ahead and have confidence that we can continue to make a good living even in an uncertain, dangerous and troubled world. In fact, Singapore today is in a much stronger position than we were in the past. We have many things going for us. We are a more well-known hub for the region, we are more prosperous, we are more stable, and we are more united than ever.
In addition, we can see many opportunities around us despite the uncertainties of the region. What are some of these opportunities? One example is the digital economy, which is one major growth area which will transform the region and the world. We all know about the digital economy. But it is not just a story about the US tech companies, because Southeast Asia itself is experiencing tremendous growth with regard to the digital economy, driven by a huge untapped consumer market that is starting to embrace technology and digital tools. This tremendous growth in Southeast Asia will create many more new jobs for the region and for Singapore.
Another area of growth is the green economy and sustainability. Again, this is positively impacting the whole world, but within Southeast Asia itself there is tremendous potential. This is because countries are starting to think about how they can get to net zero, by restructuring their economies, and this will impact different sectors of their economies such as transport, energy, food, urban infrastructure, waste management and even finance. In finance, for example, sustainable finance is one of the fastest growing segments in our financial services centre. Understanding what green finance is, and understanding sustainability, will become more and more important.
So digitalisation and sustainability are two powerful trends that will continue to transform the region. This will present new opportunities for Singapore, because our value proposition is a hub for the region and the world. That is our reason for Singapore’s existence, serving not just our own small market, but to be a hub for the broader region and the world. And we will continue to focus on this. In fact, we will redouble on our efforts to become a more attractive and more innovative hub. That is why we are doing projects like Changi Terminal 5, which will double the capacity of our airports, in order to accommodate future growth and strengthen our position as a well-known air hub. We are also doing projects like the Tuas Mega Port, which will double the capacity of our container ports.
Whether it is for people, talent, ideas, cargoes, or trade, we want Singapore to continue to have that attractive value proposition. We want companies, businesses and talent to come through Singapore and use Singapore as a control tower or a hub to do business in Southeast Asia and Asia. This is how we can ensure there will always be good opportunities, good career prospects, here for Singaporeans like yourselves when you graduate.
An important part of this, of course, is that young people like yourselves must be prepared to venture out and know more about our neighbours. Because if Singapore is to be a relevant hub for ASEAN and Southeast Asia, all of us must know what Southeast Asia is. Does not mean that you need to speak the language of all our neighbours, but you must at least understand the culture, understand the environment, and know how to do business in the region. Very often, students would like to do exchange programmes; and when they want to spend time overseas, the immediate thought is to go to US and Europe. By all means, spend time in America and Europe, but do not neglect our own backyard, do not neglect our region. That includes China and India, the two big countries in Asia, but certainly also ASEAN and Southeast Asia.
Of course, ASEAN is not homogenous. It consists of 10 countries which are quite diverse. But understanding the different countries within ASEAN, especially our closest neighbours Malaysia and Indonesia, and then further afield, Thailand, Philippines, Brunei and Vietnam, will become more important. And that is why we are focusing our efforts on making sure that all our students eventually have the chance to spend time overseas. When you go overseas, we want as many of you as possible to have a chance to go to Asia, namely China and India as well as Southeast Asia and ASEAN. So that we as Asians can know our region well, and we can offer a real value proposition to businesses when we talk about Singapore being a hub.
Within Singapore, the digital and green economy will also bring about many new opportunities, create new jobs, change the way we live and work, and interact with one another. One example is where green transport is concerned. By 2040, we intend to phase out internal combustion engines and have a complete shift to cleaner vehicles. To get there, we will progressively start to clean up our vehicle fleets. Progressively, you will see more electric vehicles – cleaner buses, for example. It is not just about the vehicles, but also the charging infrastructure; so it is quite a massive effort to start restructuring and preparing for a greener transport system. That is just in transport alone. For buildings, we are talking about having more sustainable, greener buildings, and ramping up renewable power. There are many other changes that you can imagine taking place as we start to green all aspects of our lives progressively over the next 10 to 20 years, with the aim of bringing our net emissions down to zero by 2050. These changes will, in turn, bring about new opportunities, new jobs, and new investments for Singapore.
Apart from this, there are also other things that we are doing in the longer term. As you may have seen from the Prime Minister's National Day Rally speech, we are continuing to transform our living environment within Singapore. We are very small island but in Singapore, nothing is static. We are constantly looking at how we can transform and re-develop, improve, and do better.
One example is Paya Lebar. This plot here – it is about 800 hectares of land. That is about the size of five Toa Payoh towns. The airbase is moving to Changi and Tengah so that Paya Lebar Airbase, which is now being used by the SAF, will be released. We can then redevelop this entire space for residential, commercial and other lifestyle uses. We are going to do this from the 2030s onwards, it is a massive project but it means new opportunities to transform Singapore. That is one major project but if you look all around Singapore, there are many other opportunities too. For example, we have got the city port moving to Tuas, freeing up the entire plot of land in the Greater Southern Waterfront for major development. We have got another major development planned in Jurong Lake District, and in Punggol. These are not just ideas, but live projects that we are pursuing to keep on transforming, rebuilding and making Singapore better. That is how we can make sure that we create a better, greener, more sustainable living environment for everyone.
Whenever people worry that Singapore is too small, or that we will run out of space, the answer is “do not worry”. There is no chance that we will run out of space, because we have so many possibilities. The fact that we are going to move Paya Lebar Airbase out, for example, is not just about the development that we can do here, but potentially the fact that we can remove height limits for all the buildings in the surrounding areas, all of which are now constrained by Paya Lebar Airbase. So in time to come, we can rebuild these buildings taller too. We will not be at risk of running out of space. The sky is the limit when it comes to thinking about new ideas, and continuing to improve this little island that we have.
In short, there will be many new, exciting opportunities to look forward to in the years ahead. But what is also very critical is to ensure that these opportunities are enjoyed by everyone in our society, that everyone has the chance to enjoy the fruits of Singapore's progress. It cannot be limited to a few who happen to do well or happen to have good luck while the rest of us languish behind. We want, in Singapore, to always maintain in a cohesive society where there is inclusive growth and everyone shares the fruits of Singapore success.
We have not been doing too badly in this regard. If we look at, for example, the 20th percentile of income (P20), and then the median 50th percentile (P50) of real average household income growth over the last decade – P20 has been growing faster than P50. This shows that the low-income groups are doing well. That is not something you can say in many other places. In the US for example, it has not happened, in many other countries, it has not happened. It is a reason why our income inequality has been coming down over the past decade. It has not been going up, contrary to what you may have seen, or heard. In fact, income inequality, as measured by the Gini coefficient – which is one measure of inequality – has been coming down. It is because of all our efforts to uplift incomes at the lower-end. That is very important for Singapore's cohesion – that everyone continues to have this chance of moving forward together.
How do we sustain this, even as we continue to grow as a local city, as a hub of talent, for investments, and for business? One important strategy is to make sure that we continue to have a fair and progressive tax and transfers system. What this means is that while everyone pays taxes, the wealthy and the higher-income pay more. And when the Government receives the revenues, we will allocate more spending to those with greater needs. To put it very simply, for every dollar of tax that a lower-income household pays today, they get back $4 in benefits. For every dollar of tax that a middle-income household pays today, they get back $2 in benefits. But for every dollar of tax that the higher-income household pays, they only get 30 cents in benefits. That is how our system works. This is in fact part of the design of the system to be progressive, tilted in favour of the vulnerable and lower-income groups to give them all the advantage they need, in order for them to progress and do well for themselves and their families.
I have spoken about this in the macro sense, in terms of dollars of tax and dollars of benefits. So let me give you some specific examples of how we actually do this. Take KidSTART for example, where we go out to engage lower-income families, particularly those living in rental flats. We engage those with young children and we make sure that we provide as much support for their young children as possible so that even if their parents do not have the means to send their children for things like enrichment programs, it does not matter. By giving them a good support early in life, children from lower income families can be assured that they can have a good start in life regardless of their family background. And if they work hard, do well in schools, they can easily do better than their parents later on. That is a very tangible way in which we can ensure social mobility, and also ensure that poverty does not ever get entrenched.
Another example is a programme called ComLink+. We go out to the community, identifying lower-income families, families in need, and Government agencies to engage them and find out what their needs are. Then we provide “wraparound” solutions for them, and hand hold them, as they work through their difficulties. Very often when you encounter families like that, the issue is not just about giving money. While it is easy to provide financial help, often there are much more complex problems that need to be resolved. It could be marital issues or family issues, which may require counselling. They may also need help finding a job.
There are all sorts of issues that need to be addressed. In that sense, you need very close hand-holding to help these families. You need agencies to walk alongside them and understand what the issues are. Design the relevant interventions and help them overcome the obstacles that they face in life. This is extremely resource-intensive. Because for every family that is in need, you will need social workers, counsellors, a whole team of people coming together to walk alongside them and help them. That is what we are trying to do, family by family.
And so when I mentioned earlier about $4 in benefits for every dollar of tax, that is actually the resources needed in order to make sure that every family is reached out to, so that we can all progress together. This is why it is also very important for us to understand that making this work is not going to be possible just through the Government's efforts alone.
In order to enable this sort of solutions, we need everyone to come onboard, everyone to do their part. We need community groups. We need more volunteers. We need more counsellors. We need more people who will be prepared to spend time to mentor young children. We need the whole of society, everyone in Singapore, to chip in and do their part.
That is why I recently launched this new exercise, called Forward Singapore. It is an effort to refresh and strengthen our social compact, so that we can chart our new way forward over the next 10 years and beyond; and I have some questions I would like to pose to all of you:
• How can we continue to provide more opportunities for every Singaporean?
• How can we keep Singapore cohesive and inclusive as we move forward together?
• And, of course, what change would you like to see in Singapore and what can you do to help make that a reality?
So do not just ask for changes and say it is somebody else's business to get the things that you like to see done. Instead, think of how can you be involved as an active citizen in shaping Singapore's future.
The bottom line is this, all of us here in this room have inherited a Singapore from our forefathers that is really quite precious. A Singapore that is stable, prosperous and united. We should cherish that and we should never take that for granted. Instead, it is our collective responsibility to see how we can improve it and make it better. So let us be fearless and brave in shaping a better tomorrow and let us all do our part to write the next chapter of the Singapore Story together. And on that note, I look forward to hearing your comments and feedback at the engagement later. Thank you very much.