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Opening Remarks by Minister for Finance Lawrence Wong at Singapore Regional Business Forum on 22 March 2022, at Sands Grand Ballroom

22 Mar 2022
Distinguished guests
Ladies and gentlemen

1. I am very happy to join you this morning at the Singapore Regional Business Forum. The theme of your forum and for the broader summit is about accelerating transformation in an endemic world.

2. Indeed, when we prepared for the Singapore Budget which was just delivered not too long ago, our focus was not just to deal with immediate issues, but to prepare Singapore for this new endemic, post-pandemic future.

a. We recognise that COVID-19 was a crisis of a generation – it has changed the world permanently, and we have to adapt to it 

b. But before the world could fully recover from COVID-19, we were confronted with yet another debacle event. In fact, there are very few history-making events that happened. This happens once in a while. But in a short span of two years, we have had COVID-19 and now we have another event, which was the invasion of Ukraine by Russia – which is now the largest war on European soil for almost 80 years.

c. This is not just a conflict in a distant land. It is, as many have said, likely to be a major turning point in history. The established international order, or the post-Cold War era that began with the fall of the Berlin Wall, has been shaken.  So we are likely entering a new world order, which could very well be less hospitable for a small country like Singapore. 

d. Whether it is COVID-19 or Ukraine, there can be no doubt that we are living in a more dangerous, troubled and volatile world.

3. In the immediate term, there are significant downside risks – for both growth and inflation  

a. Global supply chains were already heavily disrupted by the pandemic and bottlenecks that were presented because of COVID-19, and now the war in Ukraine has presented new risks to the supply of key materials.  

b. We already see this in energy markets. All of us are seeing higher prices for oil, gas and electricity.

c. It is impacting many other areas too. Food is being impacted, because Russia and Ukraine are big exporters of corn, barley, wheat and fertilizer. We have not experienced the full impact on food yet, and there may well be specific areas of impact too, like aluminum, nickel, or even something like neon gas which is used to produce semi-conductor chips. Ukraine accounts for 50% of neon gas production in the world. So there is no doubt that there will be more supply chain disruptions in the months to come. 

d. No one can tell what the situation will be like and how the situation in Ukraine will unfold. Of course, we hope for cooler heads to prevail and the situation to de-escalate. We hope off-ramps can be found, so that progressively, things can stabilise. 

e. But as tensions are prolonged or if things escalate further, there will certainly be further impact on global growth and inflation.  If both are impacted at the same time – both growth and inflation – then the global economy could go into stagflation, meaning they will have a stagnant economy with high inflation. Under these circumstances where we see significant impact on the global economy and global prices, Singapore will certainly be impacted too, even though our direct links with Russia and Ukraine are limited. 

f. That is why we are monitoring developments there very closely. As we have said before, we will not hesitate to take further measures to help businesses, households and workers if necessary.

4. Beyond these near-term uncertainties, we must continue to look ahead and press on with our efforts to restructure and transform our economy for this new and uncertain future. 

5. So we are redoubling our efforts to build a more connected, more innovative and a more resilient economy. Let me touch briefly on each of these three themes. 

6. First, connectivity – this is essential, even existential, for Singapore, as we have emphasised many times.

a. Strong connectivity will enable us to be a choice destination for business, finance, trade and even data flows. This is what distinguishes Singapore as a hub. 

b. That is why we are pressing ahead with our long-term plans to enhance our infrastructure. That includes:   

i. Physical infrastructure like our Tuas Mega Port, our Changi Airport Terminal 5, as well as digital infrastructure including our broadband network, and our investments in new technologies like 6G. We can have the best types of infrastructure and digital connections, but they will not be sufficient if we are not connected in our hearts and minds. 

c. That is why, it is also very important that we always retain an ethos and mindset in Singapore to stay open to welcome entrepreneurs, talent and investments from around the world. Then we can truly be a connected hub where the best are assembled in Singapore, complementing us, competing on our side, and creating value for ourselves and for the world.

7. Talent and ideas will also drive our second imperative, which is to become more innovative. 

a. As we all know, innovation is the key to creating wealth and raising standards of living for our people here in Singapore.

b. That is why we constantly, continually, strive to be one of the key innovation hubs for the region and the world.  

c. Compared to the situation 10; 15 years ago, I would say we are doing much better on this front. 

i. We have a much more vibrant start-up eco-system. That is not just looking at start-ups but an entire eco-system for angel-investing; venture capital. We see strong growth in venture investments. Just last year alone, we had 11 Singapore-based start-ups achieving unicorn status, which is no mean feat for a small -city-state like us. 

ii. Anecdotally, I see this mindset most clearly when I talk to young people. When I was in school – this is in university in the early 90s – none of my classmate talked about becoming an entrepreneur and starting a start-up. No one. They wanted to join banks; they wanted to join big MNCs. When I entered politics in 2011, more people were talking about start-ups. These days, when I go to universities, when I talk to young students, many of them talk about doing a start-up. They have had exposure because of the overseas programmes in our universities, to Silicon Valley, to places around the world. They are keen to do something to get an enterprise going. So the situation has clearly evolved from 10 to 15 years ago. Another indicator is our local filings for patents and trademarks. That is a key indicator of a robust R&D ecosystem. These have also more than doubled over the last decade. 

d. Clearly, we are doing better. This is partly the result also of a government policy of steadily and consistently investing in science and R&D. We have been doing this over the past 15 years – part of this is in fundamental research that is far too removed from commercialisation to attract VC funding.  The Government is not a venture capital entity. We are not in the position to do that. But what we can do, is to fund basic research and fundamental R&D. That can help catalyse, hopefully, and crowd in, more private investments in R&D. 

e. While we have done well in the last few years, much more can still be done in this area because:

i. We want to see more pervasive innovation across our enterprises, especially amongst our SMEs.  

ii. That is why in this Budget, we have strengthened support for SMEs in their innovation journey, by creating more opportunities for them to partner with our research centres.  

8. Thirdly and finally, we aim to be more resilient.  

a. We have indeed faced many ups and downs over the last 2 years in our fight against COVID-19.

b. Clearly, there will be many more shocks to our economy and society in the future. 

c. I think DPM spoke this morning and highlighted this. These shocks may not occur in isolation – one crisis can fuel another crisis; one risk can create more risks. For example, climate change may facilitate the spread of more infectious diseases.  

d. So we have to be prepared for a world where there will be additional risk, more volatility; potentially more shocks to our economy and to our society. We cannot avoid these shocks. But we can learn to be more resilient – to have the ability to go through these bumps, to take some hits, but to bounce back quickly, and emerge stronger all the time.

9. How do we do this? There are many suggestions to be more resilient. DPM shared some of them. I will share three suggestions from my perspective.

10. First, we must always ensure sound and stable finances because that is key and vital to our success. That means:

a. Upholding the discipline of keeping a balanced budget and living within our means.  

b. We are fortunate in Singapore to have the benefit of accumulated reserves – reserves accumulated by our forefathers – precisely because they upheld this attitude of fiscal discipline. Today, we have the reserves that provide a steady source of annual income in our Budgets but also a critical buffer, a rainy day fund, to see us through crisis. We have already drawn more than $40 billion from the reserves over the past 2 years. It is one reason why we have been able to respond so quickly and so decisively during COVID-19. It is one assurance that we have that should the situation in the world get worse, if Singapore gets into a recession, if there are any future shocks, we will always have the fiscal fire power at our disposal to respond quickly and swiftly. We should always uphold this same mindset of fiscal responsibility and stewardship for our future. It is critical in us being resilient through crises and emergencies.

11. Second, we should continue to invest in our people.

a. We have been doing so all these past years. A major priority for Government spending has always been heavy in investments in education.  

i. In recent years, we are doing more, not just in education alone, but we are starting earlier in life, through initiatives like KidSTART; through funding of preschools.

ii. We are also extending our support beyond the formal years of schooling, through a bigger push on something called SkillsFuture.

iii. That is why, now, we are spending about $1 billion a year on continuing education and training for adult workers, and we will sustain this momentum in the coming years.

b. Here, we also need to work closely with businesses and employers – many of you in the audience. I am encouraged that many employers are doing your part. You tell us that you are very excited and you are more than ready to do more, to invest in your workers, to help your workers upgrade.  

c. I would say to you, that you cannot leave this function to your HR teams alone. Investment in people is not a HR function alone. Yes, HR takes care of it but senior management, the top management, must devote personal time and attention to the training and development of your workers.

d. The more you invest in your workers, the more personal time and attention you pay to this area, the more they can contribute to your organisation; the more motivated they will be in helping you secure your company’s next stage of growth.

12. Thirdly and finally, we have to strengthen our social compact to become more resilient.

a. When we say “we bounce back” from a shock, the ‘we’ refers to who? It refers to all of us. 

b. We collectively want to bounce back stronger and the glue that holds us together is our social compact – that is what makes us more resilient as a people and as a society. 

c. That is why, a key focus in the Budget this year is to renew and strengthen our social compact for a post-pandemic future.

i. In this Budget, we highlighted initiatives to tackle inequality and uplift our low-wage workers. It is something we have been doing progressively over the last decade. Which is one reason why, our income inequality, as measured by the Gini coefficient, has been coming down. Inequality in Singapore has been coming down over the last decade, steadily. But this year, we are giving a further push through an expansion of progressive wages and enhancement of Workfare and through these measures, we are determined to see continued decline in inequality or improvements in forging a more equal society over the coming decade. We have been focused on inequality and we have additional measures in the Budget for this. 

ii. But we are continuing to review our approach and policies in other areas.

iii. This is a major multi-year agenda, to strengthen our solidarity with one another, and to build a stronger social compact that will see us through any crisis.

13. Amidst all these uncertainties, sometimes, it can get quite discouraging when you read the news. There are lots of things happening around the world. But I would say, let us never lose heart and never give up.   

a. The reality is that Singapore is moving forward from a position of strength.

b. Our responses to the pandemic have distinguished us from other countries.  We have enhanced and strengthened our reputation over the past two years as a trusted and reliable node.   

c. The best demonstration of this, is that our pipeline of new investments is strong and healthy. More and more businesses are wanting to come here to do business in Singapore and it is not just the quantity of business and investments, but they are coming here to do more cutting- edge stuff, which is good for us. 

d. So we have many things going for Singapore.

14. Importantly, we can all have confidence so long as we stand together as one people.

a. That is how we have successfully tackled multiple crises in previous years and decades, and that is how we have been fighting this pandemic together for the past 2 years, and have been achieving good results.

b. In the process, we have built strong relationships with many stakeholders. The partnerships between the Government, trade associations and chambers, businesses and unions have strengthened through this process of tackling challenges together.

c. We want to continue to strengthen these relationships and partnerships because we value that they enable us to tackle our problems together. They show that we are stronger when we stand together. 

d. So let us continue to work together to chart our new way forward – towards a fairer, greener and more inclusive Singapore. Thank you very much.