Speech by Minister for Finance Mr Heng Swee Keat at 'U.S. Engagement in Asia: A Conversation with Minister Heng Swee Keat', at The Brookings Institution, on 15 April 2019, Washington D.C.

1. Thank you John for your kind words and warm welcome. I am happy to be here today and to meet so many of you this afternoon.

2. Today, I would like to share my thoughts on three areas:

a. First, how the US has enabled Asia’s peace, prosperity, and stability since the end of the second world war;

b. Second, how the US’ economic engagement of Asia will underpin its strategic engagement of the region moving forward; and 

c. Third, the importance of international cooperation and a rules-based international order amidst geopolitical and economic uncertainty.

The US has enabled Asia’s peace, prosperity, and stability 

3. American leadership has been instrumental for the global peace and prosperity that we have enjoyed since the end of the second world war. 

a. The US was a key driving force behind post-World War II reconstruction. 

i. The US sent aid to Western Europe through the Marshall Plan. Within Asia, it helped to rebuild Japan, the Republic of Korea, and the Philippines.

ii. The US was also the visionary and architect of this age of globalisation and economic integration, and spurred the founding of global institutions such as the United Nations, the International Monetary Fund, and the World Bank.

b. Within Asia, the US’ security umbrella has been the bedrock of our peace, stability, and prosperity. 

i. During the Cold War, the US’ role in the Vietnam War prevented the spread of communism in Southeast Asia. 

ii. The peace and stability fostered provided a conducive environment for the region’s growth and prosperity.

iii. In fact, by opening its market to the region and fuelling trade and investment, the US played an even more active role in propelling Asia’s economic development.

4. Today, the US is a key economic and security partner for many Asian countries, including Singapore.

a. US Vice President Mike Pence mentioned that US businesses have invested more than 1.4 trillion US dollars across the Indo-Pacific, and devoted more than half a billion US dollars to security assistance in the region last year^[1].

b. The robust and multi-faceted partnership between Singapore and the US has also deepened. 

i. The US-Singapore Free Trade Agreement (FTA), the first FTA signed between the US and an Asian country, has been the cornerstone of our bilateral economic relationship since it entered into force in 2004. It continues to bring substantial benefits to both US and Singapore businesses. 

1. The US is the largest foreign investor in Singapore, while Singapore is the second largest Asian investor in the US. 

2. Singapore is also the US’ largest trading partner in Southeast Asia for goods and services.

ii. On the security front, Singapore is a Major Security Cooperation Partner of the US. 

1. In 1990, our countries concluded a Memorandum of Understanding that facilitated the transit of US ships and planes through Singapore. This was at a time when the US left Clark Air Base and Subic Bay Naval Base. Today, the US is the heaviest foreign user of Singapore’s air and naval bases. In turn, more than 1,000 Singapore military personnel are hosted each year for training in the US.

2. Our armed forces train alongside each other, and have participated together in international operations in Afghanistan and the Middle East. 

c. The US’ impact in Asia goes beyond economics and security. Many in the region admire the US’ openness, dynamism, and ethos. 

i. Thousands of students from Asia study in the US every year. 

ii. In fact, the first Chinese student from China to graduate from a North American university, Yung Wing, graduated in 1854 from Yale University. 

iii. In Singapore, we have also set up the Yale-NUS College, drawing on the intellectual tradition of Yale to offer a broad-based liberal arts programme for our students.  

d. Singapore’s experience bears testament to the positive impact that US engagement has had on the region.

5. Looking ahead, we are facing increasing geopolitical and economic uncertainty. So I’ll highlight three trends just in the economic arena.
 

a. First, the trend of increasing globalisation and economic integration no longer appears straightforward. 

i. There are growing concerns that the benefits of globalisation have not been equally distributed.

ii. A recent report on the Brookings-Financial Times TIGER (Tracking Indexes for the Global Economic Recovery) index has also cited geopolitical uncertainties and trade tensions as factors that could hurt future growth prospects.  

b. The second trend is the rapid emergence and convergence of new technologies, or what some have dubbed the Fourth Industrial Revolution, is changing the way we live, work, and play.

c. And third, there has also been a shift in global economic weight towards Asia.

i. Emerging Asia has a combined real GDP of 14 trillion US dollars, making it one of the world’s largest economic regions today^[2].

ii. China’s share of global GDP (based on PPP) has risen to over 18% in 2018^[3], and China is now a major trade partner for most Asian countries, including Singapore.

iii. The ten economies of ASEAN is also one of the fastest growing regions in the world.

1. I just attended the ASEAN Finance Ministers’ and Central Bank Governors’ meetings in Thailand two weeks ago. We discussed areas to strengthen ASEAN integration, including in infrastructure and green sustainable financing, digitalisation, and cyber resilience.

2. Indeed, ASEAN has come a long way. ASEAN’s GDP has also grown over a hundredfold since its inception in 1967, from 23 billion to almost 2.8 trillion US dollars in 2017^[4].

3. ASEAN is the US’ fourth largest trading partner^[5], and is projected to be the fourth largest economy by 2030.

iv. While Asia’s growth in a short space of time has not been without trade-offs, there are widely-held views that Asia will continue to grow over the next decade.

Economic engagement underpins the US’ strategic engagement of Asia

6. How do these economic forces shape the geopolitics in the region, and what does this mean for the US’ role in the region?

7. The US’ presence in Asia will continue to remain vital to the region’s peace and prosperity. In particular, sustained, long-term economic engagement will anchor the US’ presence in, and complement its security ties to the region. This will also enable Asian countries to better engage the US.

a. Asia’s rise will lead to new needs, such as in infrastructure, demand for quality food and healthcare, and tourism. 

i. Take infrastructure for example. The Asian Development Bank has estimated that Asia will need to spend 1.7 trillion US dollars annually until 2030 on infrastructure to maintain its growth momentum^[6].

b. These needs present opportunities for American companies to grow new markets and make new investments.

i. US businesses and capabilities can meet strong Asian demand in areas that US lead, such as infrastructure and energy, and industry 4.0 sectors.

1. For example, the US is a leader in the development and application of AI-driven technologies, and is home to the most number of AI companies in the world – over 2,000^[7].

2. Another example is the digital economy. There are good opportunities for US companies, particularly in ASEAN. 
a. ASEAN is the world’s fastest growing internet region^[8], and it is projected to have a 240 billion US dollars internet economy by 2025^[9].      

ii. Many US businesses have a longstanding presence in the region, and have significant interests in growing their Asia markets. 

1. Their business operations in Asia make a sizable contribution back to the US economy, not only in terms of business opportunities, but also in the creation of good jobs for Americans back home. 

2. Today, US exports to ASEAN are growing faster than total US exports. ASEAN is also taking a rising share of US overseas investment.

- For example, between 2011 and 2018, US exports to ASEAN grew over 16%, compared to around 12% for total exports^[10].

c. Singapore is positioning ourselves as a Global-Asia Node of Technology, Innovation and Enterprise. We hope we can serve as a springboard for US companies seeking to invest in the region.

8. Indeed, deepening economic ties between the US and Asia is a key thrust of the administration’s Free and Open Indo-Pacific vision, which promotes mutually-beneficial collaboration in digital economy, infrastructure, and energy. 

a. We have seen some encouraging moves by the US. For instance, the BUILD (Better Utilization of Investments Leading to Development) Act has increased the amount of money available for development finance to 60 billion US dollars. 

b. It can complement other initiatives, such as China’s Belt and Road initiative, in promoting collaboration and connectivity in the region.

c. Last month, Singapore and the US signed a Memorandum of Understanding to promote infrastructure development and investment in Asia, including through closer collaboration between Singapore’s Infrastructure Asia office and the US’ Overseas Private Investment Corporation.

Importance of international cooperation and the rules-based international order

9. Beyond Asia, what will the US’ role in the global arena be?

10. The world we live in is increasingly interconnected – with global markets, 24-hour news cycles, and soon, 5G. This has resulted in interdependencies of an unprecedented degree. 

11. Similarly, the challenges we face – such as terrorism and climate change – are increasingly transboundary in nature, and of a global scale. These necessitate more international cooperation, and not less.

a. The UN’s Sustainable Development Goals (SDGs) recognise this. The SDGs reflect our collective aspirations, and are a call for global action. While there is no single model of development, global partnership will be required to solve complex challenges, and ensure global peace and prosperity, now and in the future.  

12. New technologies will also present opportunities for countries to come together to find solutions, create new value, and improve our quality of life.

a. For example, in areas such as sustainable clean energy, water and food security, and cities of a digital age.

13. The US and China, as two major powers, play an indispensable role in ensuring peace and security, and in any global effort to address common issues and challenges. 

a. Recent trade tensions between the US and China are worrying. The US-China relationship is a key determinant of global peace and prosperity, and the most important bilateral relationship in the world. 

b. As China continues to grow, some competition between the US and China is inevitable, as each nation strives to safeguard her interests and create a better life for her people.

c. Competition can be constructive if managed well.

i. Competition spurs innovation and drives us to learn from one another, and to be better and stronger. 

d. But competition can be disruptive if it degenerates into conflict and rivalry, and we lose our focus on common interests.  

i. While there are differences and competition between the US and China, there are also interdependences and opportunities for mutual benefit. It is not a zero-sum game. 

ii. Is it vital that disputes between both countries should be resolved in accordance with international norms and through existing multilateral frameworks. No country wants to choose sides. 

e. Ultimately, there are opportunities for the US and China to come together, and play key leadership roles in resolving global problems and challenges. 

i. Take climate change, for example. 

1. The rise in sea level poses an immediate threat to Singapore, which is a low-lying island. Much of Singapore lies only 49 feet (15 metres) above the mean sea level, with about 30% of the island being less than 16 feet (5 metres) above the mean sea level^[11].

2. Many other countries, including the US and China, are facing similar threats from climate change. 

14. This brings me to my final point - amidst the resurgence in nationalist and protectionist sentiments around the world, we must renew our commitment to a rules-based multilateral international order. 

a. Rules and norms ensure predictability in inter-state relations and commerce, while multilateral processes ensure that they are built through consensus and widely respected. 

b. The rules-based multilateral order has brought peace and prosperity, and ensured that the world we live in is not one where might is right. 

c. It has served the global community, including the US, well.

d. But global rules will need to be updated, as the global environment changes.  

i. Take the World Trade Organization (WTO), for example. 

1. Its formation after the Uruguay round recognised that the General Agreement on Tariffs and Trade (GATT) was no longer as relevant to the realities of world trade as it had been in the 1940s. 

2. While progress on the Doha round of talks has been slow, countries, including Singapore, have continued to pursue partnerships, and bilateral or regional trade deals, such as the US-Singapore FTA, as “pathfinders” to greater economic cooperation.

- This building block approach allows us to build up confidence in and enable adjustments to the global trading system.

ii. As the global economy and international order change, all countries have the responsibility to work together, to reinvigorate our rules-based international order, and ensure its continued relevance. This needs to be done consensually and multilaterally. 

e. Ultimately, we should not retreat from the rules-based multilateral international order and globalisation. 

i. The US would stand to benefit from continuing to play a leadership role in rules-setting, and dealing with challenges in our interconnected world to enable prosperity for all countries.

Conclusion

15. Finally, given that Jonathan, the Lee Kuan Yew Chair in Southeast Asian Studies, is moderating our conversation later, I would like to end off with a reference to Mr Lee. 

a. This is the only academic chair in the world named after Mr Lee. 

b. Mr Lee believed in the resilience of the US, and its capacity for renewal and revival. 

c. This is due to the can-do spirit and innovative culture that is part of the American DNA.

d. When Mr Lee addressed the Joint Meeting of the US Congress in 1985, he said and I quote: “America is a great nation moved by high ideals. Only the elevating power of her idealism can explain the benign manner in which America has exercised its enormous power since the end of World War II and the magnanimity and generosity with which it has shared its wealth to rebuild a more prosperous world.”

16. I believe that this message rings as true today as it did then. 

a. First, the US’ presence in Asia will remain critical for the region’s peace and prosperity. 

b. Second, the US’ economic engagement of Asia will increasingly underpin its strategic engagement of the region. 

c. And third, the need for international cooperation and US leadership in maintaining our rules-based multilateral international order is as vital as ever.

17. Thank you and I look forward to exchanging views with you.

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^[1] Source: US Vice President Mike Pence’s remarks at the East Asia Summit Plenary Session, Nov 2018
^[2] Source: Monetary Authority of Singapore Macroeconomic Review, Oct 2018.
^[3] Source: International Monetary Fund World Economic Outlook, Apr 2019
^[4] Current prices. Source: ASEAN Secretariat
^[5] Source: Office of the United States Trade Representative
^[6] Source: Asian Development Bank, Feb 2017
^[7] Source: China AI Development Report 2018, China Institute for Science and Technology Policy, Tsinghua University, Jul 2018
^[8] Source: Advancing the ASEAN Economic Community: The Digital Economy and the Free Flow of Data, Deloitte, Dec 2016.
^[9] Source: Google and Temasek e-Conomy Southeast Asia 2018 report
^[10] Source: CEIC Data
^[11] Source: National Climate Change Secretariat Singapore