Speech by Mr Peter Ong, Head of Civil Service Singapore, at the Opening of Asia Growth Research Centre, Ngee Ann-Adelaide Education Centre “The Drivers of Competitiveness: Services, Skills and Cities”

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.

• 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.

• 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.

• A second challenge arises from increasingly acute demographic pressures in Singapore, and a tighter domestic labour market.

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.

• In this year’s Budget, we introduced the SkillsFuture movement to develop an integrated system of education, training, and career progression for all Singaporeans.

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.

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.

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:

• 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.

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.

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.