Speech by Mr Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, and Board member of MAS, at the Asia Financial Markets Forum 2022 on 26 October 2022
Mr. Andrew Ng, President, Financial Markets Association of Singapore,
Distinguished speakers, ladies, and gentlemen,
1. A very good morning.
2. It is fitting that we have the skyline of our Central Business District to serve as our backdrop for the Asia Financial Markets Forum. Glad to see the city bustling again after two years.
3. This pandemic has been challenging, but most sectors are steadily recovering, including hard-hit ones like tourism and aviation. Thank you for working with us.
4. But as the economy recovers, we now must grapple with structural shifts and contemporary challenges that are reshaping the global economic landscape.
5. Let me first outline these shifts, before sharing about some of the opportunities we see.
Deep, structural shifts reshaping global economic landscape
6. First, the rules that have governed international trade for over 70 years are now under serious threat.
a. The Russian-Ukraine conflict has put international rules and norms to the test.
b. The strategic rivalry between the US and China has deepened, putting a strain on trade, technology, and finance.
c. This will lead to a more divided world and greatly affect the global economy.
7. Second, COVID-19 and the Russia-Ukraine crisis have exposed the vulnerabilities in the global trading system.
a. The Russia-Ukraine crisis has caused supply disruptions of essential goods and commodities. This has weakened the support for globalisation and prompted countries to onshore their supply chains and impose export restrictions.
b. The shift to a “just-in-case” instead of “just-in-time” mentality means countries are no longer simply buying from the cheapest. What results is higher costs as global supply chains become less efficient.
8. This brings me to my third point. The low-interest rate, low-inflation environment that has supported economic growth in recent decades may be coming to an end.
a. The global economy is facing strong costs and inflationary pressures. I am sure you and your companies feel this impact deeply.
b. The economic recovery from the pandemic has boosted global demand for energy and commodities, but global supply of these products remain limited, therefore pushing prices up.
9. In response, central banks have aggressively tightened monetary policy, which is expected to weigh on growth in the global economy in the near term.
10. In the medium term, inflation is set to be “higher for longer” compared to the past decade of low and benign inflation. Economies will have to face tighter supply chains, higher labour costs and the transition to a low carbon future.
11. As a small and open economy, we do not have much influence over global inflation. We are also heavily dependent on trade and external markets. These structural shifts will greatly impact our economy.
12. However, despite the gloomy outlook that I just painted, we continue to see opportunities.
Opportunities in the Global Economy
13. First, as a neutral location with a strong rule of law, Singapore has earned the trust and confidence of businesses.
a. This is invaluable, and we will continue to safeguard our neutrality and build a conducive environment for global businesses.
b. Even as some countries turn inwards and embrace protectionist moves, we will continue to stay open and connected to the world.
c. Many of you are here today because you have placed your trust in Singapore. Thank you for this trust.
d. We welcome your presence here and are excited to partner you in your growth.
14. Second, there is a global paradigm shift to achieve economic growth in an environmentally sustainable manner.
a. At COP-26 last year, almost 200 countries agreed to stronger climate action, such as stopping and reversing deforestation by 2030, and reducing emissions by an even tighter deadline. Singapore is firmly committed to play our part.
b. This global push towards sustainability also creates new and exciting opportunities in areas like green finance and carbon services.
c. As a global financial hub, Singapore is well-poised to support the greening of the economy through the intermediation of capital.
15. Third, COVID-19 has fast-tracked the pace of digitalisation.
a. With technology, everything is now available at the push of a button. Gone are the days when we had to head to a branch office or ATM to make a financial transaction.
b. Digitalisation will enable businesses to expand beyond the limitations of their physical footprint.
c. It also serves as a powerful tool for businesses transformation, allowing companies to improve productivity and create novel business models.
16. I urge all of you, as leaders of your respective sectors, to continue seizing these growth opportunities amidst the global headwinds.
Our Singapore Economy 2030 Vision
17. To strengthen our economic resilience and remain competitive in the face of these structural shifts, we need to spot new opportunities and build new engines of growth.
18. My MTI colleagues and I outlined our Singapore Economy 2030 vision earlier this year. Allow me to share the four key pillars briefly.
19. The first pillar is Manufacturing 2030.
a. Under this pillar, we aim to grow the value-added of the manufacturing sector by 50% in this decade. To do so, we will attract frontier investments and strengthen our overall ecosystem.
20. The second pillar is Trade 2030. We aim to increase our trading volumes and widen Singapore’s trading activities and markets. For this, we have three main strategies.
a. We are proactively strengthening regional economic integration through ASEAN and regional Free Trade Agreements, such as the Regional Comprehensive Economic Partnership and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. We are also pioneering new agreements, such as the Digital Economy Agreements and Green Economy Agreements, to enhance market access and create opportunities for our businesses.
b. At the same time, we are accelerating our efforts to build a strong ecosystem of trading companies and activities, and continuing to upskill our workforce.
c. Last but not least, we are ramping up the regional distribution capabilities and export competitiveness of our enterprises.
21. The third pillar is Enterprise 2030. We want to have a vibrant ecosystem of enterprises that are innovative, globally competitive, and future-ready.
a. On top of upgrading the capabilities of most firms, we have initiatives like Singapore Global Enterprises, that will accelerate the growth of local companies and help them become global champions.
b. Some of these initiatives will ensure that local companies have the capital they need to grow and create good jobs for Singaporeans.
22. The fourth pillar pertains to our large and diversified Services sector, which constitutes more than 70% of our economy. The financial services sector alone makes up for more than 10% of our GDP.
a. Sustainability and digitalisation are two big trends that present opportunities for our services sector. The financial sector has been one of the early movers in these areas.
b. Project Greenprint by MAS is one good example. Four digital platforms will be launched - these will help companies make use of capital for sustainable projects, as well access data efficiently.
23. The government has formulated the Green Economy strategy to prepare our businesses for the green economy. We launched the Enterprise Sustainability Programme last year, which helps local enterprises boost their capabilities and capture opportunities in sustainability.
24. As for digitalisation, we will continue to support companies and workers to ride the wave of digitalisation.
25. SM Tharman spoke about the Financial Services Industry Transformation Map (ITM) earlier. It is one of the 23 ITMs that are being refreshed.
a. Led by the Future Economy Council, the ITMs have laid a strong foundation for the next steps that we must make to remain competitive.
b. Collectively, the ITMs bring us closer to achieving our Singapore Economy 2030 vision.
All stakeholders have a role to play in seizing these opportunities
26. The government cannot do this alone. Your partnership is key.
27. All of us here must continue to take charge of our growth. a. As businesses innovate, restructure, and renew their business models, we too, must enhance our skills and remain nimble.
28. Trade Associations such as the Financial Markets Association of Singapore (FMAS) are critical in providing peer support to businesses and workers.
a. For example, the training and development courses conducted by FMAS are practical ways of supporting professional development and upskilling in the sector.
29. On this note, I want to congratulate FMAS for reaching a significant milestone since your founding half a century ago
30. I hope you will continue to partner businesses, workers, and the government to bring the industry from strength to strength.
31. I want to draw our attention to the city skyline again. As you can see, our Central Business District is vibrant and dynamic, and many companies from around the world call it home.
32. Indeed, our financial services industry is one of the most diverse in the region, and we will continue to be a trusted and open partner to you. We will not stop growing, engaging you and your businesses, and being relevant to the world.
33. I wish you a productive time at the Asia Financial Markets Forum. Thank you.