Prime Minister Lee Hsien Loong delivered his National Day Rally speech yesterday (August 18), discussing Singapore’s current challenges and the moves the Government will be undertaking to revive the city.
Here’s what you need to know about the potential impact of external forces on Singapore’s economy, and our current economic situation.
“Singapore Is A Good Friend Of Both The US And China”
During the segment of PM Lee’s speech that was delivered in Mandarin, he brought up the topic of growing tensions between US and China, and how this would potentially impact us.
He mentioned that given China’s rapid rise to becoming the world’s second largest economy, the US “has to accomodate an increasingly powerful and influential China”, which is “by no means an easy adjustment”.
“But the US needs to accept that China’s rise is inevitable, and that it is neither possible nor wise to prevent it,” he added.
Instead, the US should seek to build constructive bilateral relations, including economic cooperation, with China.
PM Lee, National Day Rally 2019
PM Lee clarified, however, that China also needs to do its part by “[putting] itself in other countries’ shoes, and take account of their interests and viewpoints”.
“By doing so, it will enhance prospects for peaceful and harmonious relations with other countries. It is also more likely to be viewed as a magnanimous country, and a partner willing to work for mutual benefit.”
He noted that while it’s natural that US and China “compete for influence and power”, there is also a need for both to “develop appropriate mechanisms to manage the inevitable frictions” – something that they have “yet to find a way to manage”.
“Their tensions will persist for some time, and this will impact the whole world.”
Why this is important to Singapore and Singaporeans is because it affects both our relations with the US and China and also impacts our economy.
Singapore is a good friend of both the US and China, and we want to remain so.
PM Lee, National Day Rally 2019
PM Lee stated that the US is both an important security and economic partner to Singapore, and that “the size and scale of US investments in Singapore far out-strip any other country’s”.
On China, PM Lee brought up how Singapore has “extensive economic cooperation with China”, and how, “apart from China itself, Singapore is the only sovereign country in the world with a majority ethnic Chinese population”.
He warned, however, that even with the “shared cultural heritage”, we have our own history and culture, and should thus have “our own perspectives on various issues”.
Our position is this: On any issue, our views and actions will always be based on principles, and not sentiment. Regardless of whom our audience is, whether it is in Singapore, Washington, or Beijing, we always express the same views.
PM Lee, National Day Rally 2019
“[Singaporeans] must be clear-eyed about our own national interests and understand the government’s considerations when we adopt principled positions on bilateral, regional or international issues.”
Implications For Singapore’s Economy – “Our Growth Will Be Affected”
Aside from international relations, US-China tensions will also adversely impact the global economy and ours.
PM Lee brought in the example of Chinese tech giant Huawei, and how trade wars might mean that “Chinese and American companies will each have to develop their own microchips, smartphones, and telecommunication systems”.
This would eventually trickle down to how Singaporeans might then “have to carry multiple phones” when we go overseas, and the conundrum of choosing which telecommunication system to install in Singapore.
Singapore is a small open economy that has benefited greatly from globalisation. If US-China relations continue to worsen, the world will continue to bifurcate.
PM Lee, National Day Rally 2019
“This augurs a more troubled future for us. Our growth will be affected. […] Overall, deteriorating US-China relations is bad news for the world economy, and a definite minus for Singapore.”
He concluded that while these “deeper and wider structural effects” will only be felt over time, we would still need to “begin preparing” and “adapt ourselves quickly to the new international realities”.
“Our Economy Has Slowed Down Significantly”
Bringing it back to our economy, PM Lee shared that this year, our economy has slowed down “significantly”, and this is most likely caused by weakening global demand and international trade.
The most affected impacted sectors are manufacturing and trade-related services.
“Thankfully, other sectors have so far not been very much affected. Retrenchment and unemployment rates remain low.”
PM Lee concluded that the current situation thus “does not warrant immediate stimulus measures”, but the government is prepared to “intervene promptly and appropriately to sustain our economy and livelihoods of our workers” if the situation takes a significant turn for the worse.
The government and union leaders are watching trends closely, and are fully prepared. We have experienced cyclical downturns like this in the past, and we are confident we can take this in our stride.
PM Lee, National Day Rally 2019
Keeping Singaporean Workers Competitive
Beyond top-down measures from the government, PM Lee brought up how companies are, and should be, playing their part to keep their workers competitive and ready for the changes.
He mentioned the example of the Jumbo Group, and its emphasis on training and development of its workers in an industry that “typically has a high turnover rate”.
“By tailoring training to employees’ individual potentials and providing good mentorship, Jumbo has enabled its staff to upskill and grow with the company.”
PM Lee brought in Enterprise Singapore’s Scale-up SG programme, a newly-launched 2.5-year programme that helps selected high-growth local companies scale rapidly.
He later explained why he brought up the example of Jumbo: 1. to remind employees to upskill and retrain to remain relevant and employable; 2. to encourage companies in their transformation efforts; 3. to assure both employers and employees of the Government’s full support in their upskilling and upgrading journey.
There are many government support schemes to help local enterprises develop and expand their businesses. This means more good jobs for Singaporeans.
PM Lee, National Day Rally 2019
“I firmly believe that if the government and people are united, Singaporeans can continue to enjoy ever better lives, and Singapore will continue to shine in the world.”
- Read about the changes to Singapore’s retirement age and CPF contributions for older workers.
- Read about the lower tuition fees and increased bursaries for polytechnic and university students.
- Read about the Government’s S$100 billion investment to tackle climate change.
- Read about the early childhood education subsidies for low-income families.