Singapore must keep upgrading its economy to stay competitive in a troubled world, says PM Wong

Singapore must continually upgrade its economy so as to stay competitive in a troubled world, Prime Minister Lawrence Wong said on Tuesday (Nov 18).

In a keynote address at this year’s GIC Insights dinner, PM Wong, who is also finance minister and deputy chairman of Singapore’s sovereign wealth fund, said that the multilateral global order that once generated broad-based benefits across the world is “steadily unravelling”.

For decades, investors could work on the assumption of low tariffs, predictable rules and stable supply chains, pointed out PM Wong. But many countries are now reassessing those assumptions.

“They worry that trade specialisation has created dependencies and vulnerabilities,” he said. 

“Now, no country can be entirely self-sufficient. But more and more governments are prepared to accept some inefficiency and higher costs in return for greater resilience and security.” 

Besides the heightened geopolitical risks and uncertainty, the prime minister also highlighted rising macroeconomic risks as governments grapple with high debt from defence spending, ageing populations and climate adaptation. 

Correction in the near term

Despite these pressures, PM Wong said that the equity markets remain buoyant. 

This is led by optimism around new technologies, such as artificial intelligence (AI) which investors believe will unlock major productivity gains and new opportunities, according to the prime minister. 

But he cautioned that the returns from investing in AI may take time to reach the broader economy, while noting that early exuberance has accompanied every major technological revolution.

”There will be correction in the near term. And that correction can be painful – not just for tech firms, but for broader markets too,” said PM Wong. 

In uncertain times, PM Wong said that investors are looking for places with stability, security and rule of law. 

“And that is why Singapore works hard to uphold our reputation as a trusted business and financial centre,” he added

“Jurisdictions with consistent and credible track record will be better positioned to attract long-term capital.” 

But he said that safety alone is not enough, adding that “fundamentals matter too”. 

“For Singapore, that means continually upgrading our economy and strengthening our capabilities so as to stay competitive in a troubled world,” said PM Wong. 

GIC must focus on durable growth

Turning to the GIC, PM Wong said that the sovereign wealth fund must stay true to its mission as a long-term fundamental driven investor — keeping an eye on market momentum but focusing on intrinsic value and durable growth.

“We will not get every call right. Nobody can. But with careful deliberation and discipline, GIC aims to get the big calls right most of the time,” he added. 

“GIC is not merely a fund manager for the government, but a trusted custodian of the reserves that underpin Singapore’s safety and security.”

Concluding his speech, PM Wong said that GIC’s achievement has been possible not only by sound strategy and discipline execution, but also because of strong partnerships. 

“The world may feel more divided and uncertain than ever, but here in Singapore, we strive to be a convenor,” he said. 

“Bringing people together, fostering cooperation and helping to build a network of trust that are so essential in these turbulent times.” 

[[nid:651968]]

chingshijie@asiaone.com