Global economic activities increasingly viewed through security lens: PM Wong
Singapore will have to find its own path forward in a new environment marked by "dark clouds over the horizon", says Prime Minister Lawrence Wong.
by Tang See Kit · CNA · JoinSINGAPORE: More global economic activities are now being “viewed through a security lens” as the “pendulum of economic thinking has swung to the other extreme”, said Prime Minister Lawrence Wong on Monday (Sep 23).
In a new era marked by tensions between the superpowers, the world is seeing a rise in protectionism, state interventions in business activities and attempts to reconfigure supply chains for security considerations, Mr Wong said in a speech delivered at Temasek’s 50th anniversary dinner held at Shangri-La Singapore.
“Unfortunately, there are dark clouds over the horizon.”
Singapore will have to find its own path forward in the new environment, said the prime minister.
But even as the outlook darkens, Temasek – an institution synonymous with Singapore’s economic development and grounded by the same principles of resilience, adaptability and strength – will continue to be a trusted partner in the country’s future, Mr Wong said.
TEMASEK’S GROWTH
Temasek was created in 1974, at a time when the Singapore economy was still grappling with the effects of the withdrawal of British troops and in the early stages of industrialisation.
To attract investors and create jobs, the government provided loans to some firms and co-invested with others. As a result, the government soon found itself owning a collection of firms – from newly converted shipyards to an airline, and even a chicken essence company, said Mr Wong.
While it is not unusual for governments in developing countries to play a direct role in stimulating the economy, Singapore’s founding leaders felt that things should be done differently.
Temasek was hence formed to take over an initial portfolio of 35 state-owned enterprises and manage them on strict commercial principles, Mr Wong added.
“The companies would then operate on an arms-length basis from the government. This means the government should not be leaning on the companies for favours but importantly, neither should the companies be asking the government for special treatment,” he said.
Apart from this “clearer delineation of roles”, Singapore’s economic transformation was based on several key principles – to be self-reliant as a tiny island with no hinterland and no natural resources, remaining open to people from around the world, and be driven by a forward-looking mindset.
These are the same principles that have guided Temasek since its formation, said Mr Wong.
“Today, Temasek has become an institution synonymous with Singapore’s success. Your evolution mirrors our own nation’s journey,” he added.
“Your achievements are a reflection of the same resilience, adaptability and strength which is to continually strive for excellence, ceaselessly innovate, and build for the future.”
These achievements include transforming some of its portfolio companies, such as DBS and Singapore Airlines, into regional and global champions in their respective industries. The state investor’s success has transformed the Singapore economy and provided well-paying jobs for many Singaporeans, Mr Wong said.
In addition, Temasek has continued to keep Singapore its home base. This has helped to “anchor important capabilities” that made the country more resilient and better able to respond to crises and emergencies, such as during the COVID-19 pandemic.
During the pandemic, Temasek and its portfolio companies kept Singapore connected to vital supply chains and got the community care facilities at Changi Expo and Changi Exhibition Centre up and running, among others.
“We won the battle against COVID-19 because our country rallied together; and in no small part, because Temasek and its portfolio companies stepped up in our darkest hours of need,” said Mr Wong.
A NEW ENVIRONMENT AHEAD
That said, Singapore and Temasek cannot rest on its laurels as dark clouds loom over the horizon amid the growing contest for dominance and leadership between China and the US, said Mr Wong.
This has led to “more and more economic activities around the world … being viewed through a security lens”.
Already, restrictions are imposed on key technologies like artificial intelligence and semiconductors. A bigger concern is that security concerns are spilling over to more areas, he said.
“Once national resilience and security become the overriding priorities, there will be many potential gaps and areas of vulnerability to address,” he said, citing the example of how many countries were unable to make enough masks, test kits and ventilators during the pandemic.
With countries not wanting to be in a situation where their manufacturing capabilities grind to a halt due to shortage in certain critical components, the world is seeing "more state interventions in business activities and more attempts to reconfigure supply chains for security considerations", said Mr Wong.
"Essentially, the pendulum of economic thinking has swung to the other extreme. The consensus of the late 20th century was about free trade and laissez-faire economic management. Now we hear more and more calls for targeted protectionism and aggressive subsidies for key industries.
"Unfortunately, this trajectory will be with us for some time and will only lead to more zero-sum thinking and a more dangerous world."
Against this backdrop, Singapore will have to find its own path forward, he said. This includes staying open and pushing for free flows of trade and investments through regional and multilateral forums.
“Importantly, as countries and companies everywhere look to diversify their exposures and widen their range of partners, we want Singapore to be their choice partner. We want to be a reliable and trusted node from which they can operate,” said Mr Wong.
Using a finance analogy where professionals are always looking for “alpha” or the extra edge that drives higher returns, Mr Wong said Singapore’s “greatest source of alpha” lies in its reputation for trust, integrity and reliability.
“These attributes are a unique source of competitive advantage ... and it's very hard for others to replicate. I believe what's true for Singapore applies to Temasek,” he said.
Even as Temasek embarks on its next phase of transformation, these values – ranging from an adherence to exemplary standards and values, an ability to think long-term, grow with strategic discipline and to add to the Singapore brand of quality, reliability, discipline and integrity - "cannot and must not change", said Mr Wong.
“These are the attributes for which Temasek is well-known for, and these are the attributes that will ensure Temasek will remain a valued and trusted long-term partner.”
In his speech, Mr Wong also touched on how Temasek “believes not only in doing well, but also doing right and doing good”.
“Balancing and realising all of these multiple objectives is never easy,” he said. “The ability of Temasek and its portfolio companies to realise its goals depends critically on its leadership and people.”
With that, he expressed his gratitude to all the directors who have and continue to serve on Temasek’s board.
Several of them were present at the anniversary dinner, including former chairmen Mr J.Y Pillay and Mr S Dhanabalan. “They gave their hearts and minds, and their sweat and tears to build what we have today… We owe them all a great debt of gratitude," said Mr Wong.
The prime minister noted that the government “has been careful not to have any role or influence in Temasek’s investment’s decisions”. Instead, its approach “has been to hold the board accountable for Temasek’s performance.”
“But this approach has been possible only because we have people on the board who are committed and capable, and who can be trusted to work with the management to look after our long-term interests, to protect what we have inherited in Temasek, build on it and pass it on to future generations in better shape than we started,” he said.
In closing, he said: “Tonight, I would like to put on record my appreciation to everyone in Temasek and the portfolio companies. We appreciate your many contributions over these past five decades.
“To everyone – past and present – who has contributed to Temasek and the wider Temasek family, I’d like to say a very big 'thank you' to all of you.”
Temasek, which celebrates its 50th anniversary this year, has marked 2024 with initiatives such as the set-up of a S$150 million fund for skills training and talent development in Singapore.
At the anniversary dinner, it announced that it was setting aside S$100 million as concessional capital for climate action to mobilise funding for marginally bankable projects.
It also launched a commemorative book - titled “By Generations, For Generations: Fifty Years of Temasek As Told By The People Who Shaped It’’ – that chronicles key events and milestones of the firm over the past 50 years.
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