A Conversation with Lee Hsien Loong, Prime Minister of Singapore | DAVOS 2020

welcome to prime minister lee sin long prime minister lee it's a great honor for us to have you hear the story of your country is remarkable as you know singapore gained is independence in 1965 here I was born nearly 55 years ago since then it has grown from a small British trading colony to one of the more world's most sophisticated economies in the span of a generation back in 1965 per capita in Singapore was 500 US dollars today per capita is 65 thousand US dollars that represents I guess around nine percent annual growth you became a prime minister in 2004 you are the third prime minister of your country also shows the stability and have been leading no the country for 16 years we know that there is a lot of things happening in the region but this is definitely Asia century for the first time 50 percent of the global GDP is coming from Asia and Singapore's leadership is crucial so I think all the people coming here looking forward to hear your views mr. prime minister on the geopolitical outlook aspirations for Singapore's floors yours welcome Thank You Brittany I thank you for your very generous remarks on Singapore we've done reasonably well over the last half-century we worked hard for that but there were some external factors which were very important to us and I'll just mention three of them the United States China and globalization the United States was critical because it generated peace and stability and security throughout the Asia Pacific over this last half-century the Vietnam War notwithstanding it has been a benign constructive influence generating an environment where countries like Singapore small ones can participate and prosper and compete and have our place in the Sun at the same time the United States was also a major source of investments and a major market for us because they kept the economy open and they believed that by being open and by being welcoming of the growth and prosperity of others the u.s. game China also was a major factor in our success because over the last 40 years as China reformed and opened up and grew steadily even faster than Singapore our engagement with them deepened trade volumes increased dramatically investments in China grew hugely Singapore according to the Chinese statistics is the biggest source of foreign investments in China through Singapore I think some of them must be other companies based in Singapore but nevertheless it shows the depth of the relationship tourism numbers grew the engagement generated confidence lift and a certain vibrancy throughout the whole region which Singapore benefited hugely from thirdly we benefited from globalization because world trade was buoyant because people did business with one another increasingly openly there was a there were trade rounds I was a Uruguay round the WTO played a constructive role although not always effortlessly but we plugged into the global economy and that enabled a small country to be productive and so the policies we made could work now we are the turning point all three of these factors are changing the United States in terms of security I think the security balance strategic balance in the region is shifting because China has become more influential and more substantial a participant and other countries - and in the North Koreans are a major preoccupation because they have nuclear capabilities and America itself is asking the question whether they are carrying too much of a burden for this and pushing wanting them allies to take on more of a responsibility at least for financing the cost of this common security on economics to the Americans have shifted their attitudes I think there's much more concerned about impact on American workers much more concern about other countries taking advantage of America seeing this as a free rider problem rather than one where America is holding the ring and being open benefitting others but in the process benefitting itself so that is a major change we don't know that it is irreversible but it is certainly a very fundamental shift of stance the Chinese position has also shifted because as they have grown they have become much more influential much more advanced in their development their role in the international economy has changed substantially their influence has grown and their relations with other countries and put in particular with the United States has become more difficult to manage and therefore whereas it was previously effortless to say I'm friends with everybody and including friends with the United States and with China now we still want to be friends with everybody but you are pushed to be better friends with one side or the other so that's a change in the world of Europeans understand the smaller you are the better you understand it the third factor of globalization is also shifting you you discuss it all the time here because people worry about the impact on disadvantaged groups people worry about the impact on the environment people worry about the uncertainties which generate which are generated because we are so interrelated and people are anxious about the ups and downs which we no longer have a buffer to protect ourselves against and in this environment Singapore has to look forward for more than another 50 years and find a way forward to navigate them what do we do with America we remain very good friends they are major major security cooperation partner with us and I think we continue to believe that they have an important role in the region to foster stability and security no longer alone but still a indispensable role because the Chinese cannot play the role Americans do the Japanese neither and so we would like to continue to work with America we'd like to continue to work with China from time to time you will find yourself being pressed to two sides and when we do have to make a stand I think it's very important that people understand that Singapore's choices are on its own behalf because we are making decisions for Singapore and not because we are a cat's paw for one side or the other and that means you must have the courage to stand up and call things as they are and from time to time you will incur well at least a raised eyebrow and sometimes more than one raised eyebrow from one fight or the other and occasionally both but it's necessary to do that because once people no longer think that you are serious interlocutor calculating on your own behalf you are written off your finish with China we also have a big account in fact China is our biggest trading partner as it is for everybody else in the region including all of America's allies and we hope when we see that it is possible for China to adjust its position taking into account its new very strong influence in the world in order to integrate in a peaceful and constructive way into the global order which it depends upon whether they just show that one button road initiative whether it's through the Asia infrastructure and investment bank or other diplomatic initiatives I think China will have a major role to play and Singapore hopes that we'll be able to cooperate with them and participate and encourage them to engage in a way which leaves space for other countries to prosper to set their own path and in the long term to welcome a new major player and not feel that this is a elephant in the room which may not notice who else is there and what may be underfoot on globalization I think notwithstanding their pressures and their problems we have no choice but to continue to bet on countries cooperating closely with one another because of five and a half million or six million people in Singapore have to grow our own food and make our own computers and make our own banking and living I think we will starve it is not possible but to prosper in such a new globalised but troubled environment we have to up our game raise our capabilities bring in new investments which we'll connect us to centers of vibrancy and prosperity all over the world Europe America Japan China Latin America and Africa because there are many spots of vibrancy and and and and future growth there and Link us in in a way where we make a contribution because we can do things in Singapore which is not so easy to be done all together in one place any other single place and that means we have to upgrade our companies upgrade our people education skills and have the environment where we can welcome in very high quality investments operations R&D centers places where high quality people want to live want to work want to be and it's not just costs but it's also the whole environment the safety the security the confidence the opportunities the vibrancy that is what Singapore needs to be and emits all this we have to look after our own people make sure that all these good things which happen in the world benefit not just Singapore but benefit Singaporeans across the board so that they are able to take advantage of the jobs we create so that they are able to fend for themselves against global competition so that if one industry is declining which will happen from time to time the people there are given the help and the support and the time to gain new skills and transfer their employment to another industry another job and be able to make a living for themselves and not feel that they are fending for themselves on their own and that the system is not on their side this system has to work for them because if it doesn't work for them the system will fail and in Singapore it must not fail because we only have one chance to succeed thank you thank you mr. price thank you very much for this tour the horizon-- there's so many questions that could be raised let me start with the global risk report at the World Economic Forum does every year the top concern by experts and business leaders in the survey that we just published last week short term was geopolitical polarization and trade wars having also a negative impact on global growth IMF came up out with their adjusted numbers for global growth this year and were more bearish than in the last report mr. prime minister do you feel that there's still challenges related to geopolitical confrontations and competition or do you see that we maybe it has peaked with the signing of the first part of the trade agreement by US and China in DC last week we are relatively relentlessly optimistic but not that much so don't think it has peaked at all it's a very serious issue how does an incumbent hyper power the United States accommodate a rising new power China which is going to grow as a percentage of the world GDP which is going to grow and develop in terms of the sophistication of its economy and which in absolute size is going to become larger than the United States although not more advanced than the US for many years to come but it will become larger very soon if it is not already and how how do both sides make the adjustments in order to accommodate each other and head off what Graham Allison calls the few cities is trap and it's not at all obvious that it is easy to do because both sides have domestic pressures those both sides primarily are calculating the next election or the next domestic political succession and those domestic pressures do not naturally factor in a global strategic stable balance so already you see the consequences because they're tariffs the counter tariffs have reduced trade has reduced welfare and the uncertainty of the conflict has meant that investments have been affected and business decisions are being cut off because you don't know you can't count on the future and the prospect of bifurcation in technology whether it's on 5g or on the whole supply chain that will cause I don't trust you therefore you don't trust me therefore I cannot rely on your products and therefore you must develop your own supply chain it's a it will take a long time for that process to come to fruit to do to run its course but it's a very expensive process which is going to hurt us I was talking to one industrialist yesterday and he said well we make say medical equipment MRI machines in an ideal world you make it in one place and you supply the whole world if we bifurcate we can put one manufacturing Center for Asia and China one manufacturing Center for America and it costs our Sun but we won't die I said that's fine if we are making the same MRI machine in both places but if they need different chips and different software and if the next time I find an MRI breakthrough I'm not going to share with you because there's a national security threat to me then I think it will cost us and I think you're not there yet but you're not heading away from that direction mr. prime minister you're right that jeetu also call that US and China is more than 40% of the global GDP so it really matters what is coming out of that corporation or a competition yes I I feel also that it is also a competition about new technologies following the fourth Industrial Revolution yes I guess both Beijing and EC has understood that those countries that are on top of these technologies will also come out of this century as some of the most influential yes hope worried are you and you already touched on it this decoupling piece because today they have been competing but if you go for different systems and you don't follow a path where this is compatible that can also have a quite significant negative impact on long-term growth and then countries will have to choose Singapore has then to choose the Chinese system or the American system and I think Europe can easily end up in the same dilemma today I'm here talking to you we have two mics for backup and they're both the same system one day I may need to have one which is an American system and one which is not an American system and I don't think that's the better world to be in because it's not just a it's going to cost us more but the mutual suspicions and the anxieties which is going to be created did he design his own that he thought oh my design did he is reverse engineer mine or did he entice my person over in order to carry the IP along inside his brain all these neutral suspicions and doubts are going only to create more frictions more problems the optimists say that you are so integrated that pulling it apart is unthinkable but I don't take quite such an optimistic view I think it makes it very hard but such things do happen before and if you do try to happen the consequences are very very very bad I mean before the First World War the European countries are all very integrated together the economies were integrated together that colonies traded with one another and people thought this was the futures globalization but that didn't stop miscalculations and tensions from building up and the first world war from breaking out disastrously beginning with what should have been a minor incident and so we've had 50 years generally of peace can you bet on another 50 years generally of peace I think that the odds are not negligible a lot of stakes we're moving from like prosper thy neighbor to beggar-thy-neighbor approach huh well nobody says that everybody says I want to prosper my neighbor but I have to think about my people first Singapore already saw last year quite significant slowdown in your growth I think you had zero point seven years percent you're more optimistic about this year and the hit last year were you paying a price already for this trade wars and some of it was from slower trade export markets were less buoyant some of it was because of electronics slowdown which is global there's some prospect the electronic slowdown will turn around this year the the people in the industry are reasonably optimistic what we are not sure this year is where the US economy is going doesn't look like it is going into a recession but nobody has a very good record predicting when the economy is going to recession a lot of numbers lost there yesterday you heard probably from present Trump very positive but does that predict the future and you never know it is the turning point when does a mood change and all of a sudden the people's perspectives shift and say how silly of me why didn't I see this before and by that time everybody else has got into a new new psychology and things turn it may not happen this year if you ask the best opinion they say chances are not but that are not negligible but the key thing is if you have the strategic tensions not being resolved and flaring up again downstream which can happen then it's not just an impact on the business cycle is an impact on the long-term trajectory of the world we are witnessing a kind of synchronized global economic slowdown but we are not seeing any kind of recession at this point but if there is a recession in the coming years how worried would you be that we have so limited tools to fight the recession you know can you have more than zero interest rate you can of course go a little bit further with quantitative easing how much of a fiscal muscle is there globally when many countries are already running with big deficits and what was the lesson learned from 2008 g20 came together and agreed on very unorthodox tools would it be possible to get the same players in the same room and agree on anything these days well that depends on your view whether things have turned sour because people have the relationship has soured or whether they work less well together because the crisis is less urgent if it is the former and you're going to a crisis and we are not on good terms well we have a problem we can't cooperate but if we are squabbling because things are not grave then when things become grave and mines are concentrated perhaps we'll have no choice but to work together again I have to hope so I don't know whether central bankers have run out of ammunition they say so but central banks are not the only policy instrument which governments have you also have fiscal policy and there are limits but in fact there are very respectable and eminent economists like Larry Summers who argued that in the last downturn and in the recovery fiscal policy was not used enough and people were too worried about running deficit whereas you should have run the deficits spent the money wisely not just to feel good or to boondoggle but to invest in infrastructure education things which make a difference improve your productive capacity and then the economy will recover and then in a way you've got something of a free lunch I don't generally believe in a free lunch but I do believe there's a role for fiscal policy and there are countries that still have huge fiscal muscles though quite large economies Germany for example has got a very balanced budget but they have very deep institutional and collective memories of hyperinflation and they they do not wish to go in that direction they have this rush to the nola in their law their zero black zero well that's that's not a bad discipline to impose on ourselves I mean Norway Singapore has that rule - not year by year but term by term of government namely that this government if you are going to run a deficit you have first to earn the money then the next year you can run a deficit but you cannot say last term of government run a surplus and so I can now afford to run a deficit the country is rich and I think it would that's a valuable discipline but you have to apply it in a way which is appropriate to the situation mr. Prime I think the 2007 2008 economic crisis at global financial crisis in that situation if you navigate by rules the chances are you will run into a even more serious problem and maybe if there are no tools and no agreements you could run into a situation maybe not it's such a deep recession but a much longer one like we had in the 70s 1000 your growth or in the 30s because what happened in the 30s was tariffs and counter tariffs and smooth smooth wholly in in in in America and one of the things the g20 did after the global financial crisis was to say we shall not go for this tariff retaliation or competitive devaluation and we shall be in this together let's try to reflate together let's bring our monetary policy down and try and coordinate that and you do need that kind of coordination worldwide we can't all be running trade surpluses whom are we going to be having surpluses against Antarctica no thank you also for reminding us about the history which we we do remember from the history books is that in the thirties the global trade fell with 50 percent yes and the global GDP in few years fell with fine 25 percent and they got a real depression so there is a lot at stake followed by a war yeah there is a lot at stake I mean I don't think we will repeat our follies in the same way but it is quite possible for us to be inventive in making new mistakes [Music] do you see any silver linings well if you look at the tech sector there's tremendous vibrancy and optimism and everybody believes they're going to change the world they are not all right but some of them will not be wrong and if you look at things like no Google or Amazon or so many of the tech companies or Microsoft which did not exist 30 years ago and which were not a dominant 20 years ago they are now major players in their world so nobody knows what the major participants are going to be 20 years from now and it's going to generate new opportunities but it's also going to generate new problems when social media came along everybody said this is marvelous this is a way to democratize the that debate and everybody has a voice and now we shall have an egalitarian participative basically Nirvana will have a life and now we see what it is like it doesn't look at Nirvana can democracy survives social media I do not know whether it's democracy surviving but how will human societies adapt to this human societies I mean over many many centuries have developed to have a certain to have circuit breakers I mean a view and idea develops it catches fire a few more people pick it up it gets tested other people may or may not pick it up things take time gradually evidence accumulates and then some fail some succeed and move forward now all that is short-circuited into one fraction of a second the length of time it presses your button time to press a button for either a Facebook post or Twitter tweet and when you speed up the operating cycle like that by a hundred or a thousand or 10,000 times the operating system will malfunction human beings are not meant to walk like your brain doesn't speed up 10000 times you need time to hoist things in to mull it over to think it just to think it discuss it to test it and gradually to get some gray hair and then you have some better decisions about it and if you throw all that out of the window I think you need to be very confident you know what you're doing and I'm not sure that we actually have an answer to that question this platform company's scale and size is everything when the winner takes it all in a platforming economy how do you think smaller countries and medium-sized economists will will cope with this if we can participate in the global economy then we are part of it I mean in Singapore we have a lot of the the major platform companies all in Singapore Google is their Facebook is their the data centers are there the engineers are there we are not we don't have very many unicorns of our own but we are part of the global economy and part of these major participants and if there are proper rules which protect participants big and small in this environment then I think we make a living if there are no rules and all of a sudden you have a Twitter storm or something befalls you in the middle of the night next morning you wake up and you find you've been devastated it can happen Prime Minister thank you so much I think I'm I'm speaking on behalf of all the participants I would have loved to continue the another 15 minutes group get your insights but everything good also has to come to an end thank you so much for joining us and thank you for your leadership thank you you you

Channel: World Economic Forum

Views: 81,723

Keywords: World Economic Forum, Davos, politics, finance, economy, news, leadership, democracy, education, 4IR, technology, tech, AI, automation, work, future, world news, economist, world, forum, economic, world news today, worldeconomicforum, Switzerland, external affairs minister, recommended for you, globalization, robotics, bloomberg, documentary

Id: iSmkdD7nYx8

Length: 31min 27sec (1887 seconds)

Published: Thu Jul 09 2020