Speech at Temasek Seminar 2009

Mr Gan Kim Yong, Minister , SAFTI MI-OCS Auditorium

Deputy Prime Minister Teo Chee Hean

Mr Michael Palmer, Chairman GPC for Defence and Foreign Affairs

Ladies and Gentlemen


Good Morning


Introduction

1.   It gives me great pleasure to speak to you at this year's Temasek Seminar. Each year, the Temasek Seminar brings together our top students to discuss issues that are important to Singapore and our continued prosperity and progress.

2.   British economist John Maynard Keynes used the term "Animal Spirits" to describe the somewhat irrational confidence on economic prospects. But different “animals” can also be used to describe our times, our opportunities and our strengths as a nation.

The Global Financial Outlook

3.   The first of these animals is the financial "Bear" that sits at the centre of our living rooms. The bear is often used to describe a weak market. Few conversations these days can steer clear of the bearish sentiments about the financial market and the economy as a whole. Many have tried to figure out where this Bear has come from.

4.   Whatever its source, the speed and scale of the current economic downturn was unprecedented. All the major economies around the world are contracting simultaneously for the first time since the Great Depression: it is the first truly global recession of the post-war period. The World Bank projected earlier that global industrial production would fall by 15% by the middle of this year. World Trade Organisation Director General, Pascal Lamy said that world trade will fall by 10% this year, but he also said that Asia could lead recovery in trade.

5.   No one can say for sure how long we have to put up with this bear before it is chased away by the bull. Some have talked about green shoots. But we must guard against premature optimism. Our first quarter GDP has gone down 10.1%. The Ministry of Trade and Industry (MTI) has revised our growth forecast, but our economy is still expected to contract between 4% and 6% this year.

6.   But the "Bear" will not be here forever. Neither should it be the only focus of our attention. Animals can be positive too. Other than the bull, two animals are of similar interest. These are the Panda and the Peacock - they represent the emerging Asian economies of China and India. Chinese economic growth in the past 30 years is estimated to have already lifted 400 million Chinese out of poverty. It is aiming to achieve 8% growth this year, despite the difficult economic environment. India is likely to do about 5%, according to the Tata Steel Managing Director whom I met last night. By 2030, roughly two-thirds of the global middle class will be Chinese or Indian.

7.   What this means is that beyond the global financial crisis, there will be structural changes in the world economy. There will be greater uncertainty – but also more opportunities. There will be a reshuffling of the deck. Strong countries may be weakened and vice versa. At the same time, strong ones may also become stronger. As we saw with the financial crisis, Lehman Brothers went belly up while banks with sound practices that survived the crisis saw their market share increase. Goldman Sachs and JPMorgan-Chase reported record profits in recent quarters. Likewise, this crisis also offers Singapore an opportunity to improve and strengthen our position in the global economic eco-system as long as we maintain our strong fundamentals and keep doing the right things.

Our Resilient Singapore

8.   This brings us to the next animal, our very own Merlion. As the Merlion is neither fish nor beast, some of you may question if the Merlion is an animal after all!

9.   But whatever your opinion of the Merlion, you must admit that it has a certain resilience.

10.   Earlier this year, as most of you are undoubtedly aware, lightning struck the Merlion, damaging part of its mane. This being such a singular event, the internet was full of speculation of what this meant. Some saw this as a sign of cosmic importance; the more practical minded looked at whether there was adequate lightning protection for this tourist attraction, and the tourists. There was even a picture of the Merlion with a giant plaster photo-shopped onto its head!

11.   Spontaneous digital first-aid for the Merlion may seem to be nothing more than a humorous response. But this symbolic gesture underscores the role of Singaporeans in contributing to the resilience of our city-nation.

12.   This year we will celebrate our 44th National Day. We will also be celebrating 50 years of self-government. Our commitment to shared values of self-reliance and hard work, along with trust and cooperation with one another, as well as the determination to succeed despite all odds, underpin Singapore's progress and achievements over the last five decades.

13.   We see this spirit reflected in the transformation of the labour movement over the years. In the early years, industrial relationship between the workers and the employers was marked by confrontation and conflict. There were frequent strikes in Singapore, hurting our economy and our workers. In 1969, NTUC started the process of modernising the labour movement. We opted for cooperation, not confrontation. Tripartite relations strengthened and industrial actions began to subside as workers' conditions improved. There have been no strikes in Singapore for more than 20 years. Both union leaders and employers have come to the common understanding that harmonious industrial relations is the key to our progress. With this common understanding, they began to build trust and confidence among them. They became strategic partners, what we now call tripartite relationship, among the unions, the employers and the Government.

14.   This achievement should not be taken for granted. Every year during May Day, we celebrate the labour movement by holding a tripartite rally where our Prime Minister is the guest-of-honour. Many other countries mark the day with strikes and some times, violence.

15.   Even during this recession, this tripartite partnership played an important role. Workers in many countries mounted angry protests and demonstrations as people lose their jobs or see their income reduced. Here in Singapore, our response to the crisis has been collaborative and constructive. The government launched the Skills Programme for Upgrading and Resilience (SPUR) and Jobs Credit as part of the "Resilience Package". Tripartite partners issued guidelines to help companies and unions deal with the down turn.

16.   A General Manager with a Multi-National Corporation, who's a foreigner, recently shared with me that his headquarters had asked him to cut their workers here by a certain percentage, in line with all their overseas operations. He decided that this is not the Singapore way. Instead, he worked with the unions and the government to propose an alternative to their headquarters by tapping on downturn schemes like SPUR and Jobs Credit. He was able to convince the HQ that he could cut costs without cutting jobs, thus saving many jobs for Singaporeans here.

17.   While we deal with the downturn, we must also keep our eyes on the long term and build capacity and capability in key industries. We must raise the quality of our workforce so as to broaden and deepen our competitive advantage. What we do during the recession will determine whether we will emerge stronger.

18.   For this reason, we have invested significantly in Continuing Education and Training so that workers at all levels can upgrade their skills or acquire new skills. This downturn presents an excellent opportunity for building core competencies among our local workers in key industries and sectors such as the aerospace and biomedical sciences industries. This will ensure our workers are skills-ready when the economy recovers.

19.   Singapore has evolved a very high quality education system that allows our children to develop their potential and prepare them well for the future. But given that the future is changing all the time and new opportunities will emerge, we must be equipped with skills that are relevant. We must therefore encourage our workers and people to embrace lifelong learning as a way of life. Learning should not stop once we leave school. Instead, it must continue into our adult working life. We must continue to acquire new knowledge and new skills

Building Our Future Singapore in an Uncertain World

20.   I have just shared a few examples of our unique manpower policies. These are policies inspired by our shared values, enabled by trust and cooperation of Singaporeans across the society, and driven by the determination of our people to succeed. In these times of stress and uncertainty, these policies are helping Singaporeans cope and progress. They are also helping Singapore to stand out from other countries. The world is watching us, studying how we deal with the crisis in a united and uniquely Singapore way. If we do the right things, it will enhance our global standing and bring more investment and job opportunities for us.

21.   Our greatest challenge is about our strategy forward beyond this recession. We have recently set up the Economic Strategies Committee to help us identify opportunities for Singapore and chart our long term strategy for growth.

22.   The Committee has been tasked to look for new ways to grow the economy in a sustainable and inclusive way in the long run. We will look at what kind of industries we should attract and nurture, how we can tap on the Asian growth story and optimise the use of limited resources to support our growth. If we are able to position our economy well, when the recovery occurs, we will be able to create good jobs and benefit the broad majority of Singaporeans. We can then achieve sustained inclusive growth for Singapore in the long term.

23.   We will also need to address several challenges as we move forward, the challenge of potential divides in our society mentioned by the Prime Minister: Singaporeans versus non-Singaporeans, higher income workers versus lower income workers and finally, differences among races and religions in Singapore. If our society breaks up along these divides, putting us back together again would take much more than sticking a band-aid over it. We must instead leverage on our strengths, create opportunities for all to progress and celebrate the diversity while broadening the common space. This way, we can stay united as we continue our journey to build a nation.

24.   You are leaders of Singapore's tomorrow. Some of you will be serving in the Government; some of you will be doing business; while some of you may be leaders in the community. Each one of you will have a hand in writing the next chapter of the Singapore story. You have an important role to play in creating our future and forging national unity. In schools, you can reach out to your fellow Singaporeans as well as students from other countries. In the community, we look forward to some of you contributing your time and ideas to either help the less fortunate or to pursue a particular cause. What you do will determine the shape of the Singapore society in the years to come.

25.   We must not take our resilience as a nation for granted. We need to make conscious efforts to strengthen our resilience. We have inherited a nation that in some ways, like the Merlion, not a natural animal. We are a blend of parts that have grown and prospered together. The journey of nation building is not over. It has just started. Our resilience does not stem from commonality of race or religion but a unity of values and vision. Ours resilience needs to be vigilantly preserved and nurtured. We have done well over the last five decades by many measures. We are now at a crossroads where the global economic order is being reshaped and we have the opportunity to surge ahead of our competition. Your future is in your hands. Our future too is in your hands.

26.   I wish all of you a very fruitful seminar ahead. Thank you.